Vol. 731 Thursday No. 217 3 November 2011

PARLIAMENTARY DEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT

ORDER OF BUSINESS

Royal Assent Questions UK: Union Loan Companies: Interest Rates Shipping: Towing Vessels Protests: Tent Pitching Legal Aid, Sentencing and Punishment of Offenders Bill First Reading Business of the House Timing of Debates Creative Industries Debate EU: Financial Stability and Economic Growth Debate Television Advertising: Communications Committee Report Motion to Take Note

Grand Committee Welfare Reform Bill Committee (10th Day)

Written Statements Written Answers For column numbers see back page

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Parliament to take hold of this issue and to hold the House of Lords referendum soon with one simple question: do you Thursday, 3 November 2011. want Scotland to leave the United Kingdom?

11 am Lord Wallace of Tankerness: My Lords, I certainly think that one simple question that focuses on whether Prayers—read by the Lord Bishop of Bath and Wells. Scotland should or should not be a part of the United Kingdom is key. We should avoid any attempt to Royal Assent muddy the waters—as I think one rather influential 11.06 am academic put it last week—in suggesting a second question. That is spot on. I do not think that that The following Acts were given Royal Assent: would bring the clarity that we need on an issue such Coinage (Measurement) Act 2011, as this. I assure my noble friend that United Kingdom Armed Forces Act 2011, government Ministers have been pressing the Scottish Pensions Act 2011. Government to come clean as to their timings and, more specifically, what they mean by independence. UK: Union My right honourable friend the Secretary of State for Scotland has posed a number of questions and we are Question still waiting for answers. 11.07 am Lord Empey: My Lords, does the noble and learned Asked by Lord Soley Lord accept that a point will come shortly where the To ask Her Majesty’s Government whether they uncertainty created by the Scottish situation will impact have any proposals to inform the public about the negatively on investment opportunities in Scotland? advantages of maintaining the union of the United When will a proper pro-union argument be put firmly Kingdom. not only to people in Scotland but to people throughout the rest of the United Kingdom? The Advocate-General for Scotland (Lord Wallace of Tankerness): My Lords, the noble Lord, Lord Soley, Lord Wallace of Tankerness: It is interesting that said at Second Reading of the Scotland Bill that the the noble Lord should mention the economic impact United Kingdom, of the uncertainty. He may have seen a report published “is one of the most effective political and economic unions that earlier this week by Citigroup on the very important the world has ever seen”.—[Official Report, 6/9/11; col. 234.] issue of renewable energy, which made the point about The Government wholeheartedly agree, and my ministerial the dangers of investing in Scotland while there is colleagues and I will do all that we can to make the uncertainty about the future of the constitutional case for the United Kingdom. I also urge those who position of Scotland. The other side of that coin is support this unique partnership to join the debate and that there are considerable benefits of a united kingdom promote its benefits. in taking forward that agenda to ensure that we meet our climate change targets. It is not often that I have Lord Soley: I am very grateful for that Answer. the opportunity to quote with approval a Daily Record Does the noble and learned Lord agree that this editorial, but today it says: message needs to go out not just in Scotland but in “In the meantime, it’s hard to disagree with pro-UK politicians England too? There is a very real danger to our who claim green energy is a great example of Scotland and the nationalism and we need to get out the message that rest of the Britain working together”. many states around the world envy our stable system, which has brought peace and prosperity to the United Lord McConnell of Glenscorrodale: Does the Minister Kingdom and is a model for other countries. Does he accept that one of the great strengths of the union of also agree that this issue is not for any one party or any the United Kingdom is the way in which the Scots, the one part of the United Kingdom? English, the Welsh and the Northern Irish have moved Lord Wallace of Tankerness: My Lords, I certainly throughout that kingdom over the last three centuries? agree that this is not for any one party or any one part Do the Government take a position on Scots who do of the United Kingdom. Judging by the response to not currently live inside the boundaries of Scotland my Answer and to the noble Lord’s Question, we all but may have an interest in a referendum that will share a common interest in spelling out the merits for determine their country’s future? the union, which is of 304 years’ duration. I think the question the separatists have to answer is: why separate? Lord Wallace of Tankerness: My Lords, the noble Lord is absolutely right to indicate that the flow of Lord Lang of Monkton: My Lords, if the Greeks people throughout the United Kingdom is important. can organise a referendum in four weeks, why should Many families in England have relations in Scotland it take four years to organise one in Scotland? Is not and vice versa. That only underlines the important the idea of the Scottish national Administration in cultural and social ties as well as the economic and Edinburgh organising a referendum on independence social benefits that flow from our United Kingdom. a bit like a plaintiff presiding over their own case in However, we have made it clear in the past that a court when seeking a divorce? Would it not be more referendum would be on the basis of the people living appropriate for the British Government and the British in Scotland at the time of that referendum. 1341 UK: Union[LORDS] Loan Companies: Interest Rates 1342

