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General Committees

Debated on Monday 27 March 2017

Delegated Legislation Committee

Draft West Midlands Combined Authority (Functions and amendment) Order 2017

The Committee consisted of the following Members:

Chair: Mr Nigel Evans

† Ansell, Caroline (Eastbourne) (Con)

Austin, Ian (Dudley North) (Lab)

† Davies, Dr James (Vale of Clwyd) (Con)

† Doyle-Price, Jackie (Thurrock) (Con)

† Fletcher, Colleen (Coventry North East) (Lab)

† Foxcroft, Vicky (Lewisham, Deptford) (Lab)

† Ghani, Nusrat (Wealden) (Con)

† Hopkins, Kelvin (Luton North) (Lab)

† McMahon, Jim (Oldham West and Royton) (Lab)

Miller, Mrs Maria (Basingstoke) (Con)

† Percy, Andrew (Parliamentary Under-Secretary of State for Communities and Local Government)

† Pow, Rebecca (Taunton Deane) (Con)

Robinson, Mr Geoffrey (Coventry North West) (Lab)

† Smith, Royston (Southampton, Itchen) (Con)

† Swayne, Sir Desmond (New Forest West) (Con)

† Throup, Maggie (Erewash) (Con)

Glenn McKee, Committee Clerk

† attended the Committee

Second Delegated Legislation Committee

Monday 27 March 2017

[Mr Nigel Evans in the Chair]

Draft West Midlands Combined Authority (Functions and Amendment) Order 2017

I beg to move,

That the Committee has considered the draft West Midlands Combined Authority (Functions and Amendment) Order 2017.

It is a deep pleasure, Mr Evans, to serve under your chairmanship. If made, the draft order, which was laid before the House on 6 March, will bring to life the devolution deal that the Government negotiated with the West Midlands on 17 November 2015. The draft order will confer new powers on the Mayor and the combined authority, as set out in the groundbreaking and exciting devolution deal, particularly regarding transport, housing and regeneration, air quality, smoke-free premises, places and vehicles, antisocial behaviour and culture. The overall result will be to create for the West Midlands arrangements that should—and we hope will—materially contribute to the promotion of economic growth across the area, improve productivity and, of course, facilitate investment and the development of the area’s infrastructure.

From chairing previous statutory instrument Committees, Mr Evans, you will be aware that this devolution deal is one of a number that we have negotiated, in fulfilment of our important manifesto commitment to devolve powers from Westminster to local communities that choose to have an elected Mayor. Through the deal, the West Midlands combined authority will receive a devolved transport budget, new housing and regeneration powers, and control over an investment fund of £36.5 million a year for 30 years, with the aim of boosting growth and prosperity in the area.

The implementation of the deal agreed between local leaders and the Government has seen two orders already pass through the House: first, the West Midlands Combined Authority Order 2016, which, unsurprisingly, established the combined authority, and secondly, the West Midlands Combined Authority (Election of Mayor) Order 2016, which created the position of Mayor for the West Midlands. The first election will take place on 4 May.

The statutory origin of today’s draft order is in the governance review and scheme prepared by the combined authority with, of course, the consent of the constituent councils: Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton. The draft order is made in accordance with the Local Democracy, Economic Development and Construction Act 2009. The scheme sets out proposals for powers to be conferred on the combined authority, with some to be exercised by the Mayor, and for funding and constitutional provisions to support the powers. As required by the 2009 legislation, the combined authority and the councils consulted on the scheme proposals. The consultation ran for seven weeks, from 4 June to 21 August 2016, and the combined authority provided the Secretary of State with a summary of the responses last September.

Before laying the draft order before Parliament, the Secretary of State considered the statutory requirements of the 2009 Act and is satisfied that they have been met. In short, that means that any transfer of powers should lead to an improvement in the exercise of the statutory functions across the West Midlands combined authority area. The Secretary of State has also had regard to the impact on local government and communities, as required by the legislation. Furthermore, the seven constituent councils have consented to the making of the draft order.

Turning, hopefully briefly, to the detail of the draft order, the Mayor takes on responsibilities for a devolved and consolidated transport budget under the deal, and a key route network of local authority roads. The West Midlands is substantially more advanced on the key route network than other devolution deal areas, which is why those particular routes are listed in the draft order. The draft order also confers powers to enter into agreements with highways authorities, Ministers and Highways England in relation to the maintenance of roads; powers to promote road safety and to regulate traffic; powers to operate a permit scheme to control the carrying out of works on the combined authority roads; and powers to collect contributions from utility companies for diversionary works needed as a result of works on the key route network.

More generally, the Mayor will have powers to pay grants—in practice, for highways maintenance—to the seven constituent councils of the combined authority, with the condition that the Mayor have regard to the desirability of ensuring that the councils have sufficient funds to discharge their highways functions effectively. With the assistance of the combined authority, the Mayor will exercise compulsory purchase powers in relation to housing and regeneration—the same powers that presently reside with the Homes and Communities Agency. The draft order provides that the functional powers of competence already exercisable by the combined authority can also be exercised by the Mayor.

The draft order will confer a number of powers on the combined authority, in addition to its existing transport, economic development and regeneration powers. These will include issuing penalty charges in respect of bus lane contraventions across the entire combined authority, as well as powers and functions of the HCA relating to improving the supply and quality of housing—a really important power, which also includes securing the regeneration or development of land or infrastructure, and supporting the creation, regeneration and development of communities. These powers will be exercised concurrently with the HCA.

The combined authority will receive powers to designate mayoral development areas, leading to the creation of mayoral development corporations—the first such corporation, which has been approved already in this place, is in the South Tees devolution area. Powers relating to air quality will be devolved, too, as will powers to be an enforcement authority in relation to the prohibition of smoking in premises, places and vehicles; powers to issue civil injunctions for antisocial behaviour on the bus and tram network; and powers to take a role in cultural activities, with the provision and support of cultural events and entertainments across the combined authority area.

The draft order provides for the necessary constitutional and funding arrangements to support the Mayor and the combined authority, including the establishment of an independent remuneration panel to recommend the allowances of the Mayor and deputy Mayor. It also provides for the addition of five new non-constituent councils, which will not be full members of the combined authority and will not take part in the elections, but which will be around the table for important decisions. Those five new non-constituent councils—North Warwickshire, Rugby, Shropshire, Stratford-on-Avon and Warwickshire—will join the existing five non-constituent councils of Telford and Wrekin, Tamworth, Nuneaton and Bedford, Cannock Chase, and Redditch.

The draft order will come into force on 8 May when the West Midlands Mayor takes office, with the exception of the provision relating to the establishment of an independent remuneration panel, which will come into force on the day after the draft order is made, to ensure that arrangements are in place for when the Mayor is elected.

In conclusion, the draft order will devolve brand-new, far-ranging powers to the West Midlands and will put decision making in the hands of local communities. We hope, through these deals, to help to rebalance the economy and create prosperity across the West Midlands and in the other devolution deal areas that we have negotiated. I commend the draft order to the Committee.

It is a pleasure to serve under your chairmanship, Mr Evans. I am hoping for a peaceful week after the traumatic events of last week. I know that a number of Members have found it difficult to come back into the Palace of Westminster this week—it is a credit to everybody here that we have come together, across the parties, to support each other.

I am very pleased to see the draft order. I have made the point a number of times that devolution is incremental and will evolve over time, and I am pleased to see that another part of England will benefit from it. However, I struggle to concur with the Minister on a number of things he said, including that the draft order, as set out, is groundbreaking. I suppose, technically, in the creation of any structure, ground has to be broken to a certain degree. Over the Easter weekend I will be building a new shed. Ground will be broken in the course of that project, but it is hardly a skyscraper.

We need to be honest about what the draft order is and what it is not. It is the first steps in devolving power from Westminster to a local area. It is not devolution of autonomy and freedoms in the way we are demanding for England. We are very comfortable talking about devolution to Scotland, Wales and Northern Ireland, but we are less comfortable when it comes to our English towns, cities and counties.

The money that has been referenced is in addition to that which has already been spent by local authorities, but it is a drop in the ocean compared with the population of that conurbation—£36 million is insignificant when compared even with the money that local authorities are cutting from their base budgets. The most disappointing element of the draft order is that we have not seen any real attempt made at genuine fiscal devolution. Narrow powers have been passed down, but there is no ability for local authorities either to generate new taxes or to retain taxes generated in their locality for local benefit. The Opposition expected proposals by now for stamp duty retention, so that local areas can create brownfield regeneration funds or kick-start housing. Instead, local areas are dependent on central Government deciding how much they feel comfortable giving to them. I hope we can begin to make progress on some of that.

Even the powers being devolved are not real powers at all; they are certainly no more, in truth, than the powers local authorities have today. We are talking not about power to effect change, but about influence. Many local authorities provide that influence on a regular basis. On the Department for Work and Pensions devolution framework, there is no ability for a local area to develop its own contracting arrangements, because it has to stay within those of the DWP. Moreover, when programme providers fail, the greatest power that local areas will have is the ability to escalate it to the DWP at a local level so that it can be addressed. But they would do that anyway: if local councils thought that the DWP was not performing to help local residents in any way, they would naturally escalate the issue.

Where is the real power that should come with devolution? Unlike any Minister or civil servant at the DWP—this point that has been made in support of directly elected Mayors—the whole geographic area, which will be in place in just a few weeks’ time, will have no real power to change its arrangements with the DWP.

When reading back the original devolution deal that was agreed, I found it amazing how things have changed so quickly. A number of people have moved on, though some not of their own choosing. I refer, of course, to the right hon. Member for Tatton (Mr Osborne), who was Chancellor of the Exchequer at the time and party to the original devolution deal, but who is now extremely busy covering a number of different responsibilities around the world. Lord O’Neill evidently did not feel comfortable with the devolution settlements on offer and decided of his own volition to move on.

I pay tribute, however, to Albert Bore for his work as leader of Birmingham City Council, and to Councillor Ann Lucas for her work as leader of Coventry City Council. Neither of them are now on the combined authority, but we would not be discussing any type of devolution to that area without their hard work. I know this is still very raw for people who live in Sandwell, but I also pay tribute Darren Cooper, who was a signatory to the deal and who passed away before he could see the mayoral elections take place this year. My thoughts are with him, his group and his family at this time. I am sure that he would be pleased with the progress made in coming to this point.

The offer has been made before. I think that the English are frustrated with being a fourth-rate partner when it comes to debates on devolution. The time has come for a relationship of equals. If it is good enough for Scotland, Wales and Northern Ireland, surely it ought to be good enough for our English towns, cities and regions.

We need to move on from the fragmentation of devolution that is currently on offer, where deals are done behind closed doors, there is no clear framework of what can be devolved to a local level, and where we are still very prescriptive. The idea that we are spending parliamentary time talking about powers that allow a directly elected Mayor to fine drivers for driving in a bus lane or to hold an event in their area is frankly laughable. It is more reflective of a centralising state, not one where freedom and devolution are really on offer to a lot of areas.

It should not be for this place to take a view on such issues. Local areas should be able to consult their local populations in order to make those changes and to run and govern as they see fit, within a clear framework of entitlement and accountability, and to ensure that they get a fair amount of funding.

I entirely support everything my hon. Friend is saying. Does he agree that it was probably nonsense to abolish all the metropolitan councils that Labour established many years ago?

I agree with my hon. Friend. Many of the relationships forged today are not new at all: they were born during that time when people had a history of working together and recognising that on some issues it is necessary to go to a wider geography to recognise the local economy, place and identity. Sometimes it is more complex that the administrative boundaries that we draw here.

This mayoral competition is clearly hotly contested. There is a Conservative candidate whose name has slipped my mind. Siôn Simon is a fantastic advocate for the area. I went to see Siôn when he was on the campaign trail in Birmingham city centre, speaking to people about what the mayoral function can bring and the local leadership that could be put in place. There is no doubt that his vision for the area is compelling and impressive, and it really connected with local people. It was also apparent that local people did not feel that they had been included in the conversation about the development of the mayoral function in the first place.

What this comes down to is that devolution is not about government or structures; it has got to be about people and community. If people and communities do not feel that they have co-produced the devolution on offer, it is going to be very difficult to convince people that is worth coming out to vote.

I am confident that, with an outstanding candidate such as Siôn Simon, people will be inspired to come out to vote. I have no doubt that the Conservative candidate, whose name has again unfortunately slipped my mind, will get a small number to come out as well. We wait with bated breath to see the turnout.

Let us be clear: the minute a Mayor is elected—my hope and estimation is that it will be Siôn Simon—they will start to demand greater powers for the mandate they will have secured through the ballot box. At that point, I hope that the Government will have moved on and started to hand down genuine power, instead of the narrow powers in the draft order.

It is a pleasure to serve under your chairmanship, Mr Evans, however briefly. I endorse everything my hon. Friend said about the great metropolitan counties of the past that were abolished by a Conservative Government. We seem to be inching back in that direction, though we are not going fast or far enough and, of course, the moneys allocated are not much in real terms.

I have one simple question. I think the Minister mentioned an authority in Bedford in his list of towns, after Stratford-on-Avon. Did he mean Bedford?

I represent a town in the county of Bedfordshire, which is not in the west midlands. That was my simple point. If the Minister said Bedworth, I must have misheard him.

I am delighted that the hon. Gentleman spotted my deliberate mistake. I was making sure that people were awake for this important Committee. I may have inadvertently said Bedford when I meant Bedworth—I apologise if I did indeed say that. It was a deliberate accidental mistake, if such a thing can exist. My geography gets a little pasty south of Sheffield, being a proud Yorkshireman.

