Lords Chamber

House of Lords

Monday, 4 December 2006.

The House met at half-past two: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Chelmsford.

Schools: Head Teacher Vacancies

Baroness Perry of Southwark
asked Her Majesty’s Government:

Whether, in view of the number of vacancies for the post of head teacher, particularly in primary schools, they will take urgent action to encourage more well qualified applicants for these posts.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis)
My Lords, since 1997 head teacher vacancies have remained low and fairly stable—under 1 per cent in primary and secondary in January 2006, which is lower than in January 1998. The National College for School Leadership, which was set up in 2000 and has an annual grant of £79 million, has head teacher training and recruitment at the heart of its mission. We have commissioned an in-depth study of school leadership from PricewaterhouseCoopers. This work will help to ensure that we have sufficient high-quality head teachers in future.

Baroness Perry of Southwark
My Lords, I thank the Minister for that reply, although he seemed very satisfied with the circumstance of more than 1,000 schools having no leadership from a head because the vacancy cannot be filled. Will he accept that his Government’s policies—both the overweening bureaucracy, which the National Union of Teachers reckons gives secondary heads a 65-hour week, and the culture of blame and shame—partly contribute to this state of affairs?

Lord Adonis
My Lords, I have no idea where the noble Baroness gets her figure of 1,000. The latest statistics as of January 2006 show that there are 180 vacancies for full-time head teachers in local authority-maintained schools in England, which represents 0.8 per cent of head teachers in post. I do not agree with her statistics. With regard to the morale of head teachers, all the evidence is that the overwhelming majority of head teachers are very glad to be in their posts and relish the challenges that they face. For example, Dr John Dunford, who is the general secretary of the Association of School and College Leaders, said recently:

“Headship remains an extremely rewarding profession, as demonstrated by the ASCL survey which shows that 85% of secondary heads would reapply for their own jobs”.
 

I do not recognise a picture of low morale at all.

Lord Anderson of Swansea
My Lords, does my noble friend agree that the problem is not essentially financial, although there are particular problems in areas of high-cost housing, but rather one of social support? Will he encourage local authorities to have joined-up thinking and to bring together all the relevant social agencies in support of heads, particularly those dealing with families and children?

Lord Adonis
My Lords, I welcome my noble friend’s remarks. He is absolutely right about the need for joined-up thinking, which is precisely why we have created children’s services departments that bring together education and children’s social services. On recruitment, we are well aware of the importance of financial incentives, which he mentioned at the beginning, specifically in respect of London. That is why I am glad to say that, since 1997, the top of the head teacher pay scale has increased by 35 per cent in real terms from £56,600 to £93,300, with nearly £100,000 available for leaders of the most challenging secondary schools in some parts of London. We have recognised the importance of rewarding head teachers properly, which has been made possible thanks to the 50 per cent real-terms increase in education funding that has taken place since 1997.

Baroness Walmsley
My Lords, is the Minister aware of the 2006 Teachers’ Workload Survey published in October, which shows that head teachers work two and a half hours more per week than they did a year ago? Will the Government therefore learn from the success of many job-sharing initiatives in schools for teachers and deputy heads, and take away any barriers to head teachers doing the same thing—sharing their many varied responsibilities with another senior colleague? I am not just talking about delegation.

Lord Adonis
My Lords, the noble Baroness makes a valuable point on the need for workforce reform and more flexible working for head teachers and school leaders, not just school staff. I agree with what she said. The practice is increasing in local authorities, but I am sure that we can do more to encourage it, and we will seek to do so.

Baroness Trumpington
My Lords, is the Minister aware that the figure given by my noble friend Lady Perry was produced by the Association of School and College Leaders? Is he saying that it has it all wrong?

Lord Adonis
My Lords, I will explore these figures later, but the ones that I gave are from the national census of head teacher vacancies—figures gathered by my department. As I say, they show 180 vacancies for full-time head teachers in local authority-maintained schools in England as of this January.

Baroness Warnock
My Lords, following what the Minister encouragingly said about flexibility, does he agree that part of what deters teachers from becoming heads is that most of them enjoy teaching, especially in primary schools, and their contact with the classroom? Could local authorities be encouraged to make more flexible contracts for our head teachers, so that they could have three or four, or even two, hours a week teaching and keeping in touch with the children?

Lord Adonis
My Lords, as the noble Baroness will be aware, heads continue teaching in many primary schools, particularly smaller ones. They see this as a vital part of their mission. We do not want to stand in the way of the continuation of those arrangements, which are a matter for local discretion. However, there is more scope for developments such as the appointment of executive heads who span more than once school. That may be a particularly appropriate response for smaller primary schools, which could allow more senior school leaders to continue in the classroom and not take on administrative burdens. There is also the issue of the expansion in the number of bursars serving both primary and secondary schools. Our experience of bursar development—and the National College for School Leadership now has a well judged bursar training scheme—is that it relieves administrative burdens from heads, enabling them to spend more time in the classroom.

Lord Brooke of Sutton Mandeville
My Lords, what are the prospects of a rise in the number and proportion of males entering the teaching profession?

Lord Adonis
My Lords, I am glad to say that, in recruitment to teaching, applications are rising among both men and women. We are at the moment doing a good job of attracting more men into the profession.

Baroness Howe of Idlicote
My Lords, given the importance, on which I think we all agree, of head teachers having the opportunity to teach, is there also a case for attracting people to a second career from other areas where management and leadership have been of considerable importance, in view of the really large businesses that are emerging as a result of the Government’s planning?

Lord Adonis
Absolutely, my Lords. That is why, for example, the National College for School Leadership is pioneering a future leaders programme, one of the aims of which is to recruit talented leaders from other professions with a dedicated training course, so that they can take positions in school leadership. This is particularly attractive to those who started out in teaching and have some educational experience, but went off into other careers and are now looking to train to come back into teaching. Early evidence on this kind of course is promising.

Iraq: Basra Attack

14:43:00

Lord Astor of Hever
asked Her Majesty’s Government:

What is their response to the fatal attack on a British Armed Forces patrol boat near Basra on 12 November.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Drayson)
My Lords, I would first like to offer my sympathy and condolences to the families, friends and colleagues of those who were killed and injured in the attack of 12 November.  My thoughts are with them. A service police investigation is being carried out, and a review of operating procedures has been completed in theatre.

Lord Astor of Hever
My Lords, we on these Benches also offer our condolences to the friends and family of the servicemen killed. If our troops are to be moved by boat, it is vital that this waterway is secure. Are the Government really satisfied that we can rely for the safety of our troops on the Iraqi Coastal Defence Force once it takes over full responsibility, as envisaged, for the security of this waterway? Can the Minister tell the House what progress has been made on the Government’s pledge to retrieve the patrol boats and the kit taken by the Iranians on the same waterway two years ago?

Lord Drayson
My Lords, we continue to press for the return of the patrol boats taken by Iran. We have not received them as yet. As for the progress made by the Iraqi security forces, we expect to see the development of their ability to patrol areas such as the waterway. However, our prime responsibility is to ensure the protection of our own troops and we do everything we can by reviewing tactics, procedures and equipment to ensure that that happens.

Lord Garden
My Lords, from these Benches we add our condolences to the families of those who were killed in this tragic event, pursuing as they were the strategy that we have heard so often from the Minister. Yet we now know that, just six days before this tragic event, Donald Rumsfeld was sitting in his office in the Pentagon penning a memo entitled “Iraq—Illustrative New Courses of Action”, or, as the tabloid writers would say, his “cut-and-run” memo. Were the British Government consulted on any of the 21 proposals for a change of strategy in that memo, and, in particular, do the Government agree with the extraordinary proposal that there should be no more reconstruction assistance to those parts of Iraq that still suffer from violence?

Lord Drayson
My Lords, I have read the news reports about the existence of this memo but I have not seen it myself and am not really in a position to comment on its contents or our engagement—or otherwise—in it. If I can provide the House with any further information on it, I will write to the noble Lord.

As the noble Lord said, I have outlined our strategy to the House a number of times. Our strategy is clear and remains the same: to support the Iraqi Government and the progress of that country; and to assist the development of Iraq’s own security forces to the point where we can hand over to them, and allow them to take responsibility for, the security of their country. We have seen in certain provinces real success in achieving that, though without doubt we have significant concerns about those provinces where violence is at an appalling level, such as in Baghdad. However, we see that the strategy is working in those provinces and we expect to be able to hand over further provinces in the southern area in the coming months.

Lord Corbett of Castle Vale
My Lords, the Minister mentioned that we have persisted in our requests to the Iranians to return the patrol boats and the equipment that they seized two years ago. Can he tell the House whether the Iranians have agreed in principle to return the boats or whether we are still waiting for them to say one way or the other? Can he say anything about reports that Iranian-made equipment was used to sink that patrol boat just a few weeks ago in the same waterway?

Lord Drayson
My Lords, we have made progress in that the Iranians have allowed an expert team from the United Kingdom to download data from the GPS devices that were on the boats, which has enabled us to establish to the satisfaction, if I may say so, of an unbiased observer that they were not in Iranian waters but in Iraqi waters. However, the data do not demonstrate that unequivocally. As for the nature of the explosion and the device used in the attack on the waterway, we do not think it wise for us to go into our knowledge and the detail of such an attack.

Viscount Waverley
My Lords, did the Minister watch the “Panorama” programme last night? If he did so, what was his reaction? Does he agree that disengagement seems a mighty long time off?

Lord Drayson
No, my Lords, I did not see the “Panorama” programme last night. Therefore I cannot comment on it. As for disengagement, we have a strategy where we can see progress in a number of provinces. We have set out our expectations, but they will be realised only if conditions on the ground support such a handover. We need to see how those conditions develop.

Schools: Reading Initiative

14:48:00

Baroness Sharp of Guildford
asked Her Majesty’s Government:

Whether the results of the 2005–06 evaluation of the Every Child a Reader initiative are yet available; and whether extra support is now being given to primary schools to help pupils catch up before the transition to secondary school.

The Parliamentary Under-Secretary of State, Department for Education and Skills (Lord Adonis)
My Lords, a largely positive assessment of the first year of the Every Child a Reader initiative was published on 7 November, and a copy has been placed in the Library of the House. The Government have provided the Every Child a Reader project with £4.55 million on top of the substantial additional resources available for literacy support through rising school budgets and the primary literacy strategy.

Baroness Sharp of Guildford
My Lords, I thank the Minister for that reply. However, I remind him that for the past two years key stage 2 results for children at the end of primary school have not met government targets. Does he agree that the Every Child a Reader initiative, in which children aged six who are not readers are targeted and can catch up by as much as 21 months in as little as four to five months, is one worth backing and that the Government should put long-term money into?

Lord Adonis
My Lords, as I indicated, we have been backing it with £4.5 million, in partnership with others making £10 million for that initiative. We are looking at the results with great care. We have a spending review coming up and in that we will look at whether it is possible to take further work forward in that area. The noble Baroness is absolutely right: too few 11 year-olds are still not up to standard in reading. They start to fall behind in the very earliest days of primary school; they can largely be identified at the age of six; and they need intensive support. However, I add that if we got the teaching of reading better across all primary schools from the moment that children start in them, which is what we are seeking to do with greater attention to synthetic phonics, fewer would fall behind by the age of six in the first place.

Baroness Morris of Bolton
My Lords, what is being done to address the problem of the 4 million adults in the UK who still do not have the literacy skills expected of an 11 year-old? Given that many of those people will be parents, how can they read to their children—probably the most important one-to-one relationship—if they cannot read themselves?

Lord Adonis
My Lords, we are making a very big investment in adult basic skills to meet precisely the urgent concern that the noble Baroness has rightly highlighted. That has produced a very significant decrease in the number of adults without literacy skills. Those courses in basic literacy are available free of charge to parents, many of them provided by further education colleges in partnership with schools, so it is possible to provide literacy support for the parents directly alongside support for the children.

Baroness Finlay of Llandaff
My Lords, have the Government evaluated the benefit to communication skills of children in primary school learning a second language and the effect of those increased communication skills on their ability then to learn to read?

Lord Adonis
My Lords, I am not aware of a specific evaluation that links the two—that links learning of a second language with learning of the first language—but, as the noble Baroness will be aware, it is our policy to make teaching of second languages universally available in primary schools. We have significantly increased the proportion of primary schools where a second language is now being taught and, as she will be aware, our policy is that by 2012 that should be an entitlement in all primary schools across England.

Baroness Walmsley
My Lords, does the Minister agree that children should have an appropriate level of verbal communication before they can be expected to deal with systematic phonics? Does he therefore agree it should be the teacher who decides what kind of teaching to use to teach children to read in the very early stages, rather than restricting teachers to a very limited range of commercial phonics packages?

Lord Adonis
My Lords, we are not talking only about commercial phonics packages. The advice issued by my department in the primary national strategies has intensive support. For example, the Playing with Sounds handbook is available free of charge to all schools. The noble Baroness is right to say that, ultimately, it must be down to the professional judgment of the teacher, but teachers look to us for advice and guidance. We give strong advice and guidance based on best practice in the teaching of reading. Advice that we have received from Ofsted and other experts in the field points strongly to the relevance and importance of synthetic phonics as the first and fast way to teach children to read.

Lord Ramsbotham
My Lords, some three weeks ago, we discussed the question of speech and language therapists in relation to getting young offenders prepared and ready for education. It was declared that they have a tremendous role in getting hold of children at the age of five and preparing them for education. We were told that responsibility for funding those people rested with primary care trusts. Who is responsible for funding the provision of speech and language therapists for children in school before they enter education and at the basic stages of primary school?

Lord Adonis
My Lords, speech and language services themselves are the responsibility of primary care trusts. They are a health service. Of course, a lot of professionals associated with the teaching of speech and language will in fact be part of the education service and will be located in schools.

Baroness Sharples
My Lords, what proportion of children have English as their second language?

Lord Adonis
My Lords, I do not have that precise proportion to hand, but I will write to the noble Baroness.

Baroness Howe of Idlicote
My Lords, was the Minister as impressed as I was by the really quite significant improvement in the children least able to read, as a result of the personal input of the Reading Recovery teachers? Not only that, which was impressive enough, but their employment had a much wider effect on the abilities of other children to progress in other literary areas. What lesson does that point to for the future deployment of skilled teachers?

Lord Adonis
My Lords, we believe that the early results of the Every Child a Reader programme are promising, in precisely the way that the noble Baroness set out. The track record of Reading Recovery is strong, with about 80 per cent of children who complete the programme achieving national targets a year later. The early results of the latest pilot programme that we are taking forward show an average gain of 21 months in the reading age over four to five months of teaching. However, it is a very expensive programme—it costs about £2,500 per child—and we have to weigh up the gain with the expense in terms of the other sources of funding and support available to schools directly.

Lord Avebury
My Lords, my question is further to that asked by the noble Lord, Lord Ramsbotham. If a very high proportion of youngsters coming into the young offender institutions are suffering from speech, language and communications difficulties, does that not indicate that the schools are falling down on the job and that they really need to reinforce the number of speech and language therapists whom they employ?

Lord Adonis
My Lords, it certainly indicates that schools are falling down on the job. That has been a big historic problem with our school system; far too many children, particularly the sorts of children going on into young offender institutions whom the noble Lord mentioned, are not being properly taught in schools. I completely agree; but it is not simply the responsibility of the speech and language services to put that right. It is a basic function of every primary school in the country that its teachers should be effective at teaching children to read. If we get that right, we do not need these remedial and catch-up services later on in the system.

Baroness Sharp of Guildford
My Lords, does the Minister not agree that it is well worth spending £2,000 on a six year-old if you are not going to have to spend £60,000 on him when he is 16 and in a young offender institution?

Lord Adonis
My Lords, I believe that could well be the case.

Lord Laidlaw
My Lords, at a secondary school with which I am associated, no less than 40 per cent of the children entering the school read inadequately and have to have foundation classes. I am told by the primary school teachers that this is because they have insufficient teachers in year 6. Will more funding be available for primary schools to increase the number of teachers or teaching assistants for year-6 reading adequacy?

Lord Adonis
My Lords, the budgets of primary schools are rising steadily year on year. There is a national average increase of about 5 per cent in real terms in primary school budgets this year so, for the most part, the issue is not a shortage of resource for primary schools but the deployment of teachers. It is particularly vital to see that they have the properly trained teachers at the right level in the school. I do not believe that any primary school can legitimately say that an absence of resource is the reason why they teach inadequately in year 6.

Climate Change: Developing Countries

14:58:00

Baroness Rawlings
asked Her Majesty’s Government:

What percentage of projects funded by the Department for International Development address climate change concerns in developing countries.

The Lord President of the Council (Baroness Amos)
My Lords, the Government are committed to helping developing countries address climate change, as described in the 2006 DfID White Paper. Climate change concerns are by nature cross-sectoral and vary from country to country. We have no single statistic that reflects how our support addresses these concerns. However, we have committed more than £100 million over five years from 2005 specifically to improve climate research, to support low-carbon development and to integrate adaptation into development activities.

Baroness Rawlings
My Lords, I thank the Lord President of the Council for that Answer. The displacement of people by climate-related migration has been identified as a factor in violent incidents between previously peaceful neighbouring tribes or groups in Africa, and many of the world’s poorest people are the most vulnerable to increasingly frequent natural disasters brought about by climate change. What steps are Her Majesty’s Government taking to help developing nations to set up prediction and response units that are mainstreamed, inter-sectoral and national planning processes, as suggested by Sir Gordon Conway?

Baroness Amos
My Lords, the noble Baroness is right about the increase in conflict across the world as the result of arguments over resources, in particular water. We are committed to allocating 10 per cent of the funding provided in response to each natural disaster to prepare for and mitigate the impact of future disasters, including those related to climate change. The noble Baroness will know that, in addition, an element of the work we do on agriculture, infrastructure development and so forth, looks at sustainability, environmental and climate-change activity.

Baroness Whitaker
My Lords, does my noble friend agree that one of the problems is that developing countries themselves can create greenhouse gas emissions, and indeed in some cases demand the right to do so? What can DfID do to help deter that?

Baroness Amos
My Lords, we can do a number of things. We can help in research and by demonstrating that tackling climate change does not necessarily mean that economic growth and competitiveness will lessen. In addition, we are mainstreaming climate into development activities in climate-sensitive sectors such as agriculture, water, health, infrastructure and energy to help developing countries adopt low carbon energy.

Lord Lawson of Blaby
My Lords, does not the Minister agree that concern with development aid expressed on all sides of the House is based on a sense that those who are worse off should be helped by those who are better off? Is she aware that the projections of economic growth set out in the Stern review, on which projections of carbon dioxide emissions and therefore warming are based, imply that in 100 years’ time people in the developed world will be between three and six times better off than they are today—even after the highest conjectured damage from climate change? Further, under the highest conjectured damage from climate change suggested in the Stern review, people in the developing world will be between 11 and 60 times better off. Does she not feel that to ask people of this generation throughout the world to make significant sacrifices in order possibly to assist people who will be substantially better off than they are is not self-evidently sensible or even equitable?

Baroness Amos
My Lords, I do not agree because this is an issue of global concern and one for future generations; it concerns the future of our children and grandchildren. We have to tackle this issue now. The Stern review makes the economics of climate change, and the economics of doing nothing, absolutely clear.

Lord Roberts of Llandudno
My Lords, do the Government have any proposals to advise or assist the developing nations so that they will not repeat the mistakes made by the developed world? For instance, the United States is responsible for 19.8 tonnes per capita of global CO2 emissions every year, which compares with an annual 0.6 tonnes per capita of global emissions produced by Uganda. There is a massive amount of advice and assistance that would be useful to them. I am going to suggest that we are our brother’s keeper in this because climate change does not respect borders.

Baroness Amos
My Lords, I can assure the noble Lord that we have a number of projects which will help in this respect. We are working to increase support for low-carbon development through the energy investment frameworks of the multilateral development banks. We are the lead donor supporting the ClimDev Africa programme to help Africa improve climate change information. We have committed £24 million for research into addressing climate change in development in Africa, and in addition we have committed a total of £20 million to United Nations special funds to help developing countries adapt to climate change.

The Lord Bishop of Chelmsford
My Lords, if I may put my Christian Aid hat on for a moment, does the noble Baroness accept that the message from the developing world is that the issue lies in the developed world, not in the developing world? This is therefore an issue for the whole of our society and for every post in the Cabinet, not just for DfID. Does she further accept  that there are therefore issues for us in terms of our lifestyle, and that Advent might be a good point in the season of the year to begin that task?

Baroness Amos
My Lords, as to the right reverend Prelate’s last point, I am sure that he will guide us on that. I absolutely agree that this issue needs to be managed across Whitehall. That is why there is a cross-Whitehall working group which supports the work of all Ministers. Yes, the message from the developing world is that this is an issue for the developed world, but our view is that it is for all of us. We have to look at our responsibilities and at what we are doing, both individually and as a country, and we have to support efforts in the developing world to ensure that it has a sustainable economic growth which takes account of climate change and environmental sustainability.

The Earl of Sandwich
My Lords, will the noble Baroness press officials in her department not to lecture developing countries on climate change? Such countries are nearest to the coal face and have to deal with it every day. We should support them in their initiatives.

Baroness Amos
My Lords, we see this as a partnership. It is not for us to lecture; it is for us to work together on these issues for the sake of future generations.

Business

15:05:00

Lord Grocott
My Lords, with the permission of the House, my noble friend Lady Amos will repeat a Statement later today on the future of the UK nuclear deterrent. The Statement will be taken during the Second Reading of the Consumers, Estate Agents and Redress Bill after the speech by the noble Baroness, Lady Oppenheim-Barnes.

Business of the House: Sub Judice

The Lord Speaker (Baroness Hayman)
My Lords, with the leave of the House, I wish to make a Statement on the sub judice rule in respect of the death of Mr Litvinenko. As noble Lords will be aware, I have the responsibility of exercising a general power of waiver of the sub judice rule in certain circumstances. On Thursday in another place, Mr Speaker exercised his discretion to waive the strict application of the sub judice rule in respect of the inquest into the death of Mr Litvinenko, which was opened on Thursday morning and immediately adjourned. Given the wish of certain noble Lords to table Questions for Written Answer on related matters, I, too, am exercising my discretion to waive the strict application of the sub judice rule in respect of that inquest, but I do ask noble Lords to bear it carefully in mind that the inquest has been opened.

Tribunals, Courts and Enforcement Bill [HL]

Lord Evans of Temple Guiting
My Lords, I beg to move the Motion standing in the name of my noble friend Lady Ashton of Upholland on the Order Paper.

Moved, that it be an instruction to the Grand Committee to which the Tribunals, Courts and Enforcement Bill has been committed that they consider the Bill in the following order:

Clauses 1 and 2,

Schedule 1,

Clauses 3 and 4,

Schedule 2,

Clause 5,

Schedule 3,

Clauses 6 and 7,

Schedule 4,

Clauses 8 to 22,

Schedule 5,

Clauses 23 to 35,

Schedule 6,

Clauses 36 to 42,

Schedule 7,

Clauses 43 to 45,

Schedules 8 and 9,

Clauses 46 and 47,

Schedule 10,

Clauses 48 to 50,

Schedule 11,

Clauses 51 to 54,

Schedules 12 and 13,

Clauses 55 to 78,

Schedule 14,

Clauses 79 to 83,

Schedule 15,

Clauses 84 to 98,

Schedule 16,

Clauses 99 and 100,

Schedules 17 to 20,

Clauses 101 to 105,

Schedule 21,

Clauses 106 to 130,

Schedule 22,

Clauses 131 to 137,

Schedule 23,

Clauses 138 to 140—(Lord Evans of Temple Guiting.)

On Question, Motion agreed to.

Consumers, Estate Agents and Redress Bill [HL]

15:08:00

The Parliamentary Under-Secretary of State, Department of Trade and Industry (Lord Truscott)
My Lords, I beg to move that this Bill be now read a second time.

The Government are committed to a robust and effective consumer and competition regime, one that is fair to consumers as well as to business. We are committed to strong, effective, competitive markets where firms can constantly challenge one another to offer greater choice, better quality and lower prices to consumers. But consumers themselves have a key part to play. Business needs demanding and confident consumers to encourage higher standards and innovation.

Pressure to retain custom is also a powerful incentive for business to act with integrity and responsibility. That is why we want a consumer regime that is fit for the 21st century. We need to make sure that consumers have the right information to make informed choices. We need to remove the rogue traders and give consumers access to redress so that they feel confident and secure when dealing with business. In a competitive marketplace, it is the companies that give their customers what they want that will thrive.

But we in government must keep thinking about what consumers need, too. What are the Government doing to achieve this? The Consumers, Estate Agents and Redress Bill forms part of a wider programme of government reform to empower UK consumers. The Consumer Credit Act, which received Royal Assent earlier this year, represents the biggest overhaul of consumer credit legislation since 1974. It greatly improves consumer rights and redress in relation to borrowing money. The Act also introduces major changes to the licensing of consumer credit businesses and new powers to drive dishonest traders out of the market.

The Government will shortly announce their plans to implement the EU unfair commercial practices directive. The UCPD is a powerful tool, designed to tackle the rogue traders and unfair business practices that target the most vulnerable people in society and damage the reputation of honest firms by association. Once implemented, the directive will ban 31 types of unfair commercial practices outright, including high-pressure or unreasonably persistent selling methods. The directive also has rules stopping misleading and aggressive practices, and introduces a catch-all duty not to trade unfairly. We will implement the directive by the end of next year, shortly before the provisions of the Bill take effect.

The Consumers, Estate Agents and Redress Bill complements both the Consumer Credit Act and the UCPD and will empower consumers yet further. The largest element of the Bill is the Consumer Voice proposals. There has been extensive consultation on Consumer Voice over the last three years. UK consumers now benefit from choice in most of our essential services, thanks to a long-term commitment by the Government to champion open, competitive markets. The aim is to deliver choice and to foster high standards and good value in our key sectors.

The markets for essential services have been progressively liberalised over a long period, and several regulatory regimes have been developed. But there was a common model: licensed companies overseen by an independent economic regulator, and a consumer body with duties in respect of each individual sector. That has led to the current position where we have several sectoral consumer bodies, as well as a National Consumer Council that represents consumer interests across a range of markets.

The National Consumer Council, Energywatch and Postwatch have provided a valuable service to consumers. However, key issues around the current system of consumer representation have to be addressed. Consumer representation in the UK is fragmented. We lack a coherent voice for the consumer to speak with expertise and authority in discussions with companies, with government or in Europe. We need a body that is able to compare different markets and focus on areas of real concern. In addition, any consumer who needs advice or assistance must first work out where to go for help. Promoting the existence of consumer bodies has consistently been a problem, as each of the relevant bodies has sought individually to make consumers aware of its services. A sectoral consumer body cannot necessarily look at all aspects of a company’s service. Although the Consumer Action Network offers potential for increased co-operation between consumer bodies, difficulties over exchanging information remain. Different structures prevent resources or facilities from being shared effectively.

To address these issues, we propose to bring together the National Consumer Council, Energywatch and Postwatch to form a stronger, more coherent consumer advocate: the new National Consumer Council. This new body will be independent. It will have the stature to engage effectively with government, regulators and industry. It will be able to look across sectors and give advice on the basis of expert and informed analysis. Responsibility and authority to speak for consumers will rest with a single organisation. That will provide a stronger and more effective voice in the ear of policy-makers in the UK and the European Union.