Lord Stephen: Does my noble and learned friend 51 per cent, independence would trump devo max. I agree that rather than being for the UK Government it do not think that that is the sort of basis on which we should be for Alex Salmond and the SNP to spend should go into any referendum campaign. some of their own time and money explaining what full independence really means? For example, is it not time that Alex Salmond told us how many military Loan Companies: Interest Rates bases would remain in Scotland? How would he split Question the Scottish pension system from the UK system? Would he create an entirely new tax and benefits 11.15 am system for Scotland; and if, as he says, he wishes to Asked by Lord Kennedy of Southwark retain sterling as Scotland’s currency, would EU membership allow this? If it would, what powers To ask Her Majesty’s Government what measures would he intend to have to instruct Mervyn King and they propose to deal with high street lenders who the Bank of England on monetary issues, or would he charge excessive rates of interest, particularly to just leave that to George Osborne? those on the lowest incomes.

Lord Wallace of Tankerness: By asking that question, The Parliamentary Under-Secretary of State, my noble friend makes it very clear that the First Department for Business, Innovation and Skills (Baroness Minister of Scotland and his party have a host of Wilcox): My Lords, the Government recognise that it questions to answer, not least on the currency because is often the most vulnerable who have to pay the there are even those who think that if Scotland wished highest costs when accessing credit. We are commissioning to join the European Union it would be obliged to research into the impact of introducing a cap on the adopt the euro. Andrew Hughes Hallett, who is on the total cost of credit that these lenders can charge. We First Minister’s Council of Economic Advisers, indicated are also looking at the high cost credit market as part that, as was reported earlier this week. It would be of our consumer credit review and we will publish our rather odd. Some countries, but not many, adopt the final response before the end of this year. currency of a foreign country but have no powers. It just underlines what a weak position Scotland would be in. Lord Kennedy of Southwark: I thank the noble Baroness, Lady Wilcox, for her response. Does she agree that companies which charge 2,000, 3,000 or Lord Forsyth of Drumlean: Could my noble and even 4,000 per cent are legalised loan sharks? Will the learned friend consider the idea of establishing an Government look at requiring these companies to put independent commission to look at the benefits of the a health warning on their advertisements in highly union to the United Kingdom as a whole and the visible, large type explaining clearly the costs of their consequences of separation, given that the nationalists services and advising people that their local credit are determined to hold a referendum on independence, union would offer better value for money? so that everyone can see what the consequences could be and what the facts are? Baroness Wilcox: The noble Lord, Lord Kennedy, has covered three big items. I know what an expert he Lord Wallace of Tankerness: My noble friend makes is on the last one, so I will leave that for the moment. a very interesting and very constructive suggestion. This Government and the previous Government have He will understand that I am not in a position to looked again and again at capping interest rates, but accede to it from this Dispatch Box, although I will our worry has always been that that would push consider it. In the mean time we will not wait for the people towards illegal money lending. We then do not setting up of any commission that might come along. know when they are in trouble and they can be treated We will continue to make the case for the United very violently. Even looking to see whether we should Kingdom. be changing this in any way is a new venture for us. The noble Lord is absolutely right in his second point. Lord Wigley: My Lords, I can see that I am in a People should have the right information on which to minority in this House. I want to press the Minister on base their choices. the reply he gave a little earlier