Grand Committee

Grand Committee

Tuesday, 5 December 2006.

The Committee met at half-past three of the clock.

[The Deputy Chairman of Committees (VISCOUNT ALLENBY OF MEGIDDO) in the Chair.]

The Deputy Chairman of Committees (Viscount Allenby of Megiddo)
Before the Minister moves the first set of regulations, I should advise the Committee that, in the case of each order, the Motion before the Committee will be that it do report that it has considered the order in question. I should also make it clear that this Committee is charged only to consider orders and not to approve them. The Motion to approve will be moved in the Chamber in the usual way.

Compensation (Claims Management Services) Regulations 2006

Lord Evans of Temple Guiting
rose to move, That the Grand Committee do report to the House that it has considered the Compensation (Claims Management Services) Regulations 2006. First Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.

The noble Lord said: The statutory instruments, which were debated in the other place this morning, underpin the legislative framework needed to regulate the activities of claim management companies, which is contained in Part 2 of the Compensation Act 2006. The Compensation Act received Royal Assent on 25 July. Part 2 provides a detailed framework for the regulation of claims management services. Claims farmers have remained unregulated for too long. Some encourage frivolous claims through aggressive marketing techniques, mislead consumers about the options for funding their claim, and provide poor-quality advice and service. Consumers have been suffering and there is an urgent need to tackle these abuses and raise standards across the industry.

The delivery of the Act was a major achievement. Work has progressed at a remarkable pace and the regulatory framework is now being implemented. Under the current arrangements, the Secretary of State will be the regulator. Mark Boleat has been appointed as the DCA’s head of regulation and Staffordshire County Council trading standards unit has been contracted to carry out the DCA’s monitoring and compliance function. The unit will process applications for authorisation, monitor compliance with the rules and support the DCA’s regulatory efforts by seeking out any business that attempts to evade regulation.

Regulation by the Secretary of State is intended as an interim measure. The Legal Services Bill, which was introduced on 23 November, will establish a new framework for legal services regulation, including a legal services board and an office of legal complaints. It is intended that claims management regulation will become integrated into the new structure.

When the Compensation Act was debated, Ministers made it clear that the Government wished to see a major change in the quality of service and an improvement in the behaviour of claims management businesses to help improve safeguards for consumers. The orders and regulations which are before the Committee today will help achieve this aim. A wide-ranging consultation exercise on the orders and regulations took place. The Government’s response to the consultation was published on 30 November.

The regulations are made under the powers in Section 8(8) of, and the Schedule to, the Act. These set out the requirements that service providers should meet to obtain authorisation and other details relating to the operation of regulatory mechanisms. The regulations are necessarily detailed and technical. I will outline the key provisions relating to the authorisation process, rules, complaint schemes and enforcement.

The regulations set out a range of matters to which the regulator may have regard in making a decision about an applicant’s competence and suitability. The regulator can impose conditions on an authorisation. Some conditions are imposed directly by the regulations. Examples include the requirement that the authorised person complies with the rules made by the regulator, and that if the person accepts referral of potential clients from an unauthorised person, the former takes reasonable steps to ensure that the unauthorised person complies with the rules.

The application form for authorisation will require details about directors, partners and anyone else capable of having a significant influence on the policy or management of the business; regulatory action against both the business and the individuals involved and all claims management businesses in which those involved with an applicant have been involved in the past five years; and self-certification that the business complies with the regulator’s rules of conduct. The regulations will ensure that only those who meet the criteria for authorisation and agree to comply with the rules are authorised.

Applicants will have the right of appeal to the Claims Management Services Tribunal established by the Act against a decision of the regulator concerning an application, and an appeal from the tribunal to the Court of Appeal. Tribunal rules will be made in February 2007 when the relevant provisions of the Act are brought into force.

Under the Act, in paragraph 8 of the schedule, the regulator must prescribe rules for the professional conduct of authorised persons. The regulations set out the procedures for doing so. The rules clarify and expand on the requirements that all authorised persons must comply with. The rules focus on a few key points: prohibition of high-pressure selling including cold calling in person; transparent contracts and disclosure of referral fees; complaints procedure; and clients’ accounts if clients’ money is held. Key stakeholders and claims management businesses were consulted on the rules, which have now been approved by my noble and learned friend the Secretary of State.

Consumers also need protection when things go wrong. The regulations create powers for the regulator to require an authorised person to have professional indemnity insurance. The rules require authorised persons to have a clear mechanism for dealing with complaints. The regulator can review the handling by an authorised person of a complaint and can give directions in regard to complaints handling and related matters. When an authorised person has failed to comply with the rules, the regulations provide for a limited power to require redress. This is a significant part of the regulator’s power to protect consumers from unsatisfactory work or other improper practices by those providing claims management services. The regulator may direct the repayment of unjustified fees—that is, a fee that should not have been charged. It cannot order a cash payment for redress; that will follow when complaints handling comes within the Office of Legal Complaints proposed in the Legal Services Bill.

It is imperative that regulation can be enforced effectively. The regulations therefore create powers for the regulator to investigate breaches of the rules, to require the provision of documents, and to enter and search premises and take copies of documents. The regulator’s investigatory powers are exercisable in relation to an allegation or a suspicion that a person is providing a regulated claims management service without being an authorised or exempted person or having the benefit of a waiver of the obligation to be authorised or that an authorised person is acting in contravention of the rules.

The regulator must first seek information from the person or authorised person by serving a notice requiring the provision of specified information or documents. If the information or documents are not provided, or they reveal further grounds for investigation, the regulator may apply to a judge or justice of the peace for a search warrant. The regulator will also be able to impose sanctions, including suspension, or, ultimately, cancellation of authorisation. There is a right of appeal to the Claims Management Services Tribunal against a suspension or cancellation, and from the tribunal to the Court of Appeal.

I am sure that noble Lords will agree on the importance of regulating claims management services and putting in place safeguards for consumers. Regulating claims management services is a necessary step for protecting consumers. The arrangements under the regulations I have briefly outlined will help to achieve that aim.

The Compensation (Specification of Benefits) Order 2006 is made under Section 4(5) of the Act and will bring claims management services provided in relation to industrial injuries disablement benefits within the regulatory net. These are compensatory benefits and include reduced earnings allowance, retirement allowance and industrial death benefit. This order will ensure that consumers seeking such benefits and engaging the services of a claims management business will be protected by regulation. 

I shall speak to the Compensation (Regulated Claims Management Services) Order 2006 and shall refer to it as the scope order. It is made under the power in Section 4(2)(e) of the Act. The definition of claims management services in the Act is wide to ensure that there are no loopholes. Such services are regulated only if they are prescribed by order. The scope order sets out the range of activities that are to be regulated as claims management services and in relation to what kind of claim. It will cover, for example, advertising for or otherwise seeking out persons who may have a claim, advising persons on the merits of a potential claim, referring details of such claims and investigating the circumstances or merits of a claim.

The types of claim for compensation in relation to which the above activities will be regulated initially include claims relating to personal injury, criminal injuries compensation, employment, housing disrepair, claims in relation to financial products or services, including the emerging area of excessive bank charges, and, finally, industrial injuries disablement benefits.

We are targeting these areas because we believe that they are where there is the greatest risk of firms engaging in claims handling practices that are against the public interest and lead to consumer detriment. Any person providing a regulated claims management service in those areas will need to be authorised, exempted by order or have the benefit of a waiver. The Compensation (Exemptions) Order 2006 was laid on 28 November and specifies those who will be exempted from the obligation of authorisation. I look forward to a full debate on that order in the new year.

Defining sectors to be regulated by order provides flexibility to allow new areas to be brought within the scope of regulation when problems surface and for areas to be removed from the scope if no longer in need of regulation. I should make clear that services provided to a defendant are outside the intended scope and are not regarded as being within the definition of claims management services in the Act.

I commend the orders and regulations to the Committee.

Moved, That the Grand Committee do report to the House that it has considered the Compensation (Claims Management Services) Regulations 2006. First Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.—(Lord Evans of Temple Guiting.)

Lord Kingsland
We have some brief observations on two of the three orders to which the Minister has spoken, the Compensation (Claims Management Services) Regulations 2006 and the Compensation (Regulated Claims Management Services) Order 2006. We wish to raise two matters on the Compensation (Claims Management Services) Regulations 2006: overlapping regulatory systems and authorisation.

15:45:00

As far as overlapping regulation is concerned, as I understand it, the claims management services regulations apply where there is an element of uninsured risk. The most common example is where a customer has a no-fault insurance motor claim but has sustained injuries and does not have a before-the-event legal expenses policy. Many brokers, including insurance brokers, have been fully regulated by the Financial Services Authority since mid-2005; yet the new claims management services regulations will apply to all organisations that offer a claims management service, including those already regulated. Rather than simply applying the new regulations to organisations currently outside the existing regulatory regime, the insurance brokers, for example, which are offering claims management services, will be regulated twice over.

We believe that all aspects of claims management services provided by brokers should be exempt. The current draft of the new regulations provides for a limited level of exemption, which in our view is far too narrow. It is surprising that the Government have not listened to those who have raised this point, because their approach under the order goes against the whole risk-based approach that they now tell us informs all their regulatory activity. The brokers to which I have referred now face a situation where two separate bodies are involved in regulating intermediary claims activity. This cannot be in the best interests of either the efficient running of the businesses or their customers.

On authorisation, Regulation 12(5)(c) states that a business must take responsibility for those who introduce business to them, but that the individuals—the business introducing individuals—do not require authorisation. Is that the right approach? It is the activities of those who introduce business that have caused most of the damage to the sector’s reputation; that is, the damage that the Government have aimed to tackle through the Compensation Act. The unregulated behaviour of speculative canvassing has misled consumers and generated thousands of spurious claims in the past. This needs to be addressed at the source rather than policed ineffectively by proxy. Many of these individuals are freelance and not tied agents.

I do not think that it can be said against me that a requirement for authorisation is over-regulation. Without a requirement for all individuals and businesses involved in the claims process to be authorised in their own right, the unregulated market in claims introductions will continue and the Government will have failed in their aim to regulate out bad practitioners. Why is a requirement for individuals to seek authorisation impractical? How would a system such as the one proposed by the Government be overseen by the regulator? How can the regulator be confident that it will generate the results that the Government seek? What will the requirement be for businesses to ensure compliance in those from whom they obtain referrals—people who are not in any way authorised at all? All those points seem to be germane to the issue.

The Minister will be pleased to hear that I turn now, more briefly, to the Compensation (Regulated Claims Management Services) Order, on which I wish simply to raise one point. Paragraph (3)(e), states that claims management activities include, subject to paragraph (4), referring details of a claim or claimant or a course of action or potential claimant to another person, including a person having the right to conduct litigation. Paragraph (4) makes it clear that,

“the service of referring a claim’s or a claimant’s details to another person is not a regulated claims management service if it is not undertaken for or in expectation of a fee, gain or reward”.

The Government will allow a limited number of referrals for a fee if they are incidental to the main business of an organisation. An illustration of this might be a vehicle repair firm being paid by solicitors to refer customers who have been in road traffic accidents to those solicitors. In our submission, the Secretary of State as regulator should ensure that all persons carrying out any activity described in one of the categories that I have set out in paragraph (3) are properly regulated. How will a judgment on referrals that are incidental be made, whether in terms of numbers per month or the scale of the fee paid? To allow up to 100 claims per year for each body shop across the country, for example, would permit a very substantial number of unregulated claims generating significant income outside the regulations.