Savings will be achieved by cutting the cost of complaint handling, the consolidation of offices and staff and a reduction in property expenditure. Analysis by KPMG on behalf of the DTI estimates net ongoing savings of about £8.9 million per year, increasing to about £9.5 million per year by around 2015 as redundant property leases come to an end. We also propose to extend the availability of redress for consumers.

Energywatch and Postwatch currently labour under a significant burden of complaints that they can resolve only through persuasion. They have no powers to enforce resolution and cannot provide for redress or compensation. That is the role of a redress scheme, and the creation of new, separate redress services forms part of the provisions of this Bill. The provisions in Part 2 will enable Ministers to require suppliers or service providers in the energy and postal services sectors to belong to redress schemes. This will give consumers confidence that their complaint will be resolved, and there will be access to compensation and redress where warranted. The Bill also offers the potential to include the water sector within this requirement in future, following consultation.

I now come to the provisions relating to estate agents. For most people, buying a place to live is the most expensive purchase they ever make and the process can often be stressful, for buyers and sellers alike. Estate agents play a crucial role in this process. It is vital that the market for estate agency services works well, and that consumers are protected against unfair practices. Consumers need to be confident that estate agents will deal honestly with them. Many estate agents are rightly angry that their reputation is tarnished by a small minority who at best lack professionalism and at worst are dishonest.

The Office of Fair Trading recognised these issues in its study of the estate agency market published in March 2004. It found that the market was generally competitive and in most cases worked well for consumers, but that a significant number of consumers were not happy with the service that they received. Some consumers simply received poor service, with estate agents turning up late for appointments, for example, or not returning keys on time. But other complaints were more serious, such as a failure to pass on offers to sellers or to declare a personal interest in a property. In its report, the OFT made a number of recommendations to bring the Estate Agents Act 1979 up to date with modern enforcement practices. The OFT was keen to ensure a basic level of protection and to promote quality of service and redress.

The Government published their response to the OFT report in July 2004. They went further than the OFT and stated that they wanted to make membership of a redress scheme mandatory for all UK estate agents. We amended the Housing Act 2004 to ensure that complaints relating to home information packs could be addressed through redress schemes.

The Bill goes further. It will fulfil our promise that any private individual with a legitimate complaint against an estate agent should have access to redress. It also implements a number of other recommendations in the OFT report. It will improve the audit trail for transactions by requiring estate agents to make and keep records—including records of offer letters—for a period of six years. The Bill will give the OFT and local authority trading standards officers powers to go into premises and inspect records in a wider range of circumstances. This will enable them to investigate all breaches of the 1979 Act, not just criminal offences.

The Bill will also expand the circumstances in which the OFT can consider the fitness of an estate agent to practise and, if necessary, take regulatory action against them. The OFT can already ban estate agents when they have been convicted of a specified criminal offence. The Bill will allow the OFT to ban an estate agent where there is sufficient evidence that an offence has been committed, even if there is no conviction. Furthermore, the OFT will also be able to ban an estate agent where an enforcement order under the Enterprise Act 2002 or a statutory undertaking has been breached. These changes are needed to bring the 1979 Act in line with modern enforcement practice, where civil or informal action is generally used as a cost-effective and proportionate alternative to criminal prosecution.

Part 4 includes provisions on doorstep selling. In September 2002, the National Association of Citizens Advice Bureaux—now Citizens Advice—published a report, Door to Door, which looked at a wide range of goods and services sold on the doorstep, and addressed problems that had been reported to its offices. The report was submitted to the Office of Fair Trading as a super-complaint within the terms of the Enterprise Act 2002.

In November 2002, the OFT confirmed that it would investigate doorstep selling. Its report, which included seven recommendations for improving consumer protection, was published in May 2004. In response, the Government launched a public consultation and on 7 September this year they published their response. As part of that response, they decided to introduce primary legislation to ensure that all consumers have the safety net of a cooling-off period for all doorstep sales, whether the visit is solicited or not.

Consumers will be protected if they are subjected to high-pressure selling and subsequently change their minds. Removing the distinction between solicited and unsolicited visits will make the law simpler and clearer for the consumer, businesses and enforcement agencies. Businesses will be able to work with one contract for both solicited and unsolicited visits, reducing ongoing costs in the production of contracts and training of sales staff. The simpler rules will ensure that businesses do not need to spend time establishing whether their visit is solicited or unsolicited.

We welcome the report of the Delegated Powers and Regulatory Reform Committee and intend to accept both its recommendations in relation to this Bill. We are seeking the relevant clearances and will table government amendments shortly.

I hope that your Lordships’ House will join me in supporting these provisions. The Bill equips enforcers to get rid of dishonest estate agents. It gives consumers a strong champion to fight their corner, and it gives them the rights and redress that they deserve. I look forward with great anticipation to hearing noble Lords’ contributions to this important debate.

Moved, That the Bill be now read a second time.—(Lord Truscott.)

15:21:00

Baroness Wilcox
My Lords, it is a pleasure to speak in this debate, especially as it is my first legislative task in my new role as shadow spokesperson on DTI matters. I congratulate the Minister on his new post and welcome him to his place in what is a first for us both. I am sure that he will join me in welcoming in the European Union another first: the recent appointment of a dedicated commissioner for consumer protection, Mrs Meglena Kuneva of Bulgaria. I am sure we all look forward to meeting and listening to her.

I declare an interest as the former chair of the National Consumer Council, as the current president of the National Federation of Consumer Groups and the vice-president of the Trading Standards Institute. I am delighted to open the batting under this brief in a field with which I am familiar.

We had the opportunity to debate the Bill in your Lordships' House a week ago today, albeit with a lighter touch. I am pleased to have the opportunity to spend a little more time reflecting on its provisions and implications.

As we have heard, the Consumers, Estate Agents and Redress Bill exists as a result of a DTI White Paper, A Fair Deal for All—Extending Competitive Markets: Empowered Consumers, Successful Business, the OFT’s two-year report on estate agency, and various DTI consultations. I shall address the three main areas of the Bill: the merger of the NCC, Postwatch, Energywatch, the Irish postal services committee and the Welsh and Scottish consumer councils; the new provisions for solicited sales; and the proposed amendments to the 1979 Act.

While I am in favour of any plans to improve consumer understanding and create a more transparent system of complaint and redress, I am concerned by the Government’s proposed method of doing it. One needs only to point to Natural England as an example of the creation of a non-departmental public body from previously independent bodies—it is now over-budget and understaffed—to feel some trepidation at the proposals before us. We are already being lobbied by single-issue and consumer groups which are expressing anxiety about the new body, Consumer Voice.

During its 31 years of existence, the NCC has been a low-cost guerrilla force for consumer affairs. It is vital that such a body, funded by and yet independent of government, is not turned into a large, process-led home for government policy. The National Consumer Council has always been consumer driven. It has driven improvements in consumer affairs worldwide. Since its establishment by the noble Baroness, Lady Williams of Crosby, when she was on the Labour Benches in another place, it has provided the benchmark for consumer protection. It has been largely left alone by successive governments of every hue.

So I was concerned to read in paragraph 2.108 on page 31 of the regulatory impact assessment that as a result of the merger there is,

“a concern that the particular circumstances of individual sectors will be overlooked, particularly where a broadly based body tries to adopt general policies”.

Given that Her Majesty's Government are clearly aware of the potential pitfalls of a broad merger such as this, can the Minister inform noble Lords how plans for the new consumer voice are going to be set to safeguard the National Consumer Council’s precious independence and independent policy development? Indeed, the NCC has raised concerns about the proposed merger. It is concerned about the precise function of the devolved elements of the new NCC and how those bodies will operate in devolved institutions. Can the Minister shed some light on that? In its briefing to me, the NCC has been keen to ensure that advocacy, redress and advice should be provided by specialist organisations. Can the Minister, in the light of the regulatory impact assessment’s concerns, assure noble Lords that that vital specialist advice will not be lost?

It is vital that this merger is not merely treated as a cost-cutting exercise. I was concerned to read in the regulatory impact assessment that the DTI hopes to make savings on the complaints procedures by cutting complaints. It is a common myth of the public sector that complaints are a negative component of consumer relations. In fact, the opposite is true: complaints systems are the most effective representation of the needs and wishes of consumers. Companies such as Marks & Spencer or Tesco, which measure their footfall and measure the number of complaints that they get against that footfall, value them highly as they are the route to improving customer service and the quality of the product. I hope that the Minister can reassure noble Lords that cost-cutting will not be a priority over consumer service.

The Conservative Party wholly supports increasing consumer confidence and capability. We believe that that is best achieved by working hand in hand with good business. Through sharing responsibility, customers and provider relationships are strengthened and we on these Benches would welcome any Government’s commitment to make Britain the best country in the world for consumers by 2008, as this Government have done. On present form, that seems unlikely; our British consumers are dangerously in debt; the figure stands today at more than £1 trillion. Why have the Government not taken notice of those warning signals? In addition, 56 per cent of women and 43 per cent of men admit to Christmas debt caused by poor financial planning and, in the first three months of this year, there were as many insolvencies in this country as there were in the whole of 1997. Yet the Government seem to be oblivious, and we have heard of no engagement with this state of affairs from their Benches. Something is going very wrong, and we are a long way off this Government’s commitment. We are in debt and we are going the wrong way.

On estate agents, it is important to face the facts. Last Monday, the Minister stated that 21 per cent of sellers and 23 per cent of buyers experienced problems with their estate agents. However, a different set of figures is much higher; a Which? survey showed that 70 per cent of consumers believe that agents give misleading information about properties and 90 per cent believed that their estate agents cannot usually be trusted. That paints a very different picture and a very bad one; it is very important to get these facts right. It is important because approximately 1.8 million people buy or sell a house every year. As the Minister has said, for most people it is the largest transaction that they will ever make, and there is a fantastic opportunity in this Bill to improve confidence for the consumer.

There is a real distrust surrounding estate agents. I wonder why, given that 70 per cent of all estate agents are already signed up to voluntary regulation and have codes of practice and qualifications under the NAEA and the RICS. There is real ambition within the industry to raise standards and, therefore, its reputation. The NAEA and the RICS warmly welcome the creation of a statutory ombudsman and redress scheme. I, as do the trade bodies, wish the scheme great success.

However, we remain concerned that redress will not adequately deter malpractice. I was concerned in my reading of the Bill that in reality redress will be a mere safety net and will not act as a deterrent. Noble Lords will be well aware that England does not have a positive licensing scheme for estate agents. Anyone can set up as an estate agent without any proven experience or aptitude. It is important that the redress scheme is tied closely to existing regulations. In light of that, the extension of the powers of the OFT in holding estate agents to account under a redress scheme is a welcome addition, but I am anxious that it may not go far enough.

There are certain caveats in the Bill that I am concerned about. In new Section 23A, to be added to the 1979 Act under Schedule 6 to this Bill, it will be possible for the Secretary of State to limit not only the types of complaint that may be made under a redress scheme, but the type of people who can make a complaint. I was as surprised to read this as I was to discover in the Explanatory Notes that a redress order,

“may apply to all who engage in estate agency work, or only to specified descriptions of them, and may exclude certain types of estate agency work”.

I understood that the Bill would apply to all consumers in the estate agency market. I hope that the Minister will be able to reassure myself and other noble Lords that the Bill will do more than provide a smokescreen for an industry that is in serious need of a standard redress system. I should be grateful if the Minister could describe in detail what form a redress scheme will take. Is it likely that there will be more than one scheme? If so, how will consumers be reassured that both schemes are of the same high standard? I understand that the OFT will have the power to create a redress scheme without the approval of the Secretary of State, and that the Secretary of State will have the power to create his own scheme which will not need approval from the OFT.

I am concerned about how consistency between the two potential schemes will be achieved so that they are transparent and inspire confidence in consumers seeking redress. It would be ironic were this Bill to champion transparency at the first point of contact with consumers, in Consumer Direct, only to create confusion in the very system that is set to provide redress for consumers where the initial stages fail to help.

On solicited sales, “doorstep selling”, while the new provision for solicited sales, introducing a cooling-off period equating to the consumer rights for unsolicited sales, is the right direction of travel, I have concerns about the implications for small off-premises traders such as plumbers and electricians and the possible impact on consumers. Can the Minister reassure me that a new cooling-off period for all solicited sales will not result in, for example, a plumber refusing to fix a broken boiler until the cooling-off period has been completed to avoid the consequences of a customer changing their mind? If this were to happen, how ironic it would be that we had supported a Bill that sought to improve consumer service in the watchdogs, but had worsened it on the ground.

While there is much that is positive about the Bill, I remain cautious about the detail of many of these proposals pending answers from the Minister on structuring, costs and the detail of transition proposals in the following stages of the Bill. These Benches are committed to creating confident consumers. Where we believe that the Bill will achieve that, we will certainly support it.

15:34:00

Lord Borrie
My Lords, I commend the Bill to noble Lords and very much welcome the positive remarks that have just been delivered by the noble Baroness, Lady Wilcox, particularly with regard to the estate agents redress scheme, which will cover estate agents generally rather than some two-thirds of them. I also welcome her positive remarks about the National Consumer Council. It has not always been thus from the Conservative Party. Soon after the Conservative Party, under Mr Edward Heath, was elected in 1970, it carried out its pledge to abolish the then Consumer Council, which had been set up less than eight years earlier. That was an unfortunate destructive act, because the Consumer Council had established itself as an authoritative and considered voice for the consumer, whose interests were so often neglected and ignored by other interests, represented by the CBI, the trade unions and the Government.

The Labour Party opposed the abolition of the Consumer Council, and one of its first acts on resuming power in 1974 was to create the present National Consumer Council, as the noble Baroness has recognised, to look after the interest of consumers in general and—I emphasise this point because it was emphasised at the time—the interests of less affluent consumers in particular. The first chairman was later a Member of this House, who is sadly now deceased; Lord Young of Dartington. When the noble Baroness, Lady Thatcher, became Prime Minister, she allowed the National Consumer Council to continue. Mind you, she did abolish the Price Commission, which also protected consumers, but the National Consumer Council continued. Two of its later chairmen now grace the Conservative Benches in this House; the noble Baroness, Lady Wilcox, who has just spoken, and the noble Baroness, Lady Oppenheim-Barnes, who will speak next. The former Labour Minister, my noble friend Lord Whitty, who will be speaking later in the debate, is the current chairman.

The 30-plus years of the National Consumer Council have been years of outstanding, productive effort in making the case so often for stronger consumer protection in many fields, and making that case on the basis of through research. That has always been regarded as essential. This Bill has to take account of the fact that a number of industries have been privatised or deregulated, and various specialised, particular consumer representational bodies have been created. It makes sense in the Bill—although the noble Baroness has raised some perfectly pertinent questions about ensuring that no little bit gets lost sight of when they are merged—that Energywatch, Postwatch and others should be merged with the National Consumer Council.

I was rather astonished, however, not by what the noble Baroness, Lady Wilcox, said today, but what she said a week ago, on 27 November. I see no basis for the noble Baroness asserting in the debate on the gracious Speech that the National Consumer Council is now set to be “another government mouthpiece”. I hope that she will reconsider that point, because it is far from the mark. The National Consumer Council will continue to be, and is intended to be, independent. Anything else would be of no use to Her Majesty’s Government—whether Labour, Conservative or any other. I have noticed over the years that the National Consumer Council has overlapped somewhat with the Office of Fair Trading in giving information, advice and education to consumers. Both it and the DTI have been engaged in Consumer Direct, the valuable telephone and online consumer advice service. It does not matter too much if there is some overlap of that kind.

High-pressure salesmanship has plagued consumers in various ways for many years. A deterrent against high-pressure salesmanship on the doorstep and in your own home has been the statutory cooling-off period, which gives the right to cancel contracts. But that right has not been available if the consumer has expressly requested or solicited the visit. Therefore, I welcome Clause 58 of the Bill, which extends consumer rights to cancel when home visits have been solicited by the consumer. Surely, that is right. Whenever a consumer is visited at home, there is a risk of undue pressure to sign up to some sales proposition simply to get rid of the persistent and, no doubt, endlessly talking salesman. After all, you can hardly walk out of your own home like you can from a shop.

It must be the lawyer in me that points out that the additional consumer protection in Clause 58 comes under the heading “Miscellaneous and general”. I suggest to the Minister that some of us might consider what other matters might be put into that part of the Bill. The Minister will recall that earlier this year, when the final touches were being put on the Bill, a most unfortunate incident took place that has been rippling for many weeks—the collapse of Farepak. That company had taken some £40 million in small amounts from less affluent consumers who sought to save to buy Christmas presents. It was suggested that the company should have been required by law to ring-fence those consumer savings instead of being able to misuse those savings on all sort of extraneous premises.

I am thinking of solicitors’ client accounts. I am also thinking of estate agents—given that they will receive a lot of knocking in this Bill—whose must hold deposits in separate accounts. It is not unknown that such a law should be required. At Second Reading, I confine myself to asking whether the Minister has considered, or whether he will consider, a new legal requirement on such saving schemes to protect consumer money. Would not Part 4 of the Bill be an appropriate vehicle?

Part 3, to amend the Estate Agents Act 1979, is one of the most important parts of the Bill. Clause 52 requires all estate agents to participate in a redress scheme. The 1979 Act was passed into law when I was Director-General of Fair Trading, and my office was given the power to ban estate agents from acting in the manner to which I have referred in certain circumstances. It is a type of negative licensing system and has frequently been used when, for example, an estate agent is convicted of defrauding customers by stealing deposits paid on a house purchase. There are already broad powers to ban estate agents who are considered to be unfit to practise, but I welcome the extended powers in this Bill.

The Office of Fair Trading’s local agents are the trading standards officers in local authority departments. The Bill gives them additional powers which no doubt some lawyers in the Liberal Democrat Party will want to watch with great care. On the face of it, such provisions would make the banning powers under the Estate Agents Act more useful.

Many estate agents have belonged to a redress scheme administered by the Ombudsman for Estate Agents and his staff, who work under the supervision of its council. The current chairman is the noble Baroness, Lady Shephard of Northwold, who sits on the Opposition Benches, although she is not in her place today. I was a member of the council for the estate agents’ ombudsman in its early years in the 1990s, under the chairmanship of someone from our Benches—the noble Baroness, Lady Mallalieu. The Ombudsman for Estate Agents has done the immensely useful job of investigating complaints and granting—at any rate modest—compensation where appropriate. In theory, the compensation can be up to a maximum of £25,000 but I do not think that it has reached anywhere near that figure in any case. Unfortunately, a large number of estate agents—roughly one third of the total—have declined to join and the Government’s proposals are intended to fill that obvious deficiency. The Government know that only too well, because it is the basis for the changes in the Bill. The Bill does not specify that estate agents must join the present Ombudsman for Estate Agents scheme but if that scheme’s record, constitution and so on pass muster—or might do so with change—it may become the approved scheme for the Office of Fair Trading and the Secretary of State. Having a number of schemes competing, no doubt, to provide the best service for customers, would seem a rather odd system of adjudication in this country. I do not think that it occurs in ombudsman schemes in insurance, banking and so on.

There is much to commend in the Bill. The House will, when we are in Committee, fulfil its usual and useful role of making detailed improvements.

15:46:00

Baroness Oppenheim-Barnes
My Lords, when I looked at the speakers list, I saw that I was fortunate enough to be the last speaker before the Statement. I then saw that I was to follow the noble Lord, Lord Borrie, who is the great acknowledged expert in this field. That was one of the very good reasons why I reappointed him to the job of Director-General of Fair Trading when I was Minister of State.

I am also very grateful to the noble Lord for straying into the political area. I was not going to do so but he has provoked me. The Conservative Government whom he criticised were the first to create a Minister of State and a whole department of consumer affairs; they also introduced the Fair Trading Act 1973 and the first Consumer Credit Bill, which was carried on by other Governments. I subsequently introduced, as Minister of State, the Competition Act, which he supported. Well, well, well, my Lords—we now have a major consumer Bill from this Government, who over the past nine or so years have downgraded ministerial responsibility for consumer affairs from the level of Minister of State to that of Parliamentary Under-Secretary, then to Parliamentary Under-Secretary with mixed responsibilities, and then to having no ministerial person responsible at all. They filleted the Office of Fair Trading, they desiccated the NCC and they condensed the Monopolies and Mergers Commission. I suppose that a deathbed conversion is always welcome.

When news of the Farepak disaster broke—here I definitely agree with the noble Lord, Lord Borrie—there was no officially designated consumer affairs Minister in the Government to comment. It fell to Back-Bench MPs and eventually the Chancellor to ask people, as he usually does, to put their hands in their pockets to help people, which they very generously did. I therefore hope that, in Committee, we will find it possible to take steps in Part 4 to regulate the industry. Christmas clubs are very popular; I am not sure that they are the best form of saving for consumers but they certainly need to be regulated.

So we now have, after nearly nine years, a Bill that appears to cobble together a vast range of new duties and powers for a new NCC, the implementation of which will not be helped by the vagueness of some of the drafting, and which will certainly be very costly—as it will have to be if it is to function properly—despite other savings that may be made.

Despite what the noble Lord, Lord Borrie, said, my main concern is to support what my noble friend Lady Wilcox said about the independence of the new NCC and other bodies which may criss-cross around and in front of it. I, my predecessors and my immediate successor, my noble friend the very notable Lady Wilcox, who was an excellent chairman of the NCC, were completely free to investigate whatever we wanted, and we could report and publish our findings without submitting them to the Government. Indeed, I remember the publication of two particularly controversial reports when I was chairman of the NCC. In one, we published the fact that British consumers were at a great disadvantage as a result of the CAP; in another, we called for greater access to justice for consumers. That has subsequently been dealt with under legislation by this Government, for which I commend them.

I turn to the subject of the new NCC’s new functions relating to utilities and the Post Office. I am not as unduly concerned as others that they are to come under the same body so long as the NCC is given the manpower and resources for all the new functions, which will be vast and costly. Without them, the task could be overwhelming and could not be carried out correctly. I particularly welcome the NCC’s new role of giving advice and pursuing redress in certain defined cases, limited though they are by their definition. Both as a Minister and a chairman of the NCC, one of my major concerns was the lack of this kind of provision across the board. As already illustrated, as a result of CABs harnessing the information that they were gaining on doorstep selling, there are now welcome provisions in the Bill to help to deal with that practice. They have come about because of complaints which have been gathered and analysed, and that is why I should like to see something far greater across the board than the provisions that are limited to the utilities.

When I was a Minister, I wanted to introduce an across-the-board scheme of this kind. I was frustrated in that ambition because the cost would have been prohibitive. Perhaps tragedies such as Farepak would have been avoided if greater counselling, advice or gathering of evidence had been available. In my experience, the General Consumer Council for Northern Ireland was free to carry out such functions and it did so very successfully. I am not sure why it has been left out of the Bill, and perhaps the Minister will let us know.

Another of my objectives as Minister was to simplify the law so that consumers knew what their obligations and rights were. To that end, I produced the consumer education pack for schools, which was circulated throughout the system. I took a number of the classes myself and they proved popular and informative, as well as being very cost-effective. Therefore, I am sad that there is no mention in the Bill of a responsibility to carry that forward.

Finally, I wish the NCC very good luck, especially in dealing with British Gas and Post Office complaints. It will need it. It will also need time and patience and, as I have said before, resources.

I am sure that a very interesting Committee stage awaits us. I shall not comment on the estate agents part of the Bill because that area of consumer affairs was never within my remit in the department. Nevertheless, I welcome many clauses in the Bill, which, again, will have to be studied very carefully. No doubt the Minister will enlighten us and help us further in this matter at later stages of the Bill. I hope that by the time he has to oversee the implementation of the Bill, he will have become Minister of State for Consumer Affairs, as this important responsibility warrants.

Nuclear Deterrent

15:55:00

The Lord President of the Council (Baroness Amos)
My Lords, with the leave of the House, I shall now repeat a Statement made in another place by my right honourable friend the Prime Minister. The Statement is as follows:

“With your permission, Mr Speaker, I shall make a Statement about the Government's decision to maintain the United Kingdom's independent nuclear deterrent.

“There are many complex technical, financial and military issues to be debated in respect of this decision. But none of them obscures or alters the fundamental political judgment at the crux of it. Britain has had an independent nuclear deterrent for the past half century. In that time the world has changed dramatically, not least in the collapse of the Soviet Union, the original context in which the deterrent was acquired. Given that this change has occurred, the question is whether it is wise to maintain the deterrent in the very different times of today.

“The whole point, of course, about the deterrent, is not to create the circumstances in which it can be used, but on the contrary to try to create circumstances in which it is never used. Necessarily, therefore, any analysis of what role it could play in any situation that is hypothetical will always be open to the most strenuous dispute. Ultimately, this decision is a judgment, a judgment about possible risks to our country and its security; and the place of the deterrent in thwarting those risks.

“The Government's judgment, on balance, is that though the Cold War is over, we cannot be certain in the decades ahead that a major nuclear threat to our strategic interests will not emerge; that there is also a new and potentially hazardous threat from states such as North Korea, which claims already to have developed nuclear weapons, or Iran, which is in breach of its non-proliferation duties; that there is a possible connection between some of those states and international terrorism; that it is noteworthy that no present nuclear power is, or is even considering, divesting itself of its nuclear capability unilaterally; and that in these circumstances it would be unwise and dangerous for Britain, alone of any of the nuclear powers, to give up its independent nuclear deterrent.

“Notice that I do not say that the opposite decision is unthinkable; or that anyone who proposes it is pacifist or indifferent to our country's defence. There are perfectly respectable arguments against the judgment we have made. I both understand them and appreciate their force. It is just that, in the final analysis, the risk of giving up something that has been one of the mainstays of our security since the war, and moreover doing so when the one certain thing about our world today is its uncertainty, is not a risk I feel we can responsibly take. Our independent nuclear deterrent is the ultimate insurance. It may be—indeed, we hope it is—the case that the eventuality against which we are insuring ourselves will never come to pass. But in this era of unpredictable but rapid change, when every decade has a magnitude of difference with the last, and when the consequences of a misjudgment on this issue would be potentially catastrophic, would we want to drop this insurance, and not as part of a global move to do so but on our own? I think not.

“However, what will happen from today will be a very full process of debate. It is our intention at the conclusion of that process in March of next year to have a vote in this House. We will make arrangements during the process to answer as fully as possible any of the questions that arise. And of course I am sure that the Defence Select Committee, at least, will want to examine the issue carefully. The White Paper, which we publish today, goes into not merely the reasons for the decision but also a technical explanation of the various options and tries to cover in some detail all potential lines of dispute or inquiry. I hope, therefore, that we can focus on the decision itself, not the process.

“Let me now turn to some of the key questions. First, the reason this decision comes to us now is that if, in 2007, we do not take the initial steps toward maintaining our deterrent, shortage of time may prevent us from being able to do so. Necessarily we can only form this view based on estimates, but these are from the evidence given to us by our own experts, by the industry that would build the new submarines and the experience of other nuclear states.

“Our deterrent is based on four submarines. At any one time, one will be in dock, undergoing extensive repair and maintenance, usually for around four years. The other three will be at sea, or in port for short periods, but at all times at least one will be on deterrent patrol, fully armed. The submarines are equipped with Trident D5 missiles which are US-manufactured but maintained with our close technical and scientific collaboration. The operation of the system is fully independent. A missile can be fired only on the instructions of the British Prime Minister.

“The current Vanguard submarines have a service life of 25 years. The first boat should leave service in 2017. We can extend that for five years; so in 2022 that extension will be concluded. In 2024, the second boat will also end its extended service life. By that time, we will have only two Vanguard submarines. This will be insufficient to guarantee continuous patrolling.

“The best evidence we have is that it will take us 17 years to design, build and deploy a new submarine. Working back from 2024, therefore, that means we have to take this decision in 2007. Of course, all these timelines are estimates, but they conform to the experience of other countries with submarine deterrents as well as to our own.

“Secondly, we have looked carefully at the scope of different options. The White Paper sets them out: for example, aircraft with cruise missiles, but cruise missiles travel at subsonic speeds and building the special aircraft would be hugely expensive; or a surface ship equipped with Trident, but that is a far easier target. Another option is a land-based system with Trident. But in a small country such as the United Kingdom that is immensely problematic and also, again, an easier target. There is no doubt at least on this score: if you want an independent nuclear deterrent for a nation like the United Kingdom, a submarine-based one is best.

“It is also our only deterrent. In the 1990s we moved to Trident as our sole nuclear capability. Of the other major nuclear powers, the US has submarine, air and land-based capability. Russia has all three capabilities and has the largest number of nuclear weapons. France has both submarine and air-launched capability and has a new class of submarines in development, the last of which is due to come into service in 2010. China has a smaller number of land-based strategic nuclear weapons but is working on modernising its capability, including a submarine-based nuclear ballistic missile.

“We will continue to procure some elements of the system, particularly those relating to the missile, from the United States but, as now, we will maintain full operational independence. The submarines, missiles, warheads, and command chain are entirely under British control, and will remain so after 2024. This gives British Prime Ministers the necessary assurance that no aggressor can escalate a crisis beyond UK control.

“A new generation of submarines will make maximum use of existing infrastructure and technology. The overall design and manufacture costs—of some £15 billion to £20 billion—are spread over three decades; are on average 3 per cent of the defence budget; and are at their highest in the early 2020s. As before, we will ensure that the investment required will not be at the expense of the conventional capabilities that our Armed Forces need. It is our intention that the procurement and building will, as now, be done by British industry, with thousands of British, highly skilled jobs involved.

“However, we will investigate whether, with a new design, we can maintain continuous patrol with a fleet of only three submarines. A decision on this will be made once we know more about the submarines’ detailed design. No decisions are needed now on the warhead. We can extend the life of the D5 Trident missile to 2042. After that, there will be the opportunity for us to participate in any new missile design in collaboration with the United States, something which will be confirmed in an exchange of letters between myself and the President of the US.

“Maintaining our nuclear deterrent capability is also fully consistent with all our international obligations. We have the smallest stockpile of nuclear warheads among the recognised nuclear weapons states and are the only one to have reduced to a single deterrent system. Furthermore, we have decided, on expert advice, that we can reduce our stockpile of operationally available warheads to no more than 160, which represents a further 20 per cent reduction. Compared with previous plans, we will have reduced the number of such weapons by nearly half.

“So we inexorably return to the central judgment: maintain our independent nuclear deterrent or not? It is written as a fact by many that there is no possibility of nuclear confrontation with any major nuclear power. Except that it is not a fact. Like everything else germane to this judgment, it is a prediction. It is probably right—but certain? No, we cannot say that.

“The new dimension is undoubtedly the desire by states—highly dubious in their intentions, such as North Korea and Iran—to pursue nuclear weapons capability. Fortunately, Libya has given up its WMD ambitions and has played a positive role internationally; and the notorious network of AQ Khan, the former Pakistani nuclear physicist, has been shut down. But proliferation remains a real problem. The notion of unstable, usually deeply repressive and anti-democratic states, in some cases profoundly inimical to our way of life, having a nuclear capability, is a distinct and novel reason for Britain not to give up its capacity to deter. It is not utterly fanciful either to imagine states sponsoring nuclear terrorism from their soil. We know that this global terrorism seeks chemical, biological and nuclear devices. It is not impossible to contemplate a rogue Government helping such an acquisition. It is true that our deterrent would not deter or prevent terrorists, but it is bound to have an impact on Governments who might sponsor them.

“Then there is the argument, attractive to all of us who believe in the power of countries to lead by example—as we seek to do in climate change and have done in respect of debt relief—that Britain giving up its deterrent would encourage others in the same direction. Unfortunately, there is no evidence that any major nuclear power would follow such an example—on the contrary. As for the new, would-be nuclear powers, it really would be naïve to think that they would be influenced by a purely British decision; more likely they would construe it as weakness.

“Finally, there is one other argument—that we shelter under the nuclear deterrent of America. Our co-operation with America is rightly very close. But close as it is, the independent nature of the British deterrent is again an additional insurance against circumstances where we are threatened but America is not. These circumstances, I agree, are also highly unlikely, but I am unwilling to say they are non-existent.

“In the end, therefore, we come back to the same judgment. Anyone can say that the prospect of Britain facing a threat in which our nuclear deterrent is relevant is highly improbable. No one can say, however, that it is impossible. In the early 21st century the world may have changed beyond recognition since the decision taken by the Attlee Government over half a century ago, but it is precisely because we could not have recognised then the world we live in now, that it would not be wise now to predict the unpredictable in the times to come. That is the judgment we have come to. We have done so according to what we think is in the long-term strategic interests of our nation and its security, and I commend it as such to the House”.

My Lords, that concludes the Statement.

16:09:00

Lord Strathclyde
My Lords, I am immensely grateful to the noble Baroness the Leader of the House for repeating the Statement. I agree with much of what has been said. I understand that she herself has always been a supporter of keeping a nuclear deterrent, and we on this side have always shared that view. In this dangerous world, we on this side think it foolish to advocate unilaterally abandoning our nuclear shield. If the Prime Minister and Mr Brown face down the CND rump on the Labour Benches, my honourable friends in another place will support them.

I address two objections and hope that the noble Baroness will be able to agree with me. First, it is true that the degree of potential nuclear proliferation is currently uncertain. It follows from that that we must redouble our efforts to contain proliferation. Does she agree that replacing Trident does not hinder our efforts to achieve multilateral nuclear disarmament? Is it not therefore quite wrong to say that Britain, by maintaining an existing capacity, would be entering a new nuclear arms race?

Secondly, it is true that future threats are uncertain and that some foreseeable threats are asymmetric, so that massive ICBM retaliation against a foreign power may not be the appropriate reaction. It follows from that that strategic planning should remain under review and our range of responses should be as flexible as possible.

Surely the fact that the world has changed and is changing rapidly is the very case for keeping up our guard. Today's threat is different from that predicted 20 years ago, so today we cannot predict the threat that we will face in 20 years, let alone 50 years on, when the next generation of submarines would go out of service. We need to be prepared for many eventualities.

The decision before us is a momentous one on which this House will expect a full debate. I hope that the noble Baroness will be able to confirm in her response that this House will have the same opportunity as another place to discuss the issue in detail in the coming months.

The decision is about whether to maintain our deterrent by ordering a replacement for our only strategic nuclear system. Our answer to that has been yes. Indeed, we believe that the case is overwhelming. The blunt truth, regrettably, is that a number of states are actively seeking to acquire nuclear weapons and to develop long-range delivery systems.

I cannot agree with the Liberal Democrats that we should delay a decision for years, letting our Trident fleet decay while we wait to see what happens in Pyongyang and Tehran. We cannot rule out conflict with a major state or rogue state armed with an intercontinental capability in the next 50 years. Given that, must we not retain for the foreseeable future a secure, recognised and credible ability to respond conclusively anywhere in the world, should circumstances demand it? Does the noble Baroness agree that the key to a credible system is that the platform is not vulnerable to pre-emptive attack? Can she confirm that all experts agree that a submarine-based system is the least vulnerable and offers necessary security and range?

It is easy to charge that this is all to do with the Prime Minister's desire to leave a nuclear legacy. We have heard that charge from the leader of the Liberal Democrats during his progress through the television studios this afternoon. Can the noble Baroness refute that and assure us that the whole Cabinet shares the Prime Minister’s view that we must decide this now?

On the issue of timing, is not the key to start the design and procurement process, so that the new submarines are available when the old ones go out of service? Would not a further life extension be costly and uncertain, and potentially leave a gap?

Finally, I ask the noble Baroness two specific questions. The first is on the number of submarines. The Prime Minister talked of keeping the decision open on three or four submarines. Can the noble Baroness tell us what, for him, will be the deciding factor? Is it just a matter of design or are there other considerations? The French deterrent, for example, requires four submarines. Secondly, there is the issue of warheads. Does she agree that it is essential that a new Trident should be able to launch ballistic missiles with conventional warheads and cruise missiles and that it should not be exclusively an arsenal of nuclear weapons? On nuclear systems, does she recall that the previous Conservative Government significantly reduced the number of warheads? The incoming Labour Government reduced it further. Now the Prime Minister proposes yet another reduction. Is all the advice from senior military experts that the new total is sufficient to maintain a credible deterrent?

The first duty of any Government is to take the right decisions in the national interest and never to fudge those decisions for internal party reasons. The noble Baroness can be sure that, on questions of national security, whenever the Government put the national interest first, they can count on the support at least of our party.

16:15:00

Lord McNally
My Lords, I thank the Leader of the House for repeating the Statement. As we are putting our consistency on the line, I can say that, although I have been in a succession of parties, my consistency in supporting the argument for a British nuclear deterrent can be tested. Indeed, I supported it when Mr Blair was wearing his CND badge. As for the noble Lord, Lord Strathclyde, who seems to have taken a close interest in the development of Liberal Democrat policies, which again I welcome, I remind him that there is a history of the Conservative Party swallowing a Blair-made case hook, line and sinker, only to repent at its leisure. We will be very happy to stand where we are.

This is probably the most important decision that any Prime Minister, and any Government, must take. One is worried about some of the rationale. When the Prime Minister says that our independent nuclear deterrent is the ultimate insurance, one must ask whether that is not an invitation to nuclear proliferation, because almost any country can then seek that ultimate insurance. It is extremely dangerous logic. The Prime Minister has advanced a case today for some reduction in the capacity of our deterrent, but has made a commitment to a very expensive solution to the dilemma.

We agree that now is not the time to abandon the protection that nuclear weapons provide. I should say in passing that, although I have had only a short time  to look at it, the information as presented looks interestingly clear for the layman to go through. There are important points in it. It says,

“we know of no state that has both a nuclear capability and the ability and intent to use it against our vital interests”.

It also states,

“accurately predicting events over the period 2020 to 2050 is extremely hard”.

We are therefore presented with a case in 2006 that is based chiefly, from what I can see, on the argument that it takes 17 years to develop a replacement. I will be interested to see whether all experts think that that is realistic.

We are left with the questions: why now and why this option? I am afraid that there is a suspicion that this is about the Prime Minister’s legacy. One must wonder whether this is a decision to be taken in the dying days of an Administration. We will hear from the noble Lord, Lord Foulkes of Cumnock, later. We are told in the newspapers that the Prime Minister-in-waiting will revolutionise Labour policy, clear the decks and change attitudes. So why do we need this decision in what, as I say, are the dying days of the Blair Administration? We have been given the costs, but are they really anything but notional? How much lobbying has gone on by British Aerospace and other defence suppliers?

We agree that there is a deterrent to be had, that there is a war to be fought on terrorism and on crime, and that they are not mutually exclusive. But it is legitimate to ask, as former Home Secretary Charles Clarke has asked, whether the balance is right between the kind of expenditure commitment involved in this decision and the commitment made to the war on terrorism. Further, there is a wide range of legitimate views. We shall hear the view of the noble Lord, Lord Foulkes, later, but Sir Michael Quinlan said:

“I am in favour, but not at any price”.
 

The noble Lord, Lord Hattersley, has said that replacing Trident would be an “expensive nonsense”. How we wish that the noble Lord, Lord Hattersley, would occasionally grace us with his presence, but unfortunately I do not think that we pay as much as the Guardian.

The position taken on these Benches is clear. It would be unwise at this time for Britain to abandon its nuclear weapons altogether, but we would extend the life of the present system with a reduction in the number of submarines and warheads. That is certainly not unilateral disarmament, still less is it fence-sitting. The decision to commission a new generation of nuclear-armed submarines may well be the wrong one and certainly it is being taken by the wrong Prime Minister at the wrong time. We need to use this time for a broader look at our foreign policy and security needs, our role in Europe, the reform of the United Nations, and the need to reinvigorate the non-proliferation treaty and to give impetus to nuclear disarmament—and here I echo the question put by the noble Lord, Lord Strathclyde, about the Government’s initiatives, if any, in this area.

As I have said before, this has often been a matter of grave division, certainly on these Benches and on the Benches opposite. The Conservatives have always maintained a bland unity, which makes the present position even more worrying. I do not go as far as Matthew Parris, who called this a,

“pointless piece of Blairite posturing”,

while going on to express his support very much along the lines that we are arguing. But there is a need for a rational and informed decision to be taken, and I urge the Government to both broaden and deepen the debate so that all options are discussed and consideration of our foreign policy interests is conducted without reliance on concepts such as “buying a ticket to the top table”. This is really a Statement saying, “Don’t send me naked into the conference chamber”, but the response to that from these Benches is that we must have all the available information and a fully informed debate. We must not be bounced or rushed into a decision about matters that are decades away; we should not have to rely on an assurance from the Prime Minister that the decision has to be taken now, even though many reasonable and expert opinions say that there is time and it is necessary to conduct a longer and better-informed debate.

16:23:00

Baroness Amos
My Lords, I shall start with the points raised by the noble Lord, Lord Strathclyde. First, I thank him for his overall support in these matters. This is of course a question of national security and it is important that the parties work together as much as possible. On the question of containing proliferation, we strongly believe that the best way of achieving our goal of a safer world free from nuclear weapons is through consensus. We therefore continue to engage in efforts in this direction both in terms of constraining nuclear proliferation and in terms of disarmament. That is why this Government’s record on disarmament is so important. We shall, of course, keep the strategic planning process under review.

As to whether the House will have an opportunity to debate the issue, the noble Lord, Lord Strathclyde, knows that that is a matter for the usual channels, but I cannot imagine that in this instance the usual channels will say no. The White Paper sets out very clearly the technical issues. It runs through four possible scenarios and points very clearly to the importance of maintaining and upgrading the current system. I can confirm that the whole Cabinet endorses this decision. It is a matter that we have discussed on more than one occasion.

The deciding factor on the number of submarines is basically a technical one. We want the ability to maintain continuous patrolling—that is important to us—and we need to know the design of the new submarine before we can make a decision on numbers. As to the warheads and whether reducing them to 160 will be sufficient, I can confirm that we are moving to that number on the basis of professional advice.

The noble Lord, Lord McNally, raised a number of issues and questions. I agree that the White Paper is very clear. I think that anyone who is not an expert in these matters could read the White Paper and come to a clear understanding of the issues that are being debated and discussed. I note the noble Lord’s comment that now is not the time to abandon our protection.

I thought that I went into the question of why we need to make the decision now when I was reading the Statement, but perhaps I should repeat it. The first of our Royal Navy Vanguard class ballistic missile submarines which carry the Trident D5 missile was launched in 1992 and had an original design life of 25 years. So it will come to the end of its life in 2017. Even if the life of the boats was extended by around five years—the maximum we judge to be prudent—the first two boats would leave service around 2022 and 2024. All the advice and experience that we have shows that we will need 17 years for the concept, design and building of the new submarines, which is why the decision has to be taken by 2007. I know that some will say that the last time around it took only 14 years from the decision to purchase Trident to the first system being deployed, but in the preceding decade a good deal of initial concept and design work had already taken place without commitment. That is why the estimate is 17 rather than 14 years.

We have chosen this option because we think that it will give us the greatest security and the best value for money. It is about getting the balance right. It is not about lobbying by any particular companies; it is about the UK’s security. Yes, it is a judgment, but we have made it on the basis of the information available to us. No other nuclear power is looking at giving up its nuclear deterrent at the moment.

The noble Lord asked about spending the money on countering the threat from terrorism, but he will know that we have an intensive strategy for managing risks from terrorism and we are investing heavily in a range of capabilities to deal with them. But we still need to insure against the range of potential threats that only nuclear weapons can deter, even though new threats such as terrorism have emerged. We know that the deterrent helps to deter some of the worst risks from terrorism, but we would not pretend that it deters all of them.

The Statement made the position clear with regard to costs. The overall design and manufacture costs of some £15 billion to £20 billion are spread over three decades; on average, that is 3 per cent of the defence budget, no more than any other major defence projects would cost. The costs are at their highest in the early 2020s, but if this were spread evenly over these years it would be about £1 billion a year. That is 1 per cent of our total health spending. We spend some £6 billion on our international development budget. It is important to put this project in perspective.

Some of the comments made by the noble Lord, Lord McNally, in respect of the rationale for this, the issue of lobbying and the question whether this is about the Prime Minister’s legacy were wholly inaccurate. This is a judgment that the whole Cabinet has come to. We recognise the need to make a decision now, and the Conservatives have made it clear that they do, too. The Liberal Democrats seem to be saying yes, they want to retain a deterrent, but they do not know what we should be doing.

16:31:00

Lord Archer of Sandwell
My Lords, I accept that the Government have a commendable record on reducing the nuclear arsenal in this country. However, if their view is that a nuclear capacity is essential to our security, how is it proposed that the non-nuclear powers will be persuaded that it is not essential to theirs, and how will this decision contribute to achieving non-proliferation?

Baroness Amos
My Lords, the framework within which we are working is the non-proliferation treaty. That framework recognises the five nuclear states and makes it clear that other states should not move to nuclear power, but at the same time proposes mechanisms multilaterally for the nuclear states to disarm. That is why we take the position we do on North Korea and Iran. Our best defence is that framework.

Lord Garden
My Lords, I am grateful to the noble Baroness the Leader of the House for relaying the Statement, and for giving us some Christmas reading. Those of us who are enthusiasts for nuclear strategy will study the White Paper with great interest.

In fact, I do not think there is as much difference between the various positions as is being suggested. Those of us who were on a Liberal Democrat working group on this subject reported last week in favour of a submarine-based system. We suggested—as had been suggested when the decision was made on Trident—that three might be more sensible than four. I am glad to see that the Government have done that. We also suggested that there is no magic about the number of 200 warheads; one can come down quite significantly, and that might stimulate some work in arms control.

The area I have problems with, however, and I would be grateful for an answer from the Minister on this, is the timing described in the Statement. The Minister said that the decision on Trident took 14 years. That is true if you take it from 1980, when it was made, to 1994, when Trident became operationally capable. She finessed that into 1992, when it went into the water. Trident was originally lifed for 30 years, and that continued to be stated until only two years ago. It was a 30-year system, which takes us to 2024, not the 2017 that she was talking about. It has the possibility of a life extension of five to six years at relatively low cost. The Americans are extending their Ohio class to a 45-year lifespan. There is not the urgency that is being put about to take the decision.

I do not think we differ, though. When the Minister said there were five years of development-thinking about Trident, presumably she was talking about five years of development-thinking for Trident’s successor. What date are the Government working on for the main gate decision when the real money gets spent? I will be very surprised if it is different from 2014, which we have been suggesting.

Baroness Amos
My Lords, I confirm that the Royal Navy Vanguard class of ballistic missile submarine had an original design life of 25 years. Even if the life of the boats was extended by around five years—the maximum that we judge to be prudent—the first two boats would leave service around 2022 and 2024. The noble Lord will know even better than I do that the United States has different design bases.

Any extension is an issue of security. There is some urgency—we have to make a decision in 2007. A great deal of work has gone into looking at the different options. It is laid out comprehensively in the White Paper. This is a transparent process and we have made it absolutely clear that the House of Commons will have an opportunity to vote on this. We are confident of winning the argument because the White Paper and the supporting fact-sheet show that the arguments are very clear.

Lord Craig of Radley
My Lords, I welcome the Statement and the bipartisan approach that it has received in this House and the other place. Sitting on the fence makes no sense at all. The life of the submarines has been extended to meet the current decision’s timescale, with the order for a new submarine next year. Bearing in mind that we had problems with Polaris in the latter period of its life, it would be foolish to try to extend the existing Vanguard submarines even further. Can the Minister clarify the funding of these submarines? In the Statement, it appeared that there would be additional funding, but in response to an earlier question, the Minister seemed to suggest that the money would come out of the ordinary defence budget. Perhaps she could explain whether it will come from the ordinary defence budget or whether there will be additional funds for this very important replacement for the Trident system.

Baroness Amos
My Lords, I hope that I have not confused the House. What I said in the Statement and in response to questions was that this would have no impact on our conventional capability. That is the commitment which has been made. The spending will be, as usual, through the Comprehensive Spending Review; this decision will not have an impact on that.

Lord Hamilton of Epsom
My Lords, it must be right to replace our deterrent, and it has to be right that it is a submarine-borne system. However, £15 billion to £20 billion is an awful lot of money. The Minister says it is 3 per cent of the defence budget, but it is a lot more than 3 per cent of the procurement budget. It is not as if our troops are overblessed with wonderful equipment, and one does not want to see that situation continue. Would it not be more sensible to look at putting a nuclear warhead on a Tomahawk missile and firing it out of a hunter-killer submarine? That must surely be much cheaper and although the range would be less, it would give us the deterrent and it would be submarine-borne.

Baroness Amos
My Lords, I am advised that those are subsonic and would be very easy to shoot down.

Lord Gilbert
My Lords, for those of us who believe passionately in the theory of nuclear deterrence and think that our Trident fleet and its Polaris predecessors have made a contribution to the fact that this country has not had to wage a third world war in Europe, and who do not wish to see the ultimate defence of these islands in the hands of the French or the Americans, today’s Statement by the Prime Minister will be extremely welcome. However, I am a little concerned about one thing. Perhaps my noble friend could consult her colleagues about the idea of having only three boats. There have been occasions when, with a four-boat fleet, we have been within a whisker of being unable to preserve a single boat on station. I was glad to hear her say that the Government were insistent on having something available 365 days a year. I hope that they realise that all sorts of unforeseen contingencies can occur. I for one will take a lot of persuading that we should reduce the number of submarines from four to three.

Baroness Amos
My Lords, my noble friend is quite right. I hope that I made it clear that continuous patrolling is the key and that we have to look at the technicalities and design of any new submarine. We would not reduce their number to three if we could not have continuous patrolling and factor in the unforeseen circumstances about which he spoke.

Lord O'Neill of Clackmannan
My Lords, I congratulate the Government on the Statement. This was a central part of our election manifesto in 2005 and did not appear at that time as any potential part of the Blair legacy. What is more, the process is being conducted in a more transparent fashion than was the case in the late 1970s, when some people in this House were advising the then Labour Government on nuclear matters.

As one of those who started as a unilateralist and found that it did not offer any options in terms of disarmament, I welcome the commitment to a further reduction in the number of warheads. I would certainly be of the view, as I was in 1992 when I had more than a passing interest in these matters on behalf of the Labour Party, that there is a case for reducing from four to three the number of submarines, and that the answer lies in the quality of the maintenance programmes and the ability of our dockyard support to do the business in an effective manner. If those points can be answered, many of us on this side of the House would see us getting the correct deterrent in the correct proportions at a reasonable cost. The public would find that hard to object to, because they have shown in the past that they are in favour of continuing the defence of Britain, regardless of the cost, so long as it is within reasonable bounds.

Baroness Amos
My Lords, my noble friend is quite right. The answer lies partly in the quality of the maintenance programme, but also in the overall technical design of the new submarine. He scored a political hit when referring to those in this House who advised Governments in the late 1970s.

Lord Foulkes of Cumnock
My Lords, I too join in the almost-unanimous welcome for this balanced Statement. Will the Lord President confirm that the announced 20 per cent reduction in warheads, on top of the 30 per cent reduction which has already been obtained, is entirely compatible with our obligations under the nuclear non-proliferation treaty? Will she also confirm that the argument that the possession of nuclear weapons is illegal is entirely specious? When the protestors at Faslane took the matter to the High Court of Justiciary in Edinburgh, it was ruled that they had no case. Most importantly, will she confirm that if we were to follow the advice of the Liberal Democrat leader in the House, we would have protection for our generation, but none for our children and grandchildren? That is an entirely unacceptable way to move forward.

Will the Lord President let us debate this matter? I look forward to exposing the differences in the Liberal Democrats’ statements. We have already heard entirely different statements from the noble Lords, Lord Garden and Lord McNally, which, in turn, were different from the statement of the leader of the Liberal Democrats. They are not at sixes and sevens; they are at sixes, sevens, eights, nines and tens. What we need to discuss is threes or fours, or £20 billion or £25 billion. Let us have a debate as quickly as possible.

Baroness Amos
My Lords, my noble friend is right in saying that what we are proposing is entirely compatible and consistent with our obligations under the nuclear non-proliferation treaty. On legality, we fully comply with our obligations under Article 6, which does not establish a timetable for unilateral disarmament, either nuclear or general, and does not state that replacement or updating of currently held systems would be unlawful. Instead, Article 6 places an obligation on all NPT member states to pursue the necessary negotiations to achieve the goal of disarmament. I am proud of what this Government have done with respect to our disarmament obligations.

The issue of a debate is a matter for the usual channels, but I cannot see that they would turn down the possibility. I am sure that many in this House would look forward to having a robust debate with those on the Liberal Democrat Benches.

Lord Cobbold
My Lords, have the Government given consideration to working with the French on the development of the next stage of a nuclear deterrent and sharing the costs?

Baroness Amos
My Lords, I know that the French are doing some modernising of their own. I am not aware of us giving consideration to working with the French but, if there is any further information that I can give the noble Lord, I shall write to him.

Earl Attlee
My Lords, can we afford the expenditure profile of the new deterrent, the carrier system and its air group all at the same time? Some in industry are already saying that we cannot afford the carrier system.

Baroness Amos
Yes, my Lords, we can. If noble Lords look back at what was said in the Statement, they will see that the cost is spread over three decades.

Lord Lea of Crondall
My Lords, if I understand it correctly, Article 6 refers to the need to engage in multilateral negotiations. This is not a question of unilateralism—it is definitely one of multilateralism. Could the Minister say a bit more about the circumstances in which she thinks that it would be possible to engage in serious multilateral negotiations? Is it implicit from the existence of the nuclear five—and now there is also North Korea, India, Pakistan and Israel—that this matter is seriously on the world political agenda?

Baroness Amos
My Lords, we are continuously engaged in multilateral discussions on this issue. My noble friend will know about the Comprehensive Test Ban Treaty, for example. Discussions are ongoing on fissile materials and bringing an end date to that. We see our responsibilities under the nuclear non-proliferation treaty as twofold: first, to work to ensure that states that are non-nuclear do not move to having nuclear weapons and, secondly, that those states recognised in the treaty as having nuclear weapons are able to move towards disarmament.

Lord Stoddart of Swindon
My Lords, I do not think that the Minister has really answered the question that was originally asked by the noble and learned Lord, Lord Archer of Sandwell. What do you say to those countries that are larger geographically and in population and are under greater threat than this country when they ask why, if Britain needs these weapons for security, they do not need them?