that he was fully in support of a single-question referendum in Scotland. Lord Alton of Liverpool: Has the Minister seen the If that was the case and there were a single-question latest figures for personal debt, showing that a staggering referendum in Scotland and the people of Scotland £1,450 billion is owed in personal debt by the nation at voted yes, would his Government accept that as the the present time? If it is right—and it is—to reduce outcome? national debt, should we not be doing far more to help families who are massively in debt in Britain today, Lord Wallace of Tankerness: Well, my Lords, it especially through the promotion of credit unions? would depend on what the question was. It is important that we have clarity on this. There is an idea that you Baroness Wilcox: We have tried and continue to try could have two questions. For example, the First Minister to see how we can get people to set up credit unions. has indicated that if what he describes as “devo max”— They are so popular in America, Australia, Canada perhaps even less defined than independence—was and Ireland, but we just do not seem to like them in to get 98 per cent of the vote and “independence” got this country. However, we are continuing to struggle to 1343 Loan Companies: Interest Rates[3 NOVEMBER 2011] Shipping: Towing Vessels 1344 do that. The noble Lord is right about total household Lord Elystan-Morgan: My Lords, would the Minister debt: £1.45 trillion is an enormous figure, but of that accept that in many credit contracts, judges in a civil £1.24 trillion is owed on mortgages. We are a real capacity have a considerable jurisdiction to strike out country for buying our own houses and taking out and amend their unconscionable terms? Will she see to mortgages. The amount left over is the money owed it that the greatest publicity is given to this power on personal loans, credit cards and high-cost credit. which has long been vested in civil judges? For this, we must make absolutely sure that people have the right information before they get themselves Baroness Wilcox: The answer is yes. into difficult situations. Lord Dykes: My Lords— Lord Razzall: My Lords, taking the last point made by the noble Baroness in response to the previous Baroness Gardner of Parkes: My Lords— question, is she satisfied that the review the Government are carrying out will ensure absolutely that the result does not force the very poor into the hands of loan Lord McNally: I think that the House should hear sharks, whose method of collection involves violence? from my noble friend Lady Gardner.

Baroness Wilcox: When the consumer credit review Baroness Gardner of Parkes: My Lords, is the Minister report comes out, we will know its findings, so I aware that many of us now get six or more phone calls cannot comment on them for the moment. However, it every week? It is not just a high street issue but has is always the most vulnerable who we must worry become an absolute telephone menace. People are about because they are the least likely to ask for help phoning all the time, stating that this is an official until it is too late. We will continue, as we would announcement and under the new law they can clear always continue, to make sure that the disadvantaged all your debts in no time at all. This is absolutely really are a priority for us. wrong. I have asked this question previously and the Minister told me that there was nothing the Government could do. I understand now that there is a blocking Lord Young of Norwood Green: My Lords, can the system. Will the Government publicise how to block Minister advise the House on whether the Government these calls so that these poor people are not imposed have any plans for regulating commercial providers of upon again? debt management plans, which have never been regulated and under which consumers pay upfront fees and take Baroness Wilcox: People are most vulnerable to longer to pay off their debts? Does the Minister agree receiving these calls in their homes. We have all received that there is a real need for free and impartial debt them. I will take that question away, see whether there advice such as that provided by the Consumer Credit is anything further that we are doing and write to my Counselling Service? noble friend.