If a garage or body shop is to be able to pass on referrals to solicitors for a fee, outside the regulatory system, that would undermine the whole principle of consumer protection enshrined in the Act. Body shops are often the first port of call for consumers following road accidents. Opportunities for disreputable practice in this market need to be addressed. It is not right that body shops should be free to refer claims for financial incentives while avoiding regulation to which others are subject. There is no justification whatever for incidental referrals for a fee, reward or gain to fall outside the scope of authorisation as regulated activities. Can the Minister guarantee that garages and body shops that pass on referrals for a fee, reward or gain will be covered by regulation?

Lord Carlile of Berriew
We on the Liberal Democrat Benches give a broad welcome to the regulations. They provide for additional consumer protection in an area that has long been the subject of abuse. Some years ago, a Granada Television programme that conducted a sting operation on doctors who were providing bogus medical reports to a claims farming organisation showed up an anomaly. The doctors were severely disciplined by the General Medical Council, but the claims farming agency was free from discipline and regulation. I hope that the orders will remedy that situation and provide increased consumer protection.

In relation to two points made by the noble Lord, Lord Kingsland, we support the dual approach to insurance brokers, because we are talking in these regulations about consumer-accessible structures, much more so than the rather more strategic exercise carried out by the Financial Services Authority. It is extremely important that consumers who feel aggrieved and may well have a justifiable complaint can go to a regulator who is readily accessible to them in a simple way. So far as the regulation of those who refer the claim is concerned, we could go on regulating and regulating and regulating backwards, but surely the point of the exercise is to regulate those who process the claim on behalf of the consumer.

The complexity of all these regulations tends to justify the observation of an old-fashioned lawyer such as myself, who used to appear in many personal injury actions, that probably the best way to process any kind of claim, whether for personal injury, compensation for damage to a motor car, criminal injuries or anything similar, is to find a solicitor who is prepared to do the job for you, even on a conditional fee arrangement—and do it in that way. It is self-evident that the simplest form of regulation is one-tier—and that is the case in respect of solicitors. It is currently being changed, but there is a reasonable expectation that it will work.

In relation to solicitors, a compensation scheme does not exist at this stage in the structures set out under these regulations. I hope that the Minister can confirm that the Government intend that there should be at least the kind of compensation scheme available to people who suffer damage at the hands of solicitors. In my professional capacity, I have handled a few cases in which solicitors had acted either criminally or negligently, so I can tell the Committee that in many cases compensation is provided at a reasonably early stage. I recall one case in my last days as a Member of another place where substantial compensation was provided when there had been dishonesty in the conduct of some conveyancing several years earlier.

I would like to raise a few other points. Under one of the regulations, it is countenanced that fees will be payable and regulation available when people make claims for statutory benefits to which they are entitled as of right and as a matter of law. Certainly it is right that there should be regulation if people are rewarded for making such claims on a consumer’s behalf. Would the Minister clarify the position of voluntary agencies such as citizens advice bureaux, because I have not been able to find the answer in my, albeit short, researches into these matters? If they carry out work of this kind, will they be subject to regulation and, if so, can that be justified as an extra tier of management for an already hard-pressed voluntary sector, bearing in mind that CABs will often advise people to go elsewhere if better services are available? However, sometimes it is difficult to find alternatives, particularly in rural areas.

We hope that fee levels can be regulated so that, when statutory benefits are being claimed, it will not be possible for a large percentage of the return to be creamed off by the referral agency. Criminal Injuries Compensation Authority claims can be large, but it does not provide significant compensation for the cost of obtaining the compensation itself. We hope that the Minister will confirm that in such claims, which are routinely handled by solicitors and others, it is intended that the fee levels should take into account the statutory entitlement to the money being obtained and that that should be reflected at a low fee level.

The Minister said that it was intended that persons providing a regulated claims management service must have professional indemnity insurance in due course, but we regret that it is not being introduced immediately. If it is to be introduced only in time to come, there will be a difference between the use of a solicitor and the use of a claims management service, to the detriment of the consumer.

Finally, we hope that the Secretary of State will be regulator for only a short period, albeit with a structure beneath him. Regulation of claims of this kind may involve substantial casework. The sooner it becomes a free-standing, independent body recognised as having the powers of other independent professional regulation bodies, the better it will be.

16:00:00

Lord Evans of Temple Guiting
I am most grateful to the noble Lords, Lord Kingsland and Lord Carlile of Berriew, for their consideration and questions on these three orders. I shall attempt to answer their points. First, the noble Lord, Lord Kingsland, asked about overlapping regulations, and why insurance brokers should be regulated again. When insurance brokers are providing a service regulated for the purposes of the Financial Services and Markets Act 2000, they will be exempt. However, providing services for a claim concerning an uninsured loss is not a regulated activity under the 2000 Act. Insurance brokers will therefore require authorisation.

I could not agree more that the same activity should not be regulated twice. However, that does not mean that in some cases a particular business will not need to be regulated by more than one regulator for different activities. We are working closely with the Financial Services Authority to ensure that the boundary issues that the noble Lord, Lord Kingsland, mentioned are appropriately dealt with.

The noble Lord also commented on introducers under Regulation 12(5)(c). The regulations will apply in limited circumstances, as set out in Article 12 of the exemption order. We will have an opportunity for a full debate on that early in the new year. A number of introducers are exempt. Many businesses refer a small number of cases either to solicitors or claims management businesses. It would be disproportionate for such businesses to be individually authorised. However, it is important that all businesses comply with the rules of conduct. The exempt introducer status has been introduced to deal with this situation.

The noble Lord, Lord Carlile of Berriew, asks why the Government do not insist on professional indemnity insurance at the outset. It was clear from responses to a consultation exercise during the summer that, although there is general support for authorised persons to have professional indemnity insurance cover, there are concerns about some businesses’ difficulty in obtaining cover at a reasonable cost in such a short timeframe. The Government intend to require authorised persons to have professional indemnity insurance, but want to ensure that the requirement is appropriately introduced and that there is sufficient market capacity to provide the relevant insurance. It has therefore been decided not to introduce a blanket requirement at the outset; we instead favour a phased approach. We are undertaking more detailed work on this to establish the exact nature and level of the insurance requirement, and how best it could be phased in during 2007-08.

The noble Lord, Lord Carlile, also asks about the citizens advice bureaux. I confirm that not-for-profit and charitable organisations providing claims advice will be exempt. Again, this will be debated in the new year with the exemption order.

The noble Lord also asks me to confirm that fees for criminal injuries and benefits claims will be prescribed. It is not intended that the regulator would prescribe or regulate fees which authorised persons may charge. However, authorised businesses will be required to operate transparently, including providing full information to consumers about the various charges and commissions paid when cases, insurance and loans are arranged in relation to consumers’ claims. Authorised persons must always act with honesty and integrity. This is a key principle of the conduct rules.

At the point of authorisation, the regulator will consider the applicant’s practice or proposed practice in relation to the provision of information about fees. There will be firm rules of conduct. If companies break these rules of conduct, the regulator will take action, which can include suspension or cancellation of authorisation.

The noble Lord, Lord Carlile, asked for confirmation of a compensation scheme in respect of solicitors. A compensation scheme is already available to persons making complaints about solicitors. This regulation is not intended to apply to solicitors, as they are regulated by the Law Society.

Lord Carlile of Berriew
I think that the Minister misunderstood my point and I am sure that it is my fault. I used the existence of the compensation scheme against solicitors as a justification for a similar scheme against people who come within the regulations. My question was whether it is intended that, in early course, a compensation fund should be established for clients of this group of professionals, just as there is a compensation scheme for clients of solicitors. I am afraid that that is what comes of reading someone else’s note.

Lord Evans of Temple Guiting
The noble Lord, Lord Carlile, will be delighted to hear that his question is answered in the next paragraph of my speaking notes. We have a power under the Compensation Act to set up a compensation scheme for claims and regulation. However, as we made clear during the passage of the Bill, it would not be possible to set this up at the outset. The Legal Services Bill regime will ensure adequate compensation arrangements for all regulated areas.

On Question, Motion agreed to.

Compensation (Specification of Benefits) Order 2006

Lord Evans of Temple Guiting
I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Compensation (Specification of Benefits) Order 2006. First Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Compensation (Regulated Claims Management Services) Order 2006

Lord Evans of Temple Guiting
I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Compensation (Regulated Claims Management Services) Order 2006. First Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Association of Law Costs Draftsmen Order 2006

16:08:00

Lord Evans of Temple Guiting
rose to move, That the Grand Committee do report to the House that it has considered the Association of Law Costs Draftsmen Order 2006. 36th Report from the Statutory Instruments Committee (Session 2005-06).

The noble Lord said: This order is presented under Section 29 and Part 1 of Schedule 4 to the Courts and Legal Services Act 1990. It will enable qualified Fellows of the Association of Law Costs Draftsmen to exercise limited rights of audience and rights to conduct litigation in England and Wales in connection with legal costs matters. A second order will be laid once this order has been made, extending the Legal Services Ombudsman’s jurisdiction to oversee complaints against costs draftsmen.

The Association of Law Costs Draftsmen is the professional association representing and regulating law costs draftsmen working in England and Wales. Law costs draftsmen work in a small, highly specialised field. They draw up and analyse bills relating to all aspects of legal costs included in solicitors’ bills for cases in all courts. These costs can include the solicitor’s fee, the court fees, barristers’ fees and expert and witness fees.

Preparation of such bills is highly specialised work and is almost always carried out by a costs draftsman rather than a solicitor. Solicitors usually prepare their own bills in only a minority of cases—for example, those straightforward cases where the costs will be paid entirely by the solicitors’ own client and the legal costs are relatively low. Some costs draftsmen are employed full time by solicitors. Others work in partnership, as directors or employees of law costs drafting firms, or as freelancers on a partnership or sole practitioner basis.

Depending on the circumstances of each case, the costs set out in solicitors’ bills, prepared by law costs draftsmen, relate to cases heard in civil, criminal or family courts and will be paid by either the solicitors’ client, the client’s opponent or public funds. Currently, costs draftsmen must seek the judge’s approval to appear at costs hearings on a case by case basis. Members of the public cannot currently instruct a costs draftsman direct. Instructions must be channelled via a solicitor, who will then be responsible for the costs draftsman’s conduct before the judge.

The Association of Law Costs Draftsmen seeks recognition as a body authorised to grant rights to its fellows to conduct litigation on behalf of clients in matters relating to legal costs, and to appear at legal costs hearings in all courts without having to seek the judge’s permission. It wants clients to be able to instruct costs draftsmen direct rather than only via a solicitor. It also wants costs draftsmen to be authorised and regulated by their own professional association in all aspects of their work as law costs draftsmen rather than being under the supervision of solicitors in respect of their conduct at court as at present.

The rights sought will allow the association to grant rights of audience and rights to conduct litigation to suitably qualified fellows in respect of the assessment of the amount of costs payable in all courts and all types of case. This includes family, civil and criminal cases in all courts. It will apply irrespective of who will ultimately pay the legal costs claimed in the solicitors’ bill being assessed. Admittedly, this order will lead to only a small number of law costs draftsmen being able to exercise these rights—some 500 over the next five to 10 years. But, from a competition point of view, it is important that they can do so.

Costs draftsmen will be able to act independently of solicitors in legal costs proceedings. This may simplify access to costs draftsmen’s services and will potentially cut costs by enabling consumers to have direct access to the expertise of costs draftsmen, rather than being obliged to instruct and pay for a solicitor as well. Consumers and costs draftsmen will also benefit from the fact that costs draftsmen will be authorised and regulated directly by their own professional body with its expert knowledge of the specialist area involved, rather than indirectly via solicitors, who are not generally experts in this area.