I welcome the fact that the shadow Minister, the hon. Member for Oldham West and Royton, welcomes the draft order. He tends to be consistent in his contributions to these debates: he welcomes the general principle, but then he goes on to criticise the draft order. All I will say is that we must be doing something right with these deals, because two of his parliamentary colleagues have decided that these roles are so important and interesting that they have deserted the parliamentary Labour party to run for Mayor in Liverpool and in Manchester.

We are, of course, attracting big names. I cannot remember the name of the Labour candidate for the West Midlands, but I can remember the name of Andy Street, who is the excellent Conservative candidate. He is obviously the only candidate with a proper vision for the whole of the West Midlands, and we expect him to do very well come the elections. I am sorry that I cannot remember the name of the Labour candidate, but the fact that we are attracting big names to run for these roles is an indication of how much influence the new combined authorities have.

I think the shadow Minister made two policy announcements today: he recommitted the Labour party to the establishment of metropolitan councils, and then he said, “We want to be equals with Scotland and Wales.” I am not sure whether that is a new Labour policy of a Parliament for England, but those were two interesting Opposition policy announcements.

The shadow Minister said that there will be no real powers and he talked about local taxation. Shortly, local authorities will be able to retain 100% of business rates, and the Government have given them much more freedom with business rate discounts. We have given them flexibility to offer reductions, should they wish to do so.

Does the Minister accept that there is a world of difference between fiscal retention and fiscal devolution?

We are giving much more control and certainty to local authorities than ever was the case when the hon. Gentleman’s party was in government.

Well, they were not really good old days. If they were such good old days, Labour would not have left office with unemployment much higher than it was when they came to office, the economy would not have tanked and people would not have voted them out. They cannot have been that jolly. Certainly, the people in my constituency who were sacked on the Labour party’s watch do not think of them as good old days.

I am just responding to the hon. Gentleman’s point. I have noticed in a number of these debates that he makes a point, I respond to it and then he has a go at me for doing so. It is an interesting debating technique.

The hon. Gentleman also mentioned employment and skills. He said there is nothing in the draft order about the DWP and skills. The truth is that combined authorities will have full retention of the post-19 budget by the start of the 2018-19 academic year, and they will also chair the area-based reviews for post-16 skills provision. That includes the power to co-design employment support for the hardest-to-help claimants. Of course, that will be done in partnership with central Government—the DWP—because, quite rightly, they have a national framework for what they want to achieve in getting people back to work.

The deals confer a power that does not presently exist, which enables the new local structures to co-design that employment support. I would have thought that the hon. Gentleman would agree that the best way to achieve for people who are looking for work or who have employment and skills issues is with a partnership between central and local government. The co-design power, which the hon. Gentleman was a bit sniffy about, is actually really important, and I think the West Midlands will value it.

I do not think there is much more to say than that. I wish the shadow Minister well with his shed building—I am available to come and open it. Come the 2020 election, he will go to his potting shed and prepare for what he will hope will be a flatlining number of Labour MPs. I do not think he will go to his potting shed to prepare for victory.

I commend the draft order to the Committee, and we wish Andy Street all the very best for the upcoming election. I know that the people of the West Midlands will be tuned into this Committee. They will have heard the plugs for both the Labour and the Tory candidates, so we will have made a definitive impact on the election. This is an important milestone and an important step in bringing this devolution deal to fruition.

Question put and agreed to.

Committee rose.

Draft Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) (amendment) Regulations 2017

The Committee consisted of the following Members:

Chair: Sir Alan Meale

† Berry, James (Kingston and Surbiton) (Con)

† Blackwood, Nicola (Parliamentary Under-Secretary of State for Health)

Brabin, Tracy (Batley and Spen) (Lab)

† Chalk, Alex (Cheltenham) (Con)

† Cummins, Judith (Bradford South) (Lab)

† Field, Mark (Cities of London and Westminster) (Con)

† Fovargue, Yvonne (Makerfield) (Lab)

† Grant, Mrs Helen (Maidstone and The Weald) (Con)

† Hall, Luke (Thornbury and Yate) (Con)

† Hodgson, Mrs Sharon (Washington and Sunderland West) (Lab)

† Mackintosh, David (Northampton South) (Con)

Smith, Angela (Penistone and Stocksbridge) (Lab)

† Soubry, Anna (Broxtowe) (Con)

† Stewart, Bob (Beckenham) (Con)

† Stuart, Graham (Beverley and Holderness) (Con)

† Woodcock, John (Barrow and Furness) (Lab/Co-op)

Gavin O’Leary, Committee Clerk

† attended the Committee

Sixth Delegated Legislation Committee

Monday 27 March 2017

[Sir Alan Meale in the Chair]

Draft Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) (Amendment) Regulations 2017

I beg to move,

That the Committee has considered the draft Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) (Amendment) Regulations 2017.

It is a pleasure to serve under your chairmanship, Sir Alan. I am delighted to be here to speak about these important regulations, which will continue to ensure the provision of five mandatory health and development assessments and reviews as set out in the healthy child programme.

The Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) and Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) (Amendment) Regulations 2015 transferred responsibility for commissioning public health services for children aged nought to five from NHS England to local authorities, allowing local public health services to be shaped to meet local needs. That includes responsibility for delivering the healthy child programme.

The healthy child programme is the main universal health service for improving the health and wellbeing of children, providing families with health and development assessments and reviews, health promotion, screening and immunisation. It is supplemented by advice on health, wellbeing and parenting. The five reviews are offered by health visitors to pregnant women, new mothers and children from birth to age five and include the antenatal visit, new-born review, six to eight-week check, one-year review and two to two-and-a-half-year review. They are required to be provided by all local authorities in England.

Health visitors play a crucial role in ensuring that children have the best possible start in life and lead the delivery of the elements of the healthy child programme that relate to children aged nought to five. Health visitors provide valuable advice and support to families and are trained to identify health and wellbeing concerns. Through the health visitor programme, we have supported the profession more than ever before to transform the service.

In April 2015, when the health visitor programme was transferred, there was an increase of just under 50% in the number of full-time equivalent health visitors in the workplace since May 2010. Health Education England is ensuring sustainable development of the health visitor workforce, and more than 800 health visitor student training places are being commissioned. Along with service transformation, that means that more families now have access to the support they need in those precious early years.

We are also committed to supporting school-age children and young people by promoting their health and wellbeing through school nursing services. There are about 1,100 school nurses in England, supported by other professionals such as community staff nurses, healthcare support workers and nursery nurses. In January 2016, Public Health England published commissioning guidance for school nursing, which makes clear that school nurses should be accessible and responsive to children’s needs.

The 2015 regulations, which place a duty on local authorities to provide the five universal health visitor reviews, contain a sunset clause and will therefore lapse on 31 March 2017. The legal obligation on local authorities to provide health visitor services is also set to lapse on 31 March 2017. The draft regulations will prevent that from happening.

The current regulations also include a provision for a review to be undertaken of their operation. The Department of Health commissioned Public Health England to carry out a review of the operation of the five mandated universal health visitor reviews following the transfer of responsibility to local authorities, as set out in the 2015 regulations. A review was carried out in summer 2016, and Public Health England’s report was published on 1 March 2017. The review found widespread support from local authorities and commissioners for the universal health visitor programme remaining in place in order to secure the delivery of long-term benefits from the healthy child programme, including improved health and wellbeing outcomes for children and their families.

There was also a strong view held by professional representatives of local government and the nursing profession that the services are essential for prevention and early intervention and a general agreement that they deliver a positive return on investment and contribute to other Government priorities such as reducing childhood obesity, reducing smoking in pregnancy and improving maternal mental health. I would like to thank Public Health England for its important work on the review and for helping to inform the regulations.

Local authorities will continue to be funded to deliver the mandated health visitor reviews. Local authorities will receive more than £16 billion between 2015-16 and 2020-21 to spend on public health, which includes children’s services and health visitors. That is in addition to what the NHS will continue to spend on vaccinations, screening and other preventive interventions.

I announced earlier this month that we have decided to retain the ring fence on the public health grant for a further year, until 2019, as we move towards implementing 100% local business rate retention. That is a step on the way to a more locally owned system and will help to smooth the transition by providing some certainty for the next two financial years. It is right that local authorities have appropriate flexibility to deliver against their local priorities, but it is also appropriate that some key requirements are set nationally, such as the five universal health visitor reviews.

By continuing these mandated elements of the healthy child programme, we intend to maintain consistency across all local authorities when ensuring the delivery of these services. The draft regulations will remove the sunset clause from the current regulations, ensuring that local authorities continue to provide these important visits to families. Removing the sunset clause will ensure that the duty on local authorities to provide these services does not lapse on 1 April. I am confident that that sends a clear signal to health visitors, family nurses, local authorities and the public of the Government’s ongoing commitment to universal public health support for pregnant women, children and their families.

The Government are committed to improving our children and young people’s health outcomes so that they become among the best in the world. What happens in pregnancy and the early years impacts on the life throughout its course. Therefore, a healthy start for all children is vital for individuals, families, communities and, ultimately, the nation. I commend the regulations to the House.

It is a pleasure to serve under your chairmanship, Sir Alan. The Opposition are pleased that the Government have finally brought these regulations before us, especially with the end-date for the mandation of health visitor reviews being so close—it will be in five days’ time, to be exact. I welcome a lot of what the Minister said.

The regulations are welcome as they continue the mandation of health visitor reviews, which are an important part of an early intervention strategy. We will therefore not seek to divide the Committee. However, I have concerns about health visiting and what the regulations will do that I wish to raise with the Minister and on which I seek reassurance.

This year marks 155 years since the start of health visiting, which has had a range of different guises over the years, in 1862. It is important that we protect this long and proud career and give it the support it deserves. It is therefore concerning to see in the provision relating to regulation 5B of the principal regulations a potential watering down of who can do universal health visitor reviews, allowing other qualified health professionals to conduct reviews instead of health visitors. That is concerning when there is anecdotal evidence that health visitors are being told to delegate to other professionals, but are doing so only because they are so overstretched and busy with their huge workloads. That does not mean other health professionals cannot be complementary to the reviews, but the core reviews must be done by health visitors, because they are the specialists and it is their job to do it after being trained to undertake that role.

A health visitor’s role should not be diminished. I hope the Minister agrees and will assure me that she will closely monitor that issue, as I certainly will, to ensure that health visiting is not a diminished profession and that we do not see a reduction in the quality of health visitor reviews. I look forward to her response.

I am grateful for the shadow Minister’s support for the regulations. As she said, they will be essential to ensure the future health of the upcoming generation. I listened to the points she made. She can see in the health visitor numbers, which stand at 4,200, and in the 800 training places that we are committed not only to health visitors and a strong health visitor training force but to the quality of assessment within that force. I hope that she is reassured on that point.

Health visitors support families to give children the best possible start in life. That is exactly why we have taken this strong action to continue to ensure the provision of the five mandatory health and development assessments and reviews so that this service will continue to be provided to all families. I hope that the shadow Minister is reassured.

Question put and agreed to.

Committee rose.

Draft Horserace Betting Levy Regulations 2017

The Committee consisted of the following Members:

Chair: Sir Alan Meale

† Allin-Khan, Dr Rosena (Tooting) (Lab)

† Benyon, Richard (Newbury) (Con)

† Caulfield, Maria (Lewes) (Con)

† Crouch, Tracey (Parliamentary Under-Secretary of State for Culture, Media and Sport)

† Foster, Kevin (Torbay) (Con)

† Garnier, Sir Edward (Harborough) (Con)

† Hepburn, Mr Stephen (Jarrow) (Lab)

† Herbert, Nick (Arundel and South Downs) (Con)

† Kendall, Liz (Leicester West) (Lab)

† Mactaggart, Fiona (Slough) (Lab)

† Newlands, Gavin (Paisley and Renfrewshire North) (SNP)

† Opperman, Guy (Lord Commissioner of Her Majesty's Treasury)

† Shah, Naz (Bradford West) (Lab)

† Shelbrooke, Alec (Elmet and Rothwell) (Con)

† Smith, Jeff (Manchester, Withington) (Lab)

† White, Chris (Warwick and Leamington) (Con)

† Whittaker, Craig (Calder Valley) (Con)

Katy Stout, Committee Clerk

† attended the Committee

The following also attended, pursuant to Standing Order No. 118(2):

Davies, Philip (Shipley) (Con)

Robertson, Mr Laurence (Tewkesbury) (Con)

Third Delegated Legislation Committee

Monday 27 March 2017

[Sir Alan Meale in the Chair]

Draft Horserace Betting Levy Regulations 2017

I beg to move,

That the Committee has considered the draft Horserace Betting Levy Regulations 2017.

The Government propose extending the horserace betting levy to betting operators that are based offshore, which will correct the current unfairness in the levy system whereby betting operators in Britain are required to pay the levy, but those based offshore in otherwise identical circumstances are not. The issue has become more acute as the shift to betting online has increased. The levy will be due on bets on British racing made by consumers located in Britain. As part and parcel of that, we are setting down the rate of the levy in legislation, moving away from the fractious annual negotiation process and providing long-term certainty for betting and racing. It will be set at 10% of a betting operator’s gross profits on such activity.