Baroness Wilcox: We certainly agree that there should Lord Dykes: Will the Minister also look into another be free debt advice and we will continue to provide it. I serious abuse: the amount of money that currency think the noble Lord also asked about debt management exchange bureaux charge to customers travelling overseas companies. We are concerned about these. The Office for very small transactions in value, often with margins of Fair Trading has recently taken action in this area of 15 per cent either side? This is a serious abuse and we are working with the industry itself on how we because they quote zero commission but charge a can resolve these issues. Good people in the industry huge margin on those exchanges. do not want the bad people in it because they give them all a bad name. Baroness Wilcox: If they collect money that way, I suppose the Post Office would be their first stop. I will Lord Marlesford: My Lords, are the Government at look into this but do not think that there is any all concerned about the fact that there is some £60 billion intervention that we can make at the moment. of outstanding credit card debt on which interest rates of 17 per cent or more are being charged? Much of this is non-performing. Does that not cast something Shipping: Towing Vessels of a shadow over the balance sheets of the banks? Question

Baroness Wilcox: We are working hard to bring 11.22 am under control unsustainable borrowing and irresponsible Asked by Viscount Younger of Leckie lending—between which lots of bad things happen. There is no doubt that good information is terribly To ask Her Majesty’s Government why they have important for people to be able to make decisions. decided to withdraw funding from emergency towing However, the Government are not risk averse to the vessels; why funding has been arranged for an interim freedom for our people to make decisions and take replacement project only in Scottish waters; and risks—and fail. We want our people to be free to what provision they have made to protect the English succeed and that means that some of them will fail. coastline from oil spills. 1345 Shipping: Towing Vessels[LORDS] Shipping: Towing Vessels 1346