The Legal Services Ombudsman has been consulted and has confirmed that she is willing for her jurisdiction to be extended to cover complaints against law costs draftsmen. Because of the very small numbers involved, it is anticipated that her office will receive approximately one complaint per year.

These orders have passed through the required statutory approval procedure. In doing so, they have been considered and approved by the Legal Services Consultative Panel, the Office of Fair Trading and the senior judiciary and, as a result, have my full support. If this order is approved, it is anticipated that the Legal Services Bill will be amended to include the ALCD on the list of approved regulators. I now commend the order to the House. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Association of Law Costs Draftsmen Order 2006. 36th Report from the Statutory Instruments Committee (Session 2005-06).—(Lord Evans of Temple Guiting.)

Lord Carlile of Berriew
We on the Liberal Democrat Benches regard the Association of Law Cost Draftsmen as a respected body which has brought professional discipline to an area that at one time was relatively unregulated. We recognise that law cost draftsmen, particularly those who have been through the qualification provisions provided by this organisation, are often the most competent to conduct litigation, including advocacy in relation to costs. I confess the interest of having been a beneficiary and occasionally the victim of the work of law costs draftsmen, so I can give evidence of their efficacy. Appropriate scrutiny has occurred as provided in Schedule 4 to the Courts and Legal Services Act 1990. This is a step forward in providing competitive legal services.

On Question, Motion agreed to.

Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2006

16:15:00

Lord Evans of Temple Guiting
rose to move, That the Grand Committee do report to the House that it has considered the Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2006. First Report from the Statutory Instruments Committee.

The noble Lord said: These regulations make a number of minor technical but necessary changes to the Representation of the People (Combination of Polls) (England and Wales) Regulations 2004—the 2004 regulations. This is as a result of the changes introduced by the Electoral Administration Act 2006. When approved, these regulations will provide for the effective combination of a parliamentary election with another election or referendum.

These regulations revoke the provisions from the 2004 regulations that applied specifically to combined elections in June 2004 as they are no longer needed. They also revoke the prescribed form H from the 2004 regulations as a new form H—the postal voting statement to be used when there is joint issue and receipt of postal ballots—which has now been prescribed in the Representation of the People (England and Wales) Regulations 2001, as amended by the Representation of the People (England and Wales) (Amendment) (No.2) Regulations 2006. They provides for three further functions to be combined when there is joint issue and receipt of postal ballots, as a result of the changes introduced by the Electoral Administration Act 2006.

The returning officer in charge of the combined functions will also have responsibility for the creation of a corresponding number list prescribed under Rule 19A of the parliamentary elections rules; the creation of a marked postal voters list and proxy postal voters list under Rule 31A; and verification of personal identifiers on postal voting statements under Rule 45(1B)(d). It makes a number of modifications to the 2004 regulations to reflect changes made to the parliamentary elections rules by the Electoral Administration Act. It amends the form of directions for guidance of voters at combined polls to provide improved clarity for voters; removes the specific reference to European parliamentary elections from the form of declaration to be made by the companion of a voter with disabilities; and replaces the reference to “incapacity” with a reference to “disability” to reflect the change of terminology introduced by the Electoral Administration Act 2006.

The Government consulted the Electoral Commission on the draft of these regulations. The commission’s detailed response is available on its website. The Government have taken on board the commission’s comments in developing the draft. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Representation of the People (Combination of Polls) (England and Wales) (Amendment) Regulations 2006. First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

Baroness Hanham
I have very little to say about these regulations because they implement discussions that we had during the passage of the Electoral Administration Act. However, I would like to clarify two matters. I do not think the Minister mentioned the part of the regulations that relates to the abandonment of one of the two polls. Paragraphs 27A and 27B refer to the death of a candidate, but paragraph 27 refers to the abandonment of part of a poll. I want to be clear that that is right.

I am not clear where the regulations refer to the requirement for identifiers for postal votes. If there is more than one election, people are presumably expected to have postal votes for each of them, but I not sure where these regulations make clear where and by whom those identifiers—a signature and date of birth—have to be checked. Apart from that, I am happy with these regulations.

Lord Greaves
I apologise for missing much of the Minister’s speech. I was caught napping by the previous business happening rather quicker than forecast. Like the noble Baroness, we do not find anything to quibble about in these regulations. They are sensible and technical and carry through decisions that have been made about personal identifiers and other matters. We are looking forward to seeing how well the new security rules work.

These regulations repeal the rules that were made for the 2004 all-postal elections. We had some long debates on them. The debates were not bitter but were argumentative, and we marched through the lobbies a few times before the Government were able to hold those all-postal elections. We now seem to be in an era when all-postal elections have been abandoned. I hope that is the case, and it is welcome that the Government are nothing like as enthusiastic as they were about them.

I wish to make one or two detailed points, the first of which is on the issue of the ballot papers in a combined election. As I understand it, those of us who will not be allowed to have one type of ballot paper at a parliamentary election but can have a paper for a local election or referendum will be dealt with by having a strange squiggle or alternative mark put down on the corresponding number list and the marked register to show that we have had one type of ballot paper and not another. There are various categories like that. However, I presume that an elector who is entitled to two or three ballot papers at an election is entitled to refuse to accept one or more of them and to have simply the one he wants to vote on. Can the Minister tell us exactly what happens under those circumstances? The only time I have seen someone not want one, he ran out of the polling station, waving the ballot paper over his head and shouting a certain amount of abuse about it.

The last time we discussed this matter, under the Representation of the People (Amendment) Regulations, the Minister told us about the system for signing in the polling station. There will be a machine to prevent people seeing the signatures of other people, which might potentially breach the secrecy of the ballot. What progress has been made in designing that apparatus and are the Government in a position to tell us how it will work? Clearly, the people involved in elections will need to be able to tell electors what to expect.

As far as the return of postal votes is concerned—the regulations cover the situation in a combined election—there will be sample security checks of at least 20 per cent of them. Will that include checks being done throughout the period in which votes are coming back, or will a returning officer be able to fulfil their 20 per cent quota by, for example, taking the first 20 per cent that come in and not taking the late ones? There might well be problems of delaying the count if there are lots of late postal votes. Some people might see an opportunity there for getting round the regulations and getting round the security and not having particular postal votes checked by putting them all in late at the last minute. Will that be possible?

Finally, one thing I picked up from reading the regulations is that where there are pilots for electronic counts, the voters will be asked not to fold their ballot paper. Normally if you go to a polling station, you are asked to fold the ballot paper in two, so that when you put it into the box no one can see the top side of it and therefore they cannot see how you have voted. If you do not fold it, how do you get it into the ballot box without people being able to see how you voted? There seems to be a problem with secrecy there. With those detailed questions, I am happy to support the regulations.

Lord Evans of Temple Guiting
I am grateful to the two noble Lords for their comments on the regulations. I will answer the noble Baroness, Lady Hanham, first. She asked about what happens in the event of the abandonment of a poll. Where the poll at a parliamentary election is abandoned due to the death of a candidate, the regulations provide that the poll—at an election that is combined with that election; for example, a local government election—will continue. Secondly, do people have to have identifiers for both elections, and where and by whom are they checked? On the issue of receipt of postal ballots at a parliamentary election that is combined with another election, the returning officer for the parliamentary election will be responsible for checking identifiers. The noble Baroness asked about the marked postal voters list. The postal voters list will be marked when the postal voting statement has been received. The elector will be informed that it has been either received or provisionally rejected.

I have answers coming through on the detailed questions asked by the noble Lord, Lord Greaves. On postal voter identifiers, the answer is yes. That is nice and short. He also asked about pilots for electronic counts and voters being asked not to fold the ballot paper. That provision will be in a pilot order that is accurate, and an e-count result can be achieved. I think that the noble Lord asked a few more questions, and I will write to him if that is all right.

Lord Greaves
The Minister has been good enough to answer about folding the ballot paper. I understand the reason for that, which I assume is to make it easier for it to be counted electronically. The point I made is that, as I understand it, they will not be voting electronically, they will be voting in the normal way on a piece of paper, and those pieces of paper will then be counted electronically. If you do not fold your ballot paper, someone on one side or other of the person putting it in the ballot box will be able to see how you have voted. How will that be prevented?

Lord Evans of Temple Guiting
I am advised that the ballot papers will be placed face down unfolded in a ballot box designed for e-count. However, I have to tell the noble Lord, Lord Greaves, that his question has nothing to do with this order. We will write a full letter of explanation later.

Lord Greaves
I am grateful to the Minister. It is set out on page 5 in paragraph (28).

On Question, Motion agreed to.

Environmental Impact Assessment (Agriculture) (England) Regulations 2006

16:30:00

Baroness Byford
As the noble Lord, Lord Rooker, is not in the Committee Room, the Whip has suggested that we delay taking this business. I believe that the Minister is downstairs presenting awards to the British Poultry Council.

Lord McKenzie of Luton
I think that that is a sensible course of action. I do not know how long the Minister will be.

The Deputy Chairman of Committees
The Grand Committee stands adjourned for 20 minutes.

[The Sitting was suspended from 4.31 to 4.51 pm.]

Baroness Byford
rose to move, That the Grand Committee do report to the House that it has considered the Environmental Impact Assessment (Agriculture) (England) Regulations 2006 (SI 2006/2362). 46th Report from the Merits Committee (Session 2005-06).

The noble Baroness said: I am grateful to the Committee for having a temporary adjournment because it was enormously important that the Minister was presenting awards to the poultry industry. As that is where I started my trade, many years ago, as a poultry producer, I would certainly not have pulled the Minister off that particularly important job. I place on record, too, my thanks to the Minister for reconsidering the whole question of the IPCC charges because they are a real problem, on which I and many others have lobbied him.

Having started on a positive note, I am sorry to have to nitpick and raise certain questions. I suggest that we take these two sets of regulations together. Statutory Instrument 2006/2362 was made on 4 September, laid before Parliament on 7 September and came into force on 1 October. Statutory Instrument 2006/2522 was made on 13 September, when it was realised that there were errors in the first one, laid on 15 September and came into force on 30 September, but some remaining provisions came through on 10 October. Perhaps the Minister will tell us a little more on that matter.

My reasons for raising this issue in Committee are to seek clarification and assurance, and also to say, yet again, that the department is obviously not functioning as the Minister would like it to. To have to reproduce legislation so quickly after it has come into being seems undesirable, to say the least. How many copies of the original were made and how many were sold at £5.50? Consequently, how much money has been spent on reproducing the regulations? Presumably, there is a cost to the department which it covers.

With regard to Regulations 23 to 31, how much money does Natural England have in its budget to act as the enforcement authority? That is certainly not clear. Is the amount that it will cost Natural England to be taken out of the fees that it gets from the fines that may follow if people do not adhere to the regulations set? There is no clear definition of that. Also, does Natural England keep the fines or do they return to the revenue so that, in other words, they are lost?

Under Regulation 3.1, the Explanatory Memorandum for SI 2006/2522 states:

“The Department deeply regrets that it has had to break the 21-day rule”.
 

I can understand that it broke it because otherwise the other regulation would come into force. But Regulation 3.3 leaves us with a very sorry state of affairs. It states clearly:

“In order to correct a minor but persistent validation error in the S.I. template, a final draft of those Regulations was cut out and pasted into a fresh copy of the template. The new version validated correctly, but the cut-and-paste process had introduced an unexpected error into the instrument, mis-numbering all the paragraphs in Schedules 3 to 5. This was noticed after the instrument was made, and it was considered an error that was so obvious and minor that it could justifiably be corrected before the instrument was laid”.
 