Next week is horse-racing awareness week. This Committee allows me to fire the starting gun seven days early and place on record that British racing has long been a source of entertainment for many, a provider of jobs and a focal point for many rural communities. The mutually beneficial principle of transferring funding to racing from the proceeds of betting under statutory arrangements dates back to 1928. The levy itself has been in place since 1963. The levy supports funding for a range of areas, including prize money, integrity, equine welfare and veterinary science. Since 2000, more than £32 million has been invested through the levy in veterinary science and research alone.

However, changes to the market have meant that the levy is no longer fair and fit for the modern world, as betting operators based offshore are not liable to pay it. That has created a system that puts British-based operators at a competitive disadvantage and has contributed to a reduction in levy receipts. There have been a number of efforts over the past decade to broker voluntary deals to ensure a fair contribution from all who make sizeable profits from the racing product. I thank those operators that have done the right thing and made voluntary contributions over that period, but regrettably history shows that it has not been possible to reach a satisfactory solution to the problem of the many offshore bookmakers that benefit from the British racing product without being required to make a fair contribution to the industry. British racing is the envy of the world, with a rich history and traditions dating back hundreds of years. It is imperative that there is, via the levy, a solid foundation that will continue to support the sector and attract investment in sport.

The levy is a pre-existing state aid, as it was in place before the United Kingdom joined the European Economic Community, but any material change, as is the case here, requires state aid approval from the European Commission. Colleagues may recall that, in the debates considering the power to extend the levy in 2014, it was made clear that changes to the levy scheme were likely to be necessary before it could be extended. We have thought carefully about the right way to apply the state aid requirements to the British context, and we consider that the package of levy reforms taken together represent the right approach for the British industry. The Government are seeking state aid clearance and, as set out in the statutory instrument, the regulations will not come into force until state aid approval is granted. I am confident that clearance will be received shortly.

The principle of the levy is simple: all operators that benefit from British racing above a minimum threshold should contribute to its funding. The levy will apply to bookmakers—including pool betting and spread betting operators—and betting exchange providers in Britain and offshore. The levy will apply in the same way regardless of where the bet is placed, whether that is at the course, in a high-street bookmakers or online. That ensures that the levy will apply equally to all operators, with no differential treatment based on how or where customers place their bets.

The Government have considered a range of evidence in arriving at a fair rate. There have been three public consultations, and I have held a number of meetings with representatives from betting and racing. The Department commissioned an independent report on the funding of racing, and regard has also been given to the recent history of the levy and the overall landscape of the betting market.

It is important to reduce the risk of the levy acting as a barrier to betting operators entering the market. We are therefore introducing a threshold amount. No operator will pay a levy on their first slice of gross profits derived from taking bets on British horse-racing, and it will be set at £500,000. The majority of small and medium-sized operators will therefore not be liable to pay the levy. In order that the exempt amount does not create perverse incentives for an operator to artificially split their business, the regulations make provision to ensure that an operator does not benefit from multiple allowances.

The Government are of the view that the overall package of a rate of 10%, with the £500,000 de minimis threshold, is a fair and proportionate contribution from the betting industry to the mutual interest it has in a good quality racing industry. The Government consider that a fixed rate provides certainty for betting and racing. However, it is important that the levy can be responsive to future changes in the market. The Secretary of State is therefore required to review the levy rate within seven years. This period is intended to strike a balance between allowing the betting and racing industries to plan commercial strategies and long-term investments with confidence while ensuring that the levy can respond to the evolution in relevant sectors.

The Government have previously announced that we intend to make separate changes to reduce the cost of administering the levy, currently done by the Horserace Betting Levy Board, and remove the Government from day-to-day involvement in levy expenditure. We will consult on the second phase of reform in due course.

In conclusion, the reforms will create a level playing field between all betting operators. They will provide a fair return to racing and will ensure that the industry can continue to be the home of the best quality racing in the world for years to come. I commend the draft regulations to the Committee.

Order. Before I call you, Dr Allin-Khan, I am obliged to tell you that it is not satisfactory that you turned up late before the address of the Minister. This gives me no pleasure, but I am obliged to say this. I realise that the reason why you were late is possibly because of the immense security arrangements going on in this place at this time, but we always try to ensure that at least the Front-Bench speakers are present at the start of any address.

It is an honour to serve under your chairmanship, Sir Alan. I beg your pardon for being a fraction late. It is the first time it has happened and you are absolutely right that there was a very good reason for it. I am happy to indulge you further on the matter after the Committee rises.

The horserace betting levy was introduced many years before the Minister and I were born. Although it serves a good purpose, it was introduced more than half a century ago and it is time to bring it into 2017. The levy funds central areas within the racing industry, including the equal distribution of prize money; higher racing integrity; advances in equine welfare and veterinary sciences; and, importantly, improvements in the mental and physical wellbeing of participants.

The current levy does not apply to overseas and online betting operators. Given that the profits generated, which serve such important causes, have been exponentially declining, we believe it is time to revise the levy. In 2005-06 alone, the levy produced more than £99 million, but the number drastically dropped to just £54 million a decade later. With the popular rise in online gambling, especially since the development of smartphones, we have seen many aspects of our daily lives move online. We put photos in frames less and on Facebook more. Phones have become the new shops.

Just as those parts of our lives have moved online, so has betting. With relative ease, punters can place bets on any and every sports event taking place across the world. I am sure we all welcome such technological developments, but it is our duty to ensure a level playing field across all markets, including gambling. That means bringing the horserace betting levy into the 21st century, where online bookmakers are required to contribute, just as high street bookmakers are.

The levy comes into effect only when a bookmaker makes £500,000 profit on British horseracing, so it will not adversely affect smaller companies competing against larger companies. The Opposition welcome that move. In the discussions I have held with relevant organisations and bodies, there was agreement that that was a step forward worth making. Having said that, there are a few areas that I must explore and question in order to feel confident that the Government have taken them into consideration, and that they will act if they have not done so already.

I hope the Minister can reassure me on the following points. While smaller in scale, greyhound racing is a section of the market where it is not compulsory for bookmakers to contribute towards a levy. They give voluntarily at a rate of only 0.6%. Why have the Government not gone further and sought the introduction of a greyhound racing levy? Has the Minister made any predictions or estimations on the extra sums that will be generated with the changes to the levy? What discussions have there been and what considerations have been given to the welfare of horses, and will any of the additional sums raised be ring-fenced to ensure that horse welfare is made a priority?

Given that extra money will be given to racecourses across the country, will the Government ask them to commit to paying staff the living wage as set by the Living Wage Foundation? Why has the Minister chosen to review the levy after seven years? Will she explain her decision? The Opposition do not intend to divide the Committee, but I look forward to the Minister’s response to my questions.

It is a pleasure to serve under your chairmanship, Sir Alan. I do not intend to delay the Committee for too long. I have a fiancée—soon to be Mrs Foster—who was once an amateur licensed jockey. We still have Breezy, her last race-horse, which gives me an interest. Hazel assures me she will not be going on a horse in a race any time soon, and the only race Breezy is likely to compete in is one for his next feed bucket.

I welcome the regulations, and particularly the fact that they will bring a fairer and more level playing field. They are relevant to my constituency in Torbay because the people who go to Newton Abbot racecourse regularly look to stay in Torbay and bring valuable business. I welcome what the Minister has outlined. The regulations are about supporting the industry and creating a level playing field so that betting operators here do not end up paying a levy that others can avoid by using a different model of operation. The amounts that will be generated will make a real difference and the measure is needed. I am not going to ask any questions, such as what tips the Minister has for the racing coming up. I simply want to put on the record my support for the measure and how I think it will benefit my constituency.

It is a pleasure to serve under your chairmanship, Sir Alan. Given that the Scottish National party supports the legislation before us today, I will be brief in my remarks.

We accept the need for an overhaul of the system—indeed, we have voted for such in the past. In 2013 we supported a new clause to the Gambling (Licensing and Advertising) Bill, which would have made offshore bookmakers liable. The Government did not support it at the time, but I am pleased to see them come to the right conclusion on this occasion.

In addition, the Scottish Government and the cross-party horse-racing and bloodstock industries group in the Scottish Parliament also support the changes. In any event, I think all parties, both inside this place and out, would agree that a fair and sustainable instrument of reinvestment is long overdue.

Over the years, the number of bets placed online has markedly increased. In tandem with that, the proportion of online bets made using offshore bookmakers has also increased dramatically, resulting in the levy not being applied to an estimated 40% of all bets on British racing. The British Horseracing Authority has estimated that that costs the industry more than £30 million a year in lost levy receipts. The SNP does not believe that bookies can exploit the system by moving parts of their business offshore to avoid meeting their responsibilities.

It is worth noting that the levy exists for a reason. As well as supporting the nearly 17,500 people who directly work for horse-racing, it also advances horse-racing in general. Failing to abide by this important levy makes it more difficult for the sector to meet a critically important set of responsibilities, including the wellbeing of people who work in the sector alongside the horses themselves. It is right that we introduce legislation that closes that loophole.

It has been forecast that the levy will raise between £10 million and £30 million. With such a wide forecast, it is only right that we review the levy’s efficacy. Will the Minister provide the Government’s thinking on the seven-year timescale of the review? Further to the question asked by the hon. Member for Tooting, has that period been agreed by both the horse-racing and betting industries?

We must be mindful of spectators and punters across the UK who may become addicted to gambling. Problem gambling causes harm to the gambler and those around them, including family, friends and others who know them or care for them. Nearly 50% of people have gambled in the past four weeks; even though the majority of people gamble with moderation, addiction is still said to cost the UK Government £1.2 billion every year, with the impact on the individual being more devastating. Given the additional income being secured for the sport of horse-racing, we should contemplate whether additional support can be offered to those affected by problem gambling.

It is unclear how much of the funding acquired by the Horserace Betting Levy Board has been spent in Scotland. The only source of information containing a discussion of the issue is a 2015 William Hill report, which states that the betting industry’s annual contribution through the levy to Scottish racecourses for 2014 is

“£4.1 million, 6% of the total UK levy contributions”.

In addition, a 2014 document noted that the income received from the levy by Scottish racecourses exceeds that bet on Scottish fixtures. However, given that Scotland accounts for 9.8% of the betting taxes and levies collected in the UK but has 5% of the British horse-racing sector, it is likely that Scottish punters make a net contribution to horse-racing in the rest of the UK. That is estimated at £2.8 million per annum. I ask that a proportionate amount of any additional funds raised be spent in Scotland, where the country’s five racecourses attract more than 300,000 visitors annually, the economic impact of which has been valued at £170 million a year.

I welcome the new proposals set out by the Minister, and believe that they will help to secure vital resources to support the industry and horse-racing in general. They will also help to prevent aspects of the industry from moving sections of their online business to offshore accounts, avoiding their responsibilities to the levy and the sport.

I want to start by saying how important the issue is for my constituency. I estimate that between 700 and 1,000 jobs relate directly to the racing industry in West Berkshire. We are one of the three big training centres in the country, and the Lambourn valley is, of course, the home of national hunt racing. A lot of businesses on which my constituents depend have been looking carefully at the sometimes tortuous negotiations that have taken place on the subject over many years. Those of us who are members of the all-party group on racing and bloodstock industries will have sat in on frequent meetings with the Minister and her predecessors on either side of the House about how to fund such an industry fairly.

In addition to Lambourn, where there will be an impact, we have one of the premier racecourses in the country at Newbury. There are direct jobs there, as well as tourism throughout that part of the Thames valley, and the effect will be enormous. To understand the issue, including the reduction in income from the levy, we need to understand the extra costs of putting on a day’s racing at any course—leaving aside Newbury, which has the ability and location to generate other funds. There are racecourses in some of my hon. Friends’ constituencies, and in Scotland, that rely on racing for nearly all their income. We want a system that supports racing across these islands and that makes sure that the industry is set for the future.

The industry has relied for too long on an analogue system in a digital world—the hon. Member for Tooting put it well; it was brought in three years after I was born, when there was no online betting. The system by which people can now bet did not exist. Betting has of course changed in other ways. People can now bet on a place—or, to put it better, a variety of different conclusions to a race. Income to the industry has reduced because of online—and in some cases offshore—betting, from £115 million in 2007-08 to £54.5 million in 2015-16.

To answer the question of the hon. Member for Tooting about the Government’s predictions, according to the explanatory memorandum the figure of 10% will, on 2015-16 predictions, bring in an income of between £72 million and £84 million. That is not back to where we were in 2007-08, but it is certainly a big improvement. It is entirely right to implement a percentage, because then we will not have to rely on an annual review as we go forward.

Will the Minister give a little more explanation of how the governance of the levy will work and what systems will be in place following the ending of the current arrangements with the levy board? I felt at times that this issue was as difficult for Ministers of all parties to deal with as trying to pick up mercury with a fork. I congratulate the Minister on not only nailing this, but doing so with agreement right across the industry. There may be some outliers who disagree, but the conversations I have had seem to suggest that she has achieved the alchemy that has been missing; perhaps it will set her straight for a future career in negotiating a power sharing agreement in Northern Ireland.

As things stand at the moment, we are now able to say that all betting—offshore, online, onshore or in the traditional way on racecourses—will be subject to a system that will result in a fair income for racing. I congratulate the Minister on achieving that.

I feel your frustration, Sir Alan; your knowledge and insight into the horse-racing game is sadly missed by the Opposition today. I welcome you to the Chair. I was not disappointed when our spokesperson did not turn up on time today. The hon. Member for Hexham (Guy Opperman) and I hatched a plot: I would have made my name in her position today if she had not arrived. It was not to be.