I also noted from the Statement that we shall be purchasing the Trident missile from the United States of America. Exactly how independent will our deterrent be? The repair and maintenance of those delivery systems will be at the behest of the United States. Is it not also true that the targeting and guidance systems will depend on United States technology? I hope that the Minister will be able to answer those questions because an independent deterrent really needs to be independent.

Baroness Amos
My Lords, I think that I did answer the noble and learned Lord, Lord Archer of Sandwell. I said absolutely clearly that the answer lies in the nuclear non-proliferation treaty. That is the framework within which we are working and which has led us to the situation that we have now. I accept that some states seek to move towards greater proliferation, but the situation that President Kennedy and others anticipated in the 1960s has not come to pass precisely because of the nuclear non-proliferation treaty, which came into effect in 1970. There are two strands to it. One is to seek to ensure that non-nuclear states do not move to have nuclear weapons. It has not worked in every instance, but we have not seen the proliferation that was predicted. That is why the framework remains so important. The second arm of the treaty is to work for disarmament of those states recognised as nuclear states within the treaty. The United Kingdom has had considerable success with that. We are seeing the modernising of systems and the United States and Russia moving to a smaller number of warheads, all within the context of the treaty.

On the issue of independence, our current nuclear deterrent is fully operationally independent and we retain absolute sovereignty over its use. Only the Prime Minister can authorise its use, even if the missiles are to be fired as part of a NATO action. No other country, including the United States, is able to prevent launch once authorised. The instruction to fire would be transmitted to the submarine using entirely UK codes and equipment. All the command and control procedures are totally independent. The Vanguard-class submarines can readily operate without the system of global positioning by satellite. The Trident D5 missile and our warhead do not use GPS at all. The missile has an inertial guidance system. This position will not change in any way following the planned life-extension programme.

Lord Marlesford
My Lords, accepting that it is—

Baroness Crawley
My Lords, I am sorry but I am afraid that time is up.

Consumers, Estate Agents and Redress Bill [HL]

16:52:00

Second Reading debate resumed.

The Earl of Caithness
My Lords, I stay with protection but move from the defence of the realm to the consumer. Unlike my noble friend Lady Oppenheim-Barnes, I shall concentrate exclusively on Part 3, which concerns estate agents and amends the Estate Agents Act 1979. If ever an Act needed updating, that is it. I shall be supported on all sides of the House in what I want to do with the Estate Agents Act 1979, which started as a Private Member’s Bill, promoted by the then Member of Parliament for Oldham Central and Royton and supported by the then Member of Parliament for The Wrekin.

It is a great pleasure that the former MP for Oldham Central and Royton is present. I refer to the Captain of the Yeomen of the Guard, otherwise known as the Government Deputy Chief Whip. The former MP for The Wrekin is none other than the Captain of the Gentlemen-at-Arms, the Government Chief Whip. They introduced the 1977 Bill, which became the 1979 Act, having been taken up by the Government. Under Section 22 of that Act, the Secretary of State may, by regulations made by statutory instrument, make provision for ensuring that persons engaged in estate agency work satisfy minimum standards of competence.

Sadly, Section 22 has never been implemented. Noble Lords who have been Members of the House for some time will know what I am about to say, and I hope that those who are new will support me on it. We last discussed this subject when I moved an amendment on 13 September 2004 to the Housing Bill to license and provide training for estate agents. The Bill that we have in front of us is welcome so far as it goes, but it is only partially welcome in that it does not complete the job. It shuts the stable door after the horse has bolted. When you seek a full redress system and apply to the ombudsman you already have a complaint. I am trying to prevent the complaint in the first place and thereby give greater protection to the consumer. I will be moving amendments in Committee to that effect.

What I want to do is supported by the great majority of estate agents. My profession is not the most renowned in the world; second-hand car dealers, estate agents and politicians all fall into the same category. I very much hope that the mood and the time are now right to upgrade the estate agent. It seems utterly ridiculous that my daughter is going through endless exams to sell £100-worth of shares on the stock market, yet the person who can sell the biggest asset in most people’s lives—their house—is under no obligation to have any qualification or training. When the Minister loses at the next election, he can set up as an estate agent the day after and start a business with no training or qualification. I have no doubt that he will be brilliant at it and absolutely straightforward. Sadly, a lot of people in my profession are not. With the housing market continuing to expand and increase in value, the problem is getting worse. The damage that is being done to people and the amount of money that is being lost can never really be quantified. It is not an exact science. Valuing a house is not the same as valuing a share. Each house can be slightly different, and it all depends on the purchasers at the time. In my experience, there is no doubt that a lot of people are losing money and are not getting a proper service.

Yet this Government, who will not go to that stage, have recently made a hash of introducing home inspection reports. They asked surveyors to get retrained to prepare only part of the home inspection pack: the survey. I spent a lot of money and was retrained, but they consequently pulled the rug on me and various others, including the brother of the noble Lord, Lord Addington, and they did not give us any compensation. They said, “That is just too bad; we have changed our minds”. If you want the surveyor to be qualified, surely it is even more important that the agent is qualified, properly trained and kept up to a high standard.

As I said, I will move amendments in Committee, but that is the gist of my complaint about the Bill. It is okay so far, but it needs improving. This is a wonderful opportunity to address the situation that I know the noble Lord, Lord Davies of Oldham, wanted to address in 1977. He allowed for its provision; let us now put that provision into practice.

16:58:00

Lord O'Neill of Clackmannan
My Lords, I welcome this Bill. As far as I can see, there has been an awakening of consumer concern in recent years. I do not propose to follow the noble Earl, Lord Caithness. I am not an expert on estate duty matters; I am just a house owner, and I pay my money and grit my teeth.

I will talk about the other parts of this Bill. When I was in another place, a sizeable amount of my constituency workload was taken up with consumer-related complaints: disputes over whether the local authority or the water company was responsible for water and sewerage; metering of gas and electricity; utilities billing; and the failure to attend timeously to minor concerns, which meant that repeatedly people had to take time off work awaiting the gas man and others. Then there was the more serious problem of disconnection of electricity and gas, which really has a life or death effect on individuals.

In many instances, the intervention of my staff took the form of directing the public to the correct telephone number and telling them who they should speak to and what they should say to them. The combination of several consumer council organisations should provide a single telephone number and a single help point, which could considerably reduce the confusion that exists so that consumers, in a time of need, have such a point of contact. It would be even better if such a national help line number started with 0800, because call centres in recent years have developed the flexibility to direct the complainant, the consumer, to the appropriate area. It is worth putting down markers at this stage that we will want some assurances, probably in Committee, that the specialisation that has been developed in the electricity, gas and postal industries must not be lost when organisations in those industries are combined. The expertise that has been developed by them should be made available to the public with the simplest of keypad exercises.

If that is to happen, it will be necessary in the early stages to fund the new body with the appropriate resources. The early days of Postwatch and Energywatch were bedevilled by the drip-feeding of finance by the Government and I became involved in wrangles in my capacity as the chair of the Trade and Industry Select Committee. Those organisations were several months into the financial year before they knew what Treasury support they would receive. I would like a clear indication that there will be an appropriate programme of funding of the new organisations, the expanded national consumer bodies, for perhaps three to five years.

For example, Energywatch currently deals with some 60,000 complaints per annum. It is anticipated that that figure will rise by 10 per cent this year. Those complaints are resolved within some two months, but Energywatch is worried that when it is left to the companies, they will have three months in which to resolve the problems. If the issues involve billing, disconnection or other large sums of money, it is not unreasonable to assume that they should be dealt with more speedily, particularly if there is no incentive to the companies to address the issue with the kind of urgency that the personal circumstances of many of the complainants will require.

I hope that by Committee we will get an indication of what will be expected of companies. I am worried that there could be a plethora of ombudspersons’ schemes and different arrangements; for example for gas and electricity, even under the umbrella of one company. It should be incumbent, perhaps on the consumer organisation, the company or a regulator such as Ofgem or Postcomm, to provide a model that would facilitate the introduction of such schemes as quickly as possible. I know that there will be a time lag before the new body takes over, but it would be terrible if it did that in a vacuum, without schemes or proposals for the speedy handling of consumer problems.

There are other specific issues relating to vulnerable customers who currently slip through the net. It has been possible for them to highlight their problems through social services, citizens’ advice or their elected representatives. One always feels that we are getting only the tip of the proverbial iceberg with this group; many people need support and assistance—they should be among the highest priorities of the new body— but I am not convinced that that is currently happening.

I have an interest in these matters in so far as I am vice-president of National Energy Action, which is concerned about the operation of Consumer Direct. In response to the consultation document, it said:

“Consumer Direct will need some mechanism to identify and give priority to those complaints and inquiries which have more urgent everyday consequences”.
 

However, the burden of responsibility for resolving problems and complaints should lie between the company and the customer.

We must not get into the situation in which we have such a comprehensive set of arrangements that the company almost gets off scot-free. One of the achievements of Energywatch was to get some £4 million in compensation from the companies and into the pockets of predominantly poor consumers, who had overpaid, been badly billed and so on.

Some of the briefing materials we have received were based on a rather ill considered and opportunistic report from the Public Accounts Committee. From time to time, the PAC parachutes opportunistically into areas about which it knows, by and large, very little, and makes simple, trite accusations, such as, “Nobody knows who Postwatch is”. However, the number of complaints that Postwatch has highlighted has increased dramatically since it was established. I refer to highlighting the shortcomings of Royal Mail and the 16 million pieces that are lost, the delays and the bad performance. I have to say that performance is improving dramatically even as we speak, and I hope that over the Christmas period there will be a great improvement, year on year, in terms of delivery. Postwatch has been something of a victim of its own success. The number of complaints it has to deal with means that its expenditure has gone up. I must reflect the opinion expressed earlier in this debate: I hope that integrating the various consumer bodies is not a cost-cutting exercise. We must retain the specialised skills in the staff, separate the functions of the company from the regulator and, as has already been said, secure the considerable policy development expertise vested within the National Consumer Council. If we can get that, we will see an improvement.

I have certain misgivings about the role of the regulator in this process. I was always very suspicious when the regulator—Ofgem, the old electricity body—seemed to have the Electricity Consumers Council in its back pocket and worked in its offices. They should have been physically separated. The regulator’s responsibilities are different in some respects from those of consumer protection, although that is contained in its powers.

I must raise a question, which may be regarded as mischievous but it is not irrelevant. Is the proposal to bring together the consumer councils good and worth while? Why did we not include the consumer panels for Ofcom and for financial services?

My noble friend Lord Borrie mentioned Farepak, which could not, of course, be covered by such provisions because a financial service is involved. There is an interface between general consumer matters and financial matters. I suppose that happened because it is part of the Treasury and this is predominantly a DTI Bill. Once the Treasury has a Bill within its clutches, it—like the Jesuits and seven year-old children—never lets it go.

I shall make just one or two final points because I realise that I am taking up rather a lot of time. We have seen the integration of the Scottish, Irish and Welsh councils but we have not had any assurance about what is to happen to the English regions. As a Scot, I am concerned that a kind of creeping and irrelevant English nationalism is taking place at the expense of English regionalism, which is very important when it comes to issues such as this. In a number of instances, the water and postal companies, and certainly the energy companies, are still predominantly regionally based, and that should be given some consideration.

Lastly, I make a small plea for Scotland. The Scottish Parliament has considerable legislative powers, which neither of the two other Assemblies—if the Irish one is established—has. They need a passing reference or a clause in the legislation. In a very fair and reasonable letter to a number of us today, Douglas Sinclair, the chair of the Scottish Consumer Council, suggested that some provision should be made for the regional Parliament in Scotland so that it can be given its proper place in the legislation. That could be one of the tidying-up issues that we consider in Committee.

I am happy with the Bill in most respects. It has great potential. I, for one, am more than happy to give it my support today and to give it a fair wind in Committee if we can iron out some of those kinks.

17:11:00

Baroness Byford
My Lords, I read with great interest the Written Statement of 20 November made by the Secretary of State for Trade and Industry on the Bill. From it, I learnt that the Government,

“are committed to a robust and effective consumer and competition regime”.—[Official Report, 20/11/06; col. WS 15.]

I am sure that we all share that aim. It was followed by a short paragraph explaining the importance of consumers in achieving the aim and another paraphrasing the contents of the Bill. The fourth paragraph summarised events relating to doorstep selling and led into the remainder of the Statement, which consisted of seven further paragraphs, all on estate agents. Those are all important matters but, in my contribution, I shall leave the subject of estate agents aside and concentrate on the National Consumer Council, which I think is more controversial. The noble Lord, Lord O’Neill of Clackmannan, explained why he has reservations, and some of his comments will be very much reflected in my contribution.

Citizens Advice welcomes the Bill but it wants much stronger powers, particularly in relation to the regulators and the Government. The present consumer councils are worried that their expertise may be lost in a large cross-sector body, which is exactly what the noble Lord, Lord O’Neill, has just said.

I am uneasy that another overarching body is being set up under these proposals, bringing organisations together and saving money in the process. The Gershon review has resulted in genuine savings in quite a few areas, with which we are all familiar. However, at what point will the drive for savings start to adversely affect the effectiveness of the bodies that are being established? My noble friends Lady Wilcox and Lady Oppenheim-Barnes both voiced their concerns, particularly about how the new body will be financed. I accept that this is a DTI matter, and perhaps the DTI manages its money better, but one remembers the launch of Natural England only a month ago. On the day it was launched with a full flurry, Defra said that its funding would be cut by £12 million, which was a big concern to that body. So I hope that, when the Minister responds, he will be able to reassure us on the financial side.

Energywatch, the consumer watchdog for gas and electricity, has written with a number of highly pertinent questions. The most important is probably whether consumers will have easy access to an improved service. I caution the Government against travelling any further along the road of using only phone or internet access. Listening to a tinny recording of Mozart for 40 minutes is not easy access. The advice to “go on our website” is, for many people, not possible to follow, but unfortunately there seems to be a strong correlation between those without internet access and those who have serious problems with their power supplier. Again, I would be grateful for some comment from the Minister.

Energywatch wants to know whether there will be more support to the most vulnerable complainants. Moreover, it has pointed out that, although under the “joined-up” NCC the complainant will be able to receive immediate advice from Consumer Direct, nobody will act on their behalf for three months, as the noble Lord, Lord O’Neill, said. Many of those families cannot wait three months, and we need to address that issue. If you have just received a bill that is five times the normal amount, if you have spent three hours on separate occasions and a lot of money in a phone box, and if you are threatened with disconnection, you do not want to have to wait three months before someone acts on your behalf.

I have asked around and find that Energywatch is well thought of. If it considers a complaint to be well founded, it contacts the supplier, whose response to the customer is virtually immediate. In my book, an effective watchdog is one that has an effect on suppliers. How do the Government propose to ensure that the amalgamated body loses none of the touch of the constituent parts? If savings are to be made, what elements of those constituent parts will be reduced or cut altogether? I hope that the Minister will enlighten us on the detail as the Bill progresses.

My main concern with the Bill is the proposal to toss Postwatch into the pot to be known as the National Consumer Council even though the Water Council is to be excepted for the moment. Of the elements vital to life, light, heat and power are more important than post, but water is more important still. The water watchdog may be included at some time in the future but not at present. I would be glad if the Minister would tell us why, because that seems to be an odd omission.

The Post Office is an issue on which I have spoken in the House very solidly for the past six or seven years. Post Office services reflect the changes that are taking place in our society. We are moving fast from a position in which most people went to the Post Office for something most months to one where those with money for mobile phones and the bills they bring, home computers and virus scans, internet access and the associated costs of training and connection no longer need the Post Office. They pay their bills by phone, they e-mail friends and family instead of writing letters and they send presents using online services. Many of those people have several bank accounts and, should they require any form of state aid or subsidy, they will have no problem in supplying the details needed for automated payment. They are also well paid and do not need to worry about paying bills only when there are sufficient funds to do so. They rarely use cash and the money that they owe does not interfere with their normal banking experiences.

Unfortunately, as the noble Lord, Lord O’Neill, suggested, there are several million people, many of them elderly, who do not share this modern way of life. They are either totally dependent on the state or have only a small income topped up by tax credits and various benefits. Not for them the generous overdraft facilities, the personal loans and the larger mortgages. The banks do not want their custom. In particular, they do not want their overdraft.

It is distressing that someone who is forced into seeking state aid can be compelled to have it paid into a bank account only for that bank to remove a large part of that money to service a small overdraft. The threatened closure of the Post Office card account will mean that many people who have solely their state pension will be able to access it only through a bank account and will run into banking rules with banking-scale charges. Already one bank has imposed current account charges for customers with less than £1,500 either on deposit or as a minimum monthly input.

Over the months, I have listened to some rather weasel words from various Ministers when I have raised the question of post offices and how people can access money that is due to them. I am extremely concerned about the long-term banking accounts that may be withdrawn. Do people perhaps not know that there are 2 to 3 million people out there who cannot afford to allow anyone to take money automatically from their little store? The winter heating allowance was brought in when officials realised that many elderly people were cold because they simply had no money for extra fuel.

Can the Minister tell us how many people who pay their energy bills by direct debit reach the end of the financial year owing the energy supplier money? A very quick straw poll at the weekend gave me to understand that more people, like me, find that the supplier had taken more money than was required. Paying by direct debit may earn a small discount on the basic price of the fuel but, if you are on a small fixed weekly income, you cannot afford to pay one penny more than you need to, even if you get a little extra back at the end of the year.

People on low incomes still prefer to deal in cash. They prefer to walk to the local post office to draw it out over the counter. In rural areas, the nearest bank may be more than walking distance away. Many customers are suspicious of banks. So what right do the Government have to dictate that those who have paid their stamps over the years should access their money only through a bank account? Do they not realise the problems that some people have in getting one? Was there any discussion of the possible repercussions of refusing straightforward access to cash?

The closure of these post offices represents a large number of urban and rural communities that have lost their heart, thousands of people who have lost their support system and yet more who are now further socially isolated. I wish this new body well, but I hope that, through my small, humble contribution today, it will realise that a whole swathe of people cannot access services in the way that the Government would perhaps wish just because it would save them money. In the Committee days ahead, we must give serious consideration to ensuring that we are inclusive. In her excellent opening speech, my noble friend Lady Wilcox said that we must defend the most vulnerable in our society. I am worried that we may fail them if we do not really look at the Bill in Committee.

17:22:00

Lord Whitty
My Lords, I declare a fairly obvious interest as the chair of the National Consumer Council. I am pleased to follow two distinguished former bearers of that office: the noble Baroness, Lady Wilcox, on the opposition Front Bench in her first legislative outing—along with my noble friend Lord Truscott—and the noble Baroness, Lady Oppenheim-Barnes.

I welcome this overall approach—the consumer voice project—and the new landscape of consumer protection. I also support the more specific proposals on doorstep selling and, largely, the estate agent provisions, although I accept some of the points made by the noble Earl, Lord Caithness, on tightening them up. I shall concentrate largely on the overall structure of Part 1.

I support the broad structure. There is a single first-stop shop with Consumer Direct; comprehensive coverage of ombudsman, dispute-resolution and redress systems—not necessarily all in one scheme, but covering the regulated sectors; and the single policy and advocacy body, incorporating the NCC, Postwatch and Energywatch into what is called “new NCC”. That structure—cross-sectoral, learning from each other, and shifting the focus to areas of greatest consumer detriment over time—seems sensible. Making Consumer Direct the single, first telephone number in everybody’s minds for all consumer complaints also seems sensible. The proposal has great flexibility benefits. It ensures good systems of dispute resolution and redress in the regulated sectors, both benefiting consumers and putting pressure on, in particular, the energy companies to deal with complaints and advice rather better than they have in the past. One of my concerns is that the powers of the regulators to ensure that those standards are kept are weak.

The new advocacy body, the new NCC, will enable intervention in priority areas in the way that the NCC has done in the past. The noble Baroness referred to that as “guerrilla” action, which is a fair comment in many ways. The NCC has developed into a centre of excellence over the past 30 years, and we need to maintain that. We are aware of its good reports and examples: the Minister referred to the Consumer Credit Act, and later this week we will discuss the Legal Services Bill, which also originated from pressure from the NCC. In the past couple of weeks, we have had the home credit system referred to the competition authorities. We have also used the super-complaint procedure in relation to garages and our resources in relation to identity theft and food quality. There is a range of different areas of potential consumer detriment. We have also made a beginning in relation to public services in Scotland and England, where we have regarded the role of the consumer of public services as of equal importance to that in the private sector. Our colleagues in the Scottish Consumer Council took the lead in identifying the latest consumer scandal, Farepak, as a serious issue. We can build on this, and therefore the general approach of the Bill is appropriate.

However, I have concerns about a number of areas that require clarification. I hope that the Minister can satisfy me on them, if not today, then later during the passage of the Bill. The first is perhaps a bit aspirational: it would have been better if the cross-sectoral approach had applied to all sectors. The noble Baroness, Lady Byford, referred to water, which at least is in on a contingency basis for a later stage, but other areas with statutory provisions are not in the Bill—for example, transport is an area of great consumer concern, but does not feature in the Bill, presumably because the Department for Transport did not want it to. That is not appropriate when we are trying to create something to cover all areas of consumer detriment.

I also have some problems about the transition, in particular in relation to complaints and queries that currently go to Energywatch and Postwatch. Part of the strategy that the Government have adopted, which I support, is to compel companies to adopt better ways of dealing with complainants and their queries. That particularly applies in relation to energy companies. The powers in the Bill to permit regulators to force them to do so are not only a bit weak but will also take time to have full effect. We need to know what will happen to that sort of complaint in the interim. Having an improved ombudsman system and better redress puts pressure on the companies to get things right first time, which is the objective of this policy, but these provisions will take time to have effect and we need to make sure that that is covered.

The existing ombudsman system in the energy sector is not up to scratch for the job that is envisaged in this approach. There is a delay of three months because the ombudsman cannot intervene until the company has been given that long to sort a matter out. For many consumers in a difficult situation, that is pretty late in the process, so this needs tightening up. In Committee, we need to look more closely at what proportion of the complaints that are currently going to Energywatch and Postwatch will effectively be dealt with by Consumer Direct and what kinds of complaints will come to the new, expanded National Consumer Council and whether they are complex issues or involve potential disconnection or other emergency situations.

Like other noble Lords, I am concerned about the independence of the new body. I was extremely pleased to hear the Minister mention in his introduction that this body will be independent. That is very important. The current NCC was set up by the Government 30-odd years ago as a limited company and has never been in statute. In some ways, that makes it exceptionally vulnerable, because any Government could come along and abolish it without recourse to Parliament. Indeed, that has been suggested on occasion. However, it also gave the NCC great flexibility. I hope that that flexibility is maintained in the new structure. Provisions on the Secretary of State’s directions and reporting will need to be subject to serious scrutiny as we proceed.

Flexibility is needed because we need to shift from one sector to another. What is most detrimental to consumers today may change tomorrow, next year, and in five or 10 years’ time. Indeed, the issues on which we should focus now are not the traditional ones but those that arise in the public sector. The importance of the consumer role in public service relates, as the Government have recognised, to the changes that they are introducing in health, social housing and education. Those changes, although they may improve choice, at least on a one-off basis, do not engage the consumer on an ongoing basis in the way that we want in respect of both public and private services in future.

Another issue to which my noble friend Lord O'Neill referred is devolution. The existing National Consumer Council was a pre-devolution devolution. It worked pretty well; the Scottish and Welsh councils have operated very effectively. It is important that that is sustained through the Bill. The constitutional provisions are there. There will be separate councils for Scotland and for Wales; they will have separate offices; they will be appointed in consultation with the Scottish and Welsh Executives. But the following part seems to limit their role to being just advisory to the main national council. That is not what happens at the moment and it should not happen in future.

Those bodies operate substantially in the Scottish and Welsh context, in civic society and with Scottish and Welsh business, but also, crucially, with the devolved powers in Scotland and Wales to the Assembly and Parliament and local government. For example, much of the best work of the Scottish Consumer Council has been done in conjunction with the Scottish Executive in improving consumer representation in Scotland. That facility needs to be retained and the drafting does not completely reflect that role.

Noble Lords would expect me to mention sustainability, especially since the Stern report. One contribution to changing attitudes and approaches to climate change must be to allow and encourage consumers to make greener choices about the goods that they purchase. Sustainability is placed as a duty on the new National Consumer Council, but that duty is not very strongly worded compared with some other provisions in recent legislation. I would like that to be addressed in Committee.

I do not expect an answer from the Minister on my final point, which is about funding, because no Minister will ever give an answer on that. I certainly do not expect an answer on quantifiable funding, because my noble friend is sitting next to the Treasury Minister. There is a somewhat confusing position on the overall structure of funding because part of it depends on direct grant in aid from the department. Other parts of the pre-existing NCC and its Scottish and Welsh equivalents depend on project funding from other departments. Now, a big chunk will be based on the levy raised from energy and post companies. That will enable us to move attention into those areas and for those areas to benefit from generic consumer interest, such as the example given by the noble Baroness, Lady Byford, of post offices in rural areas—we will be able to consider the issue in a somewhat broader context. I am sure that she will agree that we need to address the totality of services available to people in rural areas and some of our more deprived suburbs. If funding is too ring-fenced, there will be too great a rigidity in what the body can do. On the other hand, we do not want to lose what the existing bodies can do in those two regulated sectors.

I strongly support the general thrust of the Bill. I emphasise the areas of concern that we will need to address as it proceeds. It is a good Bill. It will need some filling out and I am sure that in subsequent stages the House will fully engage in that process. I am sure that my noble friend can answer some of my concerns tonight, but I certainly do not expect him to answer them all.

17:34:00

Baroness Hanham
My Lords, I shall confine what I have to say to Part 3; that is, the estate agents’ compulsory redress scheme. During the passage of the Housing Act 2004, which brought into being the legislation governing home information packs, we had considerable discussion on whether estate agents should be more strictly regulated. As he has already said, my noble friend Lord Caithness—I supported him from the Front Bench—introduced various amendments to ensure that anyone in practice as an estate agent was qualified, registered with an approved body, trained and professionally competent. Although we believed that it was important that anyone charged with producing home information packs was covered in that way, we also wanted to widen that to estate agents’ work in general.

That was resisted by the Government, the Minister then being the noble Lord, Lord Rooker. He introduced his own amendments, which resulted in a provision for the Secretary of State to make an order to require an estate agent to be a member of an approved redress scheme, but only for the purposes of complaints about home information packs. The Bill implements those provisions, which we supported, but extends them to the generality of estate agents’ work. 

I make clear that I support the redress scheme. But, as the Minister acknowledged when he opened the debate, the buying and selling of property is one of the most stressful undertakings in which any of us are involved. It is also without doubt the most expensive and life-affecting decision. It can be carried out with confidence only if those who are professionally charged with the sale and purchase of residential properties have impeccable integrity, knowledge and professional competence.

Unlike in most other countries, there are currently no restrictions on operating as an estate agent in the United Kingdom. As my noble friend Lord Caithness pointed out, the Minister, when he no longer occupies that Bench, could, if he wanted, become an estate agent tomorrow, because anyone can set up an estate agency business with no experience, no qualifications, no insurance and without belonging to a professional body—so without the necessity of having to abide by any rules or codes of conduct.