The Explanatory Memorandum goes on to state:

“Unfortunately, the correction of that minor error introduced a surprising and yet more serious error into the instrument, with regulation 1 becoming regulation 2 … leading to consequential errors in the Regulations … Most regrettably of all, that further re-numbering error was not noticed until after the instrument had been laid and printed”,
 

That is not a happy state of affairs. Is that a lawyers’ or a printers’ error, because we have no knowledge of that?

The summary of the recommendations of the 46th Report from the Merits Committee of the 2005-06 Session states:

“These Regulations implement EU legislation on environmental impact assessment, and on habitats, by developing existing requirements for projects for the use of uncultivated land and semi-natural areas for intensive agricultural purposes. They also introduce new rules for projects for the restructuring of rural land holdings. The lack of clarity over the definition of restructuring projects in the Regulations means that there is a risk of accidental non-compliance (and thus commission of a criminal offence) by farmers and others”.
 

So it is not a light matter.

Further on, at paragraph 8, the Merits Committee states that Defra was,

“keen to choose a broad interpretation of the restructuring projects, particularly because the new rules being introduced under EU infraction pressure”.

Paragraph 9 goes on to state:

“The Department will also include details of new rules and guidance to all farmers on “cross-compliance” (planned for January 2007)”.
 

I would be grateful if the Minister could update us about where we are with that. However, in paragraph 10, the committee states:

“While we welcome DEFRA’s efforts to publicise the new rules, we are not persuaded that publicity will necessarily equate to understanding”.
 

Again, I would like to know how the Government have reacted to that.

In paragraph 11 the committee states:

“DEFRA have stressed that interpretation of the term “restructuring project” in the 2006 Regulations should be in line with the meaning of the relevant term in the EIA directive; and yet it is clear from the Department’s advice to this Committee that different Member States have interpreted this term in the EIA Directive differently. DEFRA have explained that Natural England, as the regulator with responsibility for screening decisions and consents, is ready to provide informal advice to farmers and land managers. However, it does not seem appropriate to us that uncertainties which should have been resolved in the Regulations themselves are left to be dealt with on an ad hoc basis through discussions between Natural England and individuals potentially affected”.
 

I seek a little more information from the Minister on that.

The committee states in conclusion in paragraph 12 that it is concerned that,

“the lack of clarity over the definition of restructuring projects means that there is a risk of accidental non-compliance (and thus the commission of a criminal offence) by farmers and others”.

I am sure that the Minister will agree that that is not a desirable state to be in, and that is why I have brought this issue to the attention of the Grand Committee. I shall wait to hear what other noble Lords and the Minister have to say and shall perhaps come back with further comments. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Environmental Impact Assessment (Agriculture) (England) Regulations 2006 (SI 2006/2362). 46th Report from the Merits Committee (Session 2005-06).—(Baroness Byford.)

17:00:00

Lord Greaves
I congratulate the noble Baroness, Lady Byford, on bringing this matter to the Grand Committee and thank her for it. It is a complicated set of regulations, which, quite apart from the administrative difficulties involved in getting them right, merit a certain degree of scrutiny. Far too many substantial and complex items of secondary legislation go though nowadays without being scrutinised, so it is good that we are able to scrutinise this one.

In general, this is a sensible transposition of some parts of the environmental impact assessment directive and the habitats directive. It is unfortunate that the computer programmes, be they Defra’s or those of the Stationery Office, could not get it right. The noble Baroness had her five minutes of fun going through the problems that have arisen and I do not want to repeat what she said.

Lord Rooker
Go on, make yourself.

Lord Greaves
Perhaps it is a good thing that I did not hear that. There are some substantive issues here which are worth looking at. As the noble Baroness said, the regulations re-enact and amend the regulations in relation to uncultivated land and introduce regulations, belatedly perhaps, in relation to restructuring projects on farms. The substantial matter raised by the Merits Committee, which the noble Baroness explained in detail, is the possible lack of clarity about the definition of restructuring projects. It also expressed concern about whether there will be sufficient publicity, and understanding on the part of farmers and land managers, about the requirements of the new regulations.

Defra states that Natural England will provide informal advice, but if one is looking for a clear definition of what something means in law, and it can clearly make a substantial difference to what a farmer or land manager is able to do with their land, informal advice is not entirely satisfactory. What will that advice be and who will decide it?

The regulatory functions in these matters have been transferred from the Rural Development Service in Defra to Natural England. As in all such cases, there is an interesting question of accountability. A lot of people will be monitoring this very carefully. The new arrangements may work, but, if they do not, no doubt we will all be discussing them again.

One or two specific questions arise from the regulations. The first relates to cross-compliance. The regulations relating to uncultivated land are already in the cross-compliance rules and appear again in, I believe, Rule 37. However, the restructuring regulations will not be in the cross-compliance rules. It is stated quite clearly that they will not be included. I do not understand why this is the case. Perhaps the Minister will explain it to my satisfaction.

The second question relates to publicity. My noble friend Lady Miller of Chilthorne Domer would no doubt raise it if she we here, because it relates to website publicity. Quite a few years ago, when we were talking about the CROW Bill, as it then was, whenever the Bill said that there had to be publicity in local newspapers and so on, my noble friend tabled amendments saying, “and on the departmental website”. The answer we always had then, and that we have had on a number of occasions since in different contexts, was “leave it to them, it will be okay”. We are now finding, and it is in these regulations as well, that the requirement to be on the website is being written into the law. We welcome that, because that how so many people communicate nowadays. Local newspapers are set out specifically, and websites should be set out specifically. We have an interesting situation here. Regulations 12 and 13 set out that applications for consent for significant projects, as they are called, should be in the local newspaper and on the website. Regulation 20, which covers where the decisions are announced, only specifies local newspapers,

“or by any other means it considers reasonable in the circumstances”.

So what we seem to have here is a halfway house where the websites are in one part of the regulations but not in the other. It would be helpful if there was consistency in these matters. We hope that, increasingly, legislation sets out that it does have to be on the website, because that is where nowadays a lot of people look first.

Finally, I hope that the regulations might be useful in the circumstances in parts of the uplands, including the Pennines, where I live, where there are sometimes serious threats to dry stone walls. People find that the income that they can get from hill farming is no longer worth the candle, but they can tear down and sell off the dry stone walls of natural stone for quite large amounts of money. There is a real danger that if hill farming declines significantly under the new regime—we all hope it will not but there is a possibility that it might—people will try to asset-strip those marginal farms on the edges of the moorlands in the upland areas, and the dry stone walls will be removed and sold off for astronomical prices to builders. I hope that the regulations might be useful in stopping that. Having said that, in general we support the regulations, and I look forward to hearing the answers to my questions and those asked by the noble Baroness, Lady Byford.

Lord Rooker
I will be happy to try to answer the points raised by the noble Baroness and the noble Lord. There is one minor technical glitch. Both the noble Baroness and the Deputy Chairman read out that the Committee will report that it has considered the Environmental Impact Assessment (Agriculture) (England) Regulations. Neither mentioned the Environmental Impact Assessment (Agriculture) (England) (No. 2) Regulations. I would hate to find that we have spent our time here and have to do it again.

Baroness Byford
I thought when I started that the two went together, so I was speaking to both of them.

Lord Rooker
Sorry, that is true, but the title of the second regulations has (No. 2) in it. That was not said by either the Deputy Chairman or the noble Baroness when they read it out. I do not want to be called back here again because the Committee failed to consider the regulations that we have been talking about.

The regulations implement parts of the environmental impact assessment directive, which is a very old directive that was introduced in 1985. There is a story to that, which I will repeat in a moment. The directive requires certain types of development projects that are likely to have significant effects on the environment to be subject to environmental impact assessments before they are allowed to proceed. The directive applies to more than 100 different types of project. In the UK, it is implemented mainly through environmental impact assessment rules relating to town and country planning. There are various EIA rules for projects not covered by the planning system, such as transport and forestry projects, and the two types of project to which the EIA agriculture rules apply.

The Environmental Impact Assessment Agriculture (England) Regulations came into force on 10 October 2006. They are a small but significant part of our effort to protect and enhance the rural environment, alongside much larger measures such as agri-environment schemes, SSSIs and cross compliance. The regulations do two things: they replace previous environmental impact assessment rules, which were introduced in 2001, applying to projects for the use of uncultivated land and semi-natural areas for intensive agricultural purposes and they introduce new rules applying to projects for the restructuring of rural land holdings.

We are legally obliged by the environmental impact assessment directive to have these rules, and we were required to introduce them by 1988. But UK transposition did not occur until 2001 for uncultivated land and 2006 for rural restructuring following infraction pressure. I do not want to be part of the blame culture, but there is a history to this. This has been done under infraction pressures, and the regulations have perhaps not ended up as they would have if they had been done properly when they were required to be done in 1988. We thought that they were delayed largely because the policy issues were already addressed by agri-environment schemes, hedgerows legislation and the SSSI rules.

In 2001, Defra introduced environmental impact assessment rules on uncultivated land. They gave a high degree of protection to uncultivated land and semi-natural areas, mainly by having no thresholds, which meant that all relevant projects needed permission before proceeding. Generally speaking, we have a good story to tell on the 2006 regulations—I do not want to over-egg the pudding, but this is a good Defra story for the farming community—which were developed with better regulation and Defra’s farming regulation strategy very much in mind.

The objectives in shaping the regulations were to deliver targeted environmental protection while minimising red tape and to avoid hindering our wider policy objectives. Poorly gauged rules could do more harm than good by deterring farmers from signing up to agri-environment schemes or deterring work that is beneficial to the environment. They might also restrict farmers’ ability to diversify their businesses and compete and have a negative effect on the rural land market. We are very keen to take away some of the hurdles that prevent farmers diversifying if we can. As the noble Baroness knows, I am having issues related to planning matters looked at at present.

We improved the uncultivated land rules by introducing clearer tests for when projects are caught and by introducing a modest two hectare threshold to give the rules a lighter touch, while still providing a fairly high level of protection for a valuable environmental resource. We estimate that the revised rules will place 20 to 40 per cent less burden on business than the rules they replace.

We introduced the rural restructuring rules under EC infraction pressure. In doing this, we have done all we can to achieve minimum implementation by applying the highest thresholds we reasonably can, given the infraction risk. We have also sought to avoid duplication of existing measures which tackle problematic restructuring, such as the hedgerows regulations and other environmental impact assessment rules applying to planning and forestry. The result is that we have new rules that guard against the possibility of major negative effects on the rural landscape, but will not catch farmers engaged in routine farming activities, which is not our purpose at all.

17:15:00

It may shock the noble Baroness that we have had a generally—I do not put it any higher than this—positive response from the National Farmers Union. The NFU website celebrates that it:

“Successfully lobbied government for the introduction of thresholds into the Environmental Impact Assessment (Agriculture) Regulations 2006. This will mean that fewer farmers should have to go through the EIA screening process unnecessarily”.

That is quite right. Congratulations on the lobbying that has gone on in the past. It is very important that we genuinely try to take account of the red tape issue.

I also want to address some of the issues relating to the Merits Committee. Briefly, the rules work by requiring that anyone wishing to carry out a project must apply to Natural England for a “screening decision”. If Natural England decides the project is likely to have a significant effect on the environment, the environmental impact assessment must be prepared by the applicant before Natural England makes a final consent decision. People who breach the rules may face cross-compliance deductions, prosecution, and/or have to take remedial action. The noble Lord, Lord Greaves, raised an issue about stone walls covered by cross compliance or possible deductions for removers over 10 metres. He painted a horrible scenario of what might happen in the uplands, which would not be in anyone’s interests.