Earl Attlee: My Lords, the Government believe that Noble Lords: Oh! ship salvage should be a commercial matter and that there are sufficient tugs around the majority of the Lord Kinnock: My Lords, that was about the most UK coast to respond to ships in difficulty. There are articulate ministerial answer I have heard in this House. fewer commercial tugs available in the waters off north While the Minister is right to draw attention to great and western Scotland so the Government have funded advances such as port state control, the ISM code and two tugs for an interim period to allow locally interested double hulling, even cumulatively they are not enough parties time to develop plans for sustainable provision when a ship has foundered. Is the Minister aware, without recourse to taxpayers’ money. when he puts an emphasis on commercial tug companies, that they can be expected to act commercially? This is Viscount Younger of Leckie: I thank the Minister why it is necessary for government support to ensure for that reply. He will recall the “Sea Empress” disaster that in any and all conditions—however unprofitable in 1996 when 73,000 tonnes of crude oil spilt along the they may initially seem commercially—those tugs are south Wales coast, and also the foundering of HMS available right round the British coast. “Astute” last year. Is he aware that the withdrawal of these tugs means that there are simply no replacement Earl Attlee: The noble Lord makes some quite tugs with the bollard-pulling power to effect a rescue? sensible points. However, it is important to understand How comfortable is he with the responsibility being that one of the recommendations of the Donaldson passed to ship owners, given that ownership is usually report was the SOSREP, the Secretary of State’s as clear as mud? representative, and he has extensive powers to direct that ships will assist other ships in difficulties. It is also Earl Attlee: My Lords, the world has moved on worth pointing out that the emergency towing vessels since the report of Lord Donaldson. We have port have not yet been decisive in rescuing any super-tanker state control and inspection of ships, the integrated because none has come to grief. safety management code of ships, much more reliable ships and much better situational awareness for the Lord Greenway: My Lords, would the Minister coastguard, coupled with the SOSREP system. Finally, agree that the greatest risk occurs in the Dover Strait, most tankers are double-hulled. Single-hulled tankers which is one of the most heavily trafficked maritime are not allowed in UK waters except in exceptional areas in the world? The French have somewhat reluctantly circumstances. moved one of their two large ETVs up from La Rochelle to cover the gap left by the withdrawal of our Lord West of Spithead: My Lords, is the Minister “Anglian Monarch”. Would he also agree that the aware that there is a growing perception that the Dover Strait is special because many of the ships coalition Government are suffering from collective sea transiting are deep draft vessels operating in comparatively blindness? We have just discovered that over the last shallow water? This leads to the danger that, if there few weeks we have no ship at immediate readiness for were an accident, there would be a motorway pile-up counterterrorism or disasters around the UK—no Royal situation—as last happened with the Norwegian car Navy ship at all. We have got rid of our broad area carrier “Tricolor”, which was run into by two other surveillance in the SDSR. We have just heard about ships after she had sunk, and over 100 other ships the tug towing, and I have to say there are still a lot of passed within the clearly marked exclusion zone. single-hull tankers around, not least in the Royal Fleet Earl Attlee: The noble Lord makes an extremely Auxiliary because there has been no money to replace important point and his analysis is correct. However, them. The National Maritime Intelligence Centre, which although the Dover Strait is an area of higher likelihood he referred to, is not up and running at full speed, because of the concentration of ships in the area, which it should be. I can go on and on. experience indicates that the consequences of a grounding I am sure these perceptions are not right, but could are likely to be lower because the seabed is flat and the Minister confirm that the Government are looking sandy rather than rocky. Regarding his point about the at this in a co-ordinated way because there is very real motorway pile-up, the coastguard, with automatic worry? Perceptions often seem more real than reality, monitoring of ship movements, will be aware immediately and there is a very real perception that this is not being a ship stops moving and can warn other ships of the pulled together. difficulties. Earl Attlee: The noble Lord is right, he has gone Lord Davies of Oldham: My Lords, is it not the case on—he has gone on about defence matters. This is a that the Government are not prepared to pay the commercial matter. One of the impacts of the Government relatively modest insurance policy to guarantee that funding an emergency towing vessel, say at Falmouth, we have adequate towing tug capacity in British waters? is that it prevents commercial operators from stationing If a major disaster occurs, we will be dependent upon an ETV at Falmouth because there is no work for Rotterdam or other foreign ports to produce the necessary them. towing and tug equipment. Is that not a dereliction of duty on the part of the Government? The Earl of Mar and Kellie: My Lords, can I ask my noble friend what he believes to be the maximum Earl Attlee: My Lords, the noble Lord makes an acceptable steaming time to effect a rescue after the important point about Rotterdam. Rotterdam and the contracting process has been completed? Dutch have great experience in salvage operations. There are lots of tugs operating out of there. If we Earl Attlee: My Lords, no. withdrew the funding, which we have, from the Falmouth 1347 Shipping: Towing Vessels[3 NOVEMBER 2011] Protests: Tent Pitching 1348 tug, someone will probably station a tug in Falmouth Baroness Stowell of Beeston: My Lords, I am in order to pick up the market. Currently, however, we responding to a Question about whether there should are distorting the market by paying out large sums of be emergency legislation to prevent people pitching taxpayers’ money to no good effect. tents in non-designated public spaces, but I understand the noble Lord’s point. The Government are very clear that people in all parts of the country are having to Protests: Tent Pitching deal with wage freezes and wage cuts and that some Question are having to look for a new job. Those people are dealing with these difficulties and shouldering their 11.30 am share of responsibility and they are right to expect big banks and the big bosses in companies to take their Asked by Lord Cormack fair share of responsibility as well. To ask Her Majesty’s Government whether they will introduce emergency legislation to make pitching Lord Tyler: My Lords, in congratulating my noble a tent in a non-designated public space, or on a friend perhaps I may ask her to reiterate the Government’s public thoroughfare, a criminal offence. decision to avoid a knee-jerk, piecemeal and authoritarian response on this issue. Given that the wisdom of our mutual friend Lord Cormack clearly trumps that of Baroness Stowell of Beeston: My Lords, the the Archbishop, the Bishop of London and the clergy Government brought forward provisions in the Police of St Paul’s, perhaps I may also ask her to look Reform and Social Responsibility Act 2011 which particularly at the issue of Parliament Square. She will allow local authorities to attach the power of seizure see some very sensible proposals which have come to their by-laws for encampments on local authority forward this very month from the Hansard Society—in land. These provisions will be commenced shortly. It is a report entitled A Place for People: Proposals for therefore not necessary to introduce emergency legislation. Enhancing Visitor Engagement with Parliament’s Protests on private land are the landowner’s responsibility Environs—that would enable us to take a sensible, but the Government are looking at existing laws to long-range view and to deal comprehensively with the consider whether any additional measures are needed problems referred to. to deal with such encampments. Baroness Stowell of Beeston: Of course we will look Lord Cormack: My Lords, in thanking my noble carefully at the report to which my noble friend refers. friend for replying, I welcome her to the Dispatch Box However, I stress that we passed an Act in July of this and wish her many happy and successful years there. year that introduced new measures that will put an But perhaps I may also ask her if she will rethink part end to the encampments in Parliament Square. These of that Answer. Will she impress upon the Government measures will be commenced shortly and at that time that we are facing a potentially disastrous situation? we will, thankfully, bring an end to the disruption that Next year, extra millions of people will come to this so many people have criticised and rightly complained country for the Olympics and the Cultural Olympiad. about over many years. They will come to admire our great public buildings and open spaces, not to see squalid encampments. It is essential that the Government take effective action to The Lord Bishop of Bath and Wells: My Lords, from prevent what happened at St Paul’s three weeks ago these Benches I congratulate the Minister on her happening in other places, thereby defacing the very appointment. The Church of England maintains a image of this country next year. presence in every community in the land. It is a broad church—it is perhaps the original big tent. Is the Minister aware that St Paul was a tent-maker and that Baroness Stowell of Beeston: My Lords, I am grateful St John records that Jesus pitched his tent among us, to my noble friend for his remarks; he has for many in a non-designated public space, to rescue us? years been a leading figure in debates on matters such as this, both in the other place and in this House. The point that has to be made—my noble friend the Minister Baroness Stowell of Beeston: I am very grateful to made it last week when answering a similar Question—is the right reverend Prelate for his question. Thank you. that protests on private land are the responsibility of the landowner. However, as my noble friend the Minister Lord Hunt of Kings Heath: My Lords, I, too, welcome also said last week, and as I said in my original the Minister to her position at the Dispatch Box today. Answer to the noble Lord, the Government are looking Could the Minister comment on the original suggestion at existing laws and considering whether any additional made by the noble Lord, Lord Cormack? I would ask measures are needed. that the review is undertaken very carefully indeed and that there is the widest possible consultation. In terms Lord Campbell-Savours: My Lords, is it not somewhat of what overseas visitors will see next year, would it perverse that Parliament spends its time criticising not be better that they saw an example of a vibrant people for putting up tents in protest when those who democracy in action? are responsible for the crisis in the City and in the banking institutions are walking away into the sunset Baroness Stowell of Beeston: I agree with the noble with their millions? Should we not get our priorities Lord. We are expecting many people here next year right? and want to present a thriving London to everybody 1349 Protests: Tent Pitching[LORDS] Creative Industries 1350

[BARONESS STOWELL OF BEESTON] debate demonstrates that there is consensus in this who visits. I will certainly take on board the points House, at least on the title. I also express my pleasure that he made, but I can only repeat that the department that my old friend and colleague from BBC “Newsnight”, is considering this matter at this time and taking it the noble Viscount, Lord Colville, has chosen this very seriously. debate to make his maiden speech. I believe this brings the tally of “Newsnight” alumni in this House to four. Perhaps we should start our own party. I declare an Legal Aid, Sentencing and Punishment of interest as I sit on the boards of the National Campaign Offenders Bill for the Arts and the Lowry. First Reading As a country we have always been blessed with a wealth of creative talents, which have shaped and 11.37 am illuminated our history and national identity. Creativity is part of what makes our society vibrant, unique and The Bill was brought from the Commons, read a first modern. It helps us to understand the world around us time and ordered to be printed. and forms our individual and collective identities. The journalist Matthew Parris recently referred to the culture of a country as its heartbeat—a fitting image as from Business of the House cultural activities flow into the body politic considerable Timing of Debates economic benefits. The UK creative industries are the fastest growing sector of our economy and as such are 11:37 am a critical driver for our recovery. In particular, I argue Moved By Lord Strathclyde that, properly encouraged and harnessed, they can be part of the solution to the problems our young people That the debate on the motion in the name of are facing in finding employment. Baroness Bonham-Carter of Yarnbury set down As Eric Schmidt, chairman of Google, pointed out for today shall be limited to three hours and that in in his MacTaggart lecture, the UK is the home of so the name of Lord Newby to two hours. many creative inventions: photography, television, computers—apparently in both concept and practice. The Chancellor of the Duchy of Lancaster (Lord According to him, the world’s first office computer Strathclyde): My Lords, I beg to move the Motion was built by the Lyons chain of corner shops. I thought standing in my name on the Order Paper. that its only creative contribution was tea, cakes and a few Muriel Spark characters. However, Mr Schmidt went on to point out that today none of the world’s Lord Higgins: My Lords, parliamentary-related leading exponents in these fields is from the UK. The business will prevent me being present for the second message from UK business is clear: we are struggling debate this afternoon, which in any case is very limited to maintain our position as world leaders in creativity. in both scope and time. Would my noble friend consider very carefully the need for us to have a major debate A report entitled Next Gen., commissioned by my on the crisis in the eurozone? honourable friend Ed Vaizey—Minister for the Creative Industries, among other things—to look into the needs of the video games and special effects industries, discovered Lord Strathclyde: My Lords, I was present in the that in the past two years the video games industry has House when my noble friend raised this point yesterday. fallen from third to sixth place in the global development I am very sorry, as I suspect many noble Lords are, ratings, UK companies are having to go abroad to find that they will not be able to hear my noble friend talent because of the skills shortage at home and are, speak, with all his experience and knowledge on this subject. This is of course a matter for the usual channels “turning away millions of pounds of work every year for one reason: they can’t find the skilled people they need. This means and we shall give it the most urgent consideration. job opportunities and potential tax revenues are being lost”. Motion agreed. The findings are backed by Aardman Animations, which makes the Wallace and Gromit series, among other things. An executive told the Communications Creative Industries Committee, on which I used to sit last year, Debate “We probably take more graduates from … France” and from Germany, 11.39 am “than we do from the UWE, which I could walk to from my Moved By Baroness Bonham-Carter of Yarnbury office”. Moreover, this is happening at a time when employment To call attention to the importance of the creative prospects at home are so bad. industries in the United Kingdom; and to move for The essential need is for a skills base, and that starts papers. with education. The creative industries need creative people, but creativity needs to be taught and nurtured. Baroness Bonham-Carter of Yarnbury: My Lords, I The new EBacc is to be welcomed in that it broadens am privileged and pleased to introduce this debate on the exam base. However, what it does not do is include the importance of the creative industries. The gratifyingly those subjects that develop creative skills. It consists of large number of people who are taking part in the maths, science, English, a humanity subject and a 1351 Creative Industries[3 NOVEMBER 2011] Creative Industries 1352 language. There is no art or design and no computer Bros has bought the studios, although it seems sad science. Because it will be possible to rank schools on that the profits will be going to the US rather than their attainment in the EBacc subjects, schools are here. already starting to emphasise them at the expense of creative subjects. Does my noble friend the Minister The contribution our creative sector makes is not not share my concern over a recent survey by the simply economic. Our cultural exports are a key source National Society for Education in Art and Design, in of soft power, strengthening Britain’s influence and which 60 per cent of the schools that responded said prestige around the world. At home the cultural and that they will stop teaching art and design at GCSE creative industries are central to the well-being of the level as a result of the introduction of the English country. As I mentioned at the start of this speech, I baccalaureate as they feel that they have to concentrate sit on the board of the Lowry in Salford. The idea on the subjects that it encompasses? behind it was to build a major arts complex as a trigger for the regeneration of the area. The result is We should listen to such successful and highly a building of global architectural significance in which respected individuals as Sir James Dyson and Sir John you can experience a wide-ranging programme of the Sorrell, who argue that we should invest more in performing and visual arts. Central to its ethos is creative education and design. We should listen to Ian interaction with the local population through a community Livingstone and Alex Hope, authors of the Next Gen. and education programme. An example is its Walkabout report and leaders in their world of video games and project in which a member of the Lowry team and a visual effects, who recommend that art and computer range of artists spend 14 months with a specified science should be included in the EBacc. And we community. A report commissioned following a recent should look to the international baccalaureate, which Walkabout showed that, of the 2,340 people who took does include art and has computer science as an part, 34 per cent said it improved their quality of life, elective part of its maths qualification, and follow its 71 per cent said it helped them develop skills which example. would be useful in future jobs, 76 per cent said they Finally on this point, schools need to be encouraged were more interested as a result in doing creative to promote an arts-science crossover. The success of activities, 81 per cent said participation made them those in the creative industries lies in the fusion of feel part of their local community and 93 per cent said technology and creative skills. Look at Steve Jobs. His it created better understanding between young and genius lay in being able to bring together exactly such old. What more ringing endorsement could there be of a fusion, connecting aesthetics with function. Jobs was the power of cultural activity? obsessed with design, calling it, Within our Department for Culture, Media and “the fundamental soul of a man-made creation”. Sport I believe there is recognition of the importance of the creative industries. My honourable friend Ed And guess what? The senior vice-president of industrial Vaizey has commissioned two reviews from Darren design at Apple, the leading designer behind the iMac, Henley, managing director of Classic FM. The first is the iPhone and the iPad, is a Brit called Jonathan Ive. a review into music education, out of which I believe Then there are the connections between educational will emerge the first ever national plan for music institutions and business. The University of Abertay education. The second is a cultural education review, in Dundee is providing grants of up to £25,000 for which is due to be published before the end of 2011, small companies which develop video games and other and I hope that the Minister can confirm that out of forms of interactive digital content. It also provides this there will emerge a national plan for cultural digital space and equipment. This has resulted in a education. This plan should cover formal but also cluster of creative businesses in Dundee, providing informal education, and I hope my noble friend shares employment and prosperity. The relationship between the enthusiasm felt on these Benches and by Mr Henley university and entrepreneur is clearly mutually beneficial. for the Sorrell Foundation’s National Art&Design The former ensures it is equipping its students with the Saturday Club, which runs free Saturday morning art skills they will actually need when they enter the job and design classes for school children at local colleges market; the latter gets access to cutting-edge research and universities. At present there are 14, but a further and the brightest talent pool. We need more of this 100 FE colleges and universities have indicated that and we support the work being done by Skillset in they would get involved if funding were available. this area. Another example is the Roundhouse. Last night I A different snapshot of how creative industries attended a fifth birthday celebration of its reopening. foster productivity can be seen in the phenomenon of Every year it works with 3,000 11 to 25 year-olds Harry Potter. It crosses my mind that the books were offering them the opportunity to get involved in creative written in a tea shop so maybe what we need are more projects, from the performing arts through to new tea shops. The films were made at Leavesden aerodrome media. Part of its funding comes from Arts Council where Rolls-Royce used to manufacture helicopter England and I am delighted that one of ACE’s priorities engines. It now employs vast numbers of people from over the period 2011-15 is that every child and young across the creative spectrum, from writers, actors person will have the opportunity to experience the and those adept at highly technical special effects to richness of the arts. Ten bridge organisations have practitioners of crafts such as carpenters, model makers been established that liberates young people’s strategy and painters. Happily, this is set to continue because, but ACE must now ensure that these organisations despite the end of the Harry Potter franchise, Warner receive a clear brief as to their function. 1353 Creative Industries[LORDS] Creative Industries 1354

[BARONESS BONHAM-CARTER OF YARNBURY] bring film-makers to individual countries from around One threat to the growth of this sector, to which the world: an array of financial incentives is offered. there has been a response, is the knotty problem of Germany offers them; Canada offers them; and even protecting intellectual property rights in our digital some individual states in the United States offer them. age, and the ease with which property rights can and We all recognise the dominating importