Before the Minister moves that the first statutory instrument be considered, I remind noble Lords that in the case of each statutory instrument the Motion before the Committee will be that the Committee do consider the statutory instrument in question. I should perhaps make it clear that the Motion to approve the statutory instrument will be moved in the Chamber in the usual way.

rose to move, That the Grand Committee do report to the House that it has considered the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2008.

The noble Lord said: I am happy to confirm to the Committee that these provisions are compatible with the European Convention on Human Rights.

The purpose of the regulations, which are being made under the Pneumoconiosis etc. (Workers’ Compensation) Act 1979, is to increase by 3.9 per cent the amount of compensation paid under the Act. The increased amount will apply to those who first satisfy the conditions of entitlement on or after 1 April 2008.

Increasing the amounts paid under this scheme fulfils the undertaking given by this Government to increase these payments annually. There is no legislative requirement for the amounts paid under this scheme to be increased annually but we believe that it is right that they are so increased. This was a decision we were pleased to make when responsibility for the scheme was transferred to the Department for Work and Pensions in 2003.

It may be helpful if I briefly set out the purpose of the Act. An employee can sue his employer when he suffers from a disease that he contracted from his work with that employer. However, the diseases covered by this Act are known as long latency diseases, as they take a long time to develop. This can mean that they may not be diagnosed for a very long time after exposure to the dust. In most cases, this is more than 20 years, although it can take much longer. It is not surprising that by the time of diagnosis the employer, or employers, responsible may no longer exist. Sufferers and their dependants can therefore have great difficulty in obtaining compensation.

The Act provides for lump-sum payments to be made to sufferers based on the age of the sufferer and the level of disability. Higher amounts are paid to people with higher levels of disability and where the disability arises at an early age. Currently, the average payment to sufferers is around £18,000. A claim can also be made by the sufferer’s dependants after his death, but in this case a lesser amount is paid. The average payment to dependants is currently around £6,000.

Three conditions must be satisfied before any payment can be made. First, the sufferer must be entitled to industrial injuries disablement benefit. Secondly, there must be no relevant employer who can be sued. Finally, no court action can have been brought, nor any compensation received, in respect of any of the diseases for which a person is claiming under the Act.

The Act covers five respiratory diseases, most of which are directly related to asbestos exposure. These are: mesothelioma; pneumoconiosis, which includes asbestosis; diffuse pleural thickening; primary carcinoma of the lung; and byssinosis. It is worth emphasising that these lump-sum payments are in addition to a weekly payment of industrial injuries disablement benefit.

Almost 80 per cent of claims paid under this scheme are to those suffering from mesothelioma. This is an extremely severe form of cancer and is invariably terminal within a short time.

Last year, this Government reaffirmed their commitment to look into all aspects of the current industrial injuries disablement benefit schemes. As a result, a consultation document was published on 29 January 2007 giving people the opportunity to help to shape future provision for those who are injured or made ill by their work. The consultation ended on 22 April 2007 and a report summarising the responses to it was published on the DWP website in June. The consultation process did not commit the DWP to any particular line of action. We are carefully considering several options put to us by officials.

Members will probably also be aware that a separate consultation exercise took place concerning the level of support for people suffering from mesothelioma. Current provision under the 1979 Act is limited to those who were exposed at work. Many people have been exposed to asbestos outside the workplace or through a relative who worked with asbestos. To address that, we are introducing a new lump-sum payment scheme in the Child Maintenance and Other Payments Bill. This removes the condition that a person must be entitled to industrial injuries disablement benefit in order to be entitled to a lump sum.

I support what my noble friend proposes; surely these are welcome developments. However, is he able to say how many sufferers from asbestosis are drawing moneys? Will he be able to tell me at a later time?

I thank my noble friend for that question. I shall try to make sure that he gets an answer by the time that we have finished these proceedings.

I was referring to the Child Maintenance and Other Payments Bill, and explaining that it provides support for the first time to people who have not contracted mesothelioma as a result of their work. I expect that new scheme to be operative later this year. Our intention is that payments under the scheme will be made within six weeks of the date of claim. That ensures, as far as we can, that the sufferers get some payment during their life. Where that is not possible it will at least provide monetary compensation for their dependants.

Finally—I know we all agree here—no amount of money will ever compensate these sufferers or their families. However, these regulations help us to ensure that the compensation provided in the original Act maintains its value. I commend the uprating of the payment scales to Members of the Committee, and will deal with the specific point raised by my noble friend and other comments made when I wind up. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2008. 7th Report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

I am very pleased with all the detail that the Minister gave and am grateful to him; he may be able to silence me fairly quickly and write to me. The noble Lord, Lord Jones, mentioned one of the diseases that might be classified under the label here of “etc”—asbestosis. I seem to remember that, 32 years ago, I had occasion to speak on compensation for three associated diseases—pneumoconiosis, asbestosis and another dreadful disease called byssinosis. Did the Minister mention byssinosis? It seemed to be one of the three associated diseases that would be covered by the regulations. Am I right?

I explained that five diseases were directly covered by the provisions—mesothelioma; pneumoconiosis, which includes asbestosis; diffuse pleural thickening; primary carcinoma of the lung; and byssinosis.

The regulations include byssinosis?

They do.

I am much obliged to the noble Lord. As a good accountant, I shall no doubt listen to the details of whether there is the same compensation for all the diseases or whether it is different for some of them; I suspect that the population of unfortunate sufferers from these three or five diseases will have varying numbers according to the severity of the disease. I would be pleased if he let me have that information in a note in due course, and I shall make way for much more important speakers than myself.

I shall make a short contribution to this important debate. I welcome these regulations. The Government are to be congratulated on what they have done in the recent past. It has taken a long time to get here, and there has been a lot of suffering, but we are beginning to get on top of it now. That is extremely welcome.

I shall make three points. The first is about indexation, which is the most readily available means of making sure that these payments do not fall behind earnings and retail price increases. That is a sensible way of making progress on benefits that are merely about money, but payments of this kind depend so much on the medical conditions, the background and the context in which the awards are given and in which the amounts are paid. I know that under the Social Security Contributions and Benefits Act 1992 there is a duty on the Government to look at indexation in respect of certain benefits. I wonder whether just looking at the numbers is enough. I would like an assurance that there is a medical dimension to the investigation that goes on before a final decision about the level of the annual uprating is made by Ministers. Medical science may make progress, or we may discover more and more that these terrible illnesses are more severe than we originally thought. Can we have an assurance that the uprating calculation is more than merely financial and that thought is given to some of the medical dimensions to the problem?

Secondly, I know the department inherited the scheme in 2003, and I have no evidence to think that it has any problems with it. However, like other Members of the Committee, I am all too well aware that the constraints of the Comprehensive Spending Review on the departmental spending envelope for 2008-11 mean that the administrative pressure under which the department will be administering some of these schemes will increase. Can we have an assurance that there will be no delays in assessments, payments or the processing of the applications? There are Members of the Committee who spent a lot longer than me campaigning honourably and gallantly for this system to be set up. I would not like to think that delays might happen just because we are not watching urgently and clearly enough to see that the falling Civil Service headcount, administrative back-up and resources available to the department mean that there is slippage in the consideration of claims. That would be unfortunate, particularly with regard to the severity of the conditions of some of the claimants and the long road they have had to get to the scheme as it currently is.

Finally, I do not know the answer to this question, so it is a dangerous kind of question to ask. Is there co-ordination with the devolved Administrations in Scotland and Wales? There are some differences in the way that NICE in England and its equivalent north of the border deal with some of the treatments and with the more medical dimensions of the background to this problem. I guess that in Wales and in some of the former shipyard areas of Scotland there is potentially a much higher incidence of some of these diseases, and I would like to think that this scheme is being run in close co-ordination so that best practice and maximum assistance can be given through a co-ordinated drive to try to make this scheme as successful as it should be. It is an important scheme. The Government deserve credit for setting it up and for the state it is in. I am sure we are all on the same side in striving to make it even better in future.

I, too, am grateful for the details given by the Minister, and I am glad to follow the informed remarks of the noble Lord who speaks for the Liberal Democrats. In the south Wales coalfield there is huge interest in these matters even today. The interest is clearly based on the experience of tens of thousands of miners who need these regulations.

I pay tribute to the magnificent work done in another place by many Members of Parliament over many years to obtain the payments that are now coming forward. The noble Lord, Lord Lyell, mentioned asbestosis. It might help your Lordships if I remind the Grand Committee that, in the early 1980s, the late right honourable Lord Harold Walker had charge on the opposition Front Bench of matters relating to asbestosis. I had the privilege of working with him, and we both worked under the leadership of the noble Lord, Lord Varley. I simply make these remarks to help put these excellent regulations into context. Departments, which work for many years and months on the production of regulations such as these, may be able to have a slight historic context to work by in the future.

It is obvious from the remarks that have been made by all noble Lords that the whole Committee is extremely grateful to the Minister for explaining these regulations to us. One of the problems of speaking last, even in a short debate such as this, is that much of one’s thunder has already been stolen. On these occasions I have a regular question for the Minister who is to respond, which I will come to in a minute.

The horrendous diseases to which these regulations refer are all ailments of the lung occasioned either by mining or by the inhalation of asbestos fibres, which may or may not be accompanied in the case of pneumoconiosis by tuberculosis.

I was rapidly looking through last year’s Hansard of this debate when the noble Lord, Lord Kirkwood, was speaking because I seem to remember being told some years ago that the claims were only fractionally greater than the successful payments in these cases of the diseases we are discussing today. Perhaps the Minister could confirm that. I seem to remember that in the year in question there was something in the order of 2 per cent in it.

As we have heard, the regulations uprate the statutory compensation scheme by 3.9 per cent to maintain alignment with other social security benefits, which we will deal with later. Although the Government do not have to increase the rates of payments, they said shortly after coming into office that they would do so. So, here we are again and I and thousands of sufferers appreciate very much their so doing.

However, it occurs to me that with the Child Maintenance and Other Payments Bill currently going through Parliament, with Part 4 covering mesothelioma, which of course fits into this series of diseases, the department could well have proposed altering the Pneumoconiosis etc. (Workers’ Compensation) Act to add these uprating regulations, which never do anything else, to the Social Security Benefits Up-rating Order, which does exactly the same job for the full range of other social security benefits. It would not be beyond the wit of the draftsman to change both the parent Act of these regulations and the Social Security Administration Act to achieve this objective. I might even be tempted to do it myself, given the unlikely nod and wink from the Minister. Whatever the response to that suggestion, my track record of favourable responses from Ministers in the DWP is far from first class.

Like the noble Lord, Lord Jones, and my noble friend Lord Lyell—although I would not be quite as specific as they were in referring to particular diseases covered by the regulations—I would be grateful to know how many claims there were last year. Although I appreciate that, for many of the diseases we are considering, people may suffer for many years—pneumoconiosis, for example, may last for 40 years—the trouble is that it is identified only at the very last moment; at that point, there can be death within months. I would therefore expect the number of claimants to decrease over time. Has that decrease yet manifested itself?

I note that last year, the noble Baroness, Lady Morgan of Drefelin, who spoke for the DWP on a similar order, referred to the,

“dangerous effects of asbestos, and that awareness and knowledge came into play only after large numbers of people had been exposed”.—[Official Report, 27/2/08; col. GC 140.]

There is a latent period, as I have said.

In the debate in another place last week there was a question about why pleural thickening was compensable when pleural plaques were not. Although I am advised that the former can kill whereas the latter are symptomatic, I would be grateful for the Minister’s answer—not least because the subject of pleural plaques exercises the minds of some Members of another place and one or two noble Lords with regard to the Child Maintenance and Other Payments Bill.

Finally, I am pleased to repeat that I support the regulations.

I thank all noble Lords who have spoken and warmly welcomed the proposals. I shall seek to deal with all the questions that have been raised.

First, on the question asked by the noble Lord, Lord Skelmersdale, on the number of claims, the position is that total claims received up to March 2007 are 27,101, while the total claims paid to that date are 19,214. The issue is that those are lump-sum payments; there is no continuing payment beyond that lump sum.

My noble friend Lord Jones asked about the overall statistics. I do not have the overall data on the number of people claiming industrial injuries disablement benefit, but I shall write to him on that.

On the scale of annual incidence, focusing on claims for mesothelioma, which represents 70 per cent of the total number of claims made under this scheme, in 2005 there were 2,037 deaths. The statistical research done by the HSE suggests that the number of mesothelioma deaths is expected to peak, with some 2,450 deaths between 2011 and 2015. That will give the noble Lord some idea of the scale, but I shall write with more specific information.

I am grateful to my noble friend for handling my query. He may know that the nation first took an interest with urgency in the problem of asbestosis when it became clear in the late 1960s that a workforce in a factory in Hebden Bridge literally played snowballs, as it were, with blue asbestos. It was from thereon that the tragedy that is now unfolding had its origins, in part at least. That is why I wished to pay tribute to the late Lord Harold Walker, because I saw the passion and insight with which he made his case. I also saw Ministers for the Administration of the day responding as well as they could.

I thank my noble friend for that information. I take this opportunity to acknowledge, and thank him for, the campaigning work that he has done in this area. He talked particularly about the impact of this legislation on miners. Previously, miners have been able to access the 1974 scheme, which is different from the one before us today, but following the dissolution of the British Coal Corporation on 27 March 2004 it became possible for miners to access compensation under the 1979 Act scheme as well, although there are some issues about how that works.

Again, I am grateful. My noble friend reminds me that when I served under Prime Minister Harold Wilson in his fourth Administration in 1975, I received a deputation from the south Wales miners, led by Emlyn Williams. He made the case for what eventually became these very payments. Again, I use the word “passion”. His delegation knew what the problems were in the valleys of south Wales, from the anthracite fields in the west through to the eastern valleys. Of course, these problems did not relate simply to south Wales; they could also be found in the north in parts, but they largely related to the south Wales valleys.

Again, I am grateful to my noble friend for those fascinating insights. It is a key bit of Labour history which some of us read about in books in the 1970s, and to hear directly from someone who was engaged in that and worked with a great Prime Minister as well is indeed fascinating.

The noble Lord, Lord Lyell, asked which diseases were covered. I confirm that byssinosis is covered. He asked specifically whether the same rates were applicable to each of the diseases. As I explained, the rate of compensation is determined in part by the age of the sufferer and the degree of disability that the disease demonstrates, although mesothelioma is always compensable at the highest rate of 100 per cent. However, generally the same tables apply to all the five conditions that I listed. I hope that that deals with the noble Lord’s point.

The noble Lord, Lord Kirkwood, asked about indexation. I reiterate that there is no statutory requirement for this, although there is a government commitment to it. I think that that commitment is clearly on the record and we do not necessarily need to embody it in legislation. The change is driven by the RPI adjustment; there is no reassessment along the way in terms of medical issues and evidence. The noble Lord asked for an assurance that pressures on the department would not impact on the claims process. I reassure him that, whatever pressures the department is under, they will not impact on administrative effectiveness in delivering the benefit.

I think that I dealt with the point raised by the noble Lord, Lord Skelmersdale, about the total number of claims. He also asked about pleural plaques. A House of Lords judgment was recently handed down which concluded that pleural plaques, per se, were not compensable. The Government obviously had to consider long and hard whether to seek to legislate to overturn the impact of that judgment, and they have determined not to do so. That is not to say that someone suffering from pleural plaques who then developed a disease could not be compensated for that, but with regard to the existence of pleural plaques, the Government have accepted the House of Lords judgment in that case.

I was well aware of that, but there must be some reason for the Government to accept the ruling of the court that the Minister just mentioned. Very often, Governments disapprove of rulings from your Lordships’ Judicial Committee and succeed in changing the law back to what everyone thought it was before legal colleagues—I was going to say “got at it”, but “interpreted it” would be a better way of putting it. My question remains: “Why?”.

It was because it was a very clear legal judgment. I have actually read it; we had some representations on the matter, and it was very clear that the House of Lords determined that pleural plaques were not compensable on two grounds—that the condition itself did not create compensable damage; and that the potential stress and anxiety that might flow from the existence of pleural plaques that might be indicative of exposure to asbestos was not compensable under basic provisions in the law. The Government reflected on and accepted that clear judgment. We obviously continue to engage with stakeholders on this and are listening carefully to representations about the matter. In particular, we are exploring how people who have been exposed to asbestos, of which the existence of pleural plaques is indicative, might be supported. We do not intend to override the judgment.

The noble Lord, Lord Kirkwood, asked about devolved Administrations. Obviously this is a GB scheme so, so far as there is engagement in Scotland and Wales, we need to make sure that we have a robust system for the whole of Great Britain. I dealt with the point about administrative pressures and indexation. I think that I have dealt with all questions asked by Members of the Committee, although the noble Lord, Lord Skelmersdale, looks as though he is going to prompt me because I have missed one.

I just say that I am extremely grateful for the Minister’s much fuller answer second time round on pleural plaques. However, I asked whether any consideration has been given in the department to rolling what is essentially an uprating order for these dust-borne diseases into the more general uprating order that we are going to discuss in a few moments.

I thought that I had covered that; apologies if not. The answer is no. I think that we have made a prior commitment to always try to engender a separate debate on this; I think that was the express will of noble Lords at some stage. The key point is that there is a clear government commitment to uprate on an annual basis. However, on that basis we do not feel the need to enshrine it specifically in legislation.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2008.

The noble Lord said: I believe that we are dealing with two orders, the second being the Social Security Benefits Up-rating Order 2008. Both were laid before the House on 23 January. I am satisfied that the orders are compatible with the European Convention on Human Rights.

The uprating order will increase most national insurance benefits by the September 2007 retail prices index, which was 3.9 per cent. Most income-related benefits will be increased by the Rossi index, which as Members of the Committee will be aware is the retail prices index excluding rent, mortgage interest, council tax and depreciation, and was 2.3 per cent on the same date. The uprating order provides for increases to take effect, in most cases, in the week of 7 April.

The Guaranteed Minimum Pensions Increase Order 2008 sets out the amount by which contracted-out defined benefit schemes must increase members’ guaranteed minimum pensions that accrued between 1988 and 1997. This order will provide for an increase of 3 per cent. Primary legislation provides for increases to be capped at this level, when the retail prices index exceeds 3 per cent. This year’s uprating adds nearly £4 billion to government spending. I hope that noble Lords will agree that this will reinforce our commitment to build an active welfare state and to tackle poverty by helping those most in need.

The uprating order provides an extra £2.8 billion to pensioners, of which £240 million is above inflation. Today’s pensioners are no more likely to be living in poverty than any other sector of society. Since 1997, pensioner poverty has been reduced by more than one-third through targeted support such as pension credit and around £11 billion extra funding. We have lifted more than 1 million pensioners out of relative poverty. In 1997, the poorest pensioners lived on £69 a week. From April, pension credit means that no single pensioner will need to live on less than £124 a week and that couples need not live on less than £189.35 a week. Around 2.7 million pensioner households, which is 3.3 million individuals, receive pension credit, with an average weekly award of £50. Because of our reforms, pensioner households will be an average of £1,500 better off in 2007-08 than they would have been had the 1997 system stayed in place.

My honourable friend in the other place has announced a package of measures that will simplify the state pension system and encourage take-up. The changes will make the system less confusing and intrusive. A simplified and integrated process has already been introduced to make pension credit and state pension easier to claim, but this will be extended further to include housing benefit and council tax benefit—four benefits in one call—without the need for the customer to sign and return a claim form. I am sure that noble Lords will agree that this improvement to simplify claiming council tax benefit in particular should help to increase take-up of that benefit. We recognise there are those who for a variety of reasons do not claim. We are therefore working jointly with Help the Aged, Age Concern, Citizens Advice and other partners to encourage pensioners to apply for benefits, targeting those areas where take-up is low and helping thousands more pensioners out of poverty.

We will also uprate benefits and allowances for the working population. The order provides for an extra £630 million for disabled people and carers, and an extra £420 million for those of working age. Child-related allowances paid in the income-related benefits will be increased in parallel with the child tax credits to ensure that families getting these benefits see the full value of increases in child tax credits. In particular, the allowance paid for a child dependant in the income-related benefits will from next April increase by £5.14 a week to £52.59—almost 11 per cent. This shows our commitment to provide increased financial support for low- and moderate-income families. Tax credits currently benefit nearly 6 million families and 10 million children.

This year’s uprating has provided an opportunity to provide extra help to some vulnerable teenagers as well as simplifying the benefit structure. From next April, the single-person rate for the small number of 16 and 17 year-olds getting income support and jobseeker’s allowance will be the same as the rate for 18 to 24 year-olds. This will mean an increase of £12.30, uplifting their weekly benefit from £35.65 to £47.95. The number of people in work is at record level at 29.4 million, and 1 million fewer people get out-of-work benefits than in 1997. The New Deal has helped more than 1.7 million people into work; this includes over 764,000 young people and more than 300,000 long-term unemployed adults. The New Deal for Lone Parents has helped more than 500,000 people into work, with the number of lone parents on benefits almost 250,000 lower than in 1997, and child poverty has fallen by 600,000 since 1998-99.

The cost of uprating benefits for next year is nearly £4 billion, with over two-thirds of this going to pensioners. I hope that the order has the support of the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Guaranteed Minimum Pensions Increase Order 2008. 8th Report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

I am very pleased to take part in this important and regular parliamentary occasion. It is sensible to take the two orders together. I would like to make one or two passing remarks about the Guaranteed Minimum Pensions Increase Order. I am not sure about the detail, but it appears to me—

[The Sitting was suspended for a Division in the House from 4.12 to 4.18 pm.]

Before the Division, I was raising one or two questions about the Guaranteed Minimum Pensions Increase Order. Do the Government have any plans to look at ways of getting rid of the guaranteed minimum pension? It is now a rump. I know that entitlements accrued between 1987 and the early 1990s, which I do not diminish, but they are an awkward hangover from an earlier time. They cost a lot of money to administer. I am told by people who have to do the actuarial work for them that they are fiendishly complicated and boring for them. Those few employers who still run the defined benefit schemes have to pay an enormous additional cost because of the failure fully to uprate guaranteed minimum pensions by indexation and the cap. That is a further burden on employers. With pensions legislation coming thick and fast through your Lordships’ House, and if it is possible to apply a little creativity, we should undertake a thorough review of the way in which the GMP system works. Review and reform are long overdue.

A number of colleagues who are involved in the pensions field complain that information from Her Majesty's Revenue and Customs and the National Insurance Contributions Office has often been unacceptably misleading and incorrect in the past, which causes great problems for employers who run the schemes. It is an urgent problem which I hope that the Minister will say he will address.

I turn in the main to the Social Security Benefits Up-rating Order 2008. I could speak without hesitation, deviation and even repetition for a long time about all this, because I have spoken to one such order per year since 1983. They do not get easier as you get older.

I shall say a word about the context. It is acknowledged that the Government have made a lot of progress. It is very easy to be blinded by big numbers, and we are dealing with big numbers in the social security system. We are using the September 2007 retail prices index figure, and I could persuade Members of the Committee that things have changed quite a bit since September. I am sure that noble Lords have seen the figures about energy costs that I have recently seen. They suggest that fuel inflation over the recent past was nearly 20 per cent—19.3 per cent. Fuel, particularly domestic heating fuel, cannot be avoided in a poorer family or household, and that is a worrying level of increase. Reading the commodity pages of the quality national press, it is obvious that in the next few months we will sustain quite substantial increases in basic food costs—not just in raw material costs, but in processed foods costs as well.

Therefore, although I welcome this order and think that the Government have done much, I worry whether we are making proper provision for the next 12 months. I do not want to be gloom-laden or a doomster in any sense, but we could well be heading for a much more difficult period of economic growth. If that is the case, worklessness will increase, which will make it more difficult for the Government to attack their 80 per cent employment target. In addition, the costs of living will go up. Another factor that is now worse in the context of this uprating order than in many years in the past is the residual level of indebtedness in the economy. Many poorer households have unconscionable levels of credit card debts that are very difficult to sustain. The context in which these orders are being promoted by the Government is difficult. The economic situation is likely to get worse before it gets better.

Secondly, I know the Minister will play a straight bat and say that the Government can deliver it all with the level of departmental spending but, as I said earlier, I am really concerned that the 5 per cent saving and the Gershon cuts will make it nearly impossible to deliver the changes that are coming. We have a raft of Jobcentre Plus schemes, bit and pieces and pilots. Taken on their own, they are all welcome and I am not arguing against them, but I have serious reservations about whether the headcount and the resources available to the department between 2008 and 2011 will be able to administer the processes that deliver these benefits. It is all very well increasing the benefits, but if people do not get access to them or if there are barriers to access to them, there will be great difficulty for the people we are seeking to serve.

I could make a longer point about this, but I will not, because it plays into the consequential argument about complexity on which the Select Committee in the other place produced an excellent report. There is a simplification unit in the department, but I am still not convinced that its members are earning their pay. However, if they meet me in the pub late at night they may tell me different. There is a real issue about complexity. The Social Security Advisory Committee captured it rather well when it said that there was still a,

“substantial barrier to full customer engagement”.

I think that that is right and that it will get worse because we are asking Mrs Strathie and the others who are running Jobcentre Plus and the pension credit system—the whole pension system, indeed—to do more with less. I acknowledge that there has been investment from the Treasury in the past, but I have some severe worries that the processes will fall over and that clients will not be served despite the increases in these orders.

In particular I want to mention two kinds of households and client groups. One is people in workless families without children. It is absolutely true that the Government can say that income support for pensioner households and for households with families with two and more children is higher relative to earnings than in the past. I was looking at some figures produced in the Monitoring Poverty and Social Exclusion 2006 report. It confirms that that is the case. It also makes an important point which I want the Minister to go away and think about. It demonstrates to me without any peradventure or doubt that the level of support for working-age adults without children is much lower and getting worse. A graph on page 36 of that report demonstrates that very clearly.

The other thing the report says—and I confess that I did not know this—is that almost half of all adults relying on state benefits or of working age do not have dependent children; 46 per cent are of working age without children. That client group is very important to us, and to the Government because the whole act of labour market policy that is driving the Government’s reforms—and I am in favour of that—is trying to get people into work. What if we are trying to get people into work and they find that they are actually worse off? The budget changes have made this worse because the 10 per cent tax rate—if you do not have access to child tax credit, as you will not if you are a workless household—means that the better-off calculation in terms of welfare to work is very much harder to make positive. I genuinely think that is a problem and that not enough is being done about that client group. I could go on at much greater length about that. I will not; I just make the point that it is a particular client group of families under these uprating orders who are being left behind.

The second group I want to mention in passing, and this is more familiar territory, is pensioner households and the whole question of take-up. I know that the Government have take-up schemes and that take-up schemes have come and gone in the past. There is now a structural problem about uprating and the stigma of take-up, of pension credit, housing benefit credit and council tax credit.

I was quite taken aback last week when I discovered in a press release from the Administration in Wales that it has now been calculated that up to £100 million in council tax benefit goes unclaimed in Wales. Good for the Welsh devolved Administration for finding that out. They are spending £3 million on a targeted take-up campaign. That is very welcome too. I know that the Government have got some plans to roll out some development of take-up schemes with associated organisations in the voluntary sector—not-for-profit organisations—but this is now urgent. A lot of the residual long-term poverty in our communities derives from the fact that these means-tested benefits, which are designed rightly to target the poorest, are just not getting through. That is a serious worry.