The noble Baroness, Lady Byford, said that she had come to nitpick today—her words, not mine. I do not accuse the noble Baroness of that. I cannot answer all her questions about why the regulations were redone. Obviously, it is much to be regretted that a computer glitch confused the cross-referencing in the initial EIA regulations, so we had to replace them with a corrected set. The rules of a statutory instrument have to be produced compared to a computerised template, in effect, so that the format is the same. The glitch caused the automatic numbering to make an unbidden change at the last moment, which made all the cross-referencing incorrect. Unfortunately, we did not spot the error until a few days after the regulations had been laid. Statutory instruments cannot be amended. There is a case for this House to be able to do that, but I have not come here to do revolutionary reform today. Therefore, we had to lay the corrected version—hence, the No. 2 regulations.

We replaced them free of charge to those people who had paid for them. I do not know how many were distributed. If the noble Baroness pushes me I will seek to find out how many and at what cost. That would cause extra cost to the department, but she is entitled to the answers to the question. On the money for Natural England, 9.4 staff years are budgeted, but, by the way, the fines do not pay for the regulations, which would not be normally the case.

The Merits Committee has expressed concerns on the regulations. The main concerns were that the regulations failed to give a sufficiently clear definition of the term,

“projects for the restructuring of rural land holdings”

and, as a result, there was a risk of accidental non-compliance and commission of a criminal offence by farmers and others.

On the way we defined projects for the restructuring of rural land holdings, the committee’s concern is valid to the extent that we cannot guarantee that farmers will fail to comply accidentally, which is the case with many offences in many laws. To answer the Merits Committee’s concerns, we are bound by the environmental impact assessment directive introduced in 1985, which does not define what,

“projects for the restructuring of rural land holdings”

means. In transposing the legislation we decided to follow the common practice of simply using the same wording as the directive without further elaboration. This is done, for example, in environmental impact assessment rules on the planning system and forestry. It is also the norm in other EU countries—for example, Irish and Dutch environmental impact assessment rules take the same approach.

Although we have not resolved what is meant by,

“projects for the restructuring of rural land holdings”,

in our transposing legislation, we have done so in our implementation. For example, we have explained the term in the accompanying guidance. We feel it is reasonable to expect land managers to understand and apply this definition. We consulted the NFU on this, to ensure that the guidance was as user-friendly as possible, and the NFU approved it before it was issued. There may have been a transparency problem if we had set a low threshold, which is one reason we set high thresholds. It does not seem unreasonable to require a person to realise that planning work on the scale of removing or adding more than four kilometres of field boundaries is not a minor job—four kilometres of field boundaries is quite an exercise if one is out there doing it, and I have seen it being done. Nor is removing more than 10,000 tonnes—about 400 large lorry loads of earth or rock. These are substantial jobs by any stretch of the imagination. It is not like, “I’m nipping out to knock this job off in half a day, dear, and I’ll be back”.

The guidance gives details of a Natural England telephone helpline, and other contact details. If managers are in any doubt, they are advised to contact them. It is important to publicise the regulations, which we have done. I was almost tempted to say, “I have got all this written down, put together by my fine officials, who have explained all this, the background and why it is a good news story to me”. However, a front-page article in Defra’s October Farming Link newspaper, sent out to all farmers, set it out in clear, tabloid language—I do not say that in a derogatory way—which gets the meat across to anyone interested in half a dozen bullet points. At the end, there is the helpline, and email and website addresses. If farmers did nothing but read that, the new rules to protect the countryside and the issues I have raised about the four kilometres and 10,000 tonnes are mentioned there. Our press notice was picked up by the farming press as well, so it did not get buried or die a death. Both the NFU and CLA have issued guidance to members on their own websites, and we have published straightforward guidance on the Defra website.

The Merits Committee asked why we chose to make a criminal offence of breaching the restructuring rules. For the avoidance of doubt, we did this because we considered it an effective way of ensuring compliance and making the rules enforceable. It reduces the risk of placing the UK in breach of the directive, which would happen if unnotified and unpermitted projects had significant effects on the environment, and is in the interests of consistency and proportionality. A criminal offence existed in the 2001 regulations, and we plan to keep it for uncultivated land projects. So why would we consider it a criminal offence to fail to give screening permission for an uncultivated land project, but not a restructuring one? As I said, the restructuring must be quite large.

We do not expect many to undertake restructuring projects exceeding the high thresholds we have set. It is early days. After the first two months of the regulations, no screening applications have been received to undertake restructuring projects. We expect that trend to continue, because the high thresholds exclude routine land management activities which farmers are rightly doing all the while. That would be normal, whereas what I have outlined is on a large scale. Most restructuring over the threshold will be exempt, because it will already be covered by existing legislation: the environmental impact assessment rules applying to the planning system, forestry, land drainage and water resources, the hedgerow regulations and the Law of Property Act.

We have asked Natural England to implement the rules with a light touch. Frankly, I give all Defra’s agencies that advice: see the rules are followed, but do not go over the top. We do not want farmers, or people working on the land, metaphorically trapped by barbed wire and wrapped up in red tape. We are trying to release them from that where we can. People will suffer a criminal penalty only if they are prosecuted and convicted by a court, so it not an issue of being done by Defra officials. Any prosecution would of course have to satisfy the public interest test.

This is basically a good news story, subject to the unfortunate glitch. We are prone to using computers; if you press the wrong key or there is a problem with the program, these things happen. It was unfortunate that it was not spotted. I am not in the blame game; I just want to get on with it and see that they are operating effectively, but we regret this. On the recent difficulties, I say to the noble Baroness that this issue appeared nowhere in any of my lists of the cause of the technical adjustment to Defra’s budget this year. It has not been on the scale of other issues.

Finally, I am grateful to be able to answer the question of the noble Lord, Lord Greaves, on why rural restructuring is not covered by cross compliance. The short answer is that we were keen to avoid increasing the burden of cross compliance. The new rules are designed to have a light touch, so are intended to catch only a small number of projects, whereas cross compliance already covers some of the ground dealt with in the regulations. The benefits of extending cross compliance to cover rural restructuring projects were so small that it was not worth doing. I have no doubt I could give the noble Lord a longer answer, but I hope and imagine that he will be satisfied with that one.

Baroness Byford
I am grateful to the Minister for his full response. He said I was nit-picking, but it has given us an opportunity to debate something important and, obviously, regulations which we support. Perhaps I should keep a list of how many times the Minister has to apologise for things going wrong in his department, but we will let that one pass. I certainly never suggested, as he well knows, that it was a contributor to Defra’s funding issues. I totally accept that.

I am grateful that the Minister updated us on how Defra has gone about putting it on the newsletter, along with the two other organisations. When he hopes that Natural England will deal with it with a light touch—we have not had anybody apply, but let us say that it is a problem in future—can the Minister clarify further whether Natural England will be the last port of call, or will the farmer or land manager held to account have any redress, either through the department or Natural England? I am always uneasy about something that makes somebody guilty unless you can prove that they are innocent. Here we are again, doing just that.

Lord Rooker
On Natural England, there will be a method of appeal for the farmer to the Secretary of State. If it is a question of prosecution, that would of course be an issue for the courts.

Baroness Byford
I am grateful to the Minister for that, and to the noble Lord, Lord Greaves, for his questions. We obviously support the Minister’s drive to minimise red tape that so many farmers and land managers must go through and lessen the burdens on business. Both of us want British agriculture to succeed; there is no difference between us on that. I must say, however, that we will look carefully at all the statutory instruments that come through. If we feel that the Merits Committee has raised concerns, we shall take a view: some we raise with the Minister, and others we do not. This one, however, we felt that we should. Before I finally sit down, I again seek clarification on something I have raised.

The committee referred to different member states looking at this regulation in different ways. Is the Minister satisfied that it will in no way disadvantage UK producers or land managers, compared with others throughout the EU? I support flexibility to a certain extent, but I do not want to see flexibility disadvantaging UK producers and land managers.

17:30:00

Lord Rooker
That is the dilemma. I shall take advice and perhaps write to the noble Baroness on that, but if matters are left to member states things will be done slightly differently in each. On the other hand, if there is rigidity from Brussels, everyone will complain, “It doesn’t suit our local circumstances”. I said that we were following a similar pattern to, for example, Ireland and the Netherlands in the way that we used the lack of a definition in the regulations. We simply transposed the same words in the directive, because that was the legally safe way of doing it. But if there is a relevant issue relating to the treatment of the regulations by different European countries, I shall gladly write to the noble Baroness.

Baroness Byford
I am grateful for that. At the beginning of the debate I referred to the Minister’s presentation of the awards downstairs. One of the issues raised was the whole question of the IPPC charges. The Minister has recognised that there are difficulties on that for our producers and said he will go away and think about how we can ensure that we are not disadvantaging UK producers.

Lord Rooker
Perhaps I may save myself from writing a letter. In answer to the question of why UK regulations are tougher than those in other member states, the restructuring rules are a very light touch, given that we transposed them much later than other member states. One of our problems is that, from 1988, we in this country did nothing for nearly 15 years. That is probably the root cause of our problem, because we did that under infraction pressure and the European Court of Justice case law emphasised the need to interpret the directive broadly. Infractions are brought against member states that define the directive too narrowly, so the UK opted for a broad interpretation.

The uncultivated land and semi-natural area rules are tougher here than in most member states because we wanted to protect valuable areas that were not already protected by environmental designations following the major loss of uncultivated and semi-natural areas during the 20th century. We introduced thresholds to the rules in light of the reduced threat to uncultivated land and semi-natural areas following CAP reforms and the rapidly expanding agri-environment schemes. That is the reason. In some ways it goes back to what was done under infraction pressures after we did nothing from 1988 to 2001. Then we got caught and had to deal with it in that way.

Baroness Byford
I suspect that the responsibility is shared almost equally by his Government and mine and that it should have been done earlier. I thank the Minister for answering the many questions that we have put today.

On Question, Motion agreed to.

Environmental Impact Assessment (Agriculture) (England) (No. 2) Regulations 2006

Baroness Byford
I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Grand Committee do report to the House that it has considered the Environmental Impact Assessment (Agriculture) (England) (No. 2) Regulations 2006 (SI 2006/2522). 46th Report from the Merits Committee (Session 2005–06).—(Baroness Byford.)

On Question, Motion agreed to.

Personal Injuries (NHS Charges) (Amounts) Regulations 2006

17:33:00

Baroness Royall of Blaisdon
rose to move, That the Grand Committee do report to the House that it has considered the Personal Injuries (NHS Charges) (Amounts) Regulations 2006. 2nd Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.

The noble Baroness said: For 70 years, hospitals have had the right to recover the costs of treating people injured in road accidents where the victim has been paid injury compensation. The NHS costs are borne by the compensator, rather than by the accident victim or the hospital. The principle is that those responsible for causing injury to others should pay the full cost of their actions or negligence, including the cost of treating the victim’s injuries. Under the existing Road Traffic (NHS Charges) Act 1999, the costs are recovered centrally and then paid back directly to the NHS trusts that provided the treatment.

The road traffic Act scheme has so far paid some £300 million to hospitals in Britain for them to reinvest in front-line patient care. The Health and Social Care (Community Health and Standards) Act 2003 took the powers to extent recovery of NHS costs to cases involving personal injury compensation generally. It does not seem logical that the successful road traffic Act scheme should be restricted to motor accidents. Therefore, it will not be restricted to motor accidents when the new scheme comes into force early in the new year.

When a person receives compensation for an injury, the costs of any NHS hospital treatment and ambulances in connection with the injury will be recoverable from whoever has paid the compensation. The income raised from the new injury cost recovery scheme will be paid straight back to the hospitals that provided the treatment. Those hospitals will be free to use the money to improve patient services as they see fit. In that way, we hope to recover an additional £150 million to be reinvested in front-line patient care.