The limited measures in the Bill today are, as the Minister said, based on the recommendations of the Office of Fair Trading report of 2004. Apart from the redress scheme, they also include a requirement for estate agents to keep records—one would have thought that that had been done a little while ago—to give access to officials from the Office of Fair Trading and the trading standards office and enable the Office of Fair Trading to consider the fitness of someone to practise. The latter two provisions would presumably arise as a result of a complaint and therefore, as with redress, would occur post hoc—after an event. They would not prevent something happening.

While I have no particular objections to the provisions in this part, I simply do not believe that they go anything like far enough, and nor does the National Association of Estate Agents, which might be expected to be pulling back from this as far as it could. However, a professional body which represents more than 10,000 estate agents in this country would support it being compulsory for anyone practising as an estate agent to be a member of an industry regulatory body such as its own or the Royal Institution of Chartered Surveyors, which has already introduced a technical qualification for estate agents as a minimum entry requirement.

If the professional bodies see the need for there to be a legislative requirement to ensure that there is compliance across the profession on high standards, I simply do not understand why the Government balk at that.

The current negative licensing regime, under which anyone can set up as an estate agent, even if the Office of Fair Trading can ban them in extremis, is completely insufficient. Estate agents these days are more often than not handling properties worth hundreds of thousands, and in London many millions, of pounds. They charge tens of thousands of pounds in fees and handle similar sums for the Chancellor’s stamp duty. They give advice to buyers and purchasers alike. Most are capable, some are not. Most will, by sheer weight of competition, have to act with propriety and competence. Some will not. When they do not, the loss to the person who owns or is trying to buy property could be catastrophic. After the event, compensation is not enough on its own. We really should be looking at methods of prevention.

Finally, the redress scheme relates only to residential properties. It does not include residential lettings. This is probably because these measures amend the Estate Agents Act 1979, which did not include residential lettings. The Bill will be an excellent opportunity to redress that problem, too. Although noble Lords would not think it, judging by the amount we deal with, opportunities for legislation come seldom, and it is unlikely that the concerns that I and other speakers have expressed today and which are not addressed in the Bill will be considered again for a very long time. I hope that we may be able to consider some of these issues during the passage of the Bill.

17:41:00

Lord Williams of Elvel
My Lords, I apologise for speaking in the gap. I did not put my name down to speak because I thought the debate would go on for rather longer and I would not have time to stay for the winding-up speeches.

I want to discuss two Welsh issues. My noble friend Lord O’Neill has discussed Scottish issues, and my noble friend Lord Whitty glanced at the issues that I want to discuss. The first is the remit of the new Welsh Consumer Council, which is defined in the Bill as a “territorial committee”—language that is not much appreciated west of the Severn, but let us leave that aside—of the new National Consumer Council. The purpose of this committee is,

“the provision of advice and information to the Council about consumer matters affecting the area for which the committee is established”.

This does not reflect the policy development role exercised by the current Welsh Consumer Council. I know that a further subsection allows the National Consumer Council to delegate and to devolve other functions to the new Welsh Consumer Council, but I believe that my noble friend would be right to consider that the core functions defined in the Bill for the National Consumer Council, so far as they affect Wales, should be part of the remit of the Welsh Consumer Council and should therefore be put into the Bill as such.

The second issue is the relationship between Welsh Ministers and the National Assembly for Wales, which is a devolved issue. The Bill requires the National Consumer Council, rather than the new Welsh Consumer Council, to send a copy of its forward work programme to Welsh Ministers. All that is a step back from the current devolved issue, and I very much hope that the Minister will take it upon himself to reconsider the clauses and to see whether we cannot do better than this in Committee.

17:43:00

Lord Razzall
My Lords, it is a very strange experience for me to respond to the Bill at Second Reading on behalf of the Liberal Democrats because, for the past eight years since I have been doing this, I have been looking to my left to see the noble Baroness, Lady Miller, and to my right to see the noble Lord, Lord Sainsbury; so this is a new experience. I welcome the noble Baroness and the Minister to their new appointments, and I look forward to the inevitable jousting between us.

I declare an interest in that I sit on the board of directors of a public company that has estates and managing agencies among its subsidiaries.

The subject matter of the Bill is rather like apple pie and motherhood. Listening to all the speeches and reading the representations that we have all received, there is no doubt that everyone is struggling, because none of us can be against improved consumer protection, better regulation of estate agencies or further controls on doorstep selling. Everyone is struggling to ask the same thing: all this is a very good idea but, when we get to the detail of it, are the Government going about it in the right way? No one wants to say that because everyone is worried that people will say that they are against consumer protection or the better regulation of estate agencies. That, in substance, is what everyone on all sides of the House has been saying this afternoon. Is it not time for the Government to pause and, as the Bill passes through this House and we discuss it in Committee and on Report, to ask themselves whether the perfectly acceptable and welcome aspirations in the Bill are really being fulfilled by its content?

The creation of the new National Consumer Council has had a seven-year gestation, starting with the 1999 White Paper wonderfully entitled Modern Markets: Confident Consumers. It was obviously a good idea, following that White Paper, to bring all consumer bodies under one watchdog, but the lengthy time lag since 1999 rather gives the game away. The DTI’s lead attempt to bring consumer watchdogs under one umbrella has failed, because only the DTI bodies are signing up to the new National Consumer Council. It is possible that the water watchdogs may join later—indeed, we have all been lobbied to try to ensure that that does not happen until 2010—but the rail, air and telecom watchdogs, as well as the financial services watchdog, as the Minister’s noble friend had indicated, have refused to sign up to the DTI’s plans. The existing bodies, Energywatch and Postwatch will be abolished, the existing National Consumer Council will be become the new National Consumer Council, and the existing Consumer Direct role will be significantly extended, with ombudsman schemes in place for energy and post. If, however, you have a consumer problem with the railways, the air services, telecommunications and financial services, there will be no change to the existing arrangements.

In his opening remarks, the Minister said that the existing system was fragmented. If you have an energy or a post problem at the moment, you call Energywatch or Postwatch and they deal with it. After the Bill is passed, and assuming that it is passed in its existing form, the consumer will initially contact Consumer Direct, after which there are five different lines of possible redress to which they could be directed: Consumer Direct, the various ombudsman schemes, the new National Consumer Council, Postwatch or Ofgem—hardly a simplification.

This, as various noble Lords on both sides of the House have indicated, comes at a time of continuing threat to the post office network and significantly increasing energy prices, and there is a danger that opposition and co-ordinator responses in the face of these challenges will be muzzled by a long period of uncertainty and unnecessary upheaval. In substance, there is a significant argument for merging all existing bodies to provide simplicity for the consumer, but that is not what is happening. We are getting simply the merger of two existing major bodies—Postwatch and the energy bodies. If the argument has now been lost for one consumer council, one of two things will happen. Either a lot of the expertise in Postwatch and the energy watchdog will be lost through redundancies and staff leaving, or if that does not happen, bearing in mind that there will not be one consumer watchdog, what is the point of doing it in the first place?

I turn now to the estate agency provisions. We are all well aware of the myriad unfortunate practices by rogue estate agents which bring the estate agency profession into disrepute. I shall take just two obvious ones: what is called “managing expectations”, where an estate agent invents a lower offer which actually was never made so that the vendor thinks that the higher offer he or she has received looks rather good; and the practice which I believe is known in the West End as “simmering”, where documents relating to similar properties are doctored in order to persuade buyers to pay more for the property they are seeking to buy than it is actually worth. There are many other such practices by rogue estate agents and no doubt something should be done about those.

But looking at the proposals being brought forward by the Government, it is clear that only very limited changes are to be made to the existing legislation. In summary, the Bill requires estate agents to belong to a redress scheme for the purposes of all complaints relating to estate agency work involving residential property. The Bill requires estate agents to make and keep records, including records of offer letters, for a period of six years. It will give the Office of Fair Trading and trading standards officers additional powers when they require access to premises to look at the production of records and so forth, and it expands the circumstances in which the Office of Fair Trading can consider the fitness of an estate agent to practise, and consequently to take regulatory action against him.

However, the Bill does not include any of the following: a requirement for estate agents to have a qualification, a point touched on by the noble Baroness; a requirement for estate agents to have any experience; a direct requirement for estate agents to follow a code of conduct, although that probably would be included in the rules of an approved redress scheme; a requirement for estate agents to be members of a professional body; or any protection for customers engaging in rental or property management contracts, a point touched on by the noble Baroness, Lady Hanham. I suspect that the Bill does not include that for the reasons she gave in her speech. If the Government are not going to take any of the more radical steps outlined in lobby material, letters from representative bodies we have received and points already made by a number of noble Lords today, why does the legislation not simply extend the existing ombudsman scheme?

The noble Lord, Lord Borrie, gave the game away in his speech. On matters such as these we all listen to the noble Lord above almost everyone else. After all the heat and detail of this legislation, the most likely result will be that the DTI will approve the ombudsman scheme as the standard for redress, in which case do we really need the complication we see in the Bill? Why not start from there rather than add the significant potential for further complexity with little practical result?

Lord Borrie
My Lords, in answer to the question put by the noble Lord, it is in order to get universal adherence to the code instead of adherence of only about two-thirds of estate agents.

Lord Razzall
My Lords, I appreciate that, but the point is that if the Bill goes through in its present form, unless the ombudsman scheme is the one uniformly adopted for redress we will have several schemes being approved. Surely, as the noble Lord, Lord Borrie, indicated, it would be better for the existing ombudsman scheme to be the one approved by the DTI and with which everybody will comply?

I shall touch on two further points. I mentioned that the noble Baroness referred to letting arrangements. As she indicated, there will not be many opportunities for legislation on this topic. While I know that the inclusion of provisions on residential letting would not necessarily fit that easily into the framework of the Bill, there is no reason in principle why the practices that need to be regulated, and which apply equally to residential selling, should not also apply to residential letting. As the Bill passes through this House and another place, I hope that the Government will take the opportunity to address that.

The second point of detail I want to mention is one that nobody has referred to: the Government need to reflect on the case of new-build properties. Many of them are sold directly by the main developers in this country and not through estate agents. The developer will put up a show house on the site and will employ Sharon or Tracy to sell properties from that show house. However, all the practices deemed necessary to enshrine under protection in this Bill apply equally to residential developers, but I do not think they are currently caught by the provisions because they are not estate agents. The Government need to look at that.

In conclusion, this is a well-meaning Bill, but in the case of consumer protection it seems to have been emasculated by rather typical Whitehall turf wars, and in the case of estate agents, while it is high in aspiration, it is handicapped by timidity.

17:57:00

Lord De Mauley
My Lords, this has been an interesting debate and I thank my noble friend Lady Wilcox for her opening speech, which set out our approach to the Bill. I also express our gratitude to the Minister for so kindly arranging to brief us with his team last week. It was a helpful meeting and was much appreciated. As my noble friend said, while we support much in this Bill, it is an unusual one and seems to be something of a patchwork of issues and initiatives that the Government have hitherto allowed to fall by the wayside. While estate agency, consumer communication and doorstep selling are all related through the consumer, my fear is that the Bill is something of a reaction to recent events rather than a carefully thought-through, clear and positive statement for the consumer.

I shall start with estate agents. The creation of an estate agent redress scheme is broadly welcomed on these Benches, as my noble friend has explained. However, it is clearly an afterthought following the narrow scope of the Housing Act 2004. The noble Lord, Lord Rooker, attempted to add a redress scheme in the course of our debates on that, but was unable to do so due to its scope, so we are pleased to see that such a scheme is being implemented in this Bill.

It is a concern that the Bill makes no mention of provisions for those transactions where no estate agent is involved, an issue just referred to by the noble Lord, Lord Razzall. Has the Minister considered extending the Bill to include property developers in order to ensure that there will be redress for consumers who buy direct from developers? If not, perhaps he could explain why that was not considered appropriate. Similarly my noble friend Lady Hanham, and indeed the noble Lord, Lord Razzall, referred to letting agents. Again, we would be grateful if the Minister could respond.

Under the Bill, there will be two systems of redress for home buyers: redress relating to home improvement packs and redress regarding estate agency under the Bill itself. Do Her Majesty’s Government plan to press ahead with HIPs? If so, will the redress systems be run by one or a series of different organisations? How will it be possible to ensure consistent standards? I would be grateful if the Minister could explain how he envisages this working.

We welcome the requirement for estate agents to keep records—even if, like my noble friend Lady Hanham, we are rather surprised that they do not keep them already—allowing trading standards officers to inspect those records and expanding the circumstances in which the Office of Fair Trading can take regulatory action against estate agents. It is worth pointing out that the vast majority of estate agents are both respectable and regulated by membership of one of the professional bodies. It is the rogues, as always, that need controlling.

What we are seeing are clearly moves in the right direction but, having listened to the speeches of my noble friends Lady Oppenheim-Barnes, Lord Caithness and Lady Hanham, perhaps the Minister will respond to the legitimate question that they have raised, which merits close attention, of whether consumer protection in this area should be extended further than the Bill provides. I shall also be interested to hear from the Minister whether the existing £25,000 cap on redress, to which the noble Lord, Lord Borrie, referred, will still exist under the Bill.

Having said that, I am sure that consumers will be pleased that the Bill seeks to extend redress in the gas and electricity industries, in postal services in the United Kingdom and, potentially in due course, in the English and Welsh water industries. The new power to make regulations which require providers to belong to a redress scheme is good news for consumers, who can be vulnerable to energy providers in particular, and will, we hope, encourage best practice in the industry. However, there are concerns that additional cost implications may arise from the new regulation requirements. I know that the industry, and in particular Postcomm, as well as other interested parties, is concerned about this. I hope the Minister’s response will address this concern.

My noble friend Lady Wilcox and the noble Lord, Lord Razzall, have reserved judgment on the merger of the NCC. My noble friend has aptly reminded your Lordships of the Government’s record in the creation of non-departmental public bodies. It is not a promising one. My noble friend Lady Oppenheim-Barnes has expressed specific concerns about the adequacy of staffing for the NCC, and referred to the danger of erosion of the independence of consumer bodies such as the NCC and their effective subjugation to the will of government. Although the noble Lord, Lord Borrie, rejected this, it would be good to hear the Minister’s response. The options for merger set out within the regulatory impact assessment and the wording of the clauses dealing with the merger are, as my noble friend Lady Wilcox said, in need of greater clarification.

While the merger is intended in some respects to simplify things for consumers, it creates the potential for some old-fashioned confusion. Why, as my noble friend Lady Byford asked and the noble Lords, Lord Whitty and Lord Razzall, mentioned, should the public assume that post and energy consumer issues are dealt with by one body, but transport, financial services and, for a while anyway, water dealt with by others? Other noble Lords have expressed their anxiety that the new Consumer Voice should not turn out to be a hotchpotch that takes the wide-ranging expertise of the NCC, merges it with the relatively new experiences of Energywatch and Postwatch and, as a result, fails to give consumers the fair deal they deserve.

I hope we can ensure that the new body is as effective as it can be, which is why it is important to highlight the potential pitfalls at an early stage and try to avert them. I hope that we will be able to look in greater detail at the definitions of “consumer” and “consumer matters”, as well as the proposed funding provisions for the new NCC body. I should also like to probe the Minister on the descriptions of vulnerable people and to look at whether those can be refined and clarified. These are all matters that I look forward to addressing in Committee and the subsequent stages of the Bill.

I hope I have made it very clear that we are in support of transparent and efficient consumer communications. Yet it is not only the public’s understanding of the role of Consumer Voice that is in need of clarification but the internal processes of its counterpart, Consumer Direct. While Consumer Direct seeks to simplify the complaints system, I have a concern that simplifying it in the way the Bill does could create new complexities. The noble Lord, Lord O’Neill of Clackmannan, referred to the potential for confusion and my noble friend Lady Byford referred to the difficulty that some people will have in accessing support and assistance. We think the new system may seem simple in concept but could be complex for the consumer, being process-driven rather than consumer-driven. I should be grateful if the Minister could inform your Lordships which kind of questions will be answered by Consumer Direct, which will be referenced and by whom.

According to Energywatch, consumers are at risk of becoming stranded between the instant advice offered by Consumer Direct and the redress offered by the ombudsman schemes. Again, the noble Lord, Lord O’Neill, has referred to these concerns. It is my understanding—other noble Lords have also referred to this—that where energy is concerned, the ombudsman will begin to investigate a complaint only after three months from the original letter. Is that correct? If so, does the Minister agree that consumers who need more than simple advice, or who cannot wait for the ombudsman to begin, will lose out under the new system?

Above everything, as several noble Lords have said, it is vital that the NCC maintains the expertise it has built up as a standalone consumer champion. Importantly too, while we await with interest the details of the merger of Postwatch into Consumer Voice, we recognise that the postal services market is undergoing wide-ranging and rapid change. My noble friend Lady Byford has quite rightly brought the question of post offices, especially but not only rural post offices, to the attention of the House. This is an issue right at the heart of consumer affairs in the postal service. Post offices are the keystone of communities in towns in the countryside and, as we have done in the past, we will seek to ensure that the consumer’s voice is not diminished in this merger. Postwatch, like Energywatch, has been the point of contact for sector-specific expertise since its foundation. There is much work to be done in ensuring that Consumer Voice continues to represent consumers and businesses that depend heavily on the postal services.

We are told that the cost of implementation of Consumer Voice is £8.7 million. That assumes some redundancies. Could we please see a detailed breakdown of that figure and know how many redundancies are involved? Ongoing savings for the industry are put at £8.9 million. Again, could we please see a detailed breakdown of this figure?

Turning briefly to the matter of doorstep selling, I have one question for the Minister. Most of the goods and services that are the subject of doorstep selling are accompanied by offers of credit. The Consumer Credit Act was passed in the last Session; I suspect that the Minister will confirm that doorstep lending is covered by that legislation rather than the Bill but, in view of the very close relationship between doorstep selling and doorstep lending, can he explain how consumers will understand the difference and how to deal with it?

We have had a concise insight into the Bill this afternoon from noble Lords with great expertise in their respective fields. I look forward to analysing it in greater depth in Committee, to supporting measures that we believe to be constructive and to improving those that we believe need improvement, in order to get the very best possible deal for both the consumer and business and, consequently, the industry as a whole.

18:08:00

Lord Truscott
My Lords, I have greatly enjoyed the highly constructive debate that we have had today and I am grateful for the many incisive contributions that have been made. I welcome the noble Baroness, Lady Wilcox, to her position on the Opposition Front Bench and thank her for her acute observations. I will try my best to answer as many of the questions that were raised as possible. It may be more appropriate for some of them to be dealt with in Committee but I shall do my best in the time available.

At the outset, the noble Baroness, Lady Wilcox, referred to indebtedness in society. The Government are looking at this matter with the cross-government approach set out in the Tackling Over-indebtedness Action Plan 2004. A number of associated activities deal with this area, including implementing the new Consumer Credit Act 2006 by looking at illegal moneylending, loan shark pilots and various other initiatives. It is fair to say, though, that the vast majority of credit contracts are honoured, and it is only a minority who get into trouble. The principal drivers of personal insolvencies are obviously economic.

It is also interesting to look at some of the statistics. Sound domestic economic fundamentals have underpinned the growth in personal debt, but when we look at, for example, average mortgage rates, which were 5.22 per cent in September compared with 11 per cent between 1979 and 1997, mortgage holders have been saved approximately £4,000 a year on average. That is all underpinned by low interest rates delivered by greater macroeconomic stability, which have ensured that households are paying a significantly smaller part of their income in interest. We are now in a situation where unsecured consumer credit is growing at its slowest rate for 12 years.

A number of noble Lords referred to the proposals for setting up Consumer Voice and to queries about whether it is just a cost-cutting exercise. The noble Baroness, Lady Wilcox, referred to that issue, as did my noble friend Lord O’Neill of Clackmannan and the noble Baroness, Lady Byford, among others. Although it is true that there will be net cost savings of around £8.9 million per annum, it is not a cost-cutting exercise. There will be savings from shared central functions, but not a reduction in those functions. Government funding will not be reduced.

A number of noble Lords referred to the retention of sectoral expertise. I assure your Lordships’ House that this is an integral part of our reforms. The new NCC will need to ensure that it is an effective advocate for consumers in all markets, and therefore that it has at its disposal sufficient sectoral expertise.

The noble Lord, Lord De Mauley, asked how many staff will be made redundant. We are not prescribing the exact structure of the new body in terms of staffing levels. That will be determined in conjunction with the existing consumer bodies to ensure that the new body is fit for purpose and able to undertake its new functions effectively and efficiently. The KPMG analysis itself did not assume any reduction in the number of complaints from the 2005-06 level, a point referred to by the noble Baroness, Lady Wilcox. In practice, we anticipate that the number of complaints being resolved outside the company will fall, due to the cost of the onward referral of complaints to the redress scheme.

With regard to estate agents’ redress, the noble Baroness, Lady Wilcox, questioned the number of non-frivolous complaints that may go forward to an estate agent and the number of complaints that will be dealt with. The view on the Government’s side is that residential issues are at present widely defined, which will exclude certain types of complaint so that the number of complaints will be defined in such a way that only the borderline cases for further consideration will be excluded. All legitimate complaints concerning any acts or omissions committed by someone in the course of estate agency work affecting sellers and buyers of a residential property will be covered.

A number of noble Lords spoke of the scope of the devolved Administrations, including the noble Baroness, Lady Wilcox, and my noble friends Lord O’Neill and Lord Whitty. It is the position that the new National Consumer Council will operate across Great Britain and in respect of postal services in Northern Ireland, but there will be no carve-outs. The new NCC is empowered by the Bill to represent consumer interests in all markets, including public services. In practice, the new NCC will need to take account of the existence of other sectoral consumer bodies.

The Consumer Council for Water will be merged with the new NCC, and a new redress scheme for water consumers in England and Wales will be established. The Government have announced that the position of CC Water will be reviewed in 2008 after public consultation. However, the Bill requires the new National Consumer Council to set up a Scottish Consumer Council and a Welsh Consumer Council, which will replicate the current arrangements. Those bodies will have their own chairs and members appointed by the Secretary of State after consulting the Scottish and Welsh Ministers as appropriate, so there will be an effective voice for the Scottish Consumer Council and the Welsh Consumer Council referred to by noble Lords, including my noble friend Lord Whitty.

The noble Baronesses, Lady Wilcox and Lady Oppenheim-Barnes, and my noble friend Lord Whitty asked about the independence of the NCC. I assure your Lordships that the new NCC will be an independent statutory body, underpinned by statutory functions that will enable the new body to conduct research, make inquiries, undertake investigations and make reports and representations to any party. The new body is empowered to determine its own work programme.

Baroness Oppenheim-Barnes
On that point, my Lords, the Bill clearly states that the new National Consumer Council will investigate and then report to the relevant government department, not to the public. When the noble Lord is as old and wise as I am, he will know that each department has its own fish to fry. It is not at all the same thing as first making this type of report public and then reporting to a Minister for consumer affairs who has an overall view of the situation. That is what I am concerned about.

Lord Truscott
My Lords, I am grateful to the noble Baroness for that. She made a point earlier about there being no Minister for consumer affairs. There is currently such a Minister; it is my right honourable friend Ian McCartney, Minister of State at the DTI with responsibility for consumer affairs. The point she has raised in her intervention is a valid one, and something we ought to look at in Committee.

On redress schemes generally, the ones that are established are there to resolve complaints where service providers have not been able to do so and award compensation and redress to consumers where appropriate. Consumers with a complaint should initially approach the service provider in the first instance. If needed, consumers would then be able to use the Consumer Direct service as a source of impartial advice and assistance to help. In the event that a supplier could not provide a satisfactory response to their complaint, the consumer would be signposted to the relevant redress scheme to investigate the complaint on their behalf.

The point was made by the noble Lord, Lord Razzall, about having one ombudsman scheme. The fact is that under the Bill we are leaving it to industry to come forward and seek approval of suitable redress schemes, in the plural, so the situation could be that several schemes are approved. It is also the case that the approved schemes will have to conform to minimum standards. Such standards will pay due regard to best-practice principles for redress schemes.  

Doorstep lending has been raised by a number of noble Lords, including my noble friend Lord Borrie and the noble Baroness, Lady Oppenheim-Barnes. Currently, it is a criminal offence for lenders to agree a credit agreement in an unsolicited visit to a consumer’s home. Consumers already have a cooling-off period for credit agreements agreed in their home. We will consider the regulations on doorstep lending in the Bill on doorstep lending when we draft the new regulations. Consumer credit legislation already requires lenders to give borrowers details of their cancellation rights, and the proposed consumer credit directive, if agreed in its present form, will extend those rights. It would not make sense to change the present provisions until the outcome of negotiations on the directive is clear. The Consumer Credit Act 2006, which we are in the process of implementing, already has a number of requirements on post-contract transparency in the form of statements and notices that need to be sent to consumers.

My noble friend Lord Borrie and the noble Lord, Lord De Mauley, among others, referred to doorstep lending. From a consumer’s perspective, the changes we are making to doorstep selling and the current consumer credit legislation will mean that consumers will be clear on their rights. The consumer credit legislation already requires lenders to give borrowers details of their cancellation rights.

The noble Baroness, Lady Oppenheim-Barnes, mentioned consumer education. The NCC is responsible for consumer education and will continue to be. The OFT has a role to support Consumer Direct in consumer education. Consumer Direct was rolled out nationally earlier this year—a year ahead of schedule—and provides advice on all consumer issues. We are exploring with the OFT whether to run an awareness campaign on the implementation of the new doorstep selling regulations expected to come in in April 2008.

In response to a question raised by the noble Baroness, Lady Oppenheim-Barnes, the Office of Fair Trading has a function under the Enterprise Act 2002 of publishing educational material or carrying out other educational activities for consumers. The Bill provides for the new National Consumer Council the function of facilitating consumer education which complements the role of the Office of Fair Trading.

My noble friends Lord O’Neill, Lord Borrie and Lord Whitty and the noble Baroness, Lady Oppenheim-Barnes, among others, spoke about Farepak. One cannot observe the Farepak saga without having a great deal of sympathy for those who, as a result of the company’s collapse, have lost money that they have saved and understandably feel badly let down. The circumstances of the collapse will be properly investigated by the DTI’s Companies Investigation Branch. The administrators will in due course report to the Secretary of State on the fitness or otherwise of the directors of Farepak.

The question was raised about whether the Bill should include some provisions to cover such cases. The Government are working very closely with the administrators, the Family Fund people and all those who are dealing with this difficult situation. My right honourable friend the Minister of State for Trade, Investment and Foreign Affairs met the chief executive of the Office of Fair Trading on 8 November; he asked that the OFT work with the Financial Services Authority and DTI officials to look at the regulatory framework in which Farepak operated and consider options to address any issues raised. A report will be made to him at the earliest opportunity and we will then be able to take a view on what action is required. However, I can assure noble Lords that we will take the necessary steps as expeditiously as possible to learn the lessons from the Farepak saga and to ensure, if at all possible, that there is no recurrence of this disturbing situation.

The noble Baroness, Lady Oppenheim-Barnes, spoke about the full range of the new consumer body’s remit not extending to Northern Ireland. The General Consumer Council for Northern Ireland already covers all sectors, including utilities, other than postal services. That is why the remit of the new National Consumer Council extends to Northern Ireland only in respect of postal services.

The noble Earl, Lord Caithness, the noble Baroness, Lady Hanham, and the noble Lord, Lord Razzall, spoke about the regulation of estate agents and whether they should be qualified. Estate agents are currently regulated by the Estate Agents Act 1979, which lays down the duties agents owe to clients and to third parties. It gives the OFT the power ultimately to prohibit those persons it considers unfit to carry on estate agents’ work. In addition, the Enterprise Act 2002 and local authority trading standards services can require an estate agent to change aspects of his conduct when the agent breaches specified consumer protection measures. Estate agents are also covered by the Property Misdescriptions Act 1991. However, following on from the studies and consultations that have taken place, we do not believe that licensing would in practice improve consumer protection as the evidence suggests that most estate agents who were subsequently banned had no criminal history and consequently would have been able to obtain a licence. Misconduct has appeared to be the result of a lack of integrity by individuals rather than a consequence of a lack of qualifications or knowledge of the law. That is the Government’s position.

I was asked about Consumer Direct. The new NCC will continue to carry out the sectoral functions currently undertaken by sectoral consumer bodies including Post Office monitoring and help for customers facing disconnection from energy supplies. I have dealt with questions on the budget.

A number of noble Lords spoke about vulnerable consumers. The Bill allows for the new NCC to determine for itself how to assess and categorise vulnerable people for these purposes. The Bill also enables the new NCC to act on behalf of consumers who become vulnerable through disconnection of their gas or electricity supply.

I was asked why the Ofcom Consumer Panel and the Financial Services Consumer Panel were not consulted. We consulted on their inclusion in January to April of this year. The majority of responses agreed that the panels had a different role to that of other statutory consumer bodies such as Energywatch and Postwatch and that both roles were important and were maintained by the proposals. There will be a consumer advice line for people to ring—it will be an 0800 number, a point raised by my noble friend Lord O’Neill. Arrangements will be simpler—a point made by the noble Lord, Lord Razzall—and consumers should be able to contact Consumer Direct directly for complaints rather than first finding out the correct body to contact.

The three-month period refers to the time allowed for companies to resolve complaints. The new council has a duty to act on behalf of vulnerable consumers without having to wait.

The noble Baroness, Lady Byford, spoke about post offices. People can still get their money from post offices and will continue to have the option to do so. The Post Office card account contract ends in 2010.

A number of noble Lords asked why all the consumer bodies were not being merged into one consumer advocacy body. I have already mentioned the Financial Services Consumer Panel and the Ofcom Consumer Panel. There are special reasons why water and transport were not included. With respect to water, the consumer representation has only recently been reformed. Similarly, with respect to transport, the Air Transport Users Council is a division of the sectoral regulator, the Civil Aviation Authority, so it was not thought appropriate to incorporate that at this stage.

There are four reasons for not including lettings. The Bill amends the Estate Agents Act 1979, hence its provisions do not apply to letting agents. Tenancy deposit schemes, however, are to be introduced in April 2007 under the Housing Act 2004. The Government support voluntary self-regulation of letting agents. Agents who are members of the Association of Residential Letting Agents, the Royal Institution of Chartered Surveyors and other groups have provided financial support to the national approved letting scheme. However, we will continue to monitor the operation of the lettings market. Approved redress schemes dealing with complaints about letting agents on a voluntary basis can already operate, but that would be a matter for the scheme administrators. The OEA has recently started dealing with complaints about letting.

The Earl of Caithness
My Lords, the Minister said early on in his speech that all transactions between sellers and buyers would be caught. Does that cover the point of the noble Lord, Lord Razzall, about developers?

Lord Truscott
My Lords, it depends on the definition of estate agents. Where estate agents are involved in selling property and can be defined as estate agents, the Bill will cover them. My understanding is that where they are simply selling property directly, not involving all the other activities of estate agents, they will not be covered by the Bill.

Lord Razzall
My Lords, I apologise for interrupting the Minister’s flow—I know that it is getting late. I was making rather a different point; I am grateful to the noble Earl for intervening. It is accepted that many big residential developers do not use estate agencies. I was asking the Government to find a mechanism to ensure that the Sharons and Traceys, sitting in their show house in Berkshire or Northumberland, are regulated in some way. It is nothing to do with their being estate agents; it is just that what they could get up to could be just as bad as the practices of rogue estate agents.

Lord Truscott
My Lords, it depends on the definition of the law and whether the activities in which they are involved can be defined as those of estate agents. I was not implying that they were employing other estate agents as intermediaries; what matters is the definition of their activities. We can perhaps return to that matter in Committee.

The noble Lord, Lord De Mauley, mentioned the current cap of £25,000. The cap is not imposed by government; it is up to industry to propose details of schemes, including compensation.

I shall study Hansard and write to noble Lords on questions which were not covered in my winding-up speech. As I said earlier, some details are more appropriately dealt with in Committee. In summary, the Bill will create a heavyweight champion for consumers, give enforcers the tools they need to get rid of rogue estate agents, and strengthen consumer rights and redress.

On Question, Bill read a second time, and committed to a Grand Committee.

Rehabilitation of Offenders Act 1974 (Exceptions) (Amendment No. 2) (England and Wales) Order 2006

18:34:00

Lord Bassam of Brighton
rose to move, that the draft order laid before the House on 16 November be approved. First Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, a draft of this order was laid before Parliament on 16 November. The Rehabilitation of Offenders Act 1974 allows ex-offenders not to disclose certain old, spent convictions in an effort to improve their employment opportunities, with the effect of reducing re-offending. The Act also makes it unlawful for record-keeping bodies such as the Criminal Records Bureau to disclose details of such convictions.

The Act grants power to the Secretary of State to exclude application of these general rules in relation to questions by particular employers, bodies and proceedings. The rationale behind this is to ensure that employers and bodies offering positions, professions and licences of a more sensitive nature would be able to assess an applicant’s full criminal history before making a decision. This power was exercised in 1975, when the Rehabilitation of Offenders Act 1974 (Exceptions) Order came into effect. The 1975 order has been amended periodically to ensure that the criminal disclosure regime keeps pace with changes in employment and public risk. The most recent amendment was made in July this year. The amendment before us will make minor changes relating to football.

Ministers made a commitment in September 2005 to exempt some in-house football stewards from the need to be licensed under the Private Security Industry Act 2001 by making regulations under Section 4 of that Act. Those regulations could be made only where suitable alternative arrangements were in place, which required CRB checks to be undertaken on behalf of the football authorities. Therefore, the 1975 order was amended in July to give the CRB the power to undertake checks on football security staff on behalf of the Football Association and the Football Association Premier League for the purposes of granting that exemption.

Ministers subsequently decided to exempt football security staff through primary legislation in response to an amendment to that effect to the Violent Crime Reduction Bill which was tabled by my noble friend Lord Pendry. Consequently, football security staff will be exempt from the licensing requirement under the 2001 Act due to the terms of Section 4 of that Act rather than to regulations made under that provision. This came into effect when the Violent Crime Reduction Act received Royal Assent in November.

The amendment to Section 4 of the 2001 Act does not impose a legal requirement on the football sector to have in place suitable alternative arrangements. The football sector has undertaken to work voluntarily to the same standards that would have applied under the exemption regulations and therefore to undertake CRB checks voluntarily. Since the wording of the July amendment to the 1975 order gave the CRB power to check the criminal records of football security staff only for the purpose of an exemption granted by regulations under Section 4 of the Act, an amendment must be made to enable such voluntary checks to take place.

The order, which was made in July, gave the CRB the power to undertake checks on behalf of the Football Association and the Football Association Premier League. Ministers have since agreed that the Football League should also be added to the order. The amendment of the noble Lord, Lord Pendry, to the Private Security Industry Act 2001 will also cover football. Ministers considered the responses to the consultation which mentioned football and, on reflection, decided that the same evidence as applies to other sports also covers football. The football authorities have undertaken voluntarily to work to these same standards under the amendment. This makes the system much more straightforward without losing any of the safeguards that would have been required under the exemption. I beg to move.

Moved, that the draft order laid before the House on 16 November be approved. First Report from the Statutory Instruments Committee.—(Lord Bassam of Brighton.)

Viscount Bridgeman
My Lords, I am grateful to the Minister for that explanation of the order. It is important that the measures which govern the criminal disclosure regime are kept up to date. Unless we do so, we could place at risk members of the public, especially those who are young and vulnerable. This order takes the appropriate route of increasing the coverage of the Rehabilitation of Offenders Act 1974 (Exceptions) Order 1975 to reflect subsequent developments in the way in which Football League, Football Association and Football Association Premier League matches are stewarded. I know that the Minister is well versed in this subject, and he has given me help in the past.

We agree that, when the Football Association and the Football Association Premier League assess the suitability of somebody to act as a steward in those cases where a licence issued by the Security Industry Authority is not required, the CRB should have the legal right to carry out checks on those stewards at the request of the FA or the Premier League. We support the order.

Lord Dholakia
My Lords, we are dealing with the order that was made in July, which gave the Criminal Records Bureau the power to undertake checks on behalf of the Football Association and the FA Premier League. There was an omission and the Government have now agreed that the Football League should be added to the order. We supported the amendment during the passage of the Violent Crime Reduction Bill, which is another reason why we support this consequential amendment.

My noble friend Lord Addington was right when, during debate on Amendment No. 55 to the Bill at Report, he said:

“We are talking here about correcting one of the cock-ups of history”.—[Official Report, 16/10/06; col. 636.]
 

How right he was. The initial Act was not supposed to get into this field at all. Having accepted the case made out by my noble friend and other noble Lords, including the noble Lord, Lord Pendry, I am glad that we are further rectifying the anomaly by ensuring that the Football League is added to the order. We certainly support it.

On Question, Motion agreed to.

Asylum (First List of Safe Countries) (Amendment) Order 2006

18:40:00

Lord Bassam of Brighton
rose to move, That the draft order laid before the House on 16 November be approved. 2nd Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, I shall speak also to the Accession (Immigration and Worker Authorisation) Regulations 2006.

The safe countries order adds Bulgaria and Romania to the first list of safe third countries at Part 2 of Schedule 3 to the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004. This provision is concerned with situations in which an asylum seeker may be removed to a safe third country without substantive consideration of his asylum claim—a third country being one of which he is not a national or citizen. So this instrument is not about nationals from Bulgaria or Romania seeking asylum in the UK.

Countries in the first list of safe countries in Part 2 of Schedule 3 to the 2004 Act are places which are to be treated as safe when determining whether a third country national who has made an asylum or human rights claim in the United Kingdom may be removed to one of them. The first-list countries are presumed to be places from which an asylum seeker will not be refouled in breach of the refugee convention or the European Convention on Human Rights. Provided that the Secretary of State is able to certify, therefore, that the applicant is not a national or citizen of the state listed, she or he may be removed to it and no right of appeal lies against that decision. Applicants may resist their removal on other human rights grounds in the usual way, although provision is made for such claims to be certified as clearly unfounded unless we are satisfied that they are not. If a claim is certified then any appeal may be made only outside the United Kingdom. A decision that a claim is clearly unfounded will be susceptible to judicial review in the same way. If a claim is not certified as clearly unfounded, then the applicant retains his or her in-country right of appeal on those human rights grounds.

The Part 2 list includes all member states of the European Union and Iceland and Norway, all of which are countries bound by the arrangements for determining responsibility for examining an asylum claim set down in Regulation 343, also known as the Dublin II regulation. All EU member states are bound by other European legislation forming part of the common European asylum system. Bulgaria and Romania will be similarly bound from the date of their accession. Therefore, we propose that this order shall come into force on 1 January 2007.

Dublin II, supported by evidence from the Eurodac database of fingerprints, is the cornerstone of the common European asylum system—the European asylum acquis. Combined with other measures implemented as part of the common asylum policy, it seeks to prevent asylum shopping across the European Union. Dublin II and Eurodac require a spirit of mutual trust and confidence at national level and an appreciation of the demands of working in an area of free movement by recording and processing asylum applications in accordance with the asylum acquis, controlling the external border for the benefit of all and acknowledging the consequences of illegal entry and illegal presence.

I turn to the Accession (Immigration and Worker Authorisation) Regulations 2006. I am very pleased to have the opportunity to present the Government’s proposals on the accession regulations to your Lordships' House. The accession of Bulgaria and Romania to the EU is an object of real and legitimate public interest and it is right that this House should have the opportunity to debate these proposals. Managed migration is good for our economy and is in the interests of the UK. It was this principle which informed our approach to the accession of the new member states two years ago. Accession migration has been a success and migrants from those countries are filling gaps in our labour market and helping to deliver public services.

Managed migration does not raise only economic issues. We must look not only to the economic impacts of our approach, but also to the social effect. There are public services on which accession state migration has not impacted, such as the National Health Service. Indeed, migrants from those countries are often working in our public services. However, there have also been some transitional impacts, with quite large numbers of people arriving in a short period of time, especially in areas where migration has not been a feature of life until now, which can have an impact on the community, private housing and local services such as schools. That is why we will take a gradual approach to this round of accession. We want to make sure that we understand the pressures which migration from the accession countries has created and will create. Our approach will take into account the needs of the labour market, the impact of EU expansion and the positions adopted by our fellow member states.

That is why we propose placing restrictions on Bulgarian and Romanian nationals who seek to work. Most skilled workers will need to obtain a worker authorisation document if they wish to work here. Many people in this situation will apply under the equivalent of the work permit scheme. This means that their prospective employer will need to show that there are no suitable workers from the UK or from the rest of the European Economic Area. Accession nationals will also be able to obtain this document if they wish to apply under other categories of the immigration rules, such as those applying to ministers of religion and au pairs.

Highly skilled migrants will not need to obtain a work authorisation document; they can apply under provisions equivalent to schemes such as the highly skilled migrant programme. Some Bulgarian and Romanian nationals will be able to come to the UK to do low-skilled work, but they will be restricted to jobs in the agricultural and food-processing sectors, although we will listen to representations from other parts of the economy which feel that they need low-skilled workers. There will be a quota on these schemes of 19,750. We will also be restricting these schemes to Bulgarian and Romanian nationals upon accession, which is in line with the principles of Community preference.

Students will still be able to come to the UK as now and, if they do not wish to work, they will not need to apply for any documentation. If they do wish to work—for up to 20 hours a week—they will need to apply for a registration certificate. We cannot place restrictions on the self-employed. We will take measures to make sure that people who are really working do not pose as self-employed persons.

We are proposing new powers to help us to enforce the system. It will be an offence for an employer to employ a Bulgarian or Romanian national who needs a worker authorisation document but who does not have one, or who is undertaking work other than that specified in the document. Individual workers in this situation will also be committing an offence, for which they may face prosecution, although this will be waived if the individual pays a fixed penalty. It will also be an offence for a Bulgarian or Romanian national to seek to obtain a worker authorisation card by deception.

In implementing this system, we are also catering for the needs of law-abiding employers. We will introduce an information campaign for them, backed up by a toolkit and helpline to ensure that companies are aware of the rules and of their responsibilities under the new system. We wish to work with employers to make sure that the new system benefits private enterprise and the whole economy. We are also working with the International Organisation for Migration to provide Bulgarian and Romanian nationals with information on how the rules will function. That will stress to prospective migrants the need to check their rights before they travel to the UK and the need, in most cases, not to travel to seek work.

The regulations themselves are for a total period of five years. This reflects the fact that after two years we are required to notify the Commission if we intend to maintain the restrictions. We can then maintain them for a further three years. However, we are committed to reviewing these arrangements within 12 months. I believe that these regulations enable us to pursue a controlled, managed approach to migration which is in the interests of the UK economy. I beg to move.

Moved, That the draft order laid before the House on 16 November be approved. 2nd Report from the Statutory Instruments Committee.—(Lord Bassam of Brighton.)

Viscount Bridgeman
My Lords, I shall deal first with the Asylum (First List of Safe Countries) (Amendment) Order. We indeed welcome the accession of Bulgaria and Romania to the European Union. We are concerned to ensure that asylum claims are dealt with as speedily and accurately as possible. I am grateful to the Minister for setting out the procedure for so doing. It is certainly not in the interests of the state or the individual if deportation is a lengthy process. However, that does not mean that these orders are uncontentious.

First, I address the issues raised by the Asylum (First List of Safe Countries) (Amendment) Order. As the Minister said, Bulgaria and Romania will join the EU on 1 January next. It is axiomatic that they should therefore be expected to be safe countries alongside existing members of the European Union. Their membership should surely not have been agreed had that not been the case.

By passing this order, the House is accepting that it is right that any third country national who has made an asylum or human rights claim in the United Kingdom may be removed to Bulgaria or Romania if that is appropriate under the provisions of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004. All European Union member states and states in the European Economic Area are on that list.

The Minister will, however, be aware of the concerns that have been widely expressed about the lack of readiness of the judicial system in Bulgaria. The latest EU preparedness report, Key findings of the monitoring report on Bulgaria’s preparedness for EU accession, 26 September 2006, highlighted the fact that:

“The main remaining challenges for Bulgaria are: removing ambiguities concerning the independence of the judiciary and the accountability of the judicial system by amending the Constitution; certain elements of the functioning of the Supreme Judicial Council (SJC); the efficiency of the monitoring mechanism of the new Penal Procedure Code; the adoption and implementation of a new Judicial System Act and a new Civil Procedure Code; the limited capacity of the administrative anti-corruption departments in the SJC and in the Prosecution services”.
 

What is the Government’s view on that assessment? What representations have they made to the Bulgarian Government while they were preparing to bring this order before the House? What guarantees have they obtained that the defects identified will be remedied? What is the timetable for that action?

In the case of Romania, the Government will be aware that the monitoring report on that country’s preparedness for EU accession stated:

“Romania now needs to ensure a more consistent interpretation and application of the law”.
 

What representations have been made to Romania in advance of bringing forward this order, and what response have they received?

Furthermore, there are widespread concerns about the treatment in both countries of the Roma community. What guarantees have the Government sought and obtained to ensure that the countries will no longer tolerate discrimination and racist behaviour to the Roma community?

On the immigration and worker authorisation regulations, we welcome the new limits that the Government say that they will place on Bulgarian and Romanian workers entering the United Kingdom. This is a vital area of policy that will affect the economy, public services and community relations, yet several important questions remain to be answered.

Our experience of the Government’s mishandling of the admission of workers from the A8 countries makes us very cautious when judging whether the restrictions brought forward today by the Government will be adequate. Prior to the accession of the A8, the Government indicated that they expected around 15,000 migrant workers to arrive in the United Kingdom. The UK was one of only three countries not to place restrictions on the granting of work permits. It is estimated that in the 18 months following the accession, 447,000 people arrived in the United Kingdom. This figure rises to nearly 600,000 when self-employed people such as builders and plumbers are included.

What is the Government’s estimate now of the number who will come from the A2 countries to seek work here in the first two years? What estimates have they made of the number who will ultimately settle and bring their families and dependants to the UK? What estimates have been made of the number who will seek self-employment in the United Kingdom? What will be the proof required that their employment is genuinely self-employment and that they are not simply employees posing as contractors? The Minister referred to the need to make sure that such workers do not evade the law and the regulations.

I note that those who come here to work in low-skilled jobs in agriculture and food processing will have their right to work limited to six months. Does that mean in total in their working lifetime, or are they able to return to Bulgaria or Romania at the end of that period for a matter of days, obtain a further accession worker card, return to the United Kingdom and start another period of six months’ exemption? That would clearly be unacceptable. I suggest that the position is not made clear by the drafting of paragraph (9)(3) of Article 3 of the order. I would be very grateful if the Minister could put the position clearly on the record today.

We do not oppose the making of the order but we enter severe reservations about the ability of the Government to make the system work effectively. We will judge whether the restrictions have a desirable practical effect once they have operated for a time. We must keep a close scrutiny of this very important matter.

Lord Dholakia
My Lords, I very much support the questions put by the noble Viscount, Lord Bridgeman.

The asylum amendment order adds Bulgaria and Romania to the list of safe third countries to which an asylum seeker can be removed from the United Kingdom without consideration of the merits of his asylum claim. We ought to be very clear about that.

We raised this concern during the passage of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004 when my noble friend Lord Avebury said:

“Clause 18 and Schedule 3 create a new and fiendishly complicated structure of ‘safe country’ provisions which allow a person to be removed without substantive consideration of his asylum application … There are now four sets of circumstances in which a person may be removed without a right of appeal, arranged according to the degree of confidence in their safety.
 

The first category is removal to states where a person is deemed to be safe vis-à-vis both the Refugee Convention and the ECHR … The second category comprises unnamed states which are deemed to be Refugee Convention safe, but not necessarily safe from refoulement to a country where a person may not be safe … The third category comprises another empty list, also Refugee Convention safe, but where claims based on the ECHR may be certified as clearly unfounded.
 

“Finally, there is individual certification, which may be applied to a person who is not a national of the country to which he is being sent, if he is not at risk of being refouled and is not at risk of being persecuted there for any Refugee Convention reason”.—[Official Report, 27/4/04; col. 718.]
 

We have moved from the previous requirements where each case had to be individually certified. I am uneasy whenever we speak about “safe countries”. I want a clear assurance from the Minister that if a country was not operating to the letter of the human rights convention, its inclusion on the list should be seriously reconsidered. This undertaking was given in the other place during the debate in Standing Committee on 22 January and should apply to Bulgaria and Romania.

On Bulgaria and Romania, the regulations make transitional provision to take account of the free movement rights that nationals from these states will have on accession. They also set up a worker authorisation scheme restricting access by Bulgarian and Romanian nationals to the UK labour market during a five-year transitional period. Under the terms of the EU accession treaties governing Bulgarian and Romanian entry into the EU, Britain is perfectly within its rights to introduce transitional arrangements before full access to Bulgarian and Romanian workers is granted. All EU countries have the option to keep such transitional measures in place for a maximum of seven years. There is no dispute on that particular provision. However, certain transitional measures should not be undertaken lightly. They should be clearly justified, workable and fair in their application, and lifted at the earliest possible opportunity.

We remain of the view that it is clearly beneficial to the British economy to support an open approach to labour migration within the European Union. Indeed, it is a right that hundreds of thousands of Britons exploit to their advantage by living and working elsewhere in the European Union. None the less, we acknowledge that legitimate concerns have been raised about the temporary effect of a much larger than expected inflow of labour from Poland and other accession countries in recent years. The effect on housing, schooling and overstretched local government resources in some specific areas has been significant.

The fact that the Home Office dramatically underestimated the number of newcomers to the UK from those countries has clearly dented public confidence in the system. Our view is that any transitional measures are workable only if they are developed in close co-ordination with the other EU countries that are likely to prove attractive to Bulgarian and Romanian workers. Given the presence of large, settled Bulgarian and Romanian communities in Spain and particularly Italy, it is essential that government measures to manage the flow of Bulgarian and Romanian migrants are similar in nature and timetable to a temporary restriction applied to those two countries.

To date, the Government have not given any indication that they have made an attempt to work in co-ordination with the EU member states on their proposals. Indeed, the Home Secretary has announced a series of unilateral measures that are almost certain to prove unworkable and difficult to enforce in practice. We will certainly closely scrutinise the implications of the Government’s measure, and we will continue to put forward a more rational approach to the issues of principle and practice that are at stake.

The Earl of Sandwich
My Lords, at first sight, the order on safe countries is a housekeeping measure to ensure that Bulgaria and Romania are merely added to the list of safe third countries as they become members of the European Union. I recognise that this is about the removal of third country nationals. However, it gives me the opportunity to reflect briefly on the merits of such a transition. We belong to a club with rules, but as the second statutory instrument shows, we can sometimes make up our own rules too. We cannot automatically assume that these two countries will become safe for asylum seekers overnight. No country can be said to be safe for everyone.

The noble Viscount has already mentioned the judiciary in Bulgaria. There are still serious human rights violations against citizens of those countries from which the state may be unable to protect them and others. The noble Lord, Lord Dholakia, has again drawn attention to the individual merits of asylum cases. Can the Minister confirm that once a country is declared safe, no proper risk assessment is carried out before an asylum seeker or a trafficked person is removed to that country? Does that not mean that individual circumstances will inevitably be overlooked?

There was a recent case of a woman who was retrafficked from the Ukraine to the UK, after which she was promptly removed without any assessment being carried out. Victims of trafficking from Bulgaria and Romania, who may also be third country nationals, may have protection needs elsewhere or in the UK. Women and children who are tricked into trafficking are still potential victims of further abuse or reprisals after their forced return. Debt bondage is another subtle form of family coercion. A number of trafficked Roma persons are known to have been retrafficked after their return, as family members were involved in the crime, and they had no protection against repeated exploitation. Those cases may or may not be subject to this order.

All I am saying is that we must ensure that the Government address their needs as victims of crime and ensure their safety. It cannot be assumed that every victim of trafficking would now be safe on their removal to Bulgaria or Romania solely by virtue of their being accession countries. There are concerns about this order among the refugee agencies. It might also help if the Government looked again at the UK action plan on trafficking and prepared guidelines on how best to apply the principle of “safe country” to individual circumstances.

Lord Bassam of Brighton
My Lords, I thank the noble Viscount, Lord Bridgeman, and the noble Lord, Lord Dholakia, for engaging in a serious discussion and debate on the issues and for responding to my opening remarks in a constructive way. I pay tribute to them for that. I thank the noble Earl, Lord Sandwich, for his contribution as well. Although there are obviously critical questions behind what we propose, there is an acceptance in your Lordships’ House of the importance of these issues and of trying to get them right. Obviously, at different stages, there will not always be entire satisfaction and agreement on the nature of the measures that the Government have to take in this field, which we all accept and acknowledge is not an easy one.

In seeking to add Bulgaria and Romania to the list of safe third countries, we are taking the right step to acknowledge the accession of Bulgaria and Romania and, in particular, participation in the Dublin II arrangements. It is important to remember that this provision is not about sending people back to a country of origin, but to a country that we believe is better placed to deal with the claim under international law. The asylum systems in Bulgaria and Romania have been through a process of scrutiny, which is right. That has been undertaken, in essence, by the European Commission as part of the accession process. They were not found wanting in that assessment.

I understand the concerns that have been raised about some of the treatment of minorities that is felt to have been adverse, particularly so far as the Roma are concerned. But we have to play by the rules, and the rules are set out in the accession process. We have to use that process to measure how things are and how things have changed in the past. That is an important part of a country going through the accession process and conforming to standards of which we are rightly proud. It is fair to say that the Commission assessed both countries against the requirements of the acquis on asylum, the common European asylum system, to make that approval of accession. Their assessed suitability for joining the EU is an important factor, reflecting the standards of protection for asylum seekers. The Home Office has undertaken research from a variety of sources to satisfy ourselves that Bulgaria and Romania have procedures in place to ensure that an individual will not be exposed to persecution either in that safe third country or by refoulement to the country of origin in breach of the refugee convention.

What sources did we use? We used, for example, the European Commission monitoring reports on accession, the UNHCR reports, the US Department of State reports on human rights practices and our own country research. The noble Viscount, Lord Bridgeman, raised the concern about what the Commission said about the asylum systems in Bulgaria and Romania. We acknowledge that initially there were some concerns, but the format of the Commission’s monitoring reports is to comment on any areas where matters were outstanding from previous reports and where further work would be of benefit. In the final report of September 2006—the monitoring report relating to accession on 1 January 2007—the Commission did not detail any remaining concerns about either country meeting the justice and human affairs asylum acquis. So the Commission was satisfied that those standards had been reached.

The only comment on asylum was a reference on page 26 of the September 2006 monitoring report to the fact that in Bulgaria the administrative capacity of the agency for refugees had been adequately strengthened. We play by the rules and the judgments that are made on these matters; and the judgments were not found wanting—indeed, there was active support for measures that had been taken to remedy what had been seen at an earlier stage as defects.

The noble Viscount, Lord Bridgeman, raised concerns about Roma. The order concerns essentially the removal of third country nationals, not the removal of Roma. The noble Viscount has used this opportunity to raise that issue and, of course, we have in the past expressed our concern, but we do not believe that that is an issue at present. We think that progress has been made by bringing Bulgaria and Romania into the fold of the European Union. We acknowledge the history of the Roma and where they have come from but we know that these issues have been of concern.

The noble Viscount also asked what representations had been made with regard to the penal code. The points made in the September 2006 monitoring report do not concern the application of the asylum law. Concerns have been raised regarding corruption and organised crime but those are not covered by that report. We have not made independent representations on those issues.

It is not possible to make precise predictions regarding the future, but if a state’s processes and structures began to deteriorate to a point where, in general, international obligations were no longer being met, of course we would want to take steps and make representations. However, we would expect that steps would have been taken in any event to address any concerns expressed at Community level, given that the countries concerned would not have met EU standards. All members of the EU have to be bound by EU asylum instruments.

The noble Earl, Lord Sandwich, raised the issue of people who are trafficked and retrafficked. Again, the order concerns asylum seekers, not victims of trafficking. We are concerned about this issue and the noble Earl has taken part in debates on it with myself and others representing the Government on a number of occasions. We clearly need to work with our EU partners on this issue. We believe that both Bulgaria and Romania are safe for refugee convention purposes but that such issues could be raised in human rights claims and considered in the normal way. I thank the noble Earl for raising the issue, but this is not the most appropriate forum to discuss it.

The Earl of Sandwich
My Lords, I am sorry to press the point, but I emphasised that the order affects those from third countries who happen to be in those two countries.

Lord Bassam of Brighton
My Lords, I shall reflect on what the noble Earl has said and if there are some relevant points of detail, I shall write to him and share that information with other noble Lords who have spoken.

The arrangements regarding the Accession (Immigration and Worker Authorisation) Regulations are in the best interests of the United Kingdom because we believe that migration is of benefit to us economically. There is consensus on that issue. We need there to be confidence in the system that we respond properly to concerns raised by the public about the impact of these measures. If we did not do that, the public might expect more drastic action that would not be in the best interests of the UK.

We are welcoming highly skilled migrants who will have free access to our labour market. We welcome skilled workers, too, but we need to be satisfied that they will not displace resident labour—and that is the explanation of the way that the order will work. We welcome low-skilled labour if we are satisfied that there is a real need for it and that there are insufficient workers from other EU states; and of course we welcome working students, provided that they operate within the rules.

These proposals are in tune with our broader policies on immigration and migration where they are in the interests of the United Kingdom, but we act to control and tackle abuse. We must ensure that migration is used to strengthen our economy, but we need to balance that by paying attention to its social impact, sharing responsibility for migration with people such as employers who benefit from it, but also working with employers to ensure that they benefit from the new system.

The noble Viscount, Lord Bridgeman, asked for an estimate of how many A2 nationals might come to the United Kingdom within the terms of the order. Perhaps with the benefit of hindsight, we believe that it would be inappropriate for the Government to make precise predictions. The number of skilled A2 workers who will come will depend on the skills gaps in the economy. As I made clear in my opening remarks, we will apply a quota of 19,750 A2 nationals who can access our schemes for lower-skilled migrants. For what it is worth, the 2001 census revealed that some 7,500 Romanians and 5,350 Bulgarians already lived in Britain and that suggests that we are entering a stage where we are right to have set out a more managed approach to issues of migration from accession states.

The noble Viscount raised the issue of contractors. To ensure compliance, we intend to make workplace-based checks. Revenue and Customs will co-operate and assist us with that work. On low-skilled workers generally, the answer to the noble Viscount’s point is that, yes, they can leave and come back, but coming for six months in one year and six months in the following year would break the continuity of residence.

I think that I have answered most of the points raised by noble Lords. If I have not, I will study Hansard closely, try to respond to their points in writing and share that information, as I usually do.

Viscount Bridgeman
My Lords, I am well aware that the points raised in the report on preparedness covered departments that are outwith the scope of the order, but they nevertheless form a background of concern to the House in respect of the preparedness of the whole governmental system, particularly in Bulgaria. Will the Minister write to me on those points, on the Government’s response to the report and on whether they are satisfied that the necessary requirements have been met?

Lord Bassam of Brighton
My Lords, I thought that I had responded to that point in reference to the Commission report. I shall study the noble Viscount’s point and happily write to him on any of the issues that perhaps we may not have adequately covered in this limited exchange.

Lord Dholakia
My Lords, perhaps the Minister might send me a copy, too, because I shall be interested in his response.

Lord Bassam of Brighton
My Lords, it should be taken as read that I shall share that information with other noble Lords who have been involved in this discussion.

On Question, Motion agreed to.

Accession (Immigration and Worker Authorisation) Regulations 2006

19:19:00

Lord Bassam of Brighton
My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the draft regulations laid before the House on 21 November be approved. Second Report from the Statutory Instruments Committee.—(Lord Bassam of Brighton.)

On Question, Motion agreed to.

Compensation Act 2006 (Contribution for Mesothelioma Claims) Regulations 2006

19:20:00

Lord McKenzie of Luton
rose to move, That the draft regulations laid before the House on 2 November be approved. First Report from the Statutory Instruments Committee.

The noble Lord said: My Lords, I welcome the opportunity to present this debate on amending the Financial Services Compensation Scheme to help sufferers of mesothelioma to receive more timely access to compensation.

As the House will know, mesothelioma is a cancer of the lining of the lungs or abdomen, which is almost always caused by exposure to asbestos. The Government legislated in the Compensation Act 2006 to help claimants suffering from mesothelioma to obtain the compensation to which they are entitled as quickly as possible. This was achieved through reversing the effects of the House of Lords judgment in Barker v Corus UK and conjoined cases. The Government took the view that the practical effects of that decision would have made it more difficult and time-consuming for sufferers of mesothelioma to obtain full compensation in circumstances where sufferers and their families were already under considerable pain and stress.

The Compensation Act provides that, where a person has negligently or in breach of statutory duty caused or permitted another person to be exposed to asbestos, and as a result that person has contracted mesothelioma, the negligent person will be jointly and severally liable. This will enable the claimant to recover full compensation from any responsible person.

When the change was made in relation to mesothelioma liability through the Compensation Act, an issue arose concerning the Financial Services Compensation Scheme and direct improvements that could be made to speed up access to compensation. The FSCS is an industry-backed fund of last resort relating to financial services products—in this case, insurance. It provides a consumer safety net in relation to financial services and can pay out compensation if a firm is unable or likely to be unable to pay valid claims against it. It is an independent body set up under the Financial Services and Markets Act 2000. The rationale behind the scheme is that it gives people the confidence to invest in and use financial services. It is not a fund to provide general compensation—that would be a fundamentally different compensation scheme.

Following the Government’s decision to reverse the effects of the Barker judgment, the Treasury has laid legislation to allow the Financial Services Authority to make changes to the FSCS to help victims of mesothelioma to receive more timely access to compensation. Broadly speaking, under the proposed changes negligent employers and their insurers who have paid victims of the disease will now be able to claim a contribution from the FSCS in certain cases. This should help to avoid delay in compensation being paid to claimants while the FSCS’s liability is being established. It is also fairer to insurers and responsible persons who, without these changes, would not be able to pay the mesothelioma victim up front and subsequently recover a contribution funded by the FSCS. It is a process change that does not change the overall liability of the FSCS.

The proposals have retrospective effect and allow payment of compensation to a responsible person or their insurer notwithstanding that they have already made a payment to the victim where the application for payment is made on or after 25 July 2006. The Treasury’s powers under Section 3 of the Compensation Act 2006 and the regulations laid before Parliament, provided for in subsections (7) to (11) of that section, are part of the section on damages for mesothelioma. These subsections conferred a power on the Treasury to make regulations about the provision of compensation under the FSCS to a responsible person or an insurer of a responsible person in specified circumstances. Broadly speaking, these regulations include two additional powers to enable the Financial Services Authority to make various rules in relation to the FSCS.

Regulation 2 sets out a power that deals with claims involving insurers subject to insolvency and other defaults that took place before the commencement of the FSMA on 1 December 2001. The power applies where the following conditions are met. First, where a claimant could have claimed under the FSCS order where Section 3(1) of the Compensation Act applies. The power is therefore restricted to claims relating to mesothelioma, because Section 3(1) applies only where a responsible person has negligently or in breach of statutory duty caused or permitted a victim to be exposed to asbestos. Secondly, where the victim has contracted mesothelioma as a result of exposure; thirdly, where it is not possible, because of the nature of the disease and the state of medical science, to say whether this exposure caused the illness; and, finally, where the responsible person is liable in tort for the exposure in connection with the damage caused to the victim.

Moreover, the power to make rules will apply only where and to the extent that a responsible person could claim a contribution from another person who is also responsible for causing damage to a mesothelioma victim under the Civil Liability (Contribution) Act 1978 but is unable or likely to be unable to get a contribution because an insurer of the other responsible person is unable or likely to be unable to satisfy the claim for a contribution.

The regulations also set out various specific situations that can expressly be covered by the FSA’s rules concerning the FSCS. These are that payment can be made under the new rules even though payment has been made to the victim; the value of the payment to a responsible person would not exceed what would have been available to the victim from the FSCS; payments could be made concerning applications made on or after 25 July 2006, which was the date of Royal Assent of the Compensation Act 2006, and, by virtue of Section 16(5) and (6) of the Compensation Act, can cover payments relating to a victim’s claim on or after 3 May 2006. The power also enables the rules to include payments to insurers of responsible persons.

Regulation 3 is in almost identical terms to Regulation 2. The power will allow the FSA to make rules concerning mesothelioma claims where insurers involved enter insolvency or default on their payment obligations on or after 1 December 2001. The only changes are to make the power work in the context of the FSMA generally.

The final provision in the regulations relieves the FSA of the statutory obligation to consult on its rules and any guidance that it publishes on this subject solely for the first time that this power is exercised. However, a joint consultation has in fact been carried out by HMT and the FSA, a summary of responses to which has been published on the Treasury’s website. The proposal was widely supported.

Once the Treasury’s regulations are made, the Financial Services Authority would put the proposed rule changes to its next available board meeting, which is scheduled to be later this month.

In summary, we are making a minor change to the FSCS to allow the Financial Services Authority to make rules facilitating the faster payment of compensation to victims of mesothelioma. This step was required as a direct result of the Compensation Act 2006, but it is none the less an important step in helping victims of mesothelioma to receive timely access to compensation and to make sure that insurers and responsible persons are not prejudiced with regard to the operation of the FSCS. I beg to move.

Moved, That the draft regulations laid before the House on 2 November be approved. First Report from the Statutory Instruments Committee.—(Lord McKenzie of Luton.)

Baroness Noakes
My Lords, I should like at the outset to declare an interest as a director of Hanson plc. It is fairly well known—at least in financial markets—  that Hanson has a significant exposure to asbestos litigation, including that involving mesothelioma. I assure the House that that litigation is all in the United States and, to the best of my knowledge, I have no interests that would in any way affect my ability to deal with the regulations. With that clarification of my position, I thank the Minister for introducing the regulations in his usual meticulous way.

The plight of mesothelioma victims is not a matter for party politics. The Compensation Act improved the ability of those victims to gain compensation. The regulations in effect deal with the consequences for responsible persons and their insurers. The approach taken by the regulations has been consulted on, albeit under a shortened period for consultation. However, it seems to us to be a sensible way forward and we will not oppose the regulations.

If I may, I have a couple of questions to ask the Minister. The first relates to the ability of mesothelioma victims to get compensation, depending on the existence of a responsible person. If the responsible person no longer exists or is insolvent, the compensation then potentially depends on the ability to find an insurance contract and, through that, to trace a trail to the Financial Services Compensation Scheme. But, as the Minister will be aware, comprehensive paperwork is not a hallmark of companies that become insolvent or have been wound up, and that may leave victims without compensation. I completely understand that such cases will not impact on the FSCS, which is the subject of the regulations, but can the Minister explain what the Government intend to do about those cases? The document issued at the conclusion of the consultation period referred to the matter being taken up by the Department for Work and Pensions. I was a little puzzled by that, and I hope that the Minister can explain what the Government intend to do for this category of mesothelioma victims.

My second point concerns the statement at paragraph 8.2 of the Explanatory Memorandum that the regulations mean that government departments or former nationalised industries will benefit from being able to claim a contribution from the FSCS. Will the Minister explain how many of the 1,800 or so new cases each year are expected to result in the Government or a former nationalised industry paying compensation that is then recouped ultimately from the FSCS? How much money are we talking about each year? Are the Government, in effect, picking up the ultimate liabilities of the former nationalised industries involved, or are they borne by the industry, which is now in the private sector? In sum, how much are these regulations worth to the Government?

Subject to those points, I repeat that we support the regulations.

Lord Addington
My Lords, I believe that I should step carefully when approaching these types of regulations because I feel as though I am going into quicksand. Having said that, I agree with the general thrust of the regulations. It seems that we are trying to ensure that those who have acquired an industrial injury over a long period of exposure receive compensation. However, as has been explained to me by the Minister and by those outside, this is a difficult issue involving an injury acquired over a long period of time and a variable number of employers, some of which may no longer exist. We have therefore had to turn to a special type of regulations to enable the Government to ascertain the chain of employers who are liable to pay compensation and the level of compensation that can be paid to the victims. I think that I more or less have that right—that is, we are enabling payments to be made to people. If I am not right, I will put my hands up.

Can the Government assure us that the element of retrospection required to get these regulations on to the statute book will be regarded as a one-off? If not, questions arise that go beyond this issue. Other than that, I can see no reason for objecting to the measure, as it seems to be a practical way of providing a solution. But, given that the conditions surrounding it are unusual, I should like the Minister to assure us that it will not be normal practice to rely on retrospection to enable something to happen.

Lord McKenzie of Luton
My Lords, I thank the noble Baroness, Lady Noakes, and the noble Lord, Lord Addington, for their broad support for the regulations, and I shall try to deal with the points raised. The noble Baroness asked what the Government are doing generally about claims and what work programme is under way. The Government are taking forward a programme of work led by the DWP to improve the handling of mesothelioma claims to ensure that claimants receive the compensation to which they are entitled as quickly as possible. On 20 July 2006, John Hutton announced a number of interim measures to ensure faster compensation payments to those with mesothelioma, as well as the intention to put in place a long-term solution to ensure that, wherever possible, sufferers of mesothelioma can receive compensation in life. He committed to consult stakeholders on a long-term solution.

The DWP launched a consultation exercise to discuss improving claims handling. That consultation closed on 23 November. The DWP is currently analysing the responses and will publish a summary shortly. The DWP is also organising a mesothelioma summit on 13 March 2007 at which stakeholders will discuss options for action following the consultation. Within that process, there will be an opportunity to address the issues raised by the noble Baroness. In a sense, those are outside the specific proposals in the regulations, which are to do with process.

The noble Baroness asked what the measure is worth to the Government. The purpose of the regulations is to put us back in the position that we were in when the Fairchild judgment was operating. Under that judgment, it was accepted that there was joint and several liability in respect of claims. Therefore, the Government are in neither an improved nor a disadvantaged position.

I turn to the comment in the Explanatory Memorandum. Because of joint and several liability, part of the thrust behind the regulations is to avoid payments to claimants being delayed while the question of who owes what is settled. Thus, a person—normally a major employer—can make a payment and will not then be precluded from claiming from the compensation fund, because the fund carries a liability in respect of someone who is jointly and severally liable. To that extent, going back to the Fairchild position neither advantages nor disadvantages the Government.

Baroness Noakes
My Lords, perhaps I may clarify the point that I was trying to make. I understand that, in reversing the House of Lords decision, the Government consider that they are putting themselves back in the same position. But these regulations enable the Government to go into the Financial Services Compensation Scheme. That is paid for by the industry and the Government do not pay anything into it. So we are creating a right for the Government to go into the scheme, and I was merely trying to ascertain how much it is worth to the Government to take the industry’s money.

Lord McKenzie of Luton
My Lords, that right is no more or less than the right that claimants would previously have had to go into the scheme. The only difference is that now the Government or an employer are not precluded from paying out the whole amount earlier to the claimant and then recovering the bit that the claimant would otherwise have got from the fund. Prior to the Barker judgment, payments would not be made until it was determined who had what liability, and then the compensation fund would make a parallel payment to the claimant because it was the claimant whom it had to pay. On that basis, the Government are not advantaged or disadvantaged by this measure. The benefit is in getting money into claimants’ hands sooner—not an increased amount but the same amount that they would otherwise be entitled to.

The noble Lord, Lord Addington, asked about retrospection. The House debated this matter as part of the Compensation Act. Here, the purpose of the retrospection is to take us back to the Fairchild position before the Barker judgment changed people’s understanding of the situation. Under the Barker judgment, a liability had to be apportioned and, when there were a number of possible contributors, the timescale involved in arriving at that apportionment could be substantial—again, delaying payments being received by claimants. Therefore, going back to joint and several liability through the regulations generally enables claimants to access compensation sooner than they might otherwise have done. I hope that that has dealt with the point. If not, I shall have another go.

Lord Addington
My Lords, I accept what the Government are saying, but my point relates to the fact that this is an unusual and specific process of going back or reversing to make a change. It would be valuable to hear whether the Government see this approach as dealing only with these specific circumstances.

Lord McKenzie of Luton
My Lords, I think that the noble Lord has probably answered his own question. It is not usual. These are relatively unusual circumstances. The issue was discussed when the Compensation Act was debated. It is relevant to that rather than to the regulations, which are simply a consequence of that Act.

If there are no further points, I thank noble Lords again for their support, and commend the regulations to the House.

On Question, Motion agreed to.

Health: Diabetes

19:40:00

Lord Harrison
rose to ask Her Majesty’s Government what is their response to the United Nations resolution on diabetes.

My noble Lord said: My Lords, many women were sweet on H G Wells during his lifetime. He was not only a marvellous writer but a founder member of the British Diabetic Association. His lovers said of him that he smelt alluringly of honey. That olfactory observation has been attributed to his diabetic condition. The disease’s full name is diabetes mellitus—literally the siphon of honey.

There is nothing sweet about diabetes. My words tonight will not be honeyed as we address the global pandemic and desperate need for the United Nations to unite to defeat diabetes. Every 10 seconds someone dies from diabetes. Some 6 per cent of the world’s population suffers from diabetes, and these numbers rise relentlessly each year by a further 6 per cent. If nothing is done to repel the silent killer, within 20 years 350 million diabetics worldwide will place an intolerable burden on all nations’ health systems with dire consequences for their economic and social well-being and development.

Diabetes is a silent killer; silent because unlike HIV/AIDS it has no champions of the standing of Nelson Mandela or Bill Clinton. A non-communicable disease does not excite the same fear as one that people think they might catch. Already diabetes is outstripping HIV/AIDS in the deaths it claims and the numbers it incapacitates. It is a silent killer because a diabetic bears no outward sign of a disease that suborns and weakens the body from within. Like Wells’s invisible man, a diabetic whose diabetes is well controlled walks down the street unremarked. Of course, it is true that a significant proportion of those who are blind or amputees are diabetics, but their lack of a public face results in our bothering less with the silent disease than with other more visible diseases.

The former Home Secretary, David Blunkett, has won universal admiration for his formidable political stamina in the face of his blindness, but our Deputy Prime Minister has shown great fortitude in mastering his diabetic condition—a fact disregarded when disclosed over a year ago. You cannot wear an eye patch over a faulty pancreas. It is a silent killer and an uncompromising one. You cannot get a mild dose of diabetes, and whether you are type 1 or 2, and dependent on insulin or tablets as therapy, the consequences are just as silent and just as deadly. The time is ripe to break out of the silence and to tackle diabetes head on, not just here in the United Kingdom where the Government have successfully introduced the national service framework, but also globally. It is time for the world to think globally, act locally but above all unite to act together.

Our first act must be to puncture some of the myths surrounding diabetes, which diminish our enthusiasm to unite and act together internationally. What are these myths? Contrary to the widely held perception that diabetes is a disease of the affluent, studies show that the economically disadvantaged are at a higher risk of becoming victims. Within 10 years, four out of five diabetics will live in low or average-income countries, many of whose health systems have poor access to life-saving, disability-preventing treatments. Even in rich countries, such as the USA, it is the poorest who are most vulnerable to type 2 diabetes. A cruel consequence of this is that in some developing countries, afflicted families spend up to 25 per cent of their pitiful income on diabetes care. It should also be noted that the elderly, ethnic and indigenous communities are disproportionately affected by the pandemic, with the result that the economically disadvantaged are pushed even further into poverty, thereby undermining development aid from rich nations designed to build up the same developing economies.

Another myth that diabetes is principally a disease of the elderly also needs qualification. Nowadays more young people—a nation's future workforce—are succumbing to type 2 diabetes, which is directly related to the Government’s obesity agenda. Diabetes is not just a disease that comes in rich old age. We should also recognise the underlying but overpowering economic consequences of the failure to confront diabetes. It clogs up the economic arteries of any nation—rich or poor.

Our debate tonight could not be more timely, for the nations of the world are waking up to the threat of diabetes. A United Nations resolution is shortly to be voted on, but will the United Kingdom be there? Why is this resolution crucial? First, it will focus the attention of the world on the need for urgent action that goes beyond the scope of government health departments. Workable solutions will require the whole of the Government’s thinking and implementation. Indeed, I ask my noble friend what has been the nature and result of her consultations on this vital issue with DfID, the FCO and other government departments.

Secondly, a United Nations resolution will raise awareness among all policy-makers and decision-takers of the need to work as allies of the United Nations. This will lead to a greater awareness of specific policy problems in diabetes care and will induce a more profound understanding of the human, social and economic burden that diabetes places on Governments. A resolution will make nations assign diabetes care and cure as a national priority, aid the implementation of cost-effective strategies for the prevention of the onset of diabetes and promote strategies to avoid dangerous complications arising from the disease.

The resolution will highlight the needs of special groups which themselves may vary from country to country. These groups include children with diabetes, the elderly, diabetics during pregnancy, indigenous peoples and migrant people from developing countries. The resolution will spread best practice, more effective education and training of healthcare professionals and the adoption of simple, cost-neutral prevention policies. It will also undoubtedly promote greater research among the public and private research communities and encourage more generous funding of such research from foundations such as the Gates Foundation, which see such a resolution as the seal of approval from the world community that identifies diabetes as a just and proper priority for research money.

Lloydspharmacy tells me it believes that global action is required to tackle the diabetes epidemic. It says:

“A UN resolution would be the best catalyst for this process”.
 

Since January 2004, Lloydspharmacy in its 1,200 pharmacies in the UK offers a free-of-charge diabetic screening service—a vital resource in our catching early some 750,000 undiagnosed diabetics in the UK. Early diagnosis means a saving of resources, lives and human misery. That is the kind of idea that could be copied throughout the world.

It is my hope and belief that a resolution will galvanise the world community. What is the Government’s position on this issue? I hope to hear a full exposition from my noble friend tonight and to learn that the Government are prepared to speak up, sign up and cough up to the cause of the UN resolution on diabetes. The rest of the world community is falling into line. Why are we falling out? Led by Bangladesh, the G77 countries representing 132 developing nations have signed up. Russia, Japan and the USA are on board, and Australia has entered only today. EU countries are likewise joining, including Poland, Portugal and our good neighbours, Ireland. I believe there has been a change today in that we are not arriving at a common EU solution—perhaps the Minister can tell me about that—but this liberates the United Kingdom separately to support this important resolution. I also understand that the reason for the Government’s delay until now has been expressed by DfID Secretary of State Hilary Benn as being the preference for securing a portmanteau UN resolution covering a whole range of diseases which the world must collectively confront.

That is mistaken. First, we cannot afford to wait. We must act now: every 10-second delay is another unwarranted death. Secondly, it is imperative to give diabetes a clear focus as a killer disease, arguably more potent than HIV/AIDS, and treat it separately. Thirdly, the collective fight against other world health threats will not be held back by striking a blow in favour of the world diabetic community. Rather, it will encourage others concerned to further research into other world diseases.

I understand the resolution on diabetes is on the agenda for the UN meeting on 16 December. Will the Minister give the most urgent consideration for the United Kingdom to sign up and show its credentials as a nation confident in itself, being fully engaged at an international level, and match what it has done for international development? To fail to sign up for this UN resolution now will send out the wrong signals, impoverish the international standing of the United Kingdom and, most of all, delay the fight against the worldwide pandemic of diabetes that threatens to engulf us all. To echo HG Wells, this is a war the world must fight together. Britain should lead, not lag.

19:51:00

Baroness Masham of Ilton
My Lords, I thank the noble Lord, Lord Harrison, for this important debate. I look forward to the Minister’s reply. I consider her to be someone who cares about long-term medical conditions and disability.

I became involved with diabetes through my husband. I know the condition needs constant monitoring and attention; it must be taken seriously at all times. Diabetes is increasing at an alarming pace worldwide. Following the Austrian presidency’s conference on diabetes, EU Health Ministers adopted its conclusions at their council meeting. The conclusions urged member states to improve care and treatment; to adopt robust policies to prevent type 2 diabetes; and to promote research. I would add that there must also be ongoing education of diabetic people, their families, the medical and nursing professions, employers, prison staff and the police; in fact, everyone should be aware of the consequences if diabetes is neglected. These conclusions are much the same as the UN resolution.

Some months ago, I was talking to a diabetic friend and asked him how his diabetes was. He said, “Oh, I only have type 2 diabetes, not the serious type”. I answered him, “All diabetes is serious”. A few weeks later he came up to me and said, “I am taking it seriously”.

If diabetes can be avoided, so much the better. It causes all sorts of problems, such as tiredness, blindness, leg ulcers and difficulty in healing. If it creeps up on people, however, and they become diabetic, they need the best advice possible and the correct equipment. For those who cannot look after themselves, the correct care must be forthcoming.

More than 2 million people in the UK have diabetes: 3 per cent of the population. Diabetes consumes 5 to 10 per cent of total healthcare resources. Diabetes is set to increase. Its prevalence is predicted to double worldwide, rising to at least 5 per cent by 2010, accounting for 3.07 million people in the UK. Diabetes affects the young and old, and has particularly poor outcomes in those of lower socio-economic status, and black and minority ethnic groups. Evidence supports the need for improved education of people with diabetes and their carers if better control and improved outcomes are to be achieved. If undetected or ill managed, diabetes can lead to many complications, as I have already mentioned. It can trigger a stroke and have a devastating impact on the quality of life.

Following my Question on 29 November 2006 on the need for specialised nurses for long-term conditions such as diabetes, I shall expand further. There is no doubt in my mind that the specialist trained nurse, working closely with a consultant endocrinologist in a hospital, can give vital support to the diabetic person living in the community. When something goes wrong, the specialist nurse can give the necessary information. General and district nurses, junior doctors and GPs, as well as the service users and their families, are trained in good practice in diabetes care. They advise on insulin levels, and check people’s records when they are concerned. Blood sugar levels can be complicated. When you think they might be high, they can be low, and vice versa.

There is great alarm in many quarters about the cutting of specialised services in several areas of healthcare. If people with long-term chronic conditions such as diabetes are to be able to manage their condition effectively and get specialist care if complications arise, support services must be provided, and appropriately staffed and financed. As the NHS financial crisis continues, concerns arise over diabetes programmes becoming a lower priority. Reports point to many diabetic staff posts, including nurses’ and consultants’, being frozen, as well as those of many other specialities. This will be an economic disaster in the long term: more people will end up in hospital as emergency cases. This is against NICE’s recommendations and the national service framework.

An article on Saturday 2 December—only two days ago—reported that on Friday a 12 year-old boy was awarded almost £5 million after medical errors left him severely disabled. He was deprived of oxygen at birth and suffers from cerebral palsy. Medical staff did not spot that his mother had diabetes, and backed a home birth. Due to the condition, the boy was 11 pounds eight ounces when he was born and became stuck. Diabetes in childbirth is another area with a need for specialist trained staff who understand the risks. Safety in medicine should be one of the highest priorities. The National Health Service has to pay up much needed money in negligence cases. It is a tragedy.

Last Tuesday, I went to a pharmaceutical breakfast in another place on medicines counterfeiting, which is a criminal enterprise representing a potent global threat to public health. To date, Europeans have been relatively well protected from fake medicines, but there is evidence of a growing hazard. Precautionary action is needed to prevent future harm. One of the speakers was a most inspiring lady from Nigeria, Professor Akunyili. She told us that her sister had died after being given counterfeit insulin. People across the world should be alerted to this criminal practice. Passing the United Nations resolution could help, worldwide.

20:00:00

Lord Boyd of Duncansby
My Lords, I congratulate my noble friend Lord Harrison on obtaining this debate on this important topic. My interest in diabetes is personal; I was diagnosed as a type 2 diabetic a number of years ago. But in supporting the call for a UN resolution, I want to speak about the economic cost of diabetes and the need for education in the prevention and management of the disease. While I shall speak principally about type 2 diabetes, many of the points also apply to type 1.

We have already heard about the prevalence of diabetes. It is estimated that 230 million people worldwide are suffering the disease, and that that figure will rise to 350 million by 2025. The social cost and the effect on individuals are immense. Diabetes is the primary reason for the non-accidental amputation of limbs—more than 1 million a year worldwide. Diabetes is a major cause of blindness and the largest cause of kidney failure. People with diabetes are two to four times more likely to develop cardiovascular disease. The annual direct healthcare cost of diabetes for people in the age bracket of 20 to 79 is estimated at between 153 billion and 286 billion international dollars, and that will rise to between 213 billion and 396 billion international dollars by 2025. A more meaningful way of putting it might be to say that between seven and 13 per cent of healthcare budgets worldwide are likely to be attributable to diabetes. In some areas and in some countries where the prevalence of diabetes is higher that cost could rise significantly. Those are the direct costs. There are also indirect costs in lost production, and it is estimated that they could be as much again. There is growing interest in the intangible costs, those in quality of life, but they are more difficult to assess. The future projections of costs are alarming. They suggest that unless effective preventive measures are introduced, expenditure devoted to diabetes and its complications will dominate the health economies of many countries by 2025.

Those assessments are at the macroeconomic level, but it would be wrong of us simply to concentrate on that without looking at the personal economic cost. What about the cost to the individual? For many people throughout the world in countries where healthcare is not free or subsidised, ill health poses a major economic challenge, particularly to those on low incomes. It is estimated that an individual with diabetes will spend between two and five times as much on healthcare as someone without diabetes. The economic cost does not end there because someone who has developed complications of diabetes may well be unable to work and contribute to the family budget, so diabetes can be a source and cause of poverty worldwide.

The tragedy is that much of this is preventable. The rise in type 2 diabetes is attributable to the change in our lifestyles, and the link between diabetes and lifestyle is well documented. The frequency of central obesity, hypertension and elevated blood lipids has been called the deadly quartet, and there is a particularly close causal connection between central or abdominal obesity and diabetes. It is estimated that 1.1 billion people worldwide are overweight and 320 million of them are obese. The International Obesity Task Force estimates that up to 1.7 billion people are exposed to weight-related health risks. The IOTF analysis undertaken for the World Health Report 2002 and the WHO research on the global burden of disease estimated that approximately 58 per cent of diabetes mellitus globally can be attributed to a BMI of 21 or more, but in western countries 90 per cent of type 2 diabetes is attributable, in part at least, to weight gain. We have heard that there is a particular problem with childhood obesity.

There is clear evidence that lifestyle changes are effective in preventing individuals at risk, such as those with impaired glucose tolerance, developing type 2 diabetes. Studies have shown that even a small weight loss of between 5 and 7 per cent accompanied by half an hour’s extra walking or other exercise can lower the incidence of diabetes by 58 per cent. A further study of those over 60 showed a success rate in the high-risk group of 71 per cent.

I suggest that prevention is the key, but education is required to turn that key, and we have to ensure that we develop healthcare strategies that focus on weight, exercise and other lifestyle factors, such as smoking. I welcome the fact that England is now to follow Scotland in banning smoking in public places. I went back to Scotland at the weekend, and when I went into a pub, I noticed the difference in the atmosphere between it and a similar place not far from this House. That and other measures taken by the Government are important.

In education, we also have to ensure that we look at particular target groups. There is general education for the population at large, not just on diabetes but on lifestyle, because lifestyle affects our health so much. There is also targeted education for high-risk groups—older people, the overweight, those with impaired glucose tolerance and others. There is also a function for education among those who have developed diabetes. Self-management of diabetes can be difficult for the individual, which poses a real challenge. He must be able to identify emerging health crises, adhere to medication schedules that can often be complex, and modify long-standing behaviours such as diet, exercise, smoking and other factors.

There are also significant barriers to education. Resources are a clear issue, and access is another. In developing countries, those factors can be significant. Telephone counselling can extend one-to-one counselling substantially, and interactive technologies have a part to play. However, those resources are most likely to be effective when linked to a comprehensive and co-ordinated approach to diabetes care.

Why should there be a UN resolution? It is obvious that we face a global problem that has been described as an epidemic, or even a pandemic. The economic cost, particularly to developing countries, is argument enough for a sustained and effective co-ordinated global response. The draft resolution encourages member states to develop national policies for the prevention, treatment and care of diabetes in line with sustainable development. The recognition by the UN of world diabetes day will help to raise awareness of the growing epidemic of diabetes and focus the attention of Governments and healthcare professionals to tackle diabetes.

However, I submit that the recognition of a day has another benefit. It should be the day on which we hold Governments, international organisations and healthcare professionals to account. It should be the day on which Ministers face the John Humphryses of the world to explain what action they have taken to implement diabetes strategies, and the day on and around which we in this House and others should ask: are we doing enough to find a cure for diabetes, to prevent its spread and to manage its progress?

20:10:00

Lord Dholakia
My Lords, just before entering the Chamber, I had the privilege to talk to my noble friend Lord Patel. His contribution on medical matters is well known. He said that it is important to recognise diabetes not simply for what it is, but because of its consequences, which lead to so many complications, including organ failure. What he said has been reflected so well in this debate.

First, I thank the noble Lord, Lord Harrison, for securing this important debate. I was privileged when he asked me to contribute. I come from a community where diabetes is rampant. In some parts of the subcontinent, at least, one in three people are diabetics. The noble Lord brings considerable knowledge from his experience and we would be wise to pay heed to what he has said.

The next world diabetes day will be held in November 2007. That will be an opportunity for the world to take a step forward. I believe that the sooner a UN resolution on diabetes is endorsed, the better it will be for all of us. We are all aware that each individual nation, rich or poor, develops its own strategy, but we require the international community to recognise that we all need a concerted effort to tackle diabetes.

I am concerned that, after an encouraging start, the Government seem to have backtracked on their initially supportive position of the resolution. I hope that that is not true. I am disappointed, but I hope that the Minister will explain the Government's position on what they intend to do internationally.

Diabetes is not to be overlooked or ignored. The statistics are frightening. It no longer fits the stereotype of a condition that affects the elderly or the obese. Diabetes occurs across all communities regardless of class, ethnicity or nationality—a point so well made by the noble Baroness, Lady Masham. As the noble and learned Lord, Lord Boyd of Duncansby, pointed out, there are now 230 million sufferers across the world and it is expected that the condition will affect more than 350 million by 2025. Currently, diabetes claims as many lives as HIV/AIDS. The question must be asked: are we dealing with a pandemic?

That “silent killer” is most rampant in Asia. India has the highest number of diabetics in the world, with an estimated 35 million people suffering. Indeed, some indigenous populations face genetic genocide because of the risk of type 2 diabetes. Wherever I have travelled on the Indian subcontinent, the assumption often made is that one is bound to be diabetic unless informed otherwise. We need to work to change that equation. It is not enough to stand back and allow nations across the world to deal with this problem themselves. All nations must come together to tackle it.

Let me add that, whereas those who are prosperous can afford the insulin, poverty debars many from enjoying a controlled life—again, a point well made by the noble Lord, Lord Harrison. They do not have resources or health services to look after their needs. I have been horrified that such people suffer in silence and even dietary control is out of bounds as they can only eat what they get.

We must look to the future. The humanitarian, economic, and social consequences of allowing the diabetes pandemic to go unnoticed would be disastrous not just for Britain and Asia but for the world. A diabetes pandemic would outstrip health and aid resources everywhere if no action were taken. The scale of the problem dictates that no single government or region is sufficiently equipped to tackle this threat and healthcare budgets across the world would be unable to cope. The condition is also affecting younger generations during their most economically industrious years.

Some members of your Lordships’ House attended an event where we were able to meet Sir Steve Redgrave, the five time British Olympic gold medallist, at a Diabetes UK reception. Sir Steve Redgrave suffers from diabetes, yet he has proved that that barrier to the fulfilment of life can be both combated and ultimately overcome. He is an example of courage and determination. He is a role model to those who are often resigned to live a life of misery.

The UN resolution seeks to bring together its member states to recognise and tackle the global burden of diabetes through promoting healthier living, better diets and increased physical activity. Along with that should also come tight restrictions on the advertisement not only of cigarettes, as we know, but of junk food.

Diabetes is not yet curable, but it is preventable, and supportive action by the Government for the resolution would help reverse the advance of this pandemic. In 2002, an American study called the Diabetes Protection Programme showed that it was well within the grip of most governments to tackle the causes of diabetes effectively. I already know from first-hand experience the traumas of diabetes. Both my mother and my brother were sufferers. I am very lucky not to have the condition myself, but I urge the Government to support this resolution. I admit that I have not seen the text of any such resolution—obviously it is not available at this stage—but I have no doubt that international recognition, accompanied by the endorsement of all nation states, is a step in the right direction. However, diabetes will be the greatest epidemic in human history. These are not my words but those of Dr Paul Zimmet, director of the International Diabetes Institute.

The solution to this problem lies in the worldwide family of nations working together to provide care, aid and preventive measures against diabetes. This Government must recognise and support a UN resolution for the sake of this country and many other nations around the world. I look forward to the Minister’s response. Let us hope that this short debate will open doors for those who desperately crave some normality in their lives.

I conclude by posing a few questions to the Minister. What is being done to pass information, in this case particularly to ethnic minorities, about help and advice available through the National Health Service and general practitioners? Are specialist leaflets available in various languages? Is there a programme in schools that can brief youngsters on the cause of the genetic transfer of diabetes? It would be helpful to know the Government’s position on this matter. In the mean time, I certainly support this debate and the questions that have been posed to the Minister.

20:19:00

Earl Howe
My Lords, the noble Lord, Lord Harrison, has rightly drawn our attention to a public health issue of worldwide dimensions. Those of us who, like me, spend a lot of time looking at the state of public health in this country perhaps need to remind ourselves of that fact, and the draft UN resolution on diabetes is one such reminder. As the noble Lord told us in his excellent speech, we have seen in one generation the prevalence of diabetes rise sixfold across the world. Twenty years ago, about 30 million people were affected by it. Today, as we have heard, more than 230 million, almost 6 per cent of the world’s adult population, are affected by it. In another 20 years, the figure will be 350 million. By far the largest part of the increase will be felt in the poorer developing countries; the Indian subcontinent is one of the worst affected regions.

Diabetes, as every speaker has said, is a silent epidemic in the sense described by the noble Lord, Lord Harrison, in that, unlike HIV/AIDS, which kills just as many people, it is not communicable and its victims are not aware that they have got it until the symptoms hit them. Even then, a great many are never diagnosed. Diabetes is responsible for over 1 million amputations every year and, as we have heard, for a significant percentage of cataracts, blindness, kidney failure, heart disease and stroke. In the poorer countries of Africa and Asia, the costs of diagnosis and treatment are unaffordable either for the state or for individual families. The noble and learned Lord, Lord Boyd, rightly emphasised the huge economic burden that diabetes brings with it. It is a tragedy of gigantic proportions because 80 per cent of type 2 diabetes, which accounts for the vast majority of cases, is, in theory at least, easily preventable.

These indicators are of direct relevance to public health planning at home, not only because of the higher prevalence of diabetes among black and ethnic minority groups, but because in our own society the well of ignorance about diabetes is almost as deep as it is in the less developed world. In England, the costs of treating diabetes, in all its damaging manifestations, swallow up 5 per cent of the entire NHS budget. One manifestation that has not been mentioned so far is the impact of depression or other mental illness that often ensues when diabetes is diagnosed.

The Government can be credited with recognising the importance of the issue when they published the national service framework in 1999, the aim of which is, of course, to improve services and to put in place a standardised level of treatment for diabetes sufferers. It is the extent of that standardisation that lies behind the questions that I want to ask. In April 2004, Ministers published National Service Framework for Diabetes: One Year On, which committed them to achieving two principal targets. The first was that, by 2006, a minimum of 80 per cent of people with diabetes would be offered screening for the early detection of diabetic retinopathy and that, by 2007, all at-risk patients would be covered. We therefore need to hear from the Minister how many PCTs have in fact achieved the 80 per cent target.

The second target was that practice-based registers in primary care would be updated so that all diabetes patients would continue to receive appropriate advice and treatment in line with the NSF. Can the Minister confirm that all practices in all PCTs have now done this? The figures that I have seen suggest that, by May of this year, only 60 per cent of people with diabetes were receiving eye screening, well behind the target of 80 per cent which was meant to be achieved by March. By last month, the figure had risen to only 62.3 per cent.

The problem is that the coverage of screening varies considerably between PCTs. Some are screening only a third of the target group. Others, such as Bristol South and West, Bristol North and North Somerset, are screening even less—between 16 and 18 per cent. At the other end of the scale, there are PCTs in Leeds that are managing to screen 80 or 90 per cent. Why there should be this disparity is not clear. It does not seem to have any bearing on where the PCT is or on the state of its finances. It would be helpful if the Minister could give us the department’s insight into what is happening around the country and why. She will know—indeed she may remind us—that capital funds of £27 million were ring-fenced between 2003 and 2006 to help PCTs to purchase digital cameras in order to deliver the national target on retinopathy screening, but there is a slight problem with this because the general allocation provided to PCTs for ensuring increased training and extra staff to deliver the screening services was not ring-fenced. Because of that, it has remained at the discretion of each individual PCT how it should set about meeting the 80 per cent screening target. It is no use putting half the investment in place without the other half, and it is little use putting a preventive service in place without making sure that it is continued into the future in a sustained and consistent way.

Diabetes UK has said:

“Diabetes services are at particular risk within a culture of short-termism”.
 

That is unfortunately all too true. Financial deficits in the NHS have had a detrimental impact on this area. We know that, as of May this year, eight out of 28 strategic health authorities had seen their services cut back, with some PCTs having reduced screening by over 20 per cent since the figures were last collected. We all know about devolved decision-making in the NHS, but I think that the Government have a responsibility here. It is a public health issue, not just a managerial one. We can talk about statistics very easily, but the brutal truth is that, by reason of the targets not being met, there are people out there who are going blind when they do not need to.

Equally, the Government have done something potentially very unhelpful to diabetes patients, which is to cut back the rate of reimbursement under the drug tariff for glucose testing strips. The companies that make the strips have also supplied a great many ancillary services totally free to patients, such as testing meters and helplines, which in the past have never been directly reimbursed by the NHS. A 12 per cent cut in the tariff is a big one and carries the distinct risk of some of these products and services being withdrawn, as they will simply become uneconomic. If that were to happen, making it harder for patients to monitor their blood sugar levels, it would be very regrettable. Moreover, it is almost certain that new entrants to the marketplace that might have better products and updated technologies to offer are likely to be put off. Treasury edicts must be obeyed, as we all know, but I feel that in this instance the Government may have taken a short-term decision whose long-term effects could be damaging to patients.

At the root of much diabetes is obesity. So far, nothing that the Government have done has made any appreciable difference to the steep rise in obesity, which now affects one in four adults and children, and it is the lower-income families who are most at risk. The key to tackling obesity is to influence people’s lifestyle choices by educating them, as young as possible, about the dire consequences of being dismissive or blasé about key health messages to do with diet and exercise. This is a task for industry, the voluntary sector, schools and medical professionals, as well as government, working in a concerted way over the long term. The draft UN resolution reminds us that the consequences of inaction or failure would be profoundly damaging, not only to individuals but also to our whole society. Indeed, failure should simply not be an option.

20:30:00

Baroness Royall of Blaisdon
My Lords, I am grateful to my noble friend Lord Harrison for raising diabetes as a global health issue of growing importance and for raising awareness of what he described as a silent, uncompromising killer. People suffering from diabetes and those of us who strive to fight against it certainly have a champion in him.

The noble Earl, Lord Howe, informed us that the World Health Organisation estimates that, worldwide, there were 171 million people with diabetes in 2000 compared to 30 million in 1985. I believe that this could rise to 366 million by 2030, so the figures are even more worrying. We have heard during the debate what that means in terms of human suffering and reduced life expectancy, the intolerable burden on healthcare systems and the cost on individuals and families, especially the poorest. My noble and learned friend Lord Boyd of Duncansby clearly demonstrated the staggering economic costs, both direct and indirect. The noble Lord, Lord Dholakia, told us, quite rightly, that in developing countries it is the economically most active who suffer and that this can have dire consequences on their families as well as on themselves.

Diabetes is an epidemic that demands our attention and our action. However, we do not think that a resolution in the UN General Assembly is the primary way that this will be achieved. The General Assembly has been too often burdened with unfocused debates on a proliferation of resolutions. Therefore, as part of our agenda for UN reform, we want to see a streamlined and focused agenda for the General Assembly that addresses health issues systematically and strategically. That is why we would support an initiative that referred to diabetes within a broader public health resolution or sought to raise the profile of non-communicable diseases at the World Health Organisation.

This approach would place the fight against diabetes in the wider development context. Of course, the challenges that developing countries face in tackling diabetes are not specific to diabetes; they are about providing trained staff, essential medicines, health infrastructure, good management and information systems and, above all, the necessary level of funding to make the system work. The real challenge is to establish effective health systems offering prevention, diagnosis and effective treatment to local populations. I am sure that we all agree on that.

In answer to the specific questions about the resolution which has been formally introduced into the General Assembly, I can tell my noble friend Lord Harrison that the EU is not opposing it and that the British Government are working constructively with other member states to find agreement on it. I think that will be pleasing. I well understand, however, that the urgency of the epidemic means that there is no time to wait for a general health resolution. As diet and patterns of physical activity change throughout the world, diabetes is a growing problem. We need action now.

The way for us to tackle diabetes in developing countries is to support country-led efforts to provide strong health services capable of preventing and treating all causes of ill health. Through the Department for International Development, we support individual countries’ efforts to analyse their own burden of disease and to prioritise accordingly within their health programmes.

Our recent White Paper on development committed us to increase spending on basic services—education, health, water and sanitation, and social protection—to at least half of the UK’s direct support to developing countries. We will work with developing countries to back ambitious long-term plans to improve health services, including ways of recruiting and training more doctors and nurses. The White Paper announced a doubling of our research spending in the coming years from £120 million to £240 million annually. This will enable us to broaden the research to include the emerging challenge of non-communicable diseases in developing countries, including diabetes.

Naturally, we must not ignore the growing challenge that diabetes represents to us in the United Kingdom. The figures make sobering reading. There are an estimated 2.35 million people with diabetes in England and this is predicted to grow to more than 2.5 million by 2010. The Government have taken significant steps to improve the care of people with diabetes and to address the substantial challenge of improving people’s lifestyles so that the risks of type 2 are considerably reduced.

As noble Lords are aware, in England we have the National Service Framework for Diabetes, a 10-year plan to improve services by setting national standards to drive up service quality and tackle variations in care. It sets out 12 standards to be achieved by 2013. The noble Baroness, Lady Masham of Ilton, is right about the need for better education about diabetes. Indeed, one of the NSF standards states that all people with diabetes will receive a service that encourages partnership and decision-making, supports them in managing their diabetes and helps them to adopt and maintain a healthy lifestyle.

Of course, we need education for all about healthier lifestyles. Many strategies are already being implemented to increase the public’s fitness and activity levels. I particularly like “Small Change, Big Difference”, a campaign that encourages people to make minor changes in their lifestyles to give them a better chance of living longer, healthier lives. It is aimed at adults with the message that it is never too late to start, and that even small changes in diet and physical activity can make a difference. We are also still on track to have around 120 health trainers in place by early 2007, who will see over 74,000 clients. There are many more activities, and I will gladly write to noble Lords with further information.

The noble Lord, Lord Dholakia, asked about prevention, ethnic minorities and the promotion of information. It is up to local health services to provide prevention material to their local communities in a form and language appropriate to them. There are numerous examples on the national health diabetes support team website, but I will write to the noble Lord with further information.

The noble Earl, Lord Howe, spoke about retinal screening. He referred to the target that by 2006 a minimum of 80 per cent of people with diabetes should be offered screening for the early detection and treatment, if needed, of diabetic retinopathy. The data from the local delivery plan returns show that, in March 2006, 78.4 per cent of people with diabetes had been offered screening for diabetic retinopathy, slightly below the target of 80 per cent for 2006. Great progress has been made; more people with diabetes have been offered screening for retinopathy than ever before, and to higher standards. We recognise that the speed of progress is variable across the country, and that the target has not been reached in all places, but we are keeping up the pressure to ensure that the 2007 target is met, and in a more equitable fashion nationwide.

With regard to the 15 per cent reduction in the reimbursement prices for blood glucose detection strips, I take note of the concern expressed by the noble Earl. There are no national clinical guidelines on the number of times a person should test their blood glucose using testing strips, but I recognise the concern he expresses. I will write to him further, and I will copy the letter to noble Lords who have participated in this debate.

Since the publication of the NSF for diabetes in 2002, real progress has been made in the identification, treatment and provision of services for people with diabetes. However, we have to do more to ensure that the standards set out in the framework are met across the country. Many of the initiatives outlined in the framework and its delivery strategy are embedded in two White Papers that focus on improving public health and people’s influence over the services they receive. Both Choosing Health and Our Health, Our Care, Our Say emphasise the need to develop integrated services involving healthcare professionals and the wider social community to improve health. Our policy stresses the role of multidisciplinary teams that can deliver services at a time and in a place that is most convenient for patients. That will not only help to strengthen prevention and earlier intervention, but will also ensure that people have the information they need to best manage their condition, tackling health inequalities and delivering care closer to home.

My noble friend mentioned the free diabetic service offered by Lloyds Pharmacy. Our thanks must go to Lloyds, as well as our hope that its activity will serve as a catalyst for good practice. Another example of good practice is in South Leicestershire PCT, where people with diabetes are already benefiting from more local care. People who would have been referred to hospital are now being seen at community clinics or in their own home by community diabetes specialist nurses—the sort of people the noble Baroness speaks of, quite properly, on every appropriate occasion. That is exactly what the public want—care delivered when and where they need it, not at some prescribed time at a place miles from home, and this is what we are starting to deliver.

As my noble and learned friend Lord Boyd of Duncansby and the noble Earl, Lord Howe, underlined, one of the greatest tragedies about the growing challenge of diabetes is that the type 2 form of the condition is preventable. We know that it can be prevented in two-thirds of people by improved physical activity and diet. In addition to the focus on prevention in Our Health, Our Care, Our Say, we have introduced a raft of cross-government initiatives to educate people about the risks of being overweight, as well as programmes to tackle obesity and encourage exercise. Much is also being done to tackle social exclusion and poverty, which are clearly linked to poorer health and well-being.

Our Health, Our Care, Our Say will help to ensure that local health and social care commissioners work together to understand and address health inequalities at a local level. We will increase the quantity and quality of primary care in underserved, deprived areas and ensure that people with particular needs get the services they require. I refer to young people, mothers, ethnic minorities—whose risk of developing diabetes, as the noble Lord, Lord Dholakia, pointed out, is up to six times higher than average—people with disabilities, people at the end of their lives, offenders and others. As the noble Baroness, Lady Masham of Ilton, clearly illustrated, we must also ensure that midwives and others looking after pregnant women are especially aware of the dangers of diabetes.

By March 2007, all local area agreements made between central and local government should have a mandatory section on tackling health inequalities, because health inequalities are best tackled by NHS bodies, local authorities and communities working in partnership. Such cross-government initiatives will help to tackle the ongoing epidemic of diabetes in this country and might provide good practice for developing nations. However, we must ensure that the diabetes epidemic is tackled on a global level. We will continue to work with and support developing nations to establish effective healthcare systems offering prevention, diagnosis and effective treatment to their local populations.

I am sure that through the work of the WHO, the growing challenges of diabetes and other non-communicable diseases remain high on the agenda of the UN. The WHO and the International Diabetes Federation are working together to raise awareness about diabetes worldwide through their joint project, Diabetes Action Now. I take this opportunity to pay tribute to the work of the IDF and Diabetes UK in raising the profile of diabetes in this country and across the world. This year they ensured that world diabetes day focused on raising awareness of communities and groups in developed and developing countries that experience difficulties in accessing optimal healthcare.

In addition to the several WHO resolutions on combating NCDs and the excellent 2005 report on chronic diseases, the focus continues to be on diabetes, this major cause of death and disability worldwide. Just last month, the WHO Regional Office for Europe organised a ministerial conference on counteracting obesity, attended by Caroline Flint, Minister of State for Public Health. Participants acknowledged that the link between obesity and diabetes is well established and that tackling childhood obesity now is a highly effective way of preventing diabetes in the future. These discussions will play a major role in mobilising global efforts.

This debate began with HG Wells. I will end it with Benjamin Disraeli, who said:

“The health of the people is really the foundation upon which all their happiness and all their powers as a state depend”.
 

This Government are concerned about the health of the people not only in this country, in our state, but, as the record shows, throughout the world. We want to act locally and act globally. I therefore assure your Lordships that the Department of Health and the Department for International Development will continue to engage with the WHO in its efforts to provide global action against diabetes and other non-communicable diseases.

House adjourned at 8.45 pm.