I have perhaps a penultimate point, and I have said this before. Uprating year to year is fine, but uprating over a 20-year period is dire for low-income households and social mobility. People have slipped behind earnings increases inexorably, year in and year out, over a 20-year period. We are intelligently positing some of the policy proposals over longer periods. The Government are right to look at their child poverty programme up to 2010-20, because it is only over those timescales that you can get hold of some of those issues properly.

I support the orders and welcome them, but the noble Lord, Lord Kirkwood, probed very shrewdly. It is right to support the needs of the poor.

My noble friend made a very good speech and these are welcome and excellent upratings. However, can he say a little more on statutory paternity and adoption pay in Article 11? When did paternity pay become part of the system and when was that social history made? How many are drawing paternity pay? Are the numbers increasing?

Lastly, my noble friend may read from time to time the prestigious weekly magazine—it is almost a magazine of record—the Economist. He may have noted, as I have these last several weeks, that the distinguished commentator Bagehot has been missing. When I turned to read the magazine this week, what did I see in small print? That Bagehot is on paternity leave.

I seem to remember that it was this Government’s policy to introduce paternity leave, following the successful previous policy of maternity leave. Time flies. I cannot remember whether it was four years ago or longer, but no doubt the Minister will be able to tell us in answer to the noble Lord, Lord Jones.

I do not intend to follow the comments of the noble Lord, Lord Kirkwood, except to say that I think that we are all determined that as many people as are fit enough should be in the world of work, but—it is a big but; I go along with the noble Lord, Lord Kirkwood, on this—they will not even try unless the recompense in wages or salary is more than the benefit that they got in the first place. For families with children that is comparatively easy, because of the families’ tax credit. For others, it becomes a lot more difficult, and is a lot more of a challenge for those of us making policy who have that objective.

Having said that, on behalf of my party, I am pleased to support the orders, which increase the main social security benefits and pensions by 3.9 per cent. Inflation is creeping up. I note that last year’s increase was 3.6 per cent, and both those amounts relate to the retail prices index, which is rising. Given, as was pointed out in another place and today by the noble Lord, Lord Kirkwood, that the average RPI is not representative of “individual” household bills—at least in the short term—the increase is not seen to be sufficient for many. However, as there is an annual fixed point for recording inflation, and therefore using that amount to uprate year by year, people gain when household expenditure falls relative to the RPI. The question is whether the gains equate with the minuses. I do not know whether any work has been done on this on the 20-year period of the noble Lord, Lord Kirkwood, but at some stage it would be extremely useful if the Minister could set his mind to write to us on exactly that subject.

The other income-related benefits are to be increased by the Rossi index, as the Minister said. That of course excludes rent, mortgage interest, council tax and—for some unknown reason—depreciation. I have never understood that; perhaps someone could take me quietly aside at some point and explain. Over the past year, this has been 2.3 per cent, which again will not be popular in some quarters through ignoring the point of the swings and roundabouts that I have just mentioned. It tends to be pensioners, through their lobby groups, who complain most about this. It would be helpful to know the Government’s view.

Talking of pensioners brings me to the order that we are discussing in parallel, the guaranteed minimum pensions order. As the Minister said, where inflation is more than 3 per cent, the guaranteed minimum pensions indexation is capped at 3 per cent. Unlike my noble friend Lady Noakes—she will be returning to the House tomorrow—I am not a pensions guru, although I struggle hard to make some useful points. With regard to a point just made, what effect does guaranteed minimum pension have on defined benefit pension schemes year by year? I can understand that in the past it has had some effect by dragging up the level of the minimum pension payable, but is that still the case, especially in the, alas, very rare defined benefit schemes? It would be useful to know that.

Accompanying these orders is the report of the Government Actuary—or, rather, the acting one, Mr Johnston. I have not been able to check whether last year’s Government Actuary’s Department report said the same thing as we find in paragraph 4 of the conclusion; namely, the obvious fact that if economic conditions depart from the assumptions in paragraph 4.1, which I shall come to in a minute, then the balance of the National Insurance Fund, as of 31 March, will be different from the £56.974 billion anticipated at the end of the financial year 2008-09. That may or may not be meant to sound a cautionary note but it is rather stating the obvious.

One of these imponderables must surely be the unemployment level, which is mentioned as a contributing factor in paragraph 4.1. The others in that paragraph are the employment level—as opposed to the unemployment level—which is expected to rise from 27.6 million in 2007-08 to 27.7 million in 2008-09. That is a modest increase indeed. The question arises as to where people are to come from to fill those extra 100,000 jobs. Does the Minister expect the Prime Minister’s wish to be realised when he talks of British jobs for British workers, which, with the number of immigrants coming into this country, is what I would describe as patent nonsense? Those immigrants, of course, mainly come from EU countries, and there is nothing that this Government or indeed any other can do to stop them. The pass was sold years ago, although with the new accession countries, as they are called, it was under this Government’s watch.

Another assumption that the acting Government Actuary makes is that the number of people unemployed and claiming benefit will be 840,000 on average in 2007-08, rising to 870,000 in 2008-09. We all know that the economy is slowing down but I am confused by these assumptions, because the most recent figures for unemployment that I have, which come from the Labour Force Survey, are 1,606,000 unemployed and 7.9 million defined as “economically inactive”. For the purposes of clearing up my confusion, what has happened to 810,000 people? Surely they cannot all be so self-sacrificing as not to claim benefit.

Finally, it used to be recognised that the prudent balance in the National Insurance Fund was one-sixth of expected expenditure. Mr Johnston reports that the surplus in the fund is likely to be well in excess of this at £56,947,000 by the end of 2008-09. It is perhaps hardly surprising that the National Pensioners Convention has recognised this, commenting that the surplus has been rising by more than 2.45 times in the increase of expenditure. It has therefore called for a substantial increase in the state pension, and there was a report to that effect in a tiny paragraph in Saturday’s Financial Times.

There are two points here on which I should like the Minister to respond. The first is that the fund covers a lot more than pensions; it includes jobseeker’s allowance and incapacity benefits as well as pensions. The new pensions benefits, which are expected to be £8.108 billion in 2008-09, are much more volatile than pensions and depend on assumptions which may or may not be realised.

I cannot discover what allowance has been made for longevity, although I note that total expenditure is increasing at a higher rate than the extra payments would warrant as a result of the uprating. This is the subject of the next order, so perhaps my remarks are out of place here. Nevertheless, I would be grateful for the Minister’s response to the national convention, which I believe would be the first time that any Minister would be able to put such a response on the record. Not only I would be grateful, but I am sure that the convention would, too. With these questions, I approve the orders.

I am grateful for the range of contributions. I shall try to deal with as many points as I can and will certainly write where I cannot.

The noble Lord, Lord Kirkwood, asked why we cannot do away with the guaranteed minimum pension. The Pensions Act 2007 contains provisions which allow schemes to convert guaranteed minimum pension rights to normal scheme benefits so long as they are equivalent. That is a means of addressing the noble Lord’s question. The provisions cover also the removal of contracting-out or defined contribution schemes, which is a welcome simplification of pension arrangements.

The noble Lord, Lord Skelmersdale, asked what this was all about. Where there are defined benefit schemes—previously, defined contribution schemes—and a contracting-out of SERPS, the legislation required that those contracted-out schemes provided a guaranteed minimum pension which was broadly equivalent, although not identical, to SERPS. The provision requires those defined benefit and defined contribution schemes to maintain a pension that covers the SERPS from which people have withdrawn.

Yes, I fully understand that, but my question could be translated as “Do they still have a value?”, because I am beginning to doubt it.

Indeed. The purpose of the uprating is to make sure that their value is maintained, with the right not to maintain them as a guaranteed minimum pension in the future but to build an actuarial equivalence into normal benefits being provided for in the legislation that we discussed extensively last year. Yes, there is a value. The order is about maintaining or preserving that, but giving schemes the choice to convert to equivalence, so that one no longer has to go through the detail and complexities of these calculations.

I hope that I have dealt with guaranteed minimum pensions. Perhaps I may deal next with the range of inflation measures. The noble Lords, Lord Kirkwood and Lord Skelmersdale, were right that they are inevitably backward-looking, which is the only sensible way to approach them. There is a range of measures, such as RPI, Rossi, RPIX, which is retail prices less mortgage interest payments, and the consumer prices index, which is the main macroeconomic inflation indicator and commonly used internationally. Each has its role. Traditionally, we have used RPI for the upratings. For the 2008 uprating, the RPI is 3.9 per cent and the CPI is down at 1.8 per cent, so it was beneficial to individuals that we used the RPI figure. Of course, if there are cost increases in certain commodities after the announcement, during the course of the year before the next uprating there is inevitably a bit of a lag to that—but it will be caught up when the next uprating takes place. The impact on energy prices needs to be seen also in the context of the Government’s fuel poverty strategy, which has invested considerable amounts of money in targeting the most vulnerable and helping them to tackle fuel poverty; 1.6 million households have already been helped under the Government’s Warm Front programme.

The Minister cannot get away quite as easily as that. The winter fuel payment was set at £200 in 2003, I think, and is still £200 in 2008. Some of these thresholds and disregards do not do the job that he argues that they do.

Again, you have to look at the totality of support and income that goes to households. It is right to say that the winter fuel payment is not uprated annually. However, when you look at its current value of £200 and £300 for the over-80s and compare that with the £20 in existence when we came in—

That was nothing to do with me.

No—it is never anything to do with the Liberal Democrats. There has been a dramatic improvement in outcomes.

Both noble Lords touched on the issue of the economic climate and how that is going to impact on the figures. Of course, we know that the international credit crunch is producing pressure on growth across the globe. We would maintain that, because of the financial stability in the UK and the fiscal and monetary infrastructure that is in place, the UK is better placed to weather that storm than most economies.

On the labour market, I did not quite follow the figures given by the noble Lord, Lord Skelmersdale, and perhaps I need to study the record in detail. I wonder if he is quoting two different measurements—the Labour Force Survey and the claimant count—which are not necessarily measuring precisely the same thing.

I do not think that I was confusing them but I was most certainly comparing them, because there is an enormous difference. I was asking why the Minister thought that there was such an enormous difference.

From recollection, the Labour Force Survey asks a number of questions on a sampled basis, looking back a number of weeks and forward a number of weeks. It would count as employment if someone was available and in work for as little as an hour a week. But rather than confuse the noble Lord with anecdotes, I shall write more specifically to set out precisely what is included.

That would be helpful, especially in view of the 16-hour rule.

Indeed. For the purposes of clarity I should set down in writing the different components of those two measures.

My next point goes to the heart of the point that both noble Lords made about working-age families without children and the challenges of living perpetually on benefit when it is uprated only by RPI. Yes, of course that is so—which is why we placed so much emphasis and did so much work on the benefit of encouraging and supporting people into work, for a whole range of reasons. There is the whole issue around the health, work and well-being agenda—that being in work is generally good for your health and being out of work is generally bad for your health. We know that it is the best route out of poverty, overwhelmingly for most families, which is why the investment has gone in, why we have the New Deal and why there have been the very dramatic improvements in the labour market statistics. The number of people in work is a record 29.36 million. ILO unemployment was down 13,000 on the last quarter and the number of out-of-work benefits have fallen by 1 million since 1997. Those are real and dramatic changes in the labour market, and we need to keep supporting people into work.

The greater emphasis will be achieved by integrating the skills and work agendas to make sure that people who come on to jobseeker’s allowance have skills screening and the help that they need to improve their skills. Under the flexible New Deal, we want to make sure also that people have the benefit of advisers and support, so that they not only get into work, but are sustained and encouraged to progress in it. If one were to compare most in-work calculations with equivalent benefit calculations, one would see that people are overwhelmingly better off in work. I accept that that is not always well understood, although Jobcentre Plus will do a calculation as a routine part of a customer’s experience. People sometimes forget that benefits such as council tax benefit and housing tax benefit are in-work as well as out-of-work benefits and do not necessarily factor them into the calculation. However, these are the challenges of helping people to understand and of supporting them into work.

The noble Lord, Lord Kirkwood, drew comparisons between the percentage levels of the basic state pension to show what they have been historically. He was right: the Government’s approach when they came into office was to target resources on those who needed them most. We make no apology for that because of the paucity of provision for pensioners in 1997. It was absolutely right to do that. We know that we have spent more on pensions and invested more on pensioners than would have been the case if we had only uprated the basic state pension by earnings rather than prices. We would not have done better. Under the pension reforms last year and those that we shall discuss soon, we have put in place foundations to help more people access a full basic state pension and to relink the basic state pension with earnings in 2012 or the end of the next Parliament. Nor should we overlook the benefits of S2P and what that has meant for generally poorer workers in additional support and extra pension provision.

If pension outgoings from the fund rise by the level of earnings, and income rises by the RPI, there is bound to be an imbalance between the two. Is that why the Government are building up the balance in the National Insurance Fund? Is this the real answer to the pensioners convention?

Not specifically. I was going to come on to the surplus in the national insurance fund, because we inevitably debate it at this time of year. The reality, and the answer to the National Pensioners Convention, which says that that surplus could be used dramatically to increase pensions now, is that the surplus is effectively invested back into other public services. If we spent that on increasing pensions immediately, one would have to raise taxation to deal with the other public services which the surplus currently supports. It is not available as a free amount, and is not otherwise allocated and invested in government services.

The noble Lord, Lord Kirkwood, asked whether we have the right strategy for child poverty. Six hundred thousand children have been lifted out of relative poverty already. The details announced in the previous Budget and the PBR on child benefit and child tax credit, and the issues that we have discussed in the child maintenance Bill, will support another 300,000 children in getting out of poverty, but there are still big challenges that we need to make sure we meet. We should not shy away from setting tough targets simply because they are tough.

My noble friend Lord Jones asked about statutory paternity pay and statutory adoption pay. We dealt with this on the then Work and Families Bill. I am struggling to remember which year it was—I think it was 2006. I do not have a detailed breakdown of the information but I shall certainly write to my noble friend. Of course, we should recognise that these things are generally met by employers and not by government.

The noble Lord, Lord Skelmersdale, again asked about the National Insurance Fund and said that he thought it covered a lot of things other than pensions. There is a tabulation showing total benefits for 2007-08 of something like £65 billion, with a breakdown of the figures for retirement pensions, additional pensions, widows’ bereavement pensions, incapacity benefit and contribution-based jobseeker’s allowance, and there is also a schedule showing the totality of those payments.

The noble Lord also raised the question of pension take-up and the work that is being done in that respect. Given the time that we have spent on this order, perhaps I may send him a note, as I think that we have ranged over this matter before. Very extensive work is going on to ensure that people take up the benefits to which they are entitled. I hope that I have dealt with each of the questions raised. If noble Lords do not wish to challenge or raise any other points, I shall commend the order to the Committee.

On Question, Motion agreed to.

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

Moved, That the Grand Committee do report to the House that it has considered the Social Security Benefits Up-rating Order 2008. 8th Report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Social Security (Contributions) (Re-rating) Order 2008.

The noble Lord said: I am pleased to introduce this order, which deals with various national insurance contribution rates and thresholds. I can confirm that it is compatible with the European Convention on Human Rights. All the changes were announced in a Treasury press release published on 18 October 2007.

Since 1997, the Government have delivered a comprehensive programme of reforms to the tax and benefit system. Those reforms have simplified the system, tackled child and pensioner poverty and made work pay. The 2007 Budget announced the next stage in these reforms as part of a rebalancing of the tax and NIC systems to offer more support for work, families and pensioners. The package simplified income tax and NICs, increased the personal allowances for those aged 65 and over, and changed the rates and threshold for child tax credit and working tax credit. It means that from April 2009 there will be just two main rates of income tax, and they will apply to the same bands of income as the two rates of national insurance contributions, creating one of the simplest personal tax structures of any developed country.

To achieve this simplification, the package of measures announced in the Budget in 2007 included alignment of the upper earnings limit and upper profits limit with the level at which higher rate income tax is paid from April 2009. This is a two-stage process and the change in this order to the upper profits limit for the self-employed is part of the first stage.

I start with the small earnings exception for the self-employed, below which the self-employed may claim exemption from paying class 2 contributions. The exception will rise in April from £4,635 to £4,825 a year—an increase broadly in line with prices. Many people choose to pay these contributions in order to protect their benefit entitlement. The rate of class 2 contributions for 2008-09 will rise from £2.20 to £2.30 a week—again, an increase broadly in line with prices.

Staying with the self-employed, the draft order sets the profits limits between which main-rate class 4 contributions are paid. The lower limit, at which class 4 contributions become due, will increase broadly in line with inflation and the income tax personal allowance from £5,225 to £5,435 a year. At the other end of the scale, the upper profits limit will continue to match the upper earnings limit for employees, which will go up as part of the personal tax package to £40,040 for the 2008-09 tax year. This ensures that the self-employed pay main-rate class 4 contributions on much the same range of earnings as employees liable to class 1 contributions and is an essential element in making the national insurance system fair for everyone. The draft order also deals with the weekly rate of voluntary class 3 contributions, which help those with insufficient contribution records in any given tax year to make up a qualifying year for benefit purposes. The rate of class 3 will rise in April by 30p to £8.10 a week, a standard rerating in line with prices.

The review of contribution rates is accompanied by a report from the Government Actuary detailing the effects on the National Insurance Fund of the draft order and the draft order uprating benefits laid by my right honourable friend the Secretary of State for Work and Pensions. I am pleased to say that there is no expectation that the fund will need a Treasury grant for the 2008-09 tax year.

Northern Ireland has a separate national insurance scheme from Great Britain but the two schemes are closely co-ordinated and maintain parity of contribution rates. This draft order covers both Great Britain and Northern Ireland, and I commend it to the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Social Security (Contributions) (Re-rating) Order 2008. 9th Report from the Joint Committee on Statutory Instruments.—(Lord McKenzie of Luton.)

I have a question or two. We have had a very good run, and the Minister has been very assiduous and helpful this afternoon. In earlier debates, the noble Lord, Lord Skelmersdale, acutely put his finger on some of the key contents of the Government Actuary’s departmental report, and he was right to do so because we know that the established procedure is that the Government Actuary recommends that a minimum balance of one-sixth of the estimated annual benefit expenditure should be kept in the fund, and that it would not be safe to go below that because it would prejudice the potential future payment of benefits. However, as the noble Lord, Lord Skelmersdale, rightly said, if we look at 2008-09, the estimated balance in the National Insurance Fund, to which this order contributes, is £56,000,000,000; that is not one-sixth or 16.7 per cent of the estimated benefit expenditure, but 81.5 per cent. At what point does the Government Actuary ever get round to saying that there is more money in the fund than the Government know what to do with? If we look at appendix 9—I am sure the noble Lord, Lord Skelmersdale, has it in front of him—there is a forward projection about the balance at the end of the years 2008-09 to 2012-13. I accept that they are estimates and there will be lots of variables and assumptions in them, but the balance at the end of the year as a percentage of benefit payments goes from 81.5 per cent at the end of 2008-09 to 136.3 per cent of benefit expenditure.

We will need to wait until the Budget to see what fiscal drag is doing to whatever else is available to the Chancellor, because fiscal drag brings in more and more money in a surreptitious way by more people falling into higher rates of tax, year in, year out. However, the point made by the noble Lord, Lord Skelmersdale, in the context of an earlier order, is apposite, but perhaps not in terms of the National Pensioners Convention. I hope the Minister will take the trouble to go to the next convention. They are usually held in Blackpool and are very congenial events, but not for government Ministers. I have been and survived, but only just, and I am only a Liberal Democrat—I am sounding slightly facetious. One would think that there is an embarras de richesse in the National Insurance Fund. Of course these are big numbers and things can happen, but what advice does the Government Actuary give? Does he not tap Ministers on the shoulder and say that it is getting a bit out of hand?

To a lay person—certainly to the pensioners mentioned by the noble Lord, Lord Skelmersdale— these figures look like gross. Taken together with the fiscal drag that we will see in the Budget, it will be very difficult to understand when a Minister explains it at Blackpool. What serious discussions are taking place between the GAD, the Treasury and the DWP about how these provisions, which are accumulating in a way that is very difficult to describe to hard-pressed pensioner households, are going to be dealt with in future?

The noble Lord has pinpointed a problem of success. Perhaps the explanation is that it is the Prime Minister’s very good friend Prudence.

I am sure that Prudence has a part to play in all this. I am not saying that it would be better if we had to be looking for Treasury grants. My noble friend, if I can call him that, and I were in the House of Commons at a time of big Treasury grants, not under this Administration but in times gone by. I do not want to get tempted into this issue because it is too late in the afternoon, but big Treasury grants were often required in the past to make this balance. This is a happy circumstance and I am grateful to Prudence, but she has some explaining to do at the National Pensioners Convention at Blackpool as well and the Minister had better take her with him when he goes.

I am all for the noble Lord, Lord Kirkwood, putting flesh on my bones, but I hope he does not overdo it, because otherwise I shall have to go on a diet and stop thinking for a bit, which would probably be a good thing for the House but a bad thing for me.

The order is rather different in amount from the uprating order that we have just discussed. It is also different in scope. The House as a whole must surely believe, as I do, that Ministers in the department have behaved disgracefully. The Committee will remember that on the last Pensions Bill, the noble Baroness, Lady Hollis, withdrew an amendment about allowing women, in particular, to buy extra years of class 3 contributions to augment their often lamentable state pensions on the basis of the promise that Ministers would find some way of achieving her aims, although not necessarily through buying more class 3 contributions. The noble Baroness asked an Oral Question on 17 December last about what progress the review was making. The noble Lord, Lord McKenzie of Luton, gave her the dismal answer that progress could not be made. He claimed that pensioners had been well served by the Government and pointed out that with the reduction in qualifying years from 44 to 30, by 2010 three-quarters of women would get their full state pension and 90 per cent would qualify by 2025. That is in col. 468 on 17 December 2007.

I have been pondering this a little and wonder whether the Minister could give us a little clarity. Will a woman retiring on 1 June 2011, in a little over three years from now, get the full state pension of £90.70, at the 2008-09 rate, having paid only 30 years’ contributions? I have no idea exactly what the rate will be by then and neither does the Minister, so I have to use the figures that we know and are beginning, as a result of this afternoon’s debates, to understand. A person retiring only one day before 5 April 2010 will need 44 years’ contributions, whereas, if the answer to my question is, as I expect, in the affirmative, he or she will have had to pay only 30 years’ contributions if they retire after that date. How many people are we talking about? What does 25 per cent or 90 per cent represent?

I thank noble Lords for their contributions. I shall start with the National Insurance Fund, which we touched on in our last debate. My noble friend Lord Jones is right. Where we are is a product of a successful economy, with many more people in employment and fewer people claiming unemployment benefit. Of course that will have an impact on the National Insurance Fund. The Government Actuary is independent. He is responsible for advising on whether the changes to social security are affordable.

The noble Lord encourages me to go to the National Pensioners Convention in Blackpool. I am pretty certain that I have a prior engagement, although I am not quite sure when it is. I did turn up to a regional event recently. We tucked into the sandwiches while they marched on the town hall. It was an interesting experience.

The noble Lord, Lord Skelmersdale, raised the issue of class 3 contributions. The challenge we faced in trying to accommodate the thrust of the amendment tabled by my noble friend Lady Hollis was to see that it was appropriately targeted. At the tail end of the Pensions Bill last year we set out how we would do that, specifying clearly the criteria of fairness, affordability and simplicity. I made it clear in your Lordships’ House, and my honourable friend Mike O’Brien made it clear in the other place, that there was no guarantee. We would use our best endeavours to achieve what my noble friend was seeking, but it could not be guaranteed. A lot of work was done in considering various options. At the end of the day, we come back to the issue of trying to ensure that something is properly targeted. That component is missing from this. It is potentially hugely expensive. It depends what assumptions you make about take-up, and we circulated some numbers in response to some Parliamentary Questions from my noble friend showing a range of costs and the range of people who might benefit.

The other issue is that, whichever way we analyse it, it is much more likely that the people who will take advantage of the extra buy-back will be those who are better able to afford it. It will do nothing to help people who have paid the reduced rate stamp, and it will do nothing to help people who are heading for pension credit—the very poorest pensioners. It simply will not deliver what we want. It will help only a relatively small percentage of the number of people who might be retiring. The number of people reaching state pension age in 2008 will be something like 700,000. Some 390,000 will be women, and something like 250,000 will have less than a full basic state pension on their own record. My noble friend’s proposal, at the level at which she suggested that there might be take-up, would at best cover only a fraction of the number of people who do not get a full basic state pension. I stress that, in our view, it is not well targeted.

My noble friend talked about the changes to the upper earnings level or upper profits level. Of course, that was part of an overall package. Given the hour, I will not go through all the components of it, but you cannot pick this out and say that it is an effective tax increase and ignore all the other things on which there was extra government spending. That package had a price tag of something like £2.2 billion, so, overall, there was a relaxation of the fiscal system arising from that.

I look forward to welcoming the noble Baroness, Lady Noakes, back to the House. I am sure that I will be participating in some quite fierce debates with her and that things will be as lively as ever on the National Insurance Contributions Bill. We will have the chance to get into these things in more details.

I will answer the specific question that the noble Lord raised. Somebody retiring on 1 June 2011 with 30 years’ contribution would get a full basic state pension; somebody retiring on 4 April 2010 with 30 years would not. It depends on their HRP—home responsibilities protection—which could reduce the number of years, so one cannot generalise. However, the number of qualifying years needed otherwise is 39 for a woman and 44 for a man. That is why the improvements that we made to the system last year will transform the pensions outcome for women. That is the right way to address what has been a long-standing grievance and an inequity in the system that has persisted for too long.

The cost to the individual of the reduction from 44 years to 30 is, of course, nil, even though they will have to continue paying a stamp while they are in employment. That is readily understandable; in that case, the cost to the individual is, apparently, nil. On the other hand, there will be income into the fund when people buy the extra class 3 stamps—for want of a better word. The Minister needs to explain the thinking more fully. I am sure that he will write in due course, and I do not want to pursue the matter at this hour of the night.

I shall comment briefly but, if the noble Lord will forgive me, I shall not write as we shall pick up these matters in the National Insurance Contributions Bill, but if we do not, I shall write further.

If somebody pays class 3 contributions, that will add to the fund, but if we look at the long-tail effect of that in terms of the increased costs of pensions over a longer period, that will not compensate for that. The issue is that class 3 contributions are a really good deal. If we look at the full actuarial equivalent of a class 3 contribution—at what the cost should be—it is a multiple of four, or even six times, possibly even with the uprating. The noble Lord is right that for the individual going from 39 or 44 years to 30, there is no cost, but these things are dealt with collectively on a pay-as-you-go basis, so collectively there is a cost for fewer years’ contributions and the relinking with earnings. Having said that, in view of the hour, I ask the Committee to support the Motion.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2008.

The noble Baroness said: These orders seek authority for the Construction Industry Training Board and the Engineering Construction Industry Training Board to impose a levy on employers in the industries they cover. I have a fairly lengthy speaking note, which I have tried to minimise, but I hope noble Lords will bear with me as I go through some detail. Noble Lords will be interested to note that it is anticipated that these orders will be the last single-year orders to be brought before Parliament. As a consequence of amendments made to the Industrial Training Act 1982 by the Further Education and Training Act 2007, which are due to come into force on 2 March 2008, future levy orders are likely to be three years in duration.