These regulations make provision concerning the amounts of NHS charges to be recovered under the injury costs recovery scheme from people who pay compensation in cases where an injured person receives NHS hospital treatment or ambulance services. As well as setting the tariffs for outpatient and inpatient treatment, the provision of NHS ambulance services and the maximum amount to be recovered in relation to any one injury, these regulations also set out how the injury costs recovery scheme is to deal with a range of circumstances in which the amounts to be recovered may need to be adjusted.

These regulations are made using for the first time powers under section 153(2) of the Health and Social Care (Community Health and Standards) Act 2003. The Act requires the first regulations made under these powers to be subject to the affirmative resolution procedure. The Act also requires the Secretary of State to consult the National Assembly for Wales before making regulations under Part 3 of the 2003 Act. As these regulations are made under Part 3, consultation has taken place. The noble Lord, Lord Warner, has made the following statement regarding Human Rights:

“In my view the provisions of the Personal Injuries (NHS Charges) (Amounts) Regulations 2006 are compatible with the Convention rights”.
 

Part 3 of the Health and Social Care (Community Health and Standards) Act 2003 makes provision for the establishment of a scheme to recover the costs of providing treatment to an injured person where that person has made a successful personal injury compensation claim against a third party. The injury costs recovery scheme builds on the existing scheme introduced by the Road Traffic (NHS Charges) Act 1999—the RTA scheme—which allows costs to be recovered in road traffic accident cases only. The new injury costs recovery scheme will come into force on 29 January 2007.

The injury costs recovery scheme will be administered by the Department for Work and Pension’s Compensation Recovery Unit—CRU—on behalf of the Secretary of State for Health. The CRU has operated the current RTA scheme since 1999, and has extensive links with, for example, solicitors and insurers. The person found liable to any extent in respect of the injury will also be liable to pay the relevant NHS charges in respect of NHS hospital treatment and ambulance services, in so far as provided. Compensators will have a legal obligation to inform the CRU of any claim for personal injury compensation.

Under the existing RTA scheme the amounts to be recovered are set using a simple tariff system. The tariff consists of a single one-off payment where hospital treatment is provided without admission, currently £505, or a daily rate, currently £620, for each day or part day of admission to hospital, excluding the day of discharge. There is also a statutory ceiling on how much can be recovered in relation to treatment of injuries resulting from any one incident—currently £37,100, or roughly 60 days’ in-patient treatment. These amounts have been migrated to the injury costs recovery scheme, with the addition of a new element to cover the cost of any ambulance journeys that may be required. This has been set at £159. Regulation 2 of these regulations sets out the amounts of NHS charges payable.

The tariff system means, of course, that frequently the amounts recovered do not match exactly the costs of providing treatment in any specific case. The tariffs represent average treatment costs; all these amounts have been established by calculating the average cost of treatment for injuries typically suffered in accidents and, for ambulance journeys, the average costs of providing ambulance services. These amounts are not intended to provide exact reimbursement.

Under the RTA scheme the tariffs are uprated annually on 1 April in line with NHS inflation. The increase is calculated using an average amount based on the three most recent years for which figures are known. The intention is to retain the annual uprating exercise but the tariff will not be uprated on 1 April 2007, given that the scheme will only recently have been introduced.

These regulations also set out how the ICR scheme is to deal with a range of circumstances where the amounts to be recovered may need to be adjusted. For example, the regulations make provision for where more than one person is liable to pay the NHS charges in respect of the same injury. Regulation 5 provides for the liability to pay the charges to be apportioned by the Secretary of State between two or more compensators. Naturally, there has to be adjustment for cross-border cases. Regulation 6 covers the adjustment of a certificate of NHS charges where the Secretary of State and Scottish Ministers both issue certificates. This could apply, for example, when an injured person has received treatment in both a hospital in England and a hospital in Scotland. 

If the amount specified in the certificates when aggregated exceeds the maximum amount—currently £37,100—the Secretary of State may adjust any amount specified in the certificate issued by her. Regulations 7 to 10 make provision for the repayment of overpayments of charges and the recovery of underpayment of charges, including provision requiring the Secretary of State to send out statements showing the amount of overpayment or underpayment and the action required. If, as a result of a redetermination, adjustment, review or repeal, it appears that the amount of NHS charges paid by any person is more than the amount that ought to have been paid, the Secretary of State will either pay the difference to the person who paid the NHS charges, or instruct the trust or body to pay the difference to the person who paid the NHS charges.

Where the Secretary of State pays the difference, she will instruct the relevant NHS body to pay the difference to her or deduct it from future payments to that NHS body. If it appears that the amount of NHS charges paid by any person is less than the amount that ought to have been paid, the person who paid the relevant NHS charges will pay the difference to the Secretary of State, who will then pay that difference to the relevant NHS body. Where an underpayment or overpayment occurs, the Secretary of State will send a statement to the person paying NHS charges and the relevant NHS body, setting out the details, including details of the revised amount of NHS charges.

In summary, these regulations extend the scheme that allows the NHS to recoup the cost of treating the victims of road traffic accidents to include all cases where an injured person has made a successful claim for personal injury compensation. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Personal Injuries (NHS Charges) (Amounts) Regulations 2006. 2nd Report from the Statutory Instruments Committee and 2nd Report from the Merits Committee.—(Baroness Royall of Blaisdon.)

Earl Howe
I thank the Minister for introducing the regulations. The regulations look routine and rather dull, but they are not. They are the latest manifestation of the Government’s push to levy indirect taxes on the public through the medium of higher insurance premiums and, in so doing, effectively to introduce new charges for NHS treatment, which they have consistently denied that they would ever do. They have done so twice, as the Minister explained. Provision was made in the Health and Social Care (Community Health and Standards) Act 2003 for NHS hospitals to receive reimbursement for the cost of treating those people who have suffered a personal injury and have been compensated under an insurance policy. That measure represented an extension of the scheme introduced by the Road Traffic (NHS Charges) Act 1999, under which all hospitals treating victims of road accidents would be reimbursed by motor insurers for the cost of doing so. 

It has taken some time for the Government to lay regulations to implement the extended scheme. The reason was apparently the concern expressed during the consultation exercise about whether the employers’ liability compulsory insurance market was sufficiently robust to cope with the additional demands to be made on it. The Government undertook not to put the scheme in place until they had carried out a study of the ELCI market. The study was published in late 2003, and it recommended that the new injury cost recovery scheme be postponed for a year.

A year later, there was another public consultation, which again excited concerns about the fragility of the ELCI market. Therefore, the first issue on which I should appreciate reassurance from the Minister is whether her department is absolutely satisfied that the ELCI market is now stable and strong enough to sustain the impact of the new ICR scheme. If it is so satisfied, I should be grateful to know the grounds on which it has reached that conclusion. What sums of money do the Government believe that the NHS will recover from the scheme once it is fully operational, if one excludes the amounts to be collected from motor insurers under the existing scheme? What will be the costs of collection?

At present, claims against motor insurers are collected on behalf of NHS trusts by the Compensation Recovery Unit in the Department for Work and Pensions. Can the Minister confirm that the CRU will also be charged with the work entailed by this order? I believe that she said that that was the case. If I am correct about that, can she tell me why the contract has not been put out to competitive tender? Why have the Government not sought to achieve best value? If they believe that the CRU represents best value, how do they know?

I ask those questions somewhat pointedly because when the Road Traffic (NHS Charges) Act was brought into force in 1999, no competitive tendering was done then either, despite the fact that the Government had previously issued 12 guiding principles for market testing and contracting out. They stated:

“The choice of the means to deliver best value for money, should be based on a robust assessment of the options in each set of circumstances ... Departments should regularly and systematically review what services they provide and how they are delivered to ensure better quality services at optimal cost”.
 

Are those guiding principles still applicable today? If so, can the Minister confirm that a review of the performance of the CRU has been carried out and that Ministers have concluded, on the basis of an objective assessment, that the in-house route offers best value for money?

The Government’s conduct in 1999 was particularly reprehensible. For a number of years, the National Road Traffic Accident Claims Centre, NARTRACC, a company run by Mr Frank Adlam, had been collecting fees from motor insurers for the cost of treating victims of road traffic accidents in NHS hospitals under Section 157 of the Road Traffic Act 1988. NARTRACC was engaged by 132 hospitals in the UK to undertake that work and was extremely successful in doing so. In 1996, and again after the election in 1997, Mr Adlam approached the Government to propose that the reimbursement scheme should be rolled out nationally and, through his Member of Parliament, passed extensive amounts of advice to the Department of Health on how that might be achieved to the best advantage of the NHS.

The Government decided to legislate. The legislation passed in 1999 put NARTRACC out of business without a penny of compensation. Its entire workforce was made redundant. Mr Adlam received not so much as a thank you from Ministers who, from that point on, refused to see him. Had NARTRACC lost out after a competitive tender, that would have been one thing, but no tender for the work was ever issued. The collection work was placed in-house. That decision by Mr Frank Dobson, the then Secretary of State, has never satisfactorily been explained.

NARTRACC submitted an indicative quote to the Department of Health which showed that it would be able to collect fees at a much lower cost than the CRU. It was ignored. Mr Adlam has asked for sight of the background papers supplied to the Chancellor of the Exchequer when he made his Budget announcement in 1997 about the national roll-out of NHS charges. He was told, almost unbelievably, that no such papers existed. He has asked the Department of Health for sight of policy advice submitted to Mr Dobson when the decision was made not to market test. The department has refused to release the papers on grounds of cost. When Mr Adlam offered to pay the additional cost, he was told that that was not allowed.

Considering that government legislation brought Mr Adlam’s legitimate business to an end, it would not have taken much to provide him with some measure of compensation, in accordance with the spirit of the European Convention on Human Rights. Fur farmers were put out of business by government legislation at very much the same time and provision was made to compensate them. Mr Adlam, whose company provided a public service to the NHS, was kicked out into the cold.

The whole story of NARTRACC has been one of obstructive and, frankly, less than honourable conduct by the Department of Health and, not to put too fine a point on it, mean and shabby behaviour by Ministers. Having followed the saga for the best part of eight years, I will take some persuading that what we see being rolled out in this order represents best value for money for the taxpayer or a well thought through means of achieving the Government’s policy objectives.

The amounts of money collected by the CRU have consistently fallen short of predictions—well short. When the CRU began to implement its responsibilities under 1999 Act, the operation was little short of chaotic. To be sure, it is more efficient now, but I am not sure how much more. In 1999, there was a huge backlog of cases to be followed up. All indications that I have—and I would welcome confirmation or correction—suggest that the bulk of those cases were never pursued. The financial loss to the NHS by reason of that failure by the CRU would have been significant. The scale of the workload entailed by the order will be considerable. The CRU estimated that in 2004-05, more than 77,000 claims were made against employers and that there were nearly 87,000 public liability claims. Doubtless, not all of them involved hospital treatment, but a great many will have done. If the CRU is now to undertake the collection of fees from personal injury cases, I hope that a very close watch will be kept on its efficiency and effectiveness, including cost effectiveness.

I hope that the Minister will be able to furnish me with some satisfactory replies on all these matters, if not today, then in writing. I am, of course, very willing to talk to her further.

Baroness Neuberger
I am very grateful to the Minister for introducing the regulations. I am afraid that I had not heard the story of NARTRACC that the noble Earl, Lord Howe, has just raised. I add my concern to his. If the story is as he has described it, and I imagine that it is, we need some kind of public explanation of why that should have been the case and why someone who, if you like, helped the Government to sort out how the compensation scheme should work should not have either been thanked or compensated.