I congratulate the Minister. Some 20 years ago, when I was a new MP and she was a novice researcher, we used to have a pint in Bellamy’s club, which is sadly not there anymore. We never discussed horse-racing, so I am surprised and pleased that she has achieved something that so many people before her have tried to do and not succeeded. I congratulate her on that.

I have just a few brief questions. First, the Minister mentioned that she was confident about state aid rules not being contravened. On what basis does she have that confidence? Secondly, she says that everybody is on board, so far as the bookmakers are concerned. Is everybody on board, or has she any concerns that there is a particular area that still holds concerns and may, at the end of the day, challenge her?

Thirdly, may I ask her about the distribution, so far as geography and the allocation of the money are concerned? I do not know whether she has any say in that. On geography, will all areas of the country get a share—a fair share—of the money? On allocation, let us hope it is not like the Premier League and that the money does go down to the bottom—to the smaller people at the real grassroots of horse racing, who miss out so often and who struggle to keep our great sport alive.

Order. Gentlemen, before you are called I should say that, according to the House’s guidelines and rules, Members not on the Committee may turn up and ask to stand at the discretion of the Chair. I point out to you that this is a very short Committee meeting today, and we have to give time for the Minister to respond and for any other Committee members to ask questions or answer queries. Nevertheless, I think it is in keeping that the two of you should be given an opportunity to speak, particularly because you both have such a wealth of experience in this area.

Thank you for agreeing to call me in this short debate, Sir Alan. As you say, I am not a member of the Committee, but I wanted to turn up and make a brief contribution. It is a privilege to serve under your chairmanship, and also to co-chair the all-party parliamentary group on the racing and bloodstock industries with you. That is the first interest I need to declare. Secondly, the Cheltenham racecourse is in my constituency, and a great racecourse it is. Thirdly, I need to draw the Committee’s attention to my entry in the Register of Members’ Financial Interests. I receive hospitality from bookmakers and horse-racing from time to time. I have checked with the Parliamentary Commissioner for Standards, and it is in order for me to contribute to this debate.

I support the regulations. Unlike a number of other hon. Members, I had been born when the levy was introduced—I do not suggest that that gives me any greater authority to speak on the issue. It is important that horse-racing has a boost in income, regardless of where it comes from. We hear about it being the sport of kings. We saw racing at the Cheltenham festival, in my constituency, just a week and a half ago, we are coming up to the grand national festival, and we see Royal Ascot and the Derby. At that level, yes, there is an awful lot of money in horseracing.

If we go beneath that level, we find a very different picture. Many horse races are run for prize money of £2,000. To break even over a season, it would be necessary to win about 10 races, and no horse is going to do that. Owners going into racing at certain levels know for sure that they are going to lose out. There is a need for more money in racing for stable staff, jockeys and trainers at that end of the market. There is a pyramid, and most people are at that end of the pyramid and do not make much money, and many of them struggle.

There is certainly a need for measures to be taken to bring more money into racing. As the Minister rightly said, there is an anomaly. That is nobody’s fault, but it has come about because of the changes in technology and the way people bet. It is only right that this measure be introduced to bring about fairness and consistency in how bookmakers pay the horse-racing levy.

I hope that the Government are not considering taking any further measures, which might reduce bookmakers’ ability to fund horse-racing. That is a debate for another day, but it needs to be taken seriously. If further measures were taken that undermined the bookmakers’ ability to pay, the regulations would be rendered completely useless. I hope that we can proceed with caution in other areas, but we can perhaps come to that on another day.

I echo what the hon. Member for Jarrow said. When we make these changes and more money comes into horse-racing, I hope, as someone who represents one of the top racecourses in the world, that the money is not just ploughed in at the top end and that consideration is given to the many thousands of people who struggle at the lower end of horse-racing. Without those people, there would be no Cheltenham, no gold cup, no Royal Ascot. I know that is a debate for another day, but it is a very important point.

I will comply with your request that I speak for only five minutes, Sir Alan—thank you for giving me the opportunity to support the regulations. I wish the Minister well in her endeavours.

I am grateful to you, Sir Alan, for allowing me to speak in this debate. It is a pleasure to serve under your chairmanship. Unlike the hon. Member for Jarrow, my pleasure is only tempered by the fact that we do not have the benefit of your expertise as a successful owner and breeder on the Committee today.

Like my hon. Friend the Member for Tewkesbury, I refer people to my entry in the Register of Members’ Financial Interests. Like him, I am an occasional visitor to racecourses for the benefit of bookmakers and people in the racing industry. I am grateful to both for their occasional invitations to race meetings. For many years, I have been the modest owner of racehorses, or I should probably say the owner of modest racehorses. That would be a better way to describe it.

There are two issues I want to explore. The first is whether the Government are in order in making this change in the way that they are. When I first inquired of the Clerks about the mechanism for changing the rules, the Clerk of Bills in the Public Bill Office said:

“I can say with reasonable confidence that changes to the levy itself and its scope would need primary legislation, probably contained within the next Finance Bill after the Budget in March.”

As we can see, however, this is not primary legislation. Why do we not have primary legislation when that was the advice of the Clerk, in particular given that the Minister described this in her opening remarks as a “material change” to the levy? I would like her to consider that point.

I am grateful to Lord Lipsey, who is an expert on such matters in another place, for some advice he got from Olswang’s lawyers. Their point was that it is of course in order to impose the levy on foreign betting operators who do not pay it—because

“the 2014 act specifically says so”—


“this order goes ‘well beyond’ that. It mandates a fixed levy of 10% for all bookmakers, in place of the present process of annual levy fixed by the levy board. It mandates the extension of the levy to the Tote’s on-course operation”,

which was not the case before, and all on-course bookmakers will have to pay the levy, subject to the exemption set out by the Minister. Those lawyers, too, feel that there is some doubt as to whether that is how the situation should be handled.

My final evidence is from 2013, when we had a private Member’s Bill to extend the levy to foreign operators. Responding to a point someone had made in the debate, the Minister at the time, Hugh Robertson, said about the levy:

“The best thing I can do is read to her the legal advice that I have been given by the Government Law Officers, which says that although a levy is permitted in its current form, since it originates from before 1972 and therefore pre-dates state aid rules, the European Commission is likely to consider that the collection of contributions from overseas operators would substantially alter the levy, such that it was no longer compliant with state aid. I am afraid that, regardless of how many high-priced opinions are obtained elsewhere, once the Government Law Officers have opined that the Bill is therefore defective in that respect, the Government cannot accept it.”—[Official Report, 25 January 2013; Vol. 557, c. 638.]

[Interruption.] There is a Division—should we break here?

Sitting suspended for Divisions in the House.

On resuming

I was presenting as evidence the remarks of a previous Minister; if the Minister would explain why the Department’s legal advice has changed so radically, that would be welcome. Perhaps, when she does, she will explain what will happen if the original legal advice, rather than the latest, proves accurate, and the European Court of Justice comes down on a different side of the fence from the one anticipated.

My second point is about the merits of the levy in the first place. I am astonished at the Labour party and Scottish National party support for it, because we all know that it is taking money from poor punters and giving it to rich owners; it is redistribution of wealth in reverse, so I am intrigued by their support. On the Conservative Benches we are, you will notice, Sir Alan, against subsidies for any industry unless it is farming or horse-racing. People may draw their own conclusions as to why Conservatives are all in favour of subsidies for those two industries but not for others.

The levy figures are clear. Something like 75% of the prize money in the UK goes to about the top 10 owners in the country, so it is a great benefit to Sheikh Mohammed, the Qatari royal family and Coolmore Stud—I am sure they are not really on their uppers. The question is whether we should be subsidising their sport and interests.

I have two more points to make. First, it seems to me that the Government have made changes to the scheme to satisfy the European Commission by extending the levy to the Tote and on-course bookmakers, which were not in the original proposals put out to consultation. Why do not the Government, given that they are now pursuing a policy that they do not support—it was not their original proposal—wait until after we have left the European Union, when they can introduce whatever policy they want without having to refer any of it to the European Commission and risk its going through the European Court of Justice?

Finally, we talk about the amount of money that goes from bookmakers to racing. When the levy started, it was a mechanism to do that. The Government have always been against the levy; they have tried to abolish it, because they think it is a bad system. However, it was a useful mechanism for transferring money from bookmakers to racing when there was no other mechanism for doing so.

I asked the Minister some questions not too long ago about how much money bookmakers give to the racing industry. Racing always wanted about £100 million out of the levy; that was the figure it wanted to achieve—a perfectly reasonable figure. However, let us take 2012 as an example. The levy has gone down since then but media payments have gone up, so the figure is probably still about right.

In 2012, the bookmakers handed over, in levy payments, £74 million. As my right hon. Friend the Member for Newbury said, that has gone down since—I accept that. In the same year, they also gave £153 million in media rights to show the racing in their shops and online, £88 million of which went to racecourses. That figure has gone up considerably since 2012. They also gave £12 million in sponsorship. The total going directly to racecourses from the betting industry was £174 million. However, it cost bookmakers even more than that, given the money taken out with respect to picture rights.

In that year, total prize money in racing, in the UK, was £97 million. If people were asked what proportion of prize money bookmakers in the UK should contribute to UK horseracing, I suspect that some might say half. Some zealots might say all of it. I suspect very few people would think that bookmakers should give virtually double the total UK prize money levels to the racing industry, yet that is what they do every single year. That, to me, seems excessive. The Government seem to be doing nothing to find a way to make sure that the horse-racing industry passes the money down from racecourses to owners and trainers.

If the Government proceed with this, I hope that they do not just try to extract more and more money out of bookmakers, which are actually taking less and less on horse-racing; it is becoming a smaller and smaller proportion of their business. I hope that the Government accept that bookmakers pay a huge amount into racing—I think it excessive, in many respects—and that they find a way to ensure that racecourses pass that money on in prize money, not just to the richest racehorse owners but to those at the bottom. I look forward to hearing how the Minister will say to the racing industry that, yes, the Government will make sure that it gets the money, but that it should make sure that that money goes from the racecourses to the people it is intended to support.

Sir Edward, give me a second before you proceed. Because of the two Divisions, we can now go on until 6.23 pm—although we do not have to.

Sir Alan, I apologise, not only to you but to the Committee as a whole, for my slightly late arrival at the Committee. I will certainly not go on until 6.23 pm or anything like it.

I do not want to have a row with my hon. Friend the Member for Shipley because it simply would not be worth it. However, I do not want him to think that I accept that Leicester Racecourse, in my constituency of Harborough, is at the bottom end of the racing hierarchy. It may not have the cachet of Newbury, which my right hon. Friend the Member for Newbury proudly represents, and it may not be quite like Cheltenham, but it is not a bad racecourse. If this new arrangement enables more racing to be held there, and for there to be better prize money to attract higher-quality racing at the racecourse, so much the better.

I appreciate that my hon. Friend the Member for Shipley speaks with great knowledge of the bookies’ industry. I was also delighted to hear from him that one of his many horses once ran at Leicester, steered by the great Dettori. I look forward to seeing my hon. Friend riding one of his own horses.

“No chance”, he says. There we are—there is a God.

While we are getting excited about what my hon. Friend may think is the unfair nature of this new arrangement on the bookmaking industry, I think it is important that we also discuss the unsung heroes of the racing world who work at and run, shall we say, the less famous racecourses throughout the country.

The last time I went to Leicester Racecourse—last summer, for one of the summer meetings—the number of people working backstage was probably just as great, proportionally, as it would have been at Cheltenham, Newbury or Aintree. However, the cash flow and the money going through that particular racecourse is not nearly as great as at some of the great festival racecourses.

Does my right hon. and learned Friend also agree that the cost of putting on a day’s racing and complying with all that we now require—on crowd management, health and safety and all of the other good policy changes that have been made for the public’s safety—is extremely burdensome on precisely those smaller courses?

My right hon. Friend makes the point I was trying to make rather better than I was making it myself; I am grateful to him for having done so.

It is perfectly true that the number of people from the medical services, vets, stewards and other officials now needed to put on a day’s racing is enormous. From the stable yard right the way through to the car park, there are lots and lots of people, all of whom have to be paid, apart from some of the kind volunteers who help out for the love of it. Those are not racecourses that are putting on tens of meetings a year or attracting the greatest of the prize money. Of course, the famous yards that my hon. Friend the Member for Shipley mentioned will no doubt benefit from the regulations, but I hope the money will trickle down and enable racecourses such as Leicester and—is there a racecourse at Hexham?

Well, there we are. I have achieved publicity for that great racecourse in Northumberland, in addition to the one in Leicestershire.

Even if these regulations lead to an increase in the cash flow coming into the small racecourses by only a small measure, the Government will have achieved a public benefit. I salute the Minister for what she has achieved. I wish this new levy system Godspeed, and I trust that vast sums of bookies’ money will end up in Oadby, the home of Leicester racecourse in my Harborough constituency.

I thank Committee members for their engagement and their contributions to the debate. Although the principle of an extension to the levy is, on the face of it, simple, it has been demonstrated by the important points that have been made during this debate that it is more complex than it might seem. I will address each of those points in turn.

I thank the hon. Member for Tooting and the Opposition for their support for the regulations. The hon. Lady is right in her assessment of why this is a necessary step forward. As she said, the industry and the sector have evolved, so we can all now gamble in very different ways than we could 50-odd years ago.

The hon. Lady’s comments about greyhound racing are very topical. I recently wrote to Bet365, the only major online operator contributing to the voluntary fund, to thank it for taking a lead in this key area, and I have also written to trade bodies representing all the betting operators to ask that they take part in discussions to improve the current funding position. Lord Lipsey has volunteered to chair that act of mediation. Although there are no plans to introduce a statutory levy for greyhound racing, we will try to encourage more money into the sector.

May I support the Minister’s argument? Greyhound racing grounds are closing in record numbers, which is exactly why we need these regulations. Plumpton racecourse in my constituency welcomes them, because it needs that extra funding to make it sustainable.

I thank my hon. Friend for that comment. We are incredibly proud of the whole racing industry. I have met greyhound industry representatives on a number of occasions to tell them that we continue to support them. We will try to encourage more money into the sector on a voluntary basis. We want to ensure, through the levy for horse-racing, that it has a fair amount of money going into it from the offshore sector.

The hon. Member for Tooting also asked about the living wage. Although that is not a matter for the levy, we expect racing to work with racecourses to ensure best practice. As she is aware, the Government have increased the national minimum wage, and all those working in racing will benefit from it.

The hon. Lady and other Committee members mentioned the timeframe for a review. We believe that the seven-year review set out in the regulations strikes a balance between certainty and a reasonable timeframe. The rate can be reviewed at any time if there are changes in the industry that suggest that the rate no longer remains appropriate. Otherwise, it is required to be reviewed automatically within seven years. I hope that that answers the hon. Lady’s questions.

I thank my hon. Friend the Member for Torbay for his contribution, although given that I contributed significantly to the profits of a bookmaker during Cheltenham he had probably better not rely on tips from me for the forthcoming Grand National.

The hon. Member for Paisley and Renfrewshire North asked specific questions about Scotland, and I should say at the outset that I am grateful for the Scottish National party’s support on this issue. Officials have kept the Scottish Government informed about levy reform throughout the entire process. Courses in Scotland do, and will continue to, receive levy funding, and the extension to offshore means that more money will be available for courses across Great Britain. Last year the levy board distributed almost £4 million to the five racecourses in Scotland; I hope that addresses his question.

My right hon. Friend the Member for Newbury is a long-standing advocate for reform, and I am enormously grateful for his sage advice on the sometimes complex issues in this area. He spoke eloquently about the need for these changes and then asked a specific question about governance. This is where I explain that it is quite a complex issue, because there are actually two stages, and today is merely the first phase.

In the short term, the levy board will remain responsible as the governing body, but we will consult on transferring responsibility to a nominated racing authority who will act on behalf of the racing industry. At the moment, the levy board is required to provide an annual report making clear how the money is spent; that is important to make sure that money gets to all parts of the racing industry, as others have raised, and we expect a similar to process to occur under the new racing authority.

I will quickly refer to the transitional phase and some of the administrative changes. The Government will consult on using a legislative reform order to effect the transfer of responsibility to the gambling commission and the racing authority. We will consult affected stakeholders on the detail of those proposals shortly, and we intend to complete transfer of responsibilities in early 2018. It is absolutely crucial that we minimise any disruption when moving to the new arrangements, which is why the administrative changes are intended to be completed in early 2018.

My hon. Friend, as I will call him, the Member for Jarrow has not returned from voting, but I want to put on the record my thanks for his kind words—although I was worried that he was about to reveal all my secrets as a researcher. Distribution is a matter not for Government, but for the board at the moment, and the racing authority in the future. All areas of Great Britain benefit from the levy, and that will not change. As it has done, the levy will continue to benefit the grassroots of the sport, and we expect the new racing authority to have clear criteria for allocating funding and to report that transparently. He also asked about state aid. As the statutory instrument makes clear, the legislation will only come into force once state aid clearance is received.

There is a specific provision within the statutory instrument that says it will come into force on 1 April 2017 or the day after it is made—so, the state aid clearance is expected. My officials have engaged extensively with the European Commission, and as a result I am confident that we will receive that clearance shortly. To be perfectly honest, we would not have introduced these regulations to the House if we did not have that confidence.

My hon. Friend the Member for Tewkesbury spoke very kindly about the reforms. I welcome his support for this; his experience and expertise on all things racing mean that it is even more appreciated. I am grateful.

I turn to my hon. Friend the Member for Shipley. I am pleased that Parliament’s procedures allow him, even as a non-voting member of this Committee, to express his views. I feel that some of his speech was 54 years too late. The levy exists, and it is my duty to make sure that it reflects the world we live in today.

My hon. Friend asked some very specific questions about the need for primary legislation. There is no need for primary legislation; the power in section 2 of the Gambling (Licensing and Advertising) Act 2014 allows the Government to extend the levy in a state-aid-compatible way using secondary legislation. The point of securing the power in 2014 was to allow us the flexibility to use secondary legislation, and the power is broad enough to address all the issues necessary to secure state aid approval.

We do not agree that these regulations are ultra vires. As was made clear in 2013, the levy is a state aid and, as I have said, extension to off-shore operators is a material change to the existing scheme, which requires notification and approval. On-course bookmakers and the Tote have always been liable to pay the levy since 1963, but my hon. Friend is right—state approval is required, and we have sought it and are confident we will get it shortly. The Department’s legal advice has not changed, because we have always been clear that the levy is a state aid.

Finally, my right hon. and learned Friend the Member for Harborough spoke with passion about the breadth and depth of the industry. Racing is an important sector, and it is essential that we do all we can to support it, from the small racecourses to the large ones. These reforms are long overdue, and I hope the Committee will agree that they will make a profound difference to the British racing industry and to the thousands of hard-working stable staff, jockeys, trainers and all those who make racing what it is today.

Question put and agreed to.


That the Committee has considered the draft Horserace Betting Levy Regulations 2017.

Committee rose.

Draft Judicial Pensions (Fee-Paid Judges) Regulations 2017 Draft Judicial Pensions (Amendment) Regulations 2017 Draft Judicial Pensions (Additional Voluntary Contributions) Regulations 2017

The Committee consisted of the following Members:

Chair: Mr Adrian Bailey

† Duddridge, James (Rochford and Southend East) (Con)

Dugher, Michael (Barnsley East) (Lab)

† Frazer, Lucy (South East Cambridgeshire) (Con)

† Green, Chris (Bolton West) (Con)

Hayes, Helen (Dulwich and West Norwood) (Lab)

† Lee, Dr Phillip (Parliamentary Under-Secretary of State for Justice)

McKinnell, Catherine (Newcastle upon Tyne North) (Lab)

† Qureshi, Yasmin (Bolton South East) (Lab)

Reeves, Rachel (Leeds West) (Lab)

† Shapps, Grant (Welwyn Hatfield) (Con)

† Smith, Henry (Crawley) (Con)

† Smith, Nick (Blaenau Gwent) (Lab)

† Stevenson, John (Carlisle) (Con)

† Stuart, Graham (Beverley and Holderness) (Con)

† Vaizey, Mr Edward (Wantage) (Con)

† Vara, Mr Shailesh (North West Cambridgeshire) (Con)

Jonathan Whiffing, Committee Clerk

† attended the Committee

First Delegated Legislation Committee

Monday 27 March 2017

[Mr Adrian Bailey in the Chair]

Draft Judicial Pensions (Fee-Paid Judges) Regulations 2017

With this it will be convenient to consider the draft Judicial Pensions (Amendment) Regulations 2017 and the draft Judicial Pensions (Additional Voluntary Contributions) Regulations 2017.

It is a pleasure to serve under your chairmanship, Mr Bailey. I will set out the purpose of each of the draft regulations in turn.

The draft fee-paid judges regulations will establish a pension scheme for eligible fee-paid judges that mirrors the existing pension scheme for salaried judges established by the Judicial Pensions and Retirement Act 1993. This is required following the court’s decision in the case of O’Brien v. Ministry of Justice. The draft regulations will make provision for a pension scheme for people who have held eligible fee-paid judicial office in the period between 7 April 2000 and 31 March 2015. They will also establish the fee-paid judicial added voluntary contributions scheme, the fee-paid added years scheme and the fee-paid judicial added surviving adult’s pension scheme, enabling members of the principal scheme to pay voluntary contributions towards the costs of additional benefits under one or more of these additional schemes.

Following the case of O’Brien v. Ministry of Justice and subsequent court decisions, it is now established law that a lack of pension and other specified benefits amounted to less favourable treatment of some fee-paid judicial office holders than of salaried judges doing the same or broadly similar work, which is contrary to the part-time work directive. The Ministry of Justice therefore made the commitment to implement a pension scheme for eligible fee-paid judges. We have already honoured that commitment for future service, subject to transitional protection, by introducing the Judicial Pensions Regulations 2015. However, another pension scheme is also required as the remedy in respect of reckonable fee-paid service from 7 April 2000—the date when the part-time work directive ought to have been transposed into UK law. The power to create such a fee-paid pension scheme was created by section 78 of the Pension Schemes Act 2015, which inserted a new section 18A into the Judicial Pensions and Retirement Act 1993.

The Ministry of Justice carried out a detailed public consultation on the draft fee-paid judges regulations, following which they were modified to take account of responses and as part of our own review. Our response to the consultation was published on 27 February alongside the final draft regulations.

The draft amendment regulations will amend the Judicial Pensions Regulations 2015 in a number of ways. They include provisions to take account of the creation of the fee-paid judicial pension scheme and to ensure parity of treatment between individuals with entitlement in the existing Judicial Pensions and Retirement Act 1993 scheme and those with entitlements under the fee-paid scheme in respect of their pension entitlements under the 2015 regulations. In addition, we are taking the opportunity to amend the 2015 regulations to correct a drafting error in regulation 1(3); to enable the Lord Chancellor to determine the eligibility of particular Scottish fee-paid judicial office holders to join the pension scheme created by the 2015 regulations; to remove negligence as a basis for forfeiture or set-off; to make a correction to the definition of index adjustment for revaluation purposes; and to apply full and tapering protection to those judges who were in fee-paid office on 31 March 2012 but who have subsequently been appointed to salaried office. The 2015 regulations were made under the Public Service Pensions Act 2013 to create a career-average pension scheme for judicial office holders as part of the Government’s wider reform of public service pensions. This is the first time they have been amended.

The draft additional voluntary contributions regulations will establish a judicial additional voluntary contributions scheme—a money purchase scheme that enables its members to make contributions within a range of investment options, in addition to their contributions to the 2015 judicial pension scheme. The AVC scheme is to be managed by the Lord Chancellor, and the Judicial Pension Board will oversee the governance.

The 2015 judicial pension scheme was established on 1 April 2015, in response to the Public Service Pensions Act 2013. The 2015 scheme applies to both fee-paid and salaried judicial officeholders. The existing judicial pension schemes provide a facility to contribute to a money purchase pension scheme. These AVC regulations are now providing the same facility to members of the 2015 scheme. That includes the pension flexibilities contained in the Taxation of Pensions Act 2014 and the Pension Schemes Act 2015.

In additional to the AVC regulations, we are also making separate amendments to the additional voluntary contributions scheme, established under the older judicial pension scheme, made by the Judicial Pensions and Retirement Act 1993. We are doing so via a separate set of regulations that also give effect to the pension flexibilities to enable a consistent approach.

These three sets of regulations are necessary to ensure, first, that the fee-paid judicial pension scheme regulations establish a legal remedy to provide eligible fee-paid judges with pension benefits equivalent to their salaried comparators. Secondly, the amendment regulations make provision for a range of amendments to the 2015 judicial pension scheme. Thirdly, the additional voluntary contributions regulations are being introduced to honour the Department’s commitment to provide that facility to members of the 2015 judicial pension scheme.

I hope the Committee will welcome these regulations, which make important provision for judicial pensions, in respect of the Government’s legal obligations to meet outstanding commitments and of ensuring that all the necessary arrangements are in place for a consistent approach to the relevant provisions across the judicial pension schemes. I therefore commend the three draft regulations to the Committee.

It is a pleasure to serve under your chairmanship, Mr Bailey. We welcome these provisions. It is absolutely right that there should be parity of treatment for judicial officeholders doing similar work. The provisions will also be retrospective and backdated, so that those who were not covered before now will be. We welcome the proposals.

It is a great pleasure to serve under your chairmanship, Mr Bailey, and to speak in this important Committee addressing judicial pensions amendment regulations. I want to put a few questions to the Minister, which I hope he will be able to clarify.

I note from the explanatory memorandum—obviously I had time over the weekend to go over the statutory instruments in detail, but the explanatory memorandum is probably the best thing to refer to—that at the moment the legislation is not compatible with the European convention on human rights, until the appeal McCloud v. Ministry of Justice is heard. I understand the Government’s desire to bring these regulations into being swiftly, so that we are not in a position where fee-paid judicial officeholders are at a disadvantage or are receiving unlawful pensions, but will the Minister assure us that we will not be back here again, further amending the regulations, to take into account the outcome of the appeal? Can the Minister shed some light on the debate that must have happened in the Ministry of Justice about whether this was the right moment to bring forward these important regulations?

I note with some concern that the regulations were passed only in 2015 and yet here we are, less than 18 months later, debating amendments. I am pleased, though, that the matter is being dealt with rapidly. Those of us who represent constituents who have lost out through Government pension schemes might raise an eyebrow at the fact that legislation can be introduced so rapidly to right a wrong. I represent pensioners who had worked for the Atomic Energy Authority who were stiffed out of their pensions when they were transferred to the Atomic Energy Authority Technology company. They were assured by the Government Actuary that their pensions would be no worse off than those they would have received had they remained in the public sector, so they transferred to the private sector, and now AEA Technology has gone bust and their pensions have been reduced. It has been almost impossible to get the Government to address that important issue, but I am pleased that they are very keen to do so when it comes to judges.

Can the Minister shed light on the Scottish Government’s position? I notice that they have asked that their judges be included in the scheme, rather than a separate pension scheme. There is a vigorous debate at the moment about a possible second referendum on Scottish independence, so will the Minister shed some light on what will happen to the pension scheme should Scotland become independent? How complicated will it be to separate the two pension schemes?

Finally, I note that there is no scheme for the forfeiture of a judge’s pension, because apparently that would infringe on judicial independence. I cannot help thinking that judges have got a clever point into these regulations. I do not know whether there is a provision for the forfeiture of a Member of Parliament’s pension, or whether we are immune from forfeiture in order to protect our independence. Will the Minister shed some light on what is meant by the phrase “judicial independence” in the explanatory memorandum? If a judge—they are only human—were to commit a heinous crime while sitting as a judge, would we have no redress against them, in terms of forfeiting their pension, even though the full force of the law would be brought to bear? Those important points require some explanation from the Minister, and I look forward to hearing his response.

We have had an interesting debate, and I thank the Committee for the points that have been made.

I am rather flattered that my right hon. Friend the Member for Wantage attends my Statutory Instrument Committees with such diligence and asks such informed questions. I wish I had taken such an interest in his when he was a Minister. On his comments about the European convention on human rights, the Department believes it is right to make the regulations now to ensure that the fee-paid judiciary have access to a judicial pension scheme. The Ministry of Justice has appealed against the decision in McCloud, but if it is ultimately unsuccessful, steps will be taken to remove the incompatibility. I will write to my right hon. Friend with a detailed response to his long list of questions so that he can satisfy himself that these regulations are the right thing to do.

As I have explained, the changes being introduced through these regulations are necessary to honour the Government’s commitment to implement a suitable pension scheme for eligible fee-paid judges. At the same time, we are also taking the opportunity to make other necessary changes, both to amend the existing 2015 judicial pension scheme and to create an additional voluntary contributions scheme. I hope these provisions will be welcomed by those to whom they apply. I commend the regulations to the Committee.

Question put and agreed to.


That the Committee has considered the draft Judicial Pensions (Fee-Paid Judges) Regulations 2017.

Draft Judicial Pensions (Amendment) Regulations 2017


That the Committee has considered the draft Judicial Pensions (Amendment) Regulations 2017.—(Dr Lee.)

Draft Judicial Pensions (Additional Voluntary Contributions) Regulations 2017


That the Committee has considered the draft Judicial Pensions (Additional Voluntary Contributions) Regulations 2017.—(Dr Lee.)

Committee rose.

draft Deregulation Act 2015 and small business, enterprise and employment act 2015 (Consequential Amendments) (Savings) regulations 2017

The Committee consisted of the following Members:

Chair: Robert Flello

† Barclay, Stephen (Lord Commissioner of Her Majesty's Treasury)

Beckett, Margaret (Derby South) (Lab)

† Burt, Alistair (North East Bedfordshire) (Con)

† Debbonaire, Thangam (Bristol West) (Lab)

† Esterson, Bill (Sefton Central) (Lab)

† Fitzpatrick, Jim (Poplar and Limehouse) (Lab)

† Fysh, Marcus (Yeovil) (Con)

† Graham, Richard (Gloucester) (Con)

† Haselhurst, Sir Alan (Saffron Walden) (Con)

† James, Margot (Parliamentary Under-Secretary of State for Business, Energy and Industrial Strategy)

† Morton, Wendy (Aldridge-Brownhills) (Con)

† Phillips, Jess (Birmingham, Yardley) (Lab)

† Prisk, Mr Mark (Hertford and Stortford) (Con)

† Streeting, Wes (Ilford North) (Lab)

† Swayne, Sir Desmond (New Forest West) (Con)

† Tomlinson, Justin (North Swindon) (Con)

Ben Williams, Committee Clerk

† attended the Committee

Fourth Delegated Legislation Committee

Monday 27 March 2017

[Robert Flello in the Chair]

Draft Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Savings) Regulations 2017

I beg to move,

That the Committee has considered the draft Deregulation Act 2015 and Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) (Savings) Regulations 2017.

It is a pleasure to serve under your chairmanship, Mr Flello. These regulations make consequential amendments and savings provisions to legislation that refers to the Insolvency Act 1986 as amended by the Deregulation Act 2015 and the Small Business, Enterprise and Employment Act 2015 with effect from 6 April 2017. Most significantly, the regulations update the Administration of Insolvent Estates of Deceased Persons Order 1986, which is the procedural framework that deals with the administration of the insolvent estates of deceased debtors, and the Insolvent Partnerships Order 1994 that deals with insolvent partnerships.

Over the past two years, the Government have introduced a series of reforms to modernise and streamline the insolvency process. We have achieved that through the Deregulation Act 2015, the Small Business, Enterprise and Employment Act 2015 and the new Insolvency (England and Wales) Rules 2016. The policy impetus for these measures was to remove unnecessary burdens and enable greater use of technology to reduce the cost of administering insolvency proceedings. It was part of the Government’s red tape challenge, which asked stakeholders for views on how unnecessary regulation could be reduced and how procedures could be modernised, simplified and made more efficient.

The responses that we received produced a package of measures aimed at reducing costs and improving returns to creditors. The changes, which commence in April 2017, should deliver a net benefit to business of £22 million a year. The key policy changes to which these consequential amendments apply include the fact that physical meetings will no longer be the default mechanism for making decisions in insolvency proceedings. In many cases, an office holder will be able to use a process of deemed consent, whereby they write to creditors with a proposal and, provided they do not receive objections from more than 10% in value of creditors, the proposal will be deemed to have been approved. Alternatively, office holders can use an online virtual meeting, a telephone meeting or an electronic voting system, or they can seek decisions through correspondence.

Currently, an office holder must hold a face-to-face meeting of creditors in order to lay his or her final report on the outcome of the case. These meetings are rarely attended by creditors. In future, the office holder will simply send a final account of the particular case to creditors. That will not reduce the creditors’ rights to challenge any actions of the office holder. Creditors with no further interest in an insolvency process will be able to opt out of receiving further routine correspondence and reports from the office holder. That will not include correspondence about the payment of a dividend, as the office holder will still have to notify all creditors if a dividend is proposed.

Where parties are used to corresponding electronically, that can continue after insolvency without the need to obtain permission from each creditor. That will encourage e-communication, which is generally cheaper and speedier than traditional post. Under the current rules, an office holder must obtain a court order if he or she wants to put all future communications with creditors on a website, which restricts considerably the use of technology. The requirement for a court order has therefore been removed.

If a creditor is owed up to £1,000, new provisions will allow an office holder to rely on information contained in records belonging to a company or bankrupt and to pay a dividend without the need for the creditor to submit a formal claim. As business practice has developed, particularly through new technologies, corresponding changes to insolvency law have been slow to follow. Users have not always been able to take advantage of the quickest, most cost-effective or most convenient methods of engaging with the insolvency process.

The changes coming into force on 6 April modernise the insolvency process by encouraging the use of electronic communication and decision making so that they are more fitted for the 21st century. They will increase creditor engagement through more convenient methods of interaction, as well as reducing the costs of seeking decisions. In particular, we will introduce amendments that enable modern methods of communication and decision making to be used in place of paper communications and physical meetings. This will increase creditors’ engagement in insolvency cases by encouraging the use of decision-making processes that are fit for the 21st century.

The insolvency reforms have been informed by extensive consultation and engagement with a range of parties affected by insolvency, including the insolvency profession, creditor representatives, insolvency regulators and public bodies.

It is a pleasure to serve under your chairmanship, Mr Flello.

The Minister has set out the provisions of the draft regulations concisely, but I wish to ask her to clarify a number of points. She mentioned, as do the explanatory notes, that the draft regulations will update the Administration of Insolvent Estates of Deceased Persons Order 1986 and the Insolvent Partnerships Order 1995. Will they update only those two measures or will they affect insolvency legislation more widely?

Some questions spring to mind about the creditors meeting. As the Minister said, creditors often do not attend creditors meetings. Will she set out the circumstances in which it is envisaged that a decision will be taken not to hold a creditors meeting, and on whose authority such a decision will be taken? There are reasons why creditors meetings are sometimes beneficial—it is not entirely out of the ordinary for creditors to feel that they would prefer to replace the nominated insolvency practitioner at those meetings—so it would be helpful to understand the circumstances exactly.

Will the Minister tell us the expected savings from the use of electronic communications and the anticipated increase in payments to creditors in the form of dividends? Is a review likely to be held of the success in delivering those savings and that increase in dividends once the regulations are in force? If so, in what way?

I agree that the proposals will save time and money. Using electronic processes makes perfect sense, although there are always questions about how creditors are guaranteed to receive communication electronically. What checks will be in place and what assurances can she give that all creditors will receive their correspondence in that way? What confirmation will be made that they are receiving electronic communications?

The Minister made the point that if a dividend is secured, all creditors will be notified, whether or not they have chosen to receive communications. Will that notification be made on paper, electronically, or by a combination of both methods? I look forward to her response.

In response to the hon. Gentleman’s questions, physical meetings may be requested when 10% of the value of creditors have deemed that they would prefer to take decisions via correspondence and electronic communications. On the changes to how decisions are made, he asked what saving the Government think they can achieve by abolishing physical meetings. We estimate that the total benefit to creditors will be approximately £6 million or more each year from including the removal of the requirement to hold a final meeting as well as of the default physical meeting as a way of agreeing decisions.

To answer the hon. Gentleman’s first question, it is just the two regulations that we are discussing today. I am grateful to him for his questions, and I hope that we can agree that the regulations will bring important benefits. I said that it is just the two regulations that we are discussing; that covers legislation on the main insolvency elements relating to administration and the deceased and insolvent partnerships order.

I asked whether the Minister could give an example of the circumstances in which the creditors meeting would not be held. I am not entirely sure whether she answered or not; she might have done right at the start. Perhaps she would clarify that point for me.

I hope that I understand the hon. Gentleman’s question correctly. The physical meetings will not be required when 10%, in terms of the value of the creditors, decree that it is acceptable to go ahead without physical meetings and to revert to electronic communication. I hope that I have understood him correctly in that regard, and I hope that we can agree that the regulations will bring benefits in updating the legislation to ensure that it is efficient and effective and delivers the best returns possible for those affected by insolvency. I commend the regulations to the Committee.

Question put and agreed to.

Committee rose.

Draft Public Sector Apprenticeship Targets Regulations 2017

The Committee consisted of the following Members:

Chair: Mr David Nuttall

† Argar, Edward (Charnwood) (Con)

Baron, Mr John (Basildon and Billericay) (Con)

† Cruddas, Jon (Dagenham and Rainham) (Lab)

† Duddridge, James (Rochford and Southend East) (Con)

Evans, Chris (Islwyn) (Lab/Co-op)

† Flint, Caroline (Don Valley) (Lab)

Greenwood, Lilian (Nottingham South) (Lab)

† Halfon, Robert (Minister for Apprenticeships and Skills)

† Heaton-Harris, Chris (Daventry) (Con)

† Marsden, Gordon (Blackpool South) (Lab)

† Mathias, Dr Tania (Twickenham) (Con)

† Merriman, Huw (Bexhill and Battle) (Con)

† Quince, Will (Colchester) (Con)

† Robinson, Mary (Cheadle) (Con)

† Turner, Karl (Kingston upon Hull East) (Lab)

Wollaston, Dr Sarah (Totnes) (Con)

Juliet Levy, Committee Clerk

† attended the Committee

Fifth Delegated Legislation Committee

Monday 27 March 2017

[Mr David Nuttall in the Chair]

Draft Public Sector Apprenticeship Targets Regulations 2017

I beg to move,

That the Committee has considered the draft Public Sector Apprenticeship Targets Regulations 2017.

It is an honour to serve under your chairmanship, Mr Nuttall—especially having sat next to you on the Back Benches for five years in the last Parliament. The regulations are the first use of the power under sections A9 and A10 of the Apprenticeships, Skills, Children and Learning Act 2009 to set apprenticeship targets for prescribed public bodies.

The Government are committed to delivering world-class public services and ensuring that people from all backgrounds have the opportunity to reach their full potential. Through investing in education and skills, we will tackle our productivity gap, deliver greater prosperity and promote fairness. We will create a ladder of opportunity that delivers jobs, security and prosperity and enables people from all walks of life to reach their full potential through apprenticeships.

To meet those objectives, it is vital that the public sector embraces apprenticeships, and the introduction of the target will support them to do that, building their workforce capability and delivering more for the public in the process. The regulations will strengthen the public sector’s commitment to apprenticeships, raising the prestige of that route into work by putting apprentices at the heart of every workplace.

The regulations set the target that the number of apprentices who begin to work for in-scope public bodies from 1 April 2017 to 31 March 2021 will be equal to 2.3% of the public body’s headcount in England. By engaging with public bodies, Government Departments will support their own wider public sectors to meet the 2.3% target.

Our reforms will make apprenticeships more rigorous, better structured, independently assessed and more clearly aligned with the needs of employers. By investing more than £60 million in supporting apprentices from deprived areas, we are enhancing social mobility by ensuring that everyone—regardless of age, background or circumstances—can gain the skills employers need.

Alongside the reforms to technical education, it is right that the public sector plays its part. We have committed to 3 million apprenticeship starts by 2020. Historically, the public sector has delivered far fewer apprentices than the private sector. That is why it is necessary to establish the target, to ensure that all parts of the economy are able to benefit from the skills revolution. It is only sensible that we take action to meet our public sector skills needs, and the target will do so by increasing the capacity and capability of public sector employers. It will support them in taking advantage of the reformed apprenticeship system so that they can, in turn, deliver more for the taxpayer.

During the passage of the Enterprise Act 2016, which inserted this provision into the Apprenticeships, Skills, Children and Learning Act, the House debated and voted upon provisions enabling the Government to set apprenticeship targets for prescribed public bodies. At the time, there was cross-party support for what was rightly regarded as an opportunity to both improve public services and provide more opportunities for people of all backgrounds. It is exactly that two-part benefit, which the target can and will ignite, that led the Government to act. We do not increase the responsibilities of the public sector lightly. We remain diligently aware of the challenges faced. Rather, the regulations are an opportunity for public bodies and the nation as a whole.

We consulted on the target in January 2016 and received 180 responses from bodies across the whole public sector, including numerous public sector organisations that recognised the value of apprentices in their own and wider workforces. The majority of those felt it vital that the public sector engaged with our reforms and itself benefited from the growing apprenticeship movement.

We also listened to concerns that were raised. Some respondents were critical of the target being assessed on an annual basis. As such, while we will continue to monitor public bodies’ progress in annual returns, the target is calculated for grouped bodies as an average over the target period. For all other public bodies, the target is calculated only in respect of years in which the public body has 250 or more employees. That will allow the best of both options, with organisations being able to plan their training and recruitment of apprentices to meet their workforce needs, and the Government being able to monitor, intervene and support public bodies where suitable.

Headcount is used for the purpose of calculating the target, as we believe that using full-time equivalents would result in a lower number of starts. We want the public sector to deliver its fair share of apprenticeships. However, following consultation, we will now allow local authorities to separate out the headcount of bodies for which they employ staff but do not direct the workforce planning—including schools and emergency services—in their information returns.

We chose the target of 2.3% of a public body’s headcount, because that reflects the public sector’s fair share of our commitment to achieve 3 million apprenticeship starts by 2020. Different sectors will have different ways to have regard to that target, with my Department supporting others across Government to best engage their wider public sector bodies.

The regulations prescribe the public bodies in scope of the 2.3% target, how public bodies can calculate progress towards meeting the target, and the information that they must publish and send to the Secretary of State. Regulation 2 identifies how to define the headcount that public bodies will use as the basis of their calculation of the target. Regulation 3 prescribes the public bodies in scope of the regulations. Regulation 4 identifies reporting periods relevant to both the calculation of the target and when information must be published and sent. Regulation 5 specifies the target period, and regulations 6 to 8 specify how the target is to be calculated for the different public bodies. Finally, regulation 9 specifies the information that must be returned and/or published.

The groups of public bodies described in the regulations and public bodies with 250 or more staff in England, as of 31 March in any of years 2017, 2018, 2019 or 2020, will be required to publish and/or provide information relating to their progress towards meeting the target for each year they are in scope. There are two parts to that requirement. The first is a data publication. That will identify a public body’s progress towards the target through data. Sharing that information publicly, and directly with the Department, will make bodies transparent and accountable, and make clear which bodies are leading in their investment in apprenticeships. Secondly, public bodies will have to send an apprenticeship activity return to the Department, detailing the actions that they have taken to have regard to the target, why they may not have met the target, and their intended future actions to do so.

We recognise that there will be specific challenges across sectors, including the NHS, schools and local government. I am particularly glad that standards for police constables and registered nurses have been approved, and standards for midwifery and teachers are in development. In addition, my Department will be supporting others across Whitehall to deliver apprenticeships and engage their own public sector bodies in scope of the target. Departments will lead their wider in-scope public sector bodies to understand where and how apprentices can be employed in their workforces and how they can meet the 2.3% target. For example, in my own Department, we have recently published a guide to the new apprenticeship system for different types of schools.

Departments will also work with public bodies to develop new, employer-designed apprenticeship standards and increase the number of quality apprenticeships, thereby delivering more for the public and increasing access to the ladder of opportunity, especially for those from the most deprived areas, who are under-represented in apprenticeship positions. The regulations are an important part of our wider plans for the delivery of world-class public services and a skills system with apprentices at the heart of the workplace.

It is a pleasure to serve under your chairmanship, Mr Nuttall, and to respond to the Minister’s speech. As he said, there has been cross-party consensus on this issue. We are broadly in support of the principle. How could we not be? The Minister made it clear that the Government are drawing on the 2009 Act, which was passed under a Labour Government, in inserting these proposals for targets. That was of a piece with our proposals on procurement in the 2010-15 period, which the Government, after some scepticism under the coalition, have now come round to taking forward.

We welcome the principle, but we are dealing with a very diverse collection of public bodies, not to mention the varieties of Government Department that will have to deal with this measure. As the Minister said, bodies in the scope of the regulations include Government Departments, local authorities, NHS trusts, fire and police services and local authority-maintained schools. The Houses of Parliament, further education colleges, the BBC, Channel 4 and the Post Office are exempt from the requirements. I will leave hon. Members to wonder about the criteria on which those bodies were grouped. Perhaps the Minister would like to confirm why they were exempted.

This measure is clearly a big deal for the Government. As I understand it, they expect that 16.2% of the 3 million apprenticeship starts they have pledged to deliver by 2020 will come from the public sector, because that is the percentage of public sector workers in the total workforce. As the Minister was good enough to acknowledge, the proposals have not been without questioning and some criticism. The Institute for Fiscal Studies said that, as currently devised,

“the focus on targets will distort policy and lead to the inefficient use of public money.”

It also said that

“This potentially costly policy is largely designed to hit the government’s target for 3 million new apprentices, not as a way to increase the quality of public services. It should be removed”

and that the one-size-fits-all approach to large public sector employers in England is

“clearly not a sensible way to encourage more apprenticeships, or to help deliver efficient public services.”

Some might think that is a sweeping—and possibly sharp—judgment. However, no matter how good the intentions are, we are led to ask some significant questions about whether the broad sweep of that delivery will do quite what the Government intend. I will focus my questions on the process and particular pinch-points in that area.

One such pinch-point was identified by the Local Government Association—again, these are specific issues in specific places on which the Minister might like to respond. In particular, the London boroughs made the point that they would have to increase their creation of apprenticeships by more than 570% to meet the target. The general secretary of the National Association of Head Teachers said that the target was

“unrealistic in the current climate.”

That is the important point: it is about putting the aspiration alongside what Government Departments can deliver in the current climate, and what local government can deliver. Of course, that may vary between local government areas in the same way as it does between Departments, depending on whether funding is more protected or otherwise from the Treasury.

Again—this has been a feature of the criticism of some delegated legislation proposed in recent months—there has been criticism of the lack of an impact assessment for this measure, because, as the Local Government Association said, it seems

“likely to impose significant costs on local authorities in terms of workforce planning, administration…and compliance with apprenticeship quality standards.”

As the Minister indicated, the Government’s response did acknowledge those concerns, but they largely rejected any proposals to counter them—though he touched on a number of mitigation measures. Schools will continue to be included in the apprenticeship target, which, as I understand it, will continue to be based on headcount rather than full-time equivalent numbers.

It has taken some time to develop the process. My hon. Friend the Member for Cardiff West (Kevin Brennan), the then Business, Industry and Skills shadow Minister, had a lively exchange with the then Small Businesses Minister, the right hon. Member for Broxtowe (Anna Soubry), on the matter in a Bill Committee in February 2016. On that occasion, he said that measuring by full-time equivalent would ensure that any mandatory target for the public sector reflected the actual size of the workforce. She said that, during consultations, she would look at whether full-time equivalent should be used instead of headcount. However, as we have heard, ultimately, that option was rejected.

In that Bill Committee, Labour Members raised other issues. My hon. Friend talked in particular about whether local authorities should be allowed to include apprenticeships generated in their supply chains. I do not want to stray from the focus of this Committee, but there is an interesting echo there of the discussion we are having about how widely firms and businesses should be allowed to look at other factors to cover some of their apprenticeship levy costs. In that Bill Committee, my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) asked—I do not think the Government have addressed this—whether excluding supply chains may encourage local authorities to keep services in-house when they could find better cost-value in outsourcing.

May I point out to the Minister, not that I think he is unaware of it, that the response of the supply chain, both in the public sector and the private sector, to Government initiatives, whether this initiative or the apprenticeship levy, is critical. In many sectors, as he will know, the effect of involving the supply chain, and many of the small businesses that go with it, can be twofold, threefold and, in some cases, fourfold that of a large employer. Therefore, there are still some significant questions to be addressed in that regard. It would be helpful if, in his response, he touched on that and the continuing concerns.

I go back some time in this place, so I remember well the controversy in the early to mid-2000s about the Labour Government’s Train to Gain programme, which members of the Conservative party, which was then in opposition, were highly critical of. Indeed, the Select Committee on which I served looked at some of those issues and whether Train to Gain had encouraged employers simply to rebadge existing employees. I am not suggesting that that will automatically be the effect of this initiative, but it is the case that there are some challenging targets to be met not only in London schools, where it is more difficult to rebadge existing employees as apprentices, but in other large public bodies, not excluding Government Departments.

If I were of a mischievous frame of mind and if episodes were still being made of “Yes Minister”, an interesting episode might be written on the challenges of various Government Departments to compete with other Government Departments. I say that in jest, but it is a serious point. In implementing this measure, the Government need to be careful that people are not rebadged for their existing training. The Government need to ensure that the apprenticeship contribution is a genuine, new contribution that empowers those individuals in the public sector not simply—the Minister will have heard me comment on this before—in terms of the bespoke skills that they need for the job they are doing in the public sector at that point, but in terms of the more analytical skills that they will need—this is particularly true for the large number of women in the sector—as the way in which we deliver services and administer things in the public sector begins to change. That is true in general terms, as well as in terms of the specifics about automation, which we have read quite a lot about recently.

The Minister spoke about the targets and the particular focus he wanted to have. I know he feels strongly about this issue, and I applaud him for that. He talked about the £60 million for local government to support apprenticeships in deprived areas. I ask him, as always, what scope will there be to increase that further? Those deprived areas and the local bodies in those areas—particularly local councils—have often been hit the hardest in that respect.

The Government may or may not go along with what I was speaking about in Birmingham at the FE Week conference last Thursday. I said that we want to consider committing ourselves to targets for increasing the number of apprenticeships for people with disabilities, care leavers and particularly—this is a new suggestion—veterans. I know from my own experience, as chair of the all-party parliamentary veterans group, that a number of younger leavers from the armed forces are leaving with skills that are not easily passportable into civvy street or recognised, and in some cases are leaving with very poor skills. That is an area to look at. Perhaps the Minister can tell us how that could tie into public sector apprenticeship targets.

How will the Government encourage and incentivise local authorities to increase their apprenticeship starts amid a series of cuts to funding? The figures are bleak. The Local Government Association has estimated that councils will face an overall funding shortfall of £5.8 billion by 2020, and budgets have been cut by £18 billion in real terms since 2010. My own local authority in Blackpool has taken some of the biggest hits for a small unitary. This is not simply an argument about the Labour party’s position on cuts as opposed to the Conservative party’s position. If Government are not careful, this will impair and undercut the impact of what they are trying to do.

Some three years ago, I was privileged to work with my hon. Friend the Member for City of Durham (Dr Blackman-Woods), who is now in our party’s Communities and Local Government Front-Bench team, on a pamphlet with the Smith Institute called “Apprenticeships—how local government is making a difference”. In that pamphlet, we cited a number of local authorities that were doing some very good stuff. In 2013, Lewisham Council was offering 74 apprenticeships for its 2013 intake. My own council in Blackpool was employing 45 apprentices, as well as a further 47 apprentices with its partners in the construction industry. Newcastle City Council was maintaining its commitment to apprenticeships, with a target of 500 new ones. Plymouth City Council, which is smaller, was nevertheless employing 49 young apprentices and 21 adult apprentices. In that year, it met and exceeded the Government’s target of 2.3% of the workforce being apprentices, because its figure was equivalent to 2.6% of the workforce.

The question I have for the Minister is not where are the snows of yesteryear, but where are those apprenticeships now? Many of them, sadly, have gone because those local authorities, which were very ambitious and took that forward, have simply not had the financial base—particularly given the doubts as to what the financial base will be by 2020, in terms of the variability of benefiting from retaining business rates—to continue pressing on that. If the Minister wants local government to walk the walk, as well as him talking the talk, he has to take up that issue with his colleagues in DCLG.

I have already said that we still believe that the target should, in most cases, be based on full-time equivalent—FTE. What ability will the Minister have to monitor how effective that is and how it is taken forward? I am conscious that the target is very ambitious and will involve a lot of ambitious monitoring. Who, in Government, will do that monitoring? The Minister will probably know what is coming, but anything to do with apprenticeships could be monitored, in theory, by the Skills Funding Agency, by the Institute for Apprenticeships, which will launch next month—I have said on a number of occasions that I, and many others, have concerns about its capacity and numbers—or by another body. I invite the Minister to tell us who will be doing the nuts and bolts of monitoring what happens between various Departments, for example.

The Minister talked about publishing information on take-up: how will the Government address that, regarding Departments and the other public bodies—the smorgasbord of organisations that produce their accounts at different times? He also mentioned the standards and cited a couple of positive and encouraging examples of Departments collaborating to produce particular apprenticeships and particular standards—there were always going to be one or two good examples. How will the Minister monitor particularly closely—perhaps this is an issue for the Cabinet Office as well—the performance and delivery of those areas?

As I have said, Labour Members approve of the direction of travel of the regulations, which is why we will not oppose them, but the devil, as the Minister will no doubt tire of hearing from me, is in the detail. Our questions, and the Government’s asks of the many public bodies, some of which are extremely vulnerable in a local context, need to be responded to.

It is a pleasure to serve under your chairmanship, Mr Nuttall.

I want to follow on from the contribution of my hon. Friend the Member for Blackpool South, which was thoughtful and positive, but not without constructive criticism. As he said, I think we would all agree that apprenticeships are a good idea and any opportunity to consider how we can better restore their value in society, which has perhaps for some decades not been there, is worthwhile.

What is really important, however, and this is one of the reasons why apprenticeships were so valued in their heyday, is the quality of apprenticeships and the direct routes they can provide into work, as a meaningful alternative to higher education and the university route. I say that at the start to ensure that the Minister understands that I believe that this is an area whose time has come. In hindsight, it was probably a mistake to get rid of the polytechnics, because we got rid of something that was valued for technical achievement, from surveyors to architects and all sorts of vocational jobs and life opportunities. In some ways, the university title got rid of some of the emphasis and focus on those areas. Many people of my age—friends, and also constituents—people who went into work with an apprenticeship or as a technical assistant, have in more recent times worked their way up through the company or organisation to become top management. However, when they look at the ladder for others, it is not there in the same way.

I have some questions about the regulations and the targets. There is no mention in the regulations of any repercussions following a failure of a public body to meet the targets. I would be interested in hearing the Minister’s answer on that.

There is a worry that in public bodies that have more than the average number of staff on part-time contracts, using a head count rather than full-time employment as a basis for the target will affect the number of people in those organisations who can provide the hands-on mentoring and training that apprentices need. When the overwhelming number of staff are part-time, full-time apprentices could present a problem. I would be interested in hearing the Minister’s comment on that.

What action will the Government take to ensure that there are sufficient numbers of apprenticeships in some of the exempt public bodies? Some of the most prestigious public bodies, including the BBC, Channel 4, the Post Office, the House of Commons, the House of Lords, housing associations, charities, higher education institutions, colleges and independent schools, do not have a target. I would be interested in hearing from the Minister where the direction of travel lies for those organisations, some of which should be well able, compared with a local authority, to meet public sector commitments. Is there not a danger that requesting public bodies to monitor apprenticeship starts could lead to the churn of short-termism? As well as monitoring starts, is it not also important to monitor those who complete apprenticeships and end up in a job?

In Public Accounts Committee evidence sessions on the impact of the Government’s policy in this area, I have raised some of the pertinent issues, particularly in schools, that still need to be resolved. While we all want more apprenticeships, this is a once-in-a-lifetime opportunity to ensure that they do not follow the normal pattern of gender segregation within employment. Whatever job an apprenticeship falls under, there is an absence of thinking about how to ensure that both men and women are encouraged into it, and that we do not embed another generation in which men and women go into jobs defined by their gender.

I thank the hon. Member for Blackpool South and the right hon. Member for Don Valley for their contributions. I also thank the hon. Gentleman for the kind comments he has made about my not being able to attend the FE Week conference because of the security issue that took place in Parliament. I will answer some of their points individually and some together.

On quality, the right hon. Lady made an important point about polytechnics. Perhaps the wrong decision was made. I hope that with the boost to FE through the Sainsbury reforms, national colleges and institutes of technology, and the extra £500 million announced, we will go back to state-of-the-art technical education. That is the purpose of many of the things I am trying to do in my work. We have changed the legislation to ensure that an apprenticeship does what it says on the tin—it is about not just work experience for a few months. As defined in the legislation, it must be a minimum of a year, with 20% off-the- job training. We have moved from a framework, where there was a spaghetti junction of qualifications, to rigorous employer-led standards that meet our skills deficit. That is why we have created the Institute for Apprenticeships and, from next year, subject to approval by the Lords, the Institute for Apprenticeships and Technical Education.

Both the hon. Gentleman and the right hon. Lady asked about those bodies that are outside the scope, for which there are various reasons. The House of Commons, for example, is not subject to the control or direction of Ministers. As a smoker, I know that we would legally be allowed to smoke in here, but the Speaker has made a decision that there will be no smoking. As the hon. Gentleman will know, when I entered Parliament I was the first MP to employ a full-time parliamentary apprentice in the House. Many MPs now do that, and the House of Commons has a very good apprentice scheme. Over the years, I have met those apprentices, who work in all the different areas of the House of Commons. The BBC works with the scheme very closely. As to the Post Office, the reason is partly that 97% of the 11,500 post offices are run by independent postmasters on an agency basis, rather than by people who are Post Office employees, so there are reasons why some FE colleges and universities are out of scope and why a number of organisations were not included.

Can the Minister give one good reason why a university is out of scope while schools will be affected?

FE colleges are corporations or companies, for the most part; universities are regarded as independent bodies and were not seen as in the public sector or managed in the same way. However, there may be universities subject to the levy, depending on their wage bill, so they will be required to have apprenticeships or the levy will be used to fund apprenticeships elsewhere.

An impact assessment was done for the whole Enterprise Act 2016. Neither an impact assessment nor an equalities impact assessment was prepared for the regulation, because the measure affects only publicly funded bodies, with no costs to business. The Better Regulation Executive confirmed that no impact assessment is required in relation to the regulations but, as I have said, one was done for the whole Act.

The hon. Member for Blackpool South asked whether a number of areas in public services would be able to have apprenticeships, and perhaps I can give some examples, beginning with the national health service. The public sector target is 27,500 new apprentice starts for 2017-18. That is estimated to deliver 100,000 apprentices in the course of the Parliament. The information from Health Education England is that almost 20,000 apprentices were employed in the NHS in 2015 and 2016. I have met many healthcare apprentices when visiting colleges and apprenticeship training providers. We are developing pathway apprentice standards—level 2 healthcare support worker leading to level 6 nursing apprenticeship.

I recognise that schools are a difficult issue. First, it is important for councils to share their levy pot fairly. We have issued guidance to schools. The Department for Communities and Local Government is keen that the levy pot should be shared fairly. The whole purpose of the levy is to change behaviour and create an apprenticeship and skills nation. Why cannot a teaching assistant in a school do a teaching assistant apprenticeship, a cook in a school do a hospitality and catering apprenticeship, or someone who is doing business administration do a business administration apprenticeship?

The right hon. Gentleman is responding with particular examples to what I said about problems and pressures for schools. None of those is a bad example, but the issue is whether the apprenticeships will lead to any progression or improvement in career status. I am concerned, as others may be too, about whether, particularly in strained financial circumstances, schools will rebadge people doing existing relatively low-level jobs—I put it mildly—to achieve the target.

There is an important point here. I have acknowledged in the past that there will always be some gaming of the system and I accept that once the levy comes in we will not know how much, for a while. However, if someone is doing a teaching assistant job why should they not be offered an apprenticeship and a skill? They certainly will not be able to progress without a skill. With a skill and an apprenticeship they will have a much better chance of progressing. If someone is a school cook, why not give them the chance to do a hospitality and catering apprenticeship?

I do not see the evidence that some of those routes for progression are not already working. I have in mind people in my constituency who have become teaching assistants—in fact it was something that the last Labour Government helped to create. I know a number of people who have used that route to be supported and get training, and they have ended up taking the teaching route afterwards. Likewise, in many of the schools that I visit, and I am sure that the right hon. Gentleman visits many schools too, members of the ancillary staff—whether that is in the kitchens, or on the maintenance side of the school—often have to get their NVQs and other qualifications that are suited to what they are doing, and it is concerning that we just end up with a rebadging for no good reason.

First, that may be the case for some people, which is all well and good, but I want everyone to have a chance of having an apprenticeship. However, even if the right hon. Lady is correct that everyone has a certain qualification or a certain level of training, why not give them a chance to do an additional piece of training? If they have a level 3 qualification, why not give them an apprenticeship in level 4, and so on and so forth?

As I say, the purpose of these regulations is to change behaviours. As long as standards continue to be developed—new standards are being developed and they are of higher quality—I think we will give everyone that chance. We want employers to know that when we say we want to create an apprenticeship nation, that is what we mean.

The hon. Member for Blackpool South talked about the issue of the headcount versus the full-time equivalent; that was also raised by the right hon. Member for Don Valley. We think that headcount is the fairest measure to assess workforce numbers for the purpose of delivering high-quality apprenticeships. If someone does more than one apprenticeship with the same employer, they can count towards the target more than once. Headcount data are readily available across the whole public sector, and if the headcount target were to be replaced on a full-time equivalent basis, the 2.3% target would result in a lower number of starts, meaning that the public sector would not deliver its fair share of apprenticeships unless the target was raised. Having said that, we have listened to those who are concerned about how the target might impact on them, given the high proportion of part-time workers, and we suggest that these bodies should use FTE in parallel with headcount, to report and explain any underachievement of the target as necessary.

This is not about one size fits all; we have listened to people and responded. The hon. Member for Blackpool South talked about cuts. No one has denied that there have been pressures—significant pressures—on the economy but most of the organisations that we are talking about pay the levy, so for most of them it will come out of the levy pot. It is not relevant to say that cuts will affect this process, because if an organisation wants an apprenticeship, it will come out of its levy pot. That is an important point.

The hon. Gentleman also talked about the supply chain. He will know that after the first year of the levy, provisionally 10% will be allowed in terms of the supply chain. He talked about gaming; if anything, we could affect gaming if we do not get things right. After the first year, we will see how things pan out, then we will make a decision, but the 10% figure will not apply until after the first year of operation of the levy.

The hon. Gentleman also asked whether or not this process was an efficient use of public money. If we look at apprentices’ returns, we see that if someone is doing a level 2 apprenticeship their wage increase is 11%, between £48,000 and £74,000; the figure is between £77,000 and £117,000 for level 3 apprenticeships. Ninety per cent of apprenticeships get jobs. Apprenticeships are very good for the economy. There is another figure that I forget, but all apprenticeships deliver a huge return in terms of cost-benefit to the economy.

The hon. Gentleman mentioned social justice and social mobility. He will know, because I mentioned it in the debate in Westminster Hall about financial support for apprentices, that we are undertaking a review of social mobility and apprenticeships. Some £60 million was guaranteed for this year, and the review is under way. As for the Maynard reforms, I hope to make an announcement soon—that is a real “soon” and not a civil servant’s “soon”—that I do not think he will be too unhappy with.

The hon. Gentleman talked about veterans, and I will reflect on his remarks. I have not seen his whole speech, I only read the article in FE Week. I thought that was important, and I will look at what we are doing. I know, as the Defence Secretary proudly tells me, that the Ministry of Defence is a huge employer of apprentices, but I think that is an important thought.

The hon. Lady—

That is an important area, and there are lots of jobs across the public sector that need the skills that a STEM-based education provides. However, I am sure the Minister knows as well as I do that, across the public sector as well, there is a massive amount of gender job segregation, which, in some ways, reinforces the pattern of low pay for women in certain sectors. It would be very good in the long term if we can do anything at all to encourage more diversity across those areas.

The right hon. Lady makes an important point. Some 53% of apprentices are women, and the survey suggests that female apprentices actually earn more than men. However, there is a huge problem around women in STEM subjects.

One of the issues I face when looking at careers guidance in schools is that they show a picture of a woman being a nurse and man doing engineering. That is from primary school onwards, and it is a significant problem. We are doing a huge amount of work on careers strategy and we are looking at that. Everywhere I go, I try to promote female STEM apprenticeships and females doing STEM in schools, but there are cultural issues and all kinds of problems that make this quite a difficult problem to surmount.

I thank the Minister for what he says, but perhaps he could go away and reflect. In evidence to the Public Accounts Committee, officials told us that there are targets for addressing this particular problem for black and ethnic minority people but not women, which he clearly understands from what he has just said.

It is important that we take the right action to make sure that we increase those numbers; I think that we are doing that. The hon. Member for Blackpool South asked about monitoring. The Skills Funding Agency, through the National Apprenticeship Service and the Digital Apprenticeship Service, is monitoring that and works with the bigger employers. Department for Education officials will analyse the returns on a yearly basis. He will know that my boss, the Secretary of State, chairs the “Earn and Learn” taskforce.

There is no particular stick that public sector bodies get if they do not meet targets, but we are doing everything possible. We want to work with public sector bodies—they will obviously publish their information; it will be up to the independent bodies how to collate it—to try to see this as a new thing that we are doing. We will see how it pans out each year as we assess, but at this point in time, we are trying to work with public sector bodies, rather than saying that there will be a penalty if they do not deliver on their particular targets.

You will be pleased to know that I am coming to the end of my speech, Mr Nuttall, but I shall close by saying that this is a very important part of our reforms; it is not just a stand-alone product. It is part of our designs to change behaviours to create that ladder of opportunity for millions of our young people.

Question put and agreed to.


That the Committee has considered the draft Public Sector Apprenticeship Targets Regulations 2017.

Committee rose.