The importance of skills cannot be overstated. Britain can succeed in a rapidly changing world only if we develop the skills of our people to the fullest possible extent, carry out world-class research and scholarship and apply both knowledge and skills to create an innovative and competitive economy. The creation in June last year of the Department for Innovation, Universities and Skills will drive forward delivery of the Government’s long-term vision to make Britain one of the best places in the world for science, research and innovation and to deliver the ambition of a world-class skills base. However, despite the real progress we have made since 1997, we still have a lot of work to do before our nation’s skills compare to those of our key competitor nations.

The Government have made, and continue to make, major investments in training. This year the Learning and Skills Council will fund further education and training to the value of more than £8.5 billion, but while the Government have a role in setting the framework for success, employers need to be in the driving seat if we are to equip the workforce with the skills that employers need. Recognising the important contribution made by sector skills councils since 2002 and the potential for them to make an even greater impact, we have backed the call made by the noble Lord, Lord Leitch, for sector skills councils to be reformed, relicensed and empowered. We have also backed his call for a new commission for employment and skills. It will begin its operations from 1 April. A key early task for the commission will be to manage the relicensing of the sector skills councils, making sure that every sector skills council is an authoritative and powerful advocate for skills in its sector.

In past manifestos we promised that where both sides of industry in a sector agree, we will help to set up a statutory framework for training. This commitment remains in place, and the recent order establishing the Film Industry Training Board for England and Wales, which came into effect last December, is an example of our continued commitment to this principle.

The two industrial training boards whose levy orders we are considering are models of the successful application of such frameworks. They are non-departmental public bodies set up under the Industrial Training Act 1982. Their role is to ensure that the quantity and quality of training are adequate to meet the needs of the industries they cover. They provide a wide range of services including setting occupational standards and developing vocational qualifications, delivering apprenticeships and paying direct grants to employers who carry out training to approved standards.

In fact the Construction Industry Training Board, in partnership with the Construction Industry Training Board Northern Ireland and the Construction Industry Council, operate as ConstructionSkills, the sector skills council for the construction industry. It developed one of the first sector skills agreements, which now underpins every facet of the Construction Industry Training Board’s operations. Last year it maintained its position at the forefront of developments and launched an arm of the National Skills Academy on the site of the 2012 London Olympics, to address skills issues arising from this important project.

The Engineering Construction Industry Training Board is not a sector skills council. I am pleased to say, however, that it has worked closely with the Sector Skills Development Agency and will continue to work with the new Commission for Employment and Skills to scope out its future role within the Skills for Business Network.

The Industrial Training Act 1982 contains provisions which enable levies to be raised on employers to finance an industry training board’s activities and to share the cost of training more evenly between companies in an industry. It is for the employer members of a board to make proposals for the rate of levy for the industry it covers and for the Secretary of State to make an order giving effect to the proposals.

That is the purpose of the orders before us. They give effect to proposals submitted to us for a levy to be collected by the Construction Industry Training Board in 2008 and the Engineering Construction Industry Training Board in 2009. The proposals from the Construction Industry Training Board and the Engineering Construction Industry Training Board have the support of organisations representing more than half the employers who together are likely to pay the majority of the levy. The Secretary of State is satisfied that the levies are necessary to encourage adequate training in the industry.

The Act requires industry training boards to exclude small firms from the levy, but does not set a minimum size threshold. Each of these proposals sets a level that the industry considers to be appropriate. Employers who fall below the threshold are not however precluded from benefiting from grant and other support from the boards, and many of them do so.

In the order before us the Construction Industry Training Board proposes that both its levy rates should stay the same as those approved by the House last year. The rates will be 0.5 per cent of payroll for direct employees and 1.5 per cent of net expenditure on subcontract labour. Employers whose combined payroll and net expenditure on subcontract labour is less than £76,000 will not have to pay the levy. This is an increase from last year’s threshold of £73,000 to reflect wage inflation. The level equates to an employer who employs three people full time throughout the year. 40 per cent of employers come into this category.

A further 25 per cent of employers will not be assessed for or will not pay the levy for other reasons; for example, they are in their first year of registration with the Construction Industry Training Board or will have ceased trading. This means that around 65 per cent of employers will not actually be required to pay the levy.

The higher levy rate on subcontract labour is because, according to the industry, the vast majority of training is carried out by those employers with a directly employed labour force. Employers who opt to use subcontractor labour tend to have a transitory arrangement with their subcontractors and are not normally involved in their training.

It is encouraging to see that the large contractors, who use significant amounts of subcontract labour, are recognising their responsibility to contribute more than just cash to tackle the skill shortages in the industry. Through Construction Industry Training Board-ConstructionSkills’ programme-led apprenticeships initiative, large contractors have initiated action to encourage firms in their supply chains to recruit and train apprentices.

The Engineering Construction Industry Training Board also proposes to make no changes to last year’s rates. The rates for sites will be 1.5 per cent of total payroll and net expenditure on subcontract labour. Contractors whose combined payroll and net expenditure on subcontract labour is £275,000 or less will not have to pay the levy. The level is unchanged from last year and equates to an employer who employs 15 to 20 persons full time throughout the year. It is expected that 54 per cent of sites will be exempted. For head offices, it will be 0.18 per cent of the total of payroll and net expenditure on subcontract labour. Head offices whose combined payroll and net expenditure on subcontract labour is £1 million or less will not have to pay the levy. This level is also unchanged from last year and equates to an employer who employs around 40 persons full time throughout the year. It is expected that 73 per cent of head offices will be exempted.

These proposals are expected to raise £175 million to £180 million for the Construction Industry Training Board and £14 million to £15 million for the Engineering Construction Industry Training Board, which covers a much smaller industry. It is worth pointing out that the CITB currently returns £1.90 in direct and indirect training support for every £1 levy received. For the ECITB the figure is £2.11.

The Committee will know from our annual debates that the CITB and the ECITB exist because of the support they receive from employers and employer interest groups in their sectors. As I indicated earlier, there is a firm belief that without them there would be a serious deterioration in the quantity and quality of training in these industries, leading to a deficiency in skill levels. This was confirmed by reviews of both boards carried out by my department in 2003, which found that the principle of the levy is still strongly supported in each industry. The boards’ own annual employer surveys also demonstrate continued strong support for the principle of a levy system.

The industry training boards’ successes have not occurred without the significant efforts of the many people working for them. In particular, I pay tribute to the leadership of the two boards. For the ECITB, Terry Lazenby and David Edwards have continued to spearhead the industry’s drive to meet the challenge facing it. The same is true of Sir Michael Latham and Peter Lobban, who will retire in August from the CITB. I thank them all and wish Peter Lobban a long and happy retirement.

The draft orders will enable the two boards to carry out their vital training responsibilities in 2008, and I believe it is right that the House should approve them. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Engineering Construction Industry Training Board) Order 2008. 7th Report from the Joint Committee on Statutory Instruments.—(Baroness Morgan of Drefelin.)

This has become an annual ritual. For about eight years I have welcomed these orders for these two training boards because we believe that the concept of the levy grant was a good one that has resulted in very considerable benefits to the two industries. It is slightly amusing that the Minister indicated that the Government were currently pleased with the how the scheme was working and that it had been extended to the film industry in December 2007—and that industry voted in favour of having a levy grant system.

There is a slightly plaintive paragraph in the impact assessments. Paragraph 9 in both reads:

“Ministers have acknowledged that to insist on non-statutory arrangements is unrealistic and have agreed to retain a statutory ITB subject to regular review”.

I think that there may be a touch of the Leitch agenda in the slight change in mood, which is not reflected in the impact assessment. Nevertheless, the system has worked very well. For the CITB, the Minister quoted a figure of £1.90 for every £1 invested, and for the Engineering Construction Industry Training Board, she quoted £2.11, whereas the impact assessment quotes £2.22—a slight increase on her figure, although I am not sure that it really matters.

There is some indication of the mountain that we have to climb in terms of skills. I note from the impact assessment that there are in the region of 75,000 to 80,000 employers in the construction industry, yet only 16,000 employers have apprentices. Of those 16,000, 14,600 are small and medium-sized businesses and probably have one or two apprentices at most. Therefore, we have to climb a huge mountain if we are to approach the aspiration of world-class skills held by the Government and the noble Lord, Lord Leitch.

As I said, we very much welcome the orders. As the Minister indicated, it is interesting to see the degree to which the Construction Industry Training Board is now running construction skills. I have had quite a lot to do with some of its programmes and I very much welcome what it is doing with the various programmes that it is getting up and running.

I have three questions for the Minister, although they may overlap. How do these training arrangements fit into Train to Gain? Do the two industries have to pay twice? They have to pay by levy for training schemes, yet if they were not paying by levy, Train to Gain would give them a lot of money to train their employees. Will we now see some of these firms being reluctant to participate in the levy grant system because they will be receiving the money from Train to Gain? My other question concerns apprenticeship arrangements. How far do the Government’s new plans for apprenticeships overlap with the arrangements that are already in place under the industry training board? The Government are introducing a number of inducements to employers to take up apprentices. Again, is there an overlap? Will this industry, which is paying the levy grant system, pay twice?

The Minister always presents her speeches persuasively and I, for one, thank her for her presentation. During a long parliamentary life, it has become clear to me that all is not well in the training industry, if you can call it that. It appears that every five or six years each Administration sets out reform measures, but we never seem to hit the target. Therefore, I wish the proposals of the noble Lord, Lord Leitch, well, and I certainly welcome these orders. I wish only to ask a few questions.

Can the Minister indicate how many employers are levied in our country? Do we know how many employees might be grouped under the heading of “engineering” when at work? How large in employer terms is the engineering industry? It is certainly one of our most vital remaining industries in Britain.

Do we have any idea how well the engineering construction board is progressing? Is its efficiency assessed? By whom? Who is taking the temperature? Who is watching and assessing the board? My guess is that it is rather a good board. Our last great employer of skilled employees in Britain is the aerospace industry. There are tens of thousands of employees in that great manufacturing industry. How well does the board serve the needs of our great aerospace industry?

My noble friend mentioned apprenticeships, and we both know that that is the future for what remains of British manufacturing. We know that the orders are vital to the future of British manufacturing. How many aerospace apprentices are training under the aegis of the engineering board? It would be helpful to know that. Also, is it possible to know how many apprentices are training under the aegis of the Construction Industry Training Board?

I know that my noble friend is a busy and conscientious Minister, so it is just possible that she has not read the obituary column in the Independent today. If she has not, why not? After successfully coping with these orders, my noble friend might want to read the obituary of Sir Maurice Laing. The sub-heading reads:

“Firebrand head of the Laing construction company who became the first president of the CBI”.

The article is mildly revelatory and may help the Minister with future orders.

I thank the Minister for introducing the orders. My notes, in contrast to hers, are very short. I agree with the Minister that, for us to be a world-class, competitive economy, the skills base in the UK must improve dramatically. As always, the noble Baroness speaking for the Liberal Democrats has made many of the remarks that I was going to make, so that shortens my contribution even more, but I want to re-emphasise some of the points that have been made.

Both in construction and in engineering some exemplary training can be found, particularly at level 3 apprenticeships. While there is some sense in consulting more widely among employers, it may become a disincentive for some employers to join the representative organisations that sign up to the pledge of training, which in turn may mean that it is harder to measure how much support there really is for employers wishing to join representative organisations. Can the Minister say what impact the Further Education and Training Act 2007 will have on the way in which the industrial training boards consult to establish consent for future levies?

The noble Baroness, Lady Sharp of Guildford, mentioned an explanatory memorandum covering the film industry, stating that an order to establish an ITB covering the sector came into force on 7 December 2007. That arose from work undertaken by the sector skills council in that industry. I would be interested to hear from the Minister about the lessons that can be learnt from that success in building consent for a new voluntary training levy. Are other sectors to follow? Can the Minister shed light on the successes that the film industry has had so far? Can the Minister clarify the impact that the Further Education and Training Act 2007 will have on the way in which the industrial training boards consult to establish consent for future levies? Will the extension of training levies be considered when the Government review the impact of the skills pledge in 2010?

Can the Minister expand on the Government’s plan to concentrate more strongly on level 3 skills? Will the focus remain on level 2 skills? Finally, can the Minister say at what point employers are exempt from having to sign up to the skills pledge? I know that the Minister elaborated on that, but it is still slightly unclear to me.

I thank noble Lords for taking part in this short but important debate and for the support for the orders that resonates around the Committee. We can all see the valuable work that the training levies allow. I have been asked a lot of specific questions. If I do not pick them all up, I will write to noble Lords in detail and read Hansard to ensure that we have covered all the questions.

The noble Baroness, Lady Sharp, asked whether the employers levied are paying twice. It might be helpful to say that both boards are in discussion with the department about how they can benefit from Train to Gain. They will not have to pay twice. It is important to get that on the record. The noble Baroness rightly picked up not a change of tone but a very vigorous commitment to promote employer-led training through the experience of the Leitch review and Train to Gain. This applies to the next order as well. Being new to the department, I assure her that we highly value the work of the training boards and the levies. I will definitely have to write to her about £2.22 versus £2.11. That needs to be put right on the record.

I shall try to deal with some of the questions that my noble friend has levied, if I can make that pun. He asked about the engineering industry, particularly apprenticeships in the aerospace industry. In the engineering construction industry there were 1,400-plus apprentices in training in 2006 and 200 completions. I shall have to get back to him on aerospace. In the construction industry there are around 30,000 apprenticeships in training. The largest groups are in bricklaying, carpentry and joinery, painting and decorating, bench joinery and solid plastering.

My noble friend asked who assesses the Engineering Construction Industry Training Board. That is an important question. He has a way of putting his finger on the key issues. The boards are brought to account through their annual report to their industries, which is also laid before Parliament. The employers signify satisfaction by their agreement to support the levy proposals through the consultation process that has to go on.

The Engineering Construction Industry Training Board is concerned with the erection, maintenance and dismantling of process plants, oil installations and power stations. It is not relevant to the aerospace industry. It has 60,000 people working in the sector and there are 1,400 apprentices in training.

The noble Baroness, Lady Verma, asked a very important question about the Further Education and Training Act. The changes in that Act are not aimed at weakening the role of the federations of employers. They are intended to bring the Act in line with the employment landscape for the 21st century. Although employers are not necessarily signing up to the federations in the numbers that they did in the past, the federations will still have a central role, but it is important to allow the industrial training boards to operate a levy in the way that best suits the industry. They will have to use other ways of involving employers that are not in federations. The changes to the Industrial Training Act have been made at the request of the industrial training boards on behalf of the employers and their industries. We are very much working with employers, aiming to be employer-led and maintaining strong consultation and communication between employers.

Will the Minister clarify the situation? I think I am right in saying that, as a result of the Further Education and Training Act, the only difference is that the boards do not have to come to Parliament every year to ask it to renew the order, as we have been doing today. This is therefore the last occasion that we shall be doing this. Equally, the concept of the industrial training board remains. I take it that the statutory framework, which stems from 1981-82, remains the same—that is, where an industry voluntarily requires a training board, it may have one, as has happened with the film industry. In the background, with Leitch, there is also a slight indication that post-2010, if companies do not come up with the training pledge, there may be some other form of statutory encouragement to training.

I do not want to take us to a debate about post-2010, because we aim to achieve a lot more, so we aspire to make any further statutory levy unnecessary. There are two differences in the Act. We have talked about the three-year change. Perhaps I was being obscure or opaque, but because the number of employers joining federations, which is the traditional method of consultation, is going down, there is a need to create an additional method of consultation to ensure that training levies are acceptable to and supported by employers. That is a small but important change in addition to the three-year change.

I do not want to drag the point but my understanding is that employers will be signed up to the levy. The worry will be how you measure that they are providing the training that is required of those sectors if they are not signed up through the federations. Maybe we cannot monitor that, but perhaps the Minister can let me know about that later.

That is a very important question. I will look into it and write to the noble Baroness and pick up the points raised by my noble friend.

I thank noble Lords for taking part in this discussion and for further support for employer-led training, supported financially through the levy system.

On Question, Motion agreed to.

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

Moved, That the Grand Committee do report to the House that it has considered the Industrial Training Levy (Construction Industry Training Board) Order 2008. 7th Report from the Joint Committee on Statutory Instruments.—(Baroness Morgan of Drefelin.)

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Regional Learning and Skills Councils Regulations 2007.

The noble Baroness said: I commend these draft regulations, which were laid before Parliament on 14 November 2007 and approved in another place on 4 February. This debate provides an opportunity to discuss the draft Regional Learning and Skills Councils Regulations 2007 and completes the parliamentary reform process set in train by the passage of the Further Education and Training Act 2007.

The Act contains provision relating to the restructuring of the Learning and Skills Council. Section 2 inserts a provision into the Learning and Skills Act 2000 requiring the Learning and Skills Council to establish regional learning and skills councils for each area of England specified by the Secretary of State. These will replace the 47 local councils which have been abolished under Section 3 of the 2007 Act. By “local councils”, I do not mean local authorities. When I first read my brief, I thought, “That doesn’t quite sound right”.

The draft regulations make provision about regional councils of the Learning and Skills Council for England, including matters such as membership, the appointment of members, the delegation of regional council functions, and regional council proceedings. They are the first set of regulations to be made using the power in Section 18A(2) of the Learning and Skills Act 2000 as inserted by Section 2 of the 2007 Act.

The case for change was already made during the passage of the Act—I know that noble Lords were very much involved with that. Since its creation in 2001, the Learning and Skills Council has found it increasingly necessary to operate at a regional level and within a regional context. In response to this, the LSC has already set up nine regional offices as part of its executive structure, supported by informal regional committees, which were established under paragraph 1(1)(b) of Schedule 3 to the Learning and Skills Act 2000.

Today’s draft regulations make provision about regional councils as a statutory part of the LSC’s structure, with boundaries that will match the geographic areas of the nine government office regions. The proposals form one strand of an overall package of measures to streamline the LSC’s accountability structure. They aim to bring consistency between the non-executive structure and the new internal staffing structure that the LSC has now put in place, while bringing savings of £40 million, which will be redirected to front-line services.

These changes to the LSC’s executive and non-executive structures will strengthen its capacity to commission, with partners, the learning and skills infrastructure needed across the regions and meet our aspirations to improve the skills of the population to ensure a world-class skills base by 2020.

We are continuing with these plans in the light of the recent machinery of government announcement on 16-19 funding, and the Education and Skills Bill which is passing through Parliament in another place. The decision to transfer 16-19 funding to local authorities has signalled a major change for the LSC. These changes will take time to implement and the LSC will remain responsible for funding all forms of post-16 education and training outside higher education for some time.

We will look for the LSC to build on its achievements, and to play a key role in ensuring that a wide range of skills provision is available to support business needs. To do this, it must have a strong and robust accountability structure in place which enables the LSC to work effectively with partners at all levels to ensure that the system continues to deliver on the new and challenging targets which we have set.

During the past few months, we have also published the LSC grant letter, setting out our priorities for the next three years, which will require a strong executive and non-executive LSC structure to maintain delivery. The grant letter made it clear that the LSC needs to operate strongly at national, regional and local level to achieve government's objectives. For example, the grant letter identifies delivering an expanded train-to-gain service through closer working with regional development agencies as one of the LSC’s top priorities.

These draft regulations also need to be set in the context of the review of sub-national economic growth that was published last year. It recognised that regions and localities need to play a vital part in ensuring that they can continue to benefit from economic growth. These regulations are necessary to fulfil the policies that underpin the restructuring of the LSC and make provision for the establishment of the operation of regional councils. I commend them to the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Regional Learning and Skills Councils Regulations 2007. 2nd Report from the Joint Committee on Statutory Instruments.—(Baroness Morgan of Drefelin.)

I thank the Minister for her exposition. I support the regulations. It is clear that a world-class skills base by 2020 is a most necessary objective for Britain with regard to keeping what is left of, for example, her manufacturing base. It is good to know that the councils have been given leadership in the form of setting out a strategy for the years immediately ahead. Can my noble friend indicate the salary that will be paid to council chairmen? Salaries might vary, but what sort of salary and how many days, if such it shall be? Are any female chairmen yet in post? What might a member of a council be paid? Could the Minister expound on the interface between the colleges of further education and these councils? Is there any likelihood that the relationships will be good?

I welcome these regulations and thank the Minister for explaining them. They are a follow-up to the Further Education and Training Act that passed through this House last year and embody the shift from the 47 local learning and skills councils to the nine regional learning and skills councils. The noble Lord, Lord Jones, may be interested to know that they will be backed up by 150 local partnerships in which FE colleges will undoubtedly play some part. The Explanatory Memorandum that accompanies the regulations explains that the immediate costs will be about £60 million, mostly redundancy costs for the many employees of the 47 local learning and skills councils, but in the long term there will be a saving to the Government of some £40 million, which will be ploughed into adult apprenticeship schemes. I hope that, in time, the Government may put a little more than that into adult apprenticeships because they will need a lot more money than that.

I have three questions. One is trivial and perhaps shows my ignorance of the way these regulations are drafted. The Council with a capital C that is referred in the regulations is, I take it, the national Learning and Skills Council, but there is nothing in the regulations that spells that out. We normally get a little paragraph that tells us that the “Council” is the Learning and Skills Council. Perhaps it is unnecessary because it is spelt out in the Act, but I take it that it is the “Council” mentioned here.

My second point is more substantive. The old local learning and skills councils had 750 non-executive members. They spanned business, local authorities, further and higher education institutions, trade unions, voluntary bodies and other local interests. These regulations do not specify any requirements for representation or membership. Members are to be appointed by the national Learning and Skills Council and approved by the Secretary of State, and the chairman is to be appointed by the Secretary of State. Will nothing spell out that these councils must be reasonably representative of different bodies within the region? It would seem appropriate for people from business, local authorities, the further and higher education sector, trade unions and the various voluntary bodies to be represented on these regional councils. Will there be further regulations or will guidance be issued? Will anything further be done? There is a danger that the whole thing could become a self-perpetuating oligarchy, with all our friends being reappointed in these positions. How do we stop that happening?

Finally, the Minister talked about the need for strong and robust accountability. The only accountability for these regional learning and skills councils is through the Secretary of State. There is no accountability at a regional level to any elected, democratic authority lower than through Parliament. It is right that we have accountability through Parliament but it is a somewhat protracted, indirect accountability. Talking about strong, robust accountability is nice but I think that it is a bit pie in the sky.

Once again, I thank the Minister for introducing these regulations. We all agree that we must have a world-class skills base. As before, the noble Lord, Lord Jones, has asked a number of the questions that I had intended to put, so I shall re-emphasise, and elaborate on, their importance.

The regulations make provision for the salaries of the chairman and other members of regional councils. Can the Minister confirm that each of the nine regional directors will be paid salaries of between £115,000 and £140,000? That means that, even on a generous estimate, the wage bill will be in excess of £1 million, but of course that does not take into account expenses and pension contributions. Will the Minister also shed light on the average total wage bill for each regional committee?

If the restructuring of the learning and skills councils means that they are designed to be more responsive to employer, business and local demands, what specific interface will the new bodies have in terms of the constitution of the new bodies? What are the structural relationships?

The regulations enable each regulatory council to appoint,

“such of its employees as it thinks fit to act as the staff of a regional council”.

Perhaps the Minister can elaborate on what “fit to act” means. Can she say how many employees, both full-time and part-time, are currently working for the regional councils? Can she also say what roles the sector skills councils will have? There is no mention of them in these regulations. Finally, can the Minister say whether the national apprenticeship service will have a relationship with these new bodies?

Once again, I thank noble Lords for taking part in this important discussion and for their warm welcome for these regulations. I think that I speak on behalf of the Government if I say that sometimes the Government feel that the accountability is pretty far-reaching, probing and challenging. However, it is extremely important, and I am glad that the noble Baroness, Lady Sharp, concurs with that. Clearly, the questions that have been asked are not trivial, and I am very happy to deal with them as comprehensively as I can.

My noble friend asked a question about payment, and I think that the noble Baroness, Lady Verma, was also looking for the answer on that. The average wage bill for a regional council is expected to be in the region of £252,000 per annum. That includes a regional director at £125,000, a regional chair—obviously part-time—at £23,000, and 14 regional council members at a total cost of £104,000, but an individual cost of £7,400.

Before the Minister sits down, will she also say a little about the national apprenticeship service? Will that also have a relationship with the new body?

I am sorry, I meant to come on to that. The point of having regional councils is to allow them to engage more strategically. The noble Baroness has picked up one of the most important points, which is to allow the regional councils to engage directly with the national apprenticeship service and to be strongly involved as the service develops and rolls out. They will also be involved in regional development authorities. There needs to be a lot of joining up with RDAs, the national apprenticeship service and sector skills councils. There is an enormous challenge, as the noble Baroness, Lady Sharp, stressed. She also kindly answered the point about the 150 local partnership groups. We are talking about operating at a regional level but maintaining very strong partnerships locally, particularly with small to medium-sized employers.

I have one more question for the Minister. Paragraph 3 is about the tenure for members. The chairman can be reappointed. The paragraph says:

“On ceasing to be a member or chairman a person is eligible for re-appointment”.

Is there a standard length of appointment? It is not written in the regulations. Is there any restriction on the chairman being reappointed indefinitely on every occasion?

I am apprised that there is no restriction, but I will check for the noble Baroness and come back with chapter and verse on that.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Civil Enforcement of Parking Contraventions (Representations and Appeals) (Wales) Regulations 2008.

The noble Baroness said: I am delighted to move these parking regulations. They are part of a package of measures that will put into place new procedures for parking enforcement by local authorities in Wales. They were laid before the House on 7 January and debated in the Commons on 5 February 2008. Similar regulations for England were brought before the House on 19 November 2007. The intention is that the new enforcement regime will come into force in Wales and in England from 31 March 2008.

The regulations for England and Wales are deliberately very similar to improve understanding and to avoid complications arising from any significant cross-border variations. The only material differences relate to the fact that approval for new civil parking contraventions systems—CPE—will be given by the Welsh Assembly Government in Wales, which will also issue statutory and non-statutory guidance to local authorities in Wales. This means that motorists should have no reason to be confused by separate parking enforcement systems when travelling between Wales and England, or even between different local authorities within Wales. Local authorities will also be able to compare their performance against similar local authorities to see whether their own systems require revision.

I am sure that noble Lords are well aware of the importance of good traffic management in improving road safety, reducing congestion and minimising the impact of road traffic on the environment. The Traffic Management Act 2004 gives local authorities a specific duty to manage their networks, and fair and effective parking enforcement has a role to play in that. The regulations will help them to do that in a fair, transparent and effective manner, with the overarching objective of keeping traffic moving safely. There will also be the benefit of making public transport more attractive to passengers.

Essentially, the regulations tidy up and strengthen legislation that stems from the Road Traffic Act 1991. The new enforcement system will also benefit motorists by encouraging the best use of available road space and provide a more transparent mechanism for enforcement. Ministers of the Welsh Assembly Government will be responsible for considering local authorities’ new proposals for CPE and deciding whether they should be approved.

There may be instances where a vehicle has been immobilised or removed in error, or where a penalty charge notice has been served in error, for example, because a driver might be delivering or collecting goods while displaying a valid permit or because the owner who receives a payment reminder was not the owner at the time of the contravention. That is why the regulations also provide for measures to challenge the action of local authorities and to appeal to an adjudication service should those challenges be rejected. For example, the adjudicator will have the power to return a case to the local authority to reconsider a contravention that took place in mitigating circumstances.