I will now go back to what I was originally going to say. In principle, the regulations are good. The Merits of Statutory Instruments Committee commented on the fact that two government departments have worked side by side and hand in hand and the silo mentality, unusually, seems to have been in abeyance. We would all celebrate that, and I am delighted by it. It is relatively unusual, and it is great. That is the first thing. There are some issues that need to be addressed. Before that, I seek one clarification. In the report by the Merits of Statutory Instruments Committee, there is the conclusion that it would lead to roughly a 2 per cent all round premium increase for insurance. The Government’s Explanatory Notes, assuming we are going for option 3 rather than option 2, state that the increase will be 1.5 per cent. It would be helpful, given that there is an issue about the cost, to know whether the increase in insurance claims is 1.5 per cent or 2 per cent. I would be very glad to hear that straightforward clarification.

I have two areas of concern, one of which the noble Earl, Lord Howe, has already raised. The concern is whether the employers’ liability compulsory insurance market can cope. Given the number of delays in the introduction of this because of the doubt as to whether that market could cope, what is the evidence that suggests that it can cope now? Why is it okay now, when there was a deliberately delay of a year because clearly there were worries about it? It would be good to see what the evidence might be and to hear from the Minister on that.

In addition, there is the question of whether the CRU itself—irrespective of whether it should have been put out to tender—can cope with what is clearly going to be vastly increased amounts of business. Given the considerable delays in it at the moment, will it be able to tackle what seems to be a vastly increased role? If it will be dealing with all personal injury claims, which is what the regulations seem to suggest, there is a specific question in relation to cases where individuals who are not insured become liable and the extent to which the CRU is genuinely going to pursue them for these payments for the National Health Service. Or should those costs be borne by the public purse? There is a public policy question in relation to cases where the costs will not be picked up by insurers.

My second issue of concern is rather different, and I want some kind of explanation. We are told that there will be indicative tariffs instead of compensation reflecting the actual cost of treatment. Those tariffs look reasonable and a new one is being introduced for ambulance costs of £159 per journey. I have done only a little private research on this, but it looks to me as if that figure is on the low side. How did the department reach that indicative cost? I am not entirely sure that I am convinced by indicative costs. Perhaps we should still look at compensation for the actual cost of the journey to the hospital. I imagine that the explanation is that it is simpler to do it by a tariff scheme, but I would still like to hear how the calculation was done, how the averages were arrived at and whether there will be a differential between different areas of the country. We know that the costs are very different; London and the south-east is considerably more expensive than the north-east and the north-west. This tariff scheme bears close examination.

However, apart from those concerns and the serious concern raised by the noble Earl, Lord Howe, I am delighted by the regulations.

Baroness Royall of Blaisdon
I am grateful to the noble Earl, Lord Howe, and the noble Baroness, Lady Neuberger, for their comments and general support, if not enthusiasm.

In relation to the comments from the Merits Committee, I, too, very much welcome the fact that the silo mentality seems to have disappeared and that the Merits Committee noted that. Both noble Lords understandably raised the issue of the employers’ liability compulsory insurance market. The Department of Health and the Department for Work and Pensions have been liaising closely on the introduction of the injury costs recovery scheme and the ELCI market. The Government, as the noble Earl pointed out, agreed to delay the introduction of the scheme until a study had been carried out. The final report was published in December 2003 and recommended that the implementation of the scheme be delayed for a further year.

A further consultation at the end of 2004 raised further concerns about the planned timing for introducing the ICR scheme, as the ELCI market was still considered to be fragile. However, after further discussions with the Department for Work and Pensions, which was developing a programme of work to implement the recommendations of the earlier study, Ministers agreed to a further postponement of the scheme’s implementation until October of this year, to enable the programme of work to bed in. That has now happened and information from the Association of British Insurers is that increases in premiums in 2004 are, on average, between 15 per cent and 20 per cent, compared with between 30 per cent and 50 per cent in 2003. We estimate that the impact of the introduction of the scheme will be to increase premiums by 1.5 per cent, rather than the 2 per cent mentioned by the noble Baroness, and that estimate has been confirmed by the Association of British Insurers. To recap, we have been working closely with ELCI, and it is confident that the scheme will not be an undue burden and can be implemented.

18:00:00

The noble Earl, Lord Howe, implied that this is a stealth tax. It is not a stealth tax; rather it removes from the general taxpayer the burden of meeting some of the costs of treatment of the victims of other people’s negligence and places the burden on the wrongdoer. Why should the man or woman in the street have to pay for the medical treatment of someone injured at work because their employer failed to take adequate steps to protect them?

The Department of Health currently pays the compensation recovery unit £2.2 million for administering the road traffic scheme. Under the expanded scheme, it is estimated that the CRU will be handling significantly more claims. Running costs, including staff costs, are expected to be only slightly higher—around £2.4 million—than for the road traffic recovery scheme.

I noted the concern expressed about the Compensation Recovery Unit, and I assure noble Lords that the implementation of the income contingent repayment scheme will be carefully monitored from the outset. Its success in terms of achieving policy objectives will be reviewed by the Department of Health not less than two years after implementation. It is likely to be at least that long, possibly longer, before the scheme is fully embedded so that its success can reasonably be assessed.

We believe that the CRU offers the best value for money in recovering central government moneys from compensators. It has a proven track record, electronic communications with all NHS trusts and, increasingly, with compensators. As part of central government, it has tight financial and information security requirements. There are no plans to put that work out for tender. I should add that the CRU’s IT system is very good. Quite astonishingly for a government department, it recently received a prize for its technological output and the service it gives to those using it.

I note the deep concern expressed by the noble Earl and the noble Baroness about NARTRACC. I do not have any details that I can give the noble Earl today, but shall write to him at the earliest opportunity and will copy the letter to the noble Baroness.

A question was asked about how we calculate the charges. We have used a simple tariff based on the average costs of people needing treatment for traumatic injuries, as with the existing scheme. The flat-rate charge for treatment without admission will include an amount towards the cost of any repeat attendances. A single one-off payment where hospital treatment is provided without admission will be £505. The daily rate for treatment with admission also includes an element towards follow-up appointments. Ambulance costs will be levied on a one-off payment per journey basis. I note the comments of the noble Baroness about the £159, but that is an average cost for traumatic injuries, not for all ambulance injuries. We are using a tariff rather than calculating each treatment, because it makes the scheme simpler and more economical to run.

Will householders have to pay if someone is injured on their premises? Any person who pays compensation to an individual, including private citizens, will become liable for repaying any associated NHS hospital and ambulance costs. However, if the person does not or cannot pay compensation, the NHS costs cannot be recovered. Many householders may find that they have some public liability insurance cover as it is often included in home buildings and contents insurance polices.

I think I have dealt with most of the questions raised, apart from that on NARTRACC, which I will write to the noble Earl about. If I have missed anything, or there is anything further noble Lords would like, I shall try to respond. If not, I will respond in writing.

Baroness Neuberger
I would like to test the tendering issue a little further. In a climate where patient choice requires a considerable amount of tendering of health services, not to tender this scheme seems a little eccentric. At the not-less-than-two-year point at which the regulations are looked at again, perhaps the Minister could look into the possibility of this work being tendered. It is appropriate that it should be.

Earl Howe
I endorse that comment. The Minister said that it was the belief of her department that the CRU offered best value for money in delivering the services that it does, but it did not seem from what she said that that belief was based on any hard evidence, because her department simply had not tested any alternatives. She said that there were no plans to put the work out to tender, but if the rules which were published in 1997 by the Chancellor of the Duchy of Lancaster still apply, I am not quite sure why that decision was taken. I would be grateful if the Minister came back to me and the noble Baroness on that issue.

Baroness Royall of Blaisdon
I shall certainly do so. Within the two-year envelope of time, when the review is taking place, there may be an opportunity to look at those issues, but I shall write to noble Lords in the mean time. I thank noble Lords for their support, and I commend the regulations to the Committee.

On Question, Motion agreed to.

Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006

18:07:00

Lord Evans of Temple Guiting
rose to move, That the Grand Committee do report to the House that it has considered the Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006. First Report from the Statutory Instruments Committee.

The noble Lord said: I thank the Committee for agreeing to take together these two orders being made under Scotland Act powers. This is well-established practice and continues to make the best use of parliamentary time.

The two orders are made under different sections of the Scotland Act. The order concerning animal health is made under Section 104, which allows for necessary or expedient changes in consequence of an Act of the Scottish Parliament.

The order relating to the transfer of functions—in this instance, functions concerning the Healthy Start scheme and recent climate change legislation—is made using the powers in Section 63 of the Scotland Act. The power is commonly referred to as an executive devolution order and allows for the transfer to Scottish Ministers of functions that they can then exercise in or as regards Scotland.

I hope that it will be helpful to Committee members to give a brief explanation of both orders. The Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006 is made in consequence of the Animal Health and Welfare (Scotland) Act 2006, which received Royal Assent on 11 July and is an Act of the Scottish Parliament. The 2006 Act introduces in Scotland a duty of care for all those who are responsible for animals to ensure that their welfare needs are met.

The power of courts to disqualify a person who has been convicted of an animal welfare offence from certain activities such as owning or keeping animals, which was previously contained in the Protection of Animals (Amendment) Act 1954, is retained and strengthened in the 2006 Act. By “strengthened”, I mean that the 1954 legislation contained powers that could be used to disqualify people “for having custody of” any animal. The 2006 Act widens the scope of disqualification to catch owning, keeping, arranging to keep, dealing in or controlling animals, whether directly or indirectly.

The specific purpose of the order is to maintain reciprocal arrangements on the enforcement of disqualification orders made by the Scottish courts in England and Wales. As was the case with disqualification orders made under the 1954 Act, the order also ensures that a person subject to a Scottish disqualification order made under the 2006 Act is unable to obtain a licence in England and Wales to keep an animal boarding, riding or dog-breeding establishment. That is consistent with the Animal Welfare Act, which was also given Royal Assent this year. It contains provisions—agreed to by the Scottish Parliament in December 2005—allowing recognition in Scotland of disqualification orders made by a court in England or Wales; effectively the mirror image of the order we are discussing today.

The Government and Scottish Executive believe that there should be co-operation to ensure that there is no scope for the exploitation of gaps between the animal welfare regimes north and south of the border. Both Administrations support the maintenance of the established principle of reciprocal recognition of court orders. This ensures that those convicted of serious cruelty to animals, and consequently disqualified from keeping animals in one jurisdiction, cannot escape the effect of that disqualification simply by crossing the border into another jurisdiction.

The second order before us is the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) (No.3) Order 2006. It allows for the transfer to Scottish Ministers of functions in two distinct policy areas. First, the Healthy Start scheme is the replacement for the current Welfare Food Scheme, introduced in Britain to combat food shortages during the Second World War. Latterly, the scheme offered milk and infant formula to low income families. Following a Department of Health review of that scheme, Section 13 of the Social Security Act 1988 was substituted by the Health and Social Care (Community Health and Standards) Act 2003, among other things to enable the Welfare Food Scheme to be replaced by Healthy Start.

The new scheme offers vouchers that can be exchanged for milk, fresh fruit and vegetables, and infant formula to pregnant women and children under the age of four in certain low income families. The vouchers can be used in a wide range of participating shops and pharmacies. Under the Welfare Food Scheme, tokens could only be exchanged for milk and infant formula, but the new scheme offers much more flexibility and choice.

Although, like the Welfare Food Scheme, Healthy Start is primarily based upon social security benefits, and is therefore reserved, the range of foods and matters relevant to the NHS link closely to devolved health policy. The draft order therefore transfers to Scottish Ministers the functions of prescribing the description of foods to be made available under Healthy Start in Scotland in the future and issuing directions to the health boards that will be administering parts of the scheme in Scotland.

The Scottish Ministers will deal directly with reimbursement in relation to Healthy Start vitamins. As with the Welfare Food Scheme, the intention is that contractors for the Department of Health will carry out day-to-day reimbursement functions for Healthy Start food. When dealing with reimbursement of suppliers and beneficiaries in Scotland, the Department of Health will be acting as an agent of the Scottish Ministers. This arrangement will enable the Scottish Ministers to take advantage of economies of scale and will be made possible by a further order under Section 93 of the Scotland Act. It will be made at the same time as this order. It will be subject to the negative resolution procedure and will go before the UK and Scottish Parliaments.

18:15:00

The draft order before us today also provides for the transfer to Scottish Ministers of payment and reimbursement functions in relation to Healthy Start food vouchers and Healthy Start vitamins provided to beneficiaries in Scotland. These functions are similar to those currently carried out by Scottish Ministers in terms of Welfare Food scheme reimbursement.

The second order transfers to Scottish Ministers functions in Sections 32, 32A and 32B of the Electricity Act 1989 as amended by Sections 23 and 24 of the Climate Change and Sustainable Energy Act 2006. The sections of the 1989 Act were previously executively devolved to Scottish Ministers and relate to functions allowing for the delivery of renewables obligations (Scotland), or ROS. The ROS is a key driver in increasing renewable generating capacity in Scotland. It works by imposing an obligation on licensed electricity suppliers in Scotland to provide an increasing proportion of the electricity that they supply from qualifying renewable sources, essentially sources of energy other than nuclear or fossil fuels, such as wind, wave power, solar and biomass.

As I mentioned, Sections 32, 32A and 32B of the 1989 Act have been amended by the Climate Change and Sustainable Energy Act 2006. These amendments make it easier for small/micro renewable generators to benefit from the support available under the ROS and its UK counterparts. The order therefore transfers the relevant amended functions to Scottish Ministers. It also transfers functions that will enable such generators to appoint agents to act on their behalf, greatly reducing the administrative burden that some small generators may experience.

Finally, the order transfers functions that will enable generators who generate and consume their own electricity to qualify for renewable obligation certificates without having first to sell their electricity to and then purchase it back from an electricity supplier. I hope that noble Lords will agree that both orders are a sensible use of the powers in the Scotland Act and that their very practical impact is something to be welcomed. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Animal Health and Welfare (Scotland) Act 2006 (Consequential Provisions) (England and Wales) Order 2006. First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

The Duke of Montrose
I thank the Minister for having laid out these matters so extensively. We have not always agreed to take all the Scottish orders at the same time, because we generally get quite a pot-pourri of issues and sometimes one can couple them together and sometimes that seems a little more difficult. I declare an interest as I rear livestock in Scotland.

Having sat through some of the discussion of statutes this afternoon and having noted the trials that have beset Defra in trying to transpose legislation from one printed source to another, we must congratulate the officials this time around. They have managed to pick up parts of the Animal Welfare Acts from Scotland and England, include them in this order and change all the numbers and, as far as I can see, they have done so in a perfect and accurate manner. I sometime wonder whether someone would like to run a competition between the departments on legislative drafting to see which can make the most perfect legislation. In this case, the Scotland Office is coming out ahead.

We are pleased at any moves to clarify or strengthen the powers that are needed to deal with an outbreak of infectious animal diseases. It is in everyone’s interest that someone who is proven guilty of the deliberate infection of animals, which is mentioned in the Explanatory Notes, should be subject to a disqualification. As the Minister mentioned, the duty of care towards animals in the Act in Scotland is parallel to that which was envisaged by the Animal Welfare Act 2006. The main question that still arises, and which must be of concern to the Government and the rest of us, is whether to ban in Scotland the docking of certified working puppies’ tails. The proposal has been withdrawn in Scotland and is now out for consultation. One can envisage that being an issue. Would the owner of a dog which has been certified and docked in England, who takes up residence with his dog in Scotland, which had a ban, be subject to a disqualification order? If this were so, would the order be upheld if the owner then returned to England? There are great possibilities for a new economic trade in what we might term “docking tourism”.

Clause 44 of the 2006 Act contained powers to subject those disqualified in England and Wales to the same sanctions if they removed themselves to Scotland. As the Minister pointed out, this measure provides for an equivalent power to operate in the other direction. Perhaps the Minister might be able to clear up an anomaly. If one breaches the disqualification order in England, one is liable to imprisonment for 52 weeks or a fine not exceeding level 5. If one then goes to Scotland and commits a breach there, one will be liable to only 26 weeks’ imprisonment and a level 5 fine. However, if one is disqualified in Scotland and commits a breach in England, one is liable under Article 3(3) of this order to only 13 weeks’ imprisonment or a level 5 fine. It cannot be that the Scots are always more ready to pay the fine, but there must be some reason behind it.

I express my interest in the transfer of functions order as someone who hopes to gain some benefit from renewable energy generation. The Healthy Start scheme seems to be entirely to be recommended. The rest of the order follows on from a great deal of legislation which gives Scotland greater autonomy over renewable electricity generation, be it on shore, off shore, on the hills, under the ground and other possible variations, and in which most Members of the Committee have been involved.

The Explanatory Note states that the three previous SIs in relation to the Electricity Act 1989, which amend Sections 32, 32A and 32B, have now been amended by the Climate Change and Sustainable Energy Act 2006. Could not these changes have been allowed to read across into the Scottish legislation, without us having to pass a separate instrument? Better still, could not this instrument have been drafted in such a way as to do away with earlier instruments and consolidate their powers into one, thereby simplifying the legislation? Will the Minister also explain whether the second statutory instrument which is mentioned in the Explanatory Memorandum—that is, SI 2000/3252—is that which is being modified in Article 3(3) of the order and described in note (f) as SI 2000/3253?

Lord Teverson
I, too, thank the Minister for his explanation of the legislation. On the animal welfare order, we as Liberal Democrats are keen to make sure that the Scottish Executive and the Scottish Parliament are able fully to use the powers that they should have in devolved areas.

It clearly makes sense to be able to ensure—this is the core of the proposal—that those who are disqualified in one part of the United Kingdom are disqualified also from farming or other trades involving animals. We greatly welcome that. I also understand that herds or animals which have been moved can still be seized and put into care by order of a court. Again, that seems reasonable. The alternative would seem bizarre, with extradition orders for animals or even using a European arrest warrant to bring animals back and ensure that they are cared for. Clearly, the order makes sense.

It is now some two months since the Scottish Act came into force on 6 October. Have there been any cases where people with disqualified orders have moved across borders and not been prosecuted? On the other order, I am sure my noble friend Lord Steel will have more to say.

To come back to power generation, it clearly makes sense for the greater authority in Scotland to move forward here as well. This seems to have happened through the passing of our own legislation, the Climate Change and Sustainable Energy Act 2006, which seems to have stopped what should be happening from happening. Can we have assurances that the Climate Change Bill, which will be introduced to Parliament in this Session, will not reverse what the Government are trying to with this order?

On the welfare food regulations, we entirely welcome the fact that the Scottish Executive have greater powers. In England and Wales, primary care trusts will ensure that children covered by the scheme are receiving nutrient benefits under it. Do the Executive have the power to give health boards similar responsibilities? It was clear when the Government introduced its Healthy Start scheme that the foods it covered would be under constant review. If a review takes place in England and Wales, will the Government expect the Executive to apply the findings to Scotland? Will they be shared, or will this be a completely autonomous matter for the Scottish Executive?

Lord Steel of Aikwood
I shall make a few remarks about the second of these orders, the transfer of functions to Scottish Ministers. I assume that the answer to my noble friend’s question is that, yes, food matters would be devolved to the Scottish Ministers. That is the whole point of the order.

I want to say a few words because those with long memories will recall that, during the passage of the Scotland Act through both Houses, it was said many times by Donald Dewar, myself and others that devolution was not an event, it was a process. These orders, particularly the second, are proof of that: this is a furtherance of the whole process of bringing government as near to the people as is sensible.

At the time, we were promised that, after 10 years or so, there would be a review of the workings of the Scotland Act. That means that the review will take place during the next Scottish Parliament, the election of which is due in April—not far away. That election being due is causing a flurry of opinion polls and speculation as to what the composition of the next Parliament will be. I would appeal for a moment of calm because I recall—the noble Duke, the Duke of Montrose, will also recall, no doubt—that in 1998 we had similar opinion polls predicting that there would be a great surge for the Scottish National Party. I remember the SNP campaigning in 1993 under the slogan “Free by ‘93”. Doubtless, it will have a new one saying, “In heaven by 2007”. But there is no need for an absurd reaction to these things.

18:30:00

Recently, the Home Secretary, for whom I have a high regard, seemed to have taken leave of his senses in arguing that separation would make life easier for al-Qaeda in Scotland. This is an absurdity. There are far better arguments to combat separatism, one of which centres on the social security system to which this order relates. I recently chaired a commission to  look at possible ways in which we might transfer taxation powers to the Scottish Parliament. On one thing we were certain: the complexity of the social security system is such that it makes sense to retain it as a United Kingdom function and that to try to dismantle or separate it would be extremely expensive and complex. This order is a practical measure devolving to Scottish Ministers those parts of the social security system which can sensibly be devolved, particularly the Healthy Start scheme, which is a hybrid. It is a health matter as well as a social security matter and its operation is sensibly left north of the Border to Scottish Ministers. I welcome this order as a demonstration of devolution, of the Scotland Act working effectively and I thank the Minister for introducing it.

Lord Evans of Temple Guiting
I thank the noble Lord, Lord Steel, for supporting these orders. As he said, devolution is a process and not an event. Orders were always anticipated as part of the sensible management of Scotland’s devolution settlement and the provisions in the Scotland Act recognised this. I am most grateful to the noble Lord for his support and interesting comments. I hope to answer all the questions that I have been asked. If I miss any, I will write.

I am also grateful to the noble Duke, the Duke of Montrose, for the care and attention that he has obviously given to the order. He asked about the banning of docking tails of puppies and whether an owner moving from England to Scotland would be banned. At the moment, I believe that the answer is “no”, but I understand that the Scottish Executive are considering this. I will provide clarity in writing once the consideration has finished, if it would be helpful, as I am sure that it would. The noble Duke asked about the climate change elements of the Section 63 order. This will do away with and will replace the previous executive devolution order. He also asked why the penalties are lower for Scotland than for England. The Scotland Act requires them to be lower. The power to make orders under Section 104 of the Scotland Act only allows imprisonment of up to three months on summary conviction or a fine not exceeding level 5.

The noble Lord, Lord Teverson, asked whether there have been any cases of people with disqualification orders moving to England between the passing of the Scotland Act and this order. The Scottish Executive have advised that no one with this problem has moved from Scotland to England. The noble Lord also asked: if a review takes place of foods covered, will a review also take place in Scotland? The power to specify the foods covered will be a matter for Scottish Ministers, but we would expect co-operation between the UK Government and the Scottish Ministers. I again thank Members of the Committee for their comments on these orders.

On Question, Motion agreed to.

Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) (No. 3) Order 2006

Lord Evans of Temple Guiting
I beg to move the Motion standing in my name on the Order Paper.

Moved, That the Grand Committee do report to the House that it has considered the Scotland Act 1998 (Transfer of Functions to the Scottish Ministers etc.) (No. 3) Order 2006. First Report from the Statutory Instruments Committee.—(Lord Evans of Temple Guiting.)

The Committee adjourned at 6.35 pm.