The procedures for representations and appeals largely replicate those in the 1991 Act. The regulations maintain the 1991 Act’s simplified and streamlined process in which appeals will continue to be made to an independent adjudication service that deals only with parking issues. Local authorities are required to publicise those mechanisms so that they are easily accessible to the public.

The package of regulations—others are being taken through the legislative processes of the National Assembly for Wales—has been finalised following a widespread consultation exercise. Responses were received from individual local authorities in Wales, the police, the British Parking Association, the Institute of Highways and Transport, the Chartered Institute of Logistics and Transport and others. In addition, the package of regulations has also benefited from expert and robust advice from the entirely independent adjudicators.

These proposals were first brought to the attention of local authorities in January 2007 as part of an initial consultation. It was clear even then that local authorities wishing to take on these permissive powers would need time to review their parking strategy, confirm that CPE is required, employ and train civil enforcement officers, update their ICT systems and ensure that road markings and signs are correct.

Subject to parliamentary and National Assembly for Wales procedures, and given the preparations that local authorities need to make, the coming into force date for these powers is 31 March this year. It is also important to note that local authorities that choose to take on these powers should aim to achieve self-financing as quickly as possible, utilising income from parking charges and PCNs to cover the cost of CPE. CPE is not a revenue-raising measure, and any surplus will have to be used on transport-related schemes. The Welsh Assembly Government will receive annual reports from local authorities that adopt CPE detailing their CPE activities and how any surplus was spent.

The regulations have been widely welcomed by local authorities and the public and I hope that they will be welcomed by all Members of the Committee, who I know have a great interest in promoting the best and safest use of road space and encouraging public transport. It has taken a great deal of hard work to balance the need of local authorities for a strong and effective enforcement regime with a system that motorists will recognise as flexible and fair. The Welsh Assembly Government will be issuing detailed operational guidance, statutory guidance and guidance about the use of approved devices used to record alleged contraventions to help local authorities that wish to take on CPE. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Civil Enforcement of Parking Contraventions (Representations and Appeals) (Wales) Regulations 2008. 6th Report from the Joint Committee on Statutory Instruments—(Baroness Morgan of Drefelin.)

I thank the noble Baroness for bringing this statutory instrument before us. We have no serious quarrels with it, and we welcome it. I note her comment to me about tax-raising instruments. I totally accept that this is not a tax-raising power. We have had discussions about that on other occasions in this Room. I have a few questions and a simple request. The Minister mentioned a package of regulations and powers, but it is really more than that. The complexity of legislation in Wales coming from Westminster needs some serious government attention. I ask the Minister to pass that on. I refer noble Lords to Hansard in the other place, on Tuesday 5 February in col. 8, where my honourable friend Cheryl Gillan laid out that complexity very clearly. That is well worth reading for those who are going to have a go at simplifying how regulations are interpreted for Wales, because about 10 different bits of procedure have to be gone through in four Houses—here, the other place, Europe and the Assembly—just for some parking regulations. That cannot be sensible for something so simple.

I am glad to follow the noble Lord, Lord Glentoran, who asked a pertinent question about playing fields. I offer thanks to my noble friend for her observations. These regulations, notwithstanding their ordinariness, may make just a smidgeon of a constitutional advance. Whatever, they are surely to be welcomed. Mundane though parking matters may be, as the Explanatory Memorandum shows these regulations are yet another step down the devolutionary road. The Welsh Assembly and the Mother of Parliaments are now gingerly exploring the limitations and potential of their relationship, which is but eight years old in a nation that was recognisable from at least 400 or 500 AD.

At paragraph 7.4 in the Explanatory Memorandum, regarding the responses to the documents, of which there were 16 in total, was there a theme and did the Welsh Local Government Association make a response? One assumes that it did, because it gives a strong lead to Wales’s local authorities. It is not an exaggeration to say that the Welsh Local Government Association has growing influence in the post-devolution scene. It has a lot to give and a lot to lead on. Can my noble friend say which local authorities in Wales responded to the consultation?

Many of the points that I wished to make have been covered, but I feel that it is a promising movement in the right direction for Wales to have the regulations. It is interesting from a constitutional point of view that the regulations cover non-devolved matters that are in the process of being transferred to the Assembly. I welcome that; it is a very slow process, as the noble Lord, Lord Jones, has just said. The enforcement authorities and the representations that will be made to them are a welcome step, as is the fact that there is to be an independent adjudicator. The regulations set out the grounds for making representations and for appeals.

I want to make a few points about some things in the Explanatory Memorandum. In paragraph 2.4, there is mention of civil enforcement officers acting on behalf of local authorities. First, I have a rhetorical question: do the enforcement officers already exist? I believe that they do and that they are employed by local authorities. The regulations open the door to others—agencies or private contract companies—and I am sure that those of us who live in Wales and are well acquainted with it know the situation in Cardiff, for example, where some parking has, after 10 or 12 years, become extremely expensive. Presumably, the penalties will likewise become even more expensive. It is a live issue in Cardiff, and this change may add fuel to the fire. What will the level of penalty charges be? Will they be self-financing from the point of view of employing enforcement officers? I gather from the document that, in fact, there will be no additional charges, but it seems to me that there may be.

Some other points emerge from the description in paragraph 4.6 of the Explanatory Memorandum. Local authorities will perhaps already have the staff, the equipment and the action plans, but will they all be ready by 31 March? There is some doubt about that, and some provision is made for it. However, it might be a slow process. When does the Minister think that it will all be in place?

In paragraph 5.1, there is mention of minor differences of detail between the administration arrangements in England and those in Wales. Can the Minister say what those might be? There are questions arising from that.

The other point that I might make is that paragraph 7.7 of the Explanatory Memorandum refers to a reduction from 60 to 30 minutes after the PCN is issued before a vehicle is clamped. I assume that the same applies in England. That does not seem to be very long and it could cause grave inconvenience and unnecessary bureaucracy in the process. What is the Minister’s view on that?

Paragraph 8.1, which concerns the impact of the regulations, states:

“No significant financial implications have been identified for members of the public or the public sector”.

That is a very broad statement and I am not totally convinced that local authorities will not have to find more resources. Certainly the one that I live in has received only a 2 per cent increase in funding this year, which is less than inflation. In fact, some of these matters do not add up as they should.

The other point that I want to make concerns the regulatory impact assessment, in which there is a very worthy statement. It refers to,

“restraining the growth in the use of the private car”.

That is very desirable but in much of rural Wales—which is most of Wales—there is very poor public transport and the car is the only means of getting about. I hope that that will be taken into account in all these regulations. Not so long ago, it used to be said that there was only one set of traffic lights in mid-Wales. Now there are a few more but there are not some of the traffic-management facilities that are mentioned in these documents. Quite frankly, this will be regarded by some citizens in rural Wales as “outer space” legislation.

I take the point that obviously not everyone will opt into this system, but the risk assessment makes a number of points on the costs and benefits of the regulations. Those may be a little out of the question in, for example, some market towns in central Wales, where there are often plenty of parking spaces and a very sparse population.

I thank noble Lords for joining me in the discussion on these regulations. I think that it was the noble Lord, Lord Livsey, who said that parking should be simple. I am not sure about that. In local politics, parking schemes probably engender some of the most hotly contested campaigns—certainly in my experience.

I shall aim to deal with some of the questions as helpfully as I can. The noble Lord, Lord Glentoran, raised his now perhaps well documented concerns about the process of legislation-making following the Government of Wales Act. I shall not bore everyone with my now well documented support of the process. I happen to believe that devolution is a great thing, and we are doing our very best in government to make it a success. I shall leave it at that, but I understand the noble Lord’s view and I am very happy to discuss it further whenever the opportunity arises.

In no way am I or my party anti-devolution. We strongly support it.

I thank the noble Lord for that intervention. I am delighted to hear it. He asked how many local authorities are taking up decriminalisation of parking enforcement. According to my advice, seven local authorities operate DPE in Wales. Local authorities with DPE will become CPE authorities on 31 March. Local authorities without DPE will need to apply to the Welsh Assembly Government to become CPE. The noble Lord asked what measures will encourage local authorities to do that. Successful implementation by the seven will encourage them, with other local authorities seeing a benefit to their communities. It is up to the local authorities to come to the Welsh Assembly Government if they so wish.

The noble Lord asked also about cross-border level playing fields. My experience in Cardigan was that playing fields are not always very level—there are very different gradients. As the noble Lord, Lord Livsey, identified, there is a level playing field between Wales and England, though obviously not with regard to rugby at the moment. An important point was made about the joint appeals committee for England and Wales. Such a committee is very important.

The noble Lord, Lord Livsey, asked about the level of charges. There will be two levels of charging, depending on the seriousness of the contravention: £40 plus £60, or £50 plus £70. I hope that that helps answer the noble Lord’s question.

The noble Lord asked whether the Government felt that local authorities would be ready. This is obviously a matter for local authorities. They have known about these proposals since January 2007, because time for them to train staff and to ensure that road signs and markings are correct and ready for any changeover was needed. The noble Lord asked also about a reduction in clamping time from 60 to 30 minutes. I am advised that this was changed following wide public consultation.

My noble friend Lord Jones asked about local authorities and who responded. I am afraid that I do not have sight of that information, so I shall follow up the matter with him.

The noble Lord, Lord Livsey, asked about rural Wales. I share his frustration about the difficulties of travelling in rural Wales, but I stress that this is very much about local authorities serving their local communities as best they see fit. I hope that any changes in regulations will be proportionate. I hope that noble Lords will support the regulations.

On Question, Motion agreed to.

rose to move, That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Charitable Companies Audit and Group Accounts Provisions) Order 2008.

The noble Lord said: The order represents the culmination of a process that started during the passages of the Charities Bill and Companies Bill through your Lordships’ House during 2005 and 2006. It is a rather technical order—I make no apologies for that because it needs to be—and the process is also somewhat technical. I shall take us through the explanation as carefully as I can so that the Committee can understand the order better.

The object is to provide more a straightforward scrutiny regime for smaller charities. While saying that, I would like to record my thanks to the noble Lord, Lord Hodgson of Astley Abbotts, because during the passage of the Charities Bill through this House not once but twice—some 70 hours of scrutiny—he played a blinder and made an important contribution to ensuring that this order came about. During the passage of the Charities Bill and Companies Bill in 2005 the noble Lord proposed amendments to both Bills to bring about the alignment of the accounts scrutiny requirements for charities that are companies, which are currently scrutinised under company law, and those of non-company charities, which are currently scrutinised as a matter of charity law. We were receptive to the idea and sought the views of charity sector umbrella groups and relevant professional bodies, who also warmly welcomed the proposal, and amendments were made to both Bills.

The order sets out to achieve two main changes. The first change that the order will make is to amend the Charities Act 1993 to apply the charity law accounts scrutiny provisions in place of the existing company law reporting accountant and audit requirements that apply to small charitable companies. This will ensure that charities in company form that are below the company law audit threshold will become subject to the same accounts scrutiny requirements under charity law as non-company charities, creating the level playing field that has long been called for by the sector and its professional advisers.

Changes were made to the Companies Bill, in what are now Section 1175 of and Schedule 9 to the Companies Act 2006. They remove the current company law accounts scrutiny requirements that apply to charitable companies below the audit threshold. The Charities Bill was amended, in what is now Section 77 of the Charities Act 2006, to provide an order-making power to deal with the necessary changes required to be made to charity law following the removal of small charitable companies from the company law accounts scrutiny regime. The order we are examining today is made in the exercise of that power.

Instead of the reporting accountant scrutiny regime under company law, 14,000 or so charitable companies will instead be required to undergo independent examination under charity law. Independent examination is a low-cost alternative specifically designed for charities. It is a review engagement rather than audit and has proved popular with the sector. Of those charitable companies that will be affected by this change, most will see a slight cost saving under the independent examiner scrutiny regime under charity law. For charitable companies with an income between £10,000 and £90,000, it will be a new requirement. However, as the impact assessment to this order makes clear, the vast majority—85 per cent—of charitable companies in this income bracket already opt for independent scrutiny of their accounts. As part of our commitment to proportionate regulation, we are consulting separately on a package of deregulatory proposals for charity law thresholds. The noble Lord, Lord Hodgson of Astley Abbotts, encouraged us to look carefully at thresholds during the passage of the Bill. The package includes a recommendation to increase the threshold above which independent examination of charity accounts is required from £10,000 to £25,000.

The second change that this order makes relates to the preparation and scrutiny of group accounts by charities. It is already sector practice to prepare group accounts where a charity undertakes activities through subsidiaries. It is important to be able to understand the full range of activities and resources controlled by a charity not only directly, but indirectly through subsidiaries. Until new provisions were set out in the Charities Act 2006, there was no legal basis whatever for non-company charities to prepare such accounts.

This order applies the same group accounts provisions of the Charities Act 2006 to company charities where there is no requirement for small charitable company-headed groups to do so under the Companies Act. In 2007, we published for public consultation a draft of this order, along with draft Charities (Accounts and Reports) Regulations which will be required to support the implementation of the Charities Act 2006, and this order. The changes to be made by this order were well supported on consultation.

One of the concerns raised on consultation was about the complexity of the way in which the changes are being made to the legislation. Given that this order amends the Charities Act 1993, and that amendments to that Act will also be made by the commencement of provisions of the Charities Act 2006, the Office of the Third Sector will publish, on its website, an informal consolidation of Part 6 of, and Schedule 5A to, the Charities Act 1993, to show the changes that this order and the 2006 Act will make. We hope that this will be helpful to users of the legislation. We are also discussing consolidation of charity law with the Law Commission, with the aim of preparing a consolidation Bill. During the passage of the legislation, noble Lords made particular reference to that—and I think that noble Lords were right. In addition, the Charity Commission will issue updated guidance for charities and their professional advisers on the changes to the audit, accounting and reporting regime.

Our aim is for the provisions of this order to come into force for charities’ financial years beginning on or after 1 April 2008. This is to bring these changes in at the earliest opportunity so that charities can benefit from them, as many charities financial years begin on or shortly after 1 April. However, it does give charities and their professional advisers significant time to prepare, as in effect most of the provisions will not bite until charities are preparing accounts and arranging for their scrutiny towards the end of their accounting year, which will not be until April 2009.

The order will bring about changes that were initially approved by Parliament during the passage of the Charities and Companies Acts. The changes will be welcomed by the sector and the majority of its professional advisers, and will support what charities are already doing as a matter of best practice. So we shall reap the benefits of those things. I commend the order to the House. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Charities Act 2006 (Charitable Companies Audit and Group Accounts Provisions) Order 2008. 9th Report from the Joint Committee on Statutory Instruments.—(Lord Bassam of Brighton.)

I thank the Minister for explaining the order. I echo his gratitude for the very thorough work done by my noble friend Lord Hodgson on the legislation when it passed through the House. I think that the noble Lord, Lord Davies of Oldham, was down to speak on this order today. We all know how busy he has been and I am grateful to the Minister for taking this on.

Can the Minister kindly confirm in simple terms that the order’s effect is, first, that charities that are companies will in future be treated the same as charities that are not so incorporated, and, secondly, that charity companies that own subsidiary companies will be required to prepare consolidated accounts? Assuming that that is correct, and while I am aware that the sector has broadly welcomed the provisions—and I agree that those who donate to charities deserve, of course, to know that their donations are properly dealt with—my prime concern is that of cost, particularly at the smaller end. Charities that are companies with turnovers of as little as £10,001 are now to be subject to audit. As a matter of detail—and the Minister may have referred to this—that is a more stringent procedure than that being applied to charities that are not companies.

Somewhere in the documentation, I see that the Government think that the average cost per charity will be the princely sum of £213. I practised once as an accountant and declare an interest as a member of the Institute of Chartered Accountants in England and Wales. I have to say that even I have never met an accountant who has charged as little as £213 for anything. Yet, having made this rather odd assumption, the Government go on in their analysis to say that they discount 85 per cent of the total cost to charities across the country on the grounds that many charities already have an audit. It is unclear what their justification for 85 per cent is. It may be that some percentage can fairly be applied, but I am worried about those conclusions in respect of smaller charities, which are surely less likely to have had an audit up to now. Perhaps the Minister can convince me.

I can be brief due to the clear exposition that the Committee has had of the order and the fact that we on these Benches give it a broad welcome. We endorse the underlying objective trailed in the passage of the primary legislation, which seeks to unify the account scrutiny requirements for small charitable companies. That must be beneficial.

If the impact assessment is to be believed, it seems that the costs are minimal. In the light of what the noble Lord, Lord De Mauley, said, it is right to say that it is most distressing to those who support small charities if there is mismanagement and any kind of fraud. So I suppose that the balance of argument is in favour of scrutiny, and the simpler that external scrutiny is, the better.

The Office of the Third Sector is to be congratulated on the clarity of its impact assessment statement. Admittedly, the facts are not supported by footnotes indicating precisely how they have been accumulated, but the facts are rather compelling. It is interesting that there has been a 10 per cent response to the proposed changes from the consultees and that that response has been entirely positive. I would also, however, like to hear from the Minister why it is that the timing of the order is as it is, in view of the consultation that is in train on raising the financial thresholds. It seems odd that the order should take effect the very day after the consultation is concluded. There has been no attempt to align the order with the outcome of the consultation, on the basis that the Government have put it forward. Broadly, however, the provisions are welcome.

The second part of the change—the proposal for group accounting—seems enormously sensible. However, it also conforms largely to existing practice, and it is, in a sense, ratifying a procedure that is almost universal. When one is talking about small charities, it is important to recognise that the clarity with which the rules are set out is of great importance. What the Minister said about the consolidation appearing on the website is welcome, but, when there is a consolidating Act—I understand that there may be—it will be worth asking parliamentary counsel to look closely at the simplification of language. I know that that is a difficult thing for Ministers to pursue, because they are dealing with legal draftsmen who are not only self-proclaimed but recognised experts. Speaking as someone who was, a long time ago, a consumer protection Minister, I think that we have not succeeded in making our consumer protection legislation and this kind of legislation as accessible to the lay reader as possible. The more accessible it is, the more the rubrics will be observed. The rubrics are not usually broken because of intent but because of lack of awareness. That fortifies the case for a simplification of the language when consolidation takes place. I welcome the order.

The noble Lord, Lord Bassam of Brighton, was kind enough to refer to my participation in the debates on the Charities Bill and the Companies Bill. It was a Kafkaesque experience. The Minister, reading from his brief, told us that we could not deal with accounting matters because we were dealing with company legislation. His colleague, the noble Lord, Lord Sainsbury of Turville, said, when we were dealing with the Companies Bill, that it was all to do with Home Office charity regulations. We were stuck in a situation where everybody was denying the possibility of cutting the Gordian knot. I was pleased that the Government saw the value of doing that and am even more pleased that they have put forward this order to give effect to the work that we did then.

The Minister had some good news for the sector. It is terrific to hear that the thresholds will be raised. The Committee may not be aware that the Government did not accept their own report about the basic threshold level. The original Cabinet Office report that set the whole thing going suggested a basic threshold level of a minimum of £10,000. The Government then stuck in £5,000, which meant that 50,000 charities that otherwise would not have fallen under the regulatory regime fell under it. It is terrific that the Government are now going back to what they proposed about five or six years ago.

As these are complex matters, I applaud the proposal to make the website understandable and accessible. Is there a timetable for the consolidation plans? The Committee may not be aware that large chunks of the 1993 Act have never been brought into effect. The whole section on fundraising is still waiting for Godot. It would be kind if we made sure that Godot finally arrived and that the 1992, 1993 and 2006 Acts were put together.

I congratulate the Government on lightening the regulatory burden, which is increasingly needed in the light of the ever increasing length of the accounting SORP. We heard various Members of the Committee say that a couple of pages are added every year.

I have just three questions for the Minister. First, has consultation on the legislation taken place with the ACIE, the Association of Charity Independent Examiners, which is greatly affected by it? Is it happy with the way in which it is being brought into force? Does it think that it is being done in the most effective and practical way?

The second question deals with a matter of charity law which increasingly concerns me; that is, its applicability across the United Kingdom. As the Minister will recall, we had lengthy discussions about how Scotland would fit into it. Paragraph 2 of the Explanatory Note states that the order will not apply in Scotland because it is a devolved matter. Are conversations with OSCR, the Scottish charity regulator, taking place to ensure that companies of charities that operate on a cross-border basis are able to take advantage of the simplifications? It is frightfully important that proper attention is given to that, because we will not otherwise make the progress that we should in lightening the regulatory burden, which is the Government’s objective.

There is talk about a new charity law for Northern Ireland. It would be helpful, since the Explanatory Notes refer to Northern Ireland, if the Minister updated us with any information that he may have about progress there, and say whether efforts will be made to correlate the provisions in this legislation with what is proposed for the Province.

My third question relates to the final paragraph but two of the Explanatory Notes, which begins:

“Article 8(2) substitutes a new paragraph”.

It states that,

“the duty to prepare group accounts will apply to a parent charity which is a company if the charity is not required to prepare consolidated accounts … The duty will continue to apply even if the charity chooses to prepare consolidated accounts”.

I am not quite clear about which duty is being applied, if the company is already preparing the consolidated accounts in line with the duty referred to earlier in the paragraph. It may be difficult for the Minister to answer that even more technical and detailed question immediately, but if he cannot, perhaps he could write to Members of the Committee to explain what is being applied there, so that my worries at least could be dispelled.

The Government are to be congratulated on bringing the order forward. It is helpful legislation. I congratulate the Minister on fulfilling the commitments that he made at the Committee stage of the Bill so many months ago.

I am grateful to all three noble Lords who have joined in this deliberation. I congratulate them as ever on their attention to detail, in particular the noble Lord, Lord Hodgson of Astley Abbotts. It was very kind of the noble Lord, Lord De Mauley, to thank me for stepping in—it is part of the brief; one has to be generic. I was greatly amused by the Kafkaesque description from the noble Lord, Lord Hodgson of Astley Abbotts. He had a good point. I try not to be in denial in those moments, but sometimes it is a parliamentary convenience.

My assumption would be that under the new rules an audit ought to be carried out by someone who holds a practising certificate. That is not normally held by someone who may be a chartered accountant or another form of accountant and audits charities on a voluntary basis.

I am not sure that that is necessarily the case. I shall reflect on the point, but a lot of the auditors that get involved get involved precisely because they have some expertise. At any event, no qualification is required below the £250,000 threshold. That has a beneficial effect because it reduces costs. When a qualified person undertakes an examination on a commercial basis, anecdotal evidence strongly suggests that the costs could rise to between £400 and £500 for charities in the income range of £10,000 to £90,000.

The noble Lord made some other points about changes in thresholds. There are 6,234 company charities with an income of between £10,000 and £90,000, of which data suggest that 85 per cent—some 5,300—undergo some form of independent scrutiny as a matter of best practice. We justify the figure by saying that somewhat less than 1,000—934 company charities—will probably have to go through a process that they have not previously undertaken but, as a matter of best practice, probably should have done.

The noble Lord, Lord Maclennan, rightly asked about the current thresholds review and suggested that we might want to wait for it. We think that it would be wrong to delay the important provisions contained in this order; the sector wants the changes, and if we delayed it beyond 1 April many charities would effectively have to wait a further year for them and lose the benefit of their introduction. They would effectively be waiting until 31 March 2010, which I do not think is acceptable, and which I do not think that the charity sector thinks is acceptable.

The thresholds review, published in December 2007, is important. It fulfils a promise that we made to look at thresholds at the time of the Bill being passed. The public consultation on the recommendations runs until the end of March. The thresholds for group accounts were consulted on last year as part of the consultation on separate regulations and, as I said earlier, an income threshold of £500,000 for audit and preparation of group accounts received considerable support. The other scrutiny thresholds that apply to charities are the product of extensive consultation undertaken during production of the 2002 Cabinet Office review, to which the noble Lord, Lord Hodgson of Astley Abbotts, made reference.

The noble Lord, Lord Maclennan, raised the issue of consolidation and whether it would be a better approach to group accounts. Single-line consolidation has some disadvantages. We need to be able to see the variety of activities that charity and its subsidiaries undertake. The noble Lord made a reasonable point about simplifying legislation and making it more accessible. It is a sad story that we try to encourage a broad range of giving from people from all walks of life and ranges of income, but understanding how charities work is something that comes largely through and is mediated by professionals. Perhaps that is unavoidable, but we do our best to try to make these things as accessible as possible. The Office of the Third Sector and the Charity Commission have done valuable work in trying to ensure that that is the case and last year published a plain language guide to the Charities Act 2006 that was aimed at trustees, who have found it very useful. It has become a very popular publication.

The point was also made about SORP being too complex and lengthy for charities. It is fair to say that it does not apply to all small charities—those with an income under £100,000 that choose to produce simple receipts and payments accounts, which would be the majority of charities. The SORP has the difficult job of interpreting and applying the complex financial reporting standards to charities. Standards are developed independently of government by the Accounting Standards Board and in future by the international financing reporting board. While this gives independence in the development of standards, it creates an onus for the SORP to address and interpret all relevant standards for the sector. That said, last year saw the formation of a new SORP committee, and early indications from that group are that the needs of small charities and the relevant information required by the SORP will be very much at the top of the agenda.

I think that I was also asked whether we had properly consulted the ACIE—the examiners. It was very supportive of the approach that we have adopted. It responded to the consultation and the Charity Commission is in regular contact with it.

The noble Lord, Lord Hodgson, made a point about the variations between the devolved Administrations. The position, certainly for Northern Ireland, is that the existing reporting accountant regime will be preserved by the Companies Act commencement order that BERR is preparing. The order will result in the partial commencement of Section 1175 for Great Britain only, the saving for Northern Ireland and the special rules for the audit of small charitable companies, including the provisions on reporting accountants.

As to cross-border regulation, it is fair to say that there have been some difficulties for some English and Welsh charities that operate in Scotland, particularly in registering with the charity regulator. As charity law and regulations are devolved, responsibility must rest with the OSCR and the Scottish Government. However, we have consistently stressed the importance of minimising regulatory burdens arising from the different regulatory regimes that charities operate in across the UK. These issues have been raised by both the Charity Commission and the Office of the Third Sector with their Scottish counterparts, and I think that that dialogue is proving to be very useful. Of course, there is the UK regulators’ forum, which I know came up as part of the discussion during the passage of the Bill.

The noble Lord, Lord Hodgson, asked about a couple of other points relating to the timetable for the consolidation of charity law. I cannot give a straight answer, although I should like to, or provide the noble Lord with a timetable. It is a matter outwith our control and is very much in the hands of the Law Commission. I would not wish to damn the Law Commission with faint praise, but it believes in doing a thorough job and that means that things inevitably take their time. However, we are in what are described as “positive discussions” with the Law Commission about consolidation and those have been very helpful.

I think that the noble Lord asked one other question about Article 8.2. I cannot remember exactly what it was but I shall write to him on that point.

I hope that I have covered most of the issues that were raised. If I have not, I shall check carefully in Hansard—and I am sure that the officials will check even more carefully—and we will respond in writing. Again, I thank the three noble Lords who have participated in this debate. The charity sector is well served by their diligence, and I hope that the order brings about the beneficial changes that we all anticipate and expect from it.

On Question, Motion agreed to.

That concludes the business before the Grand Committee this evening. The Committee stands adjourned.

The Committee adjourned at 7.29 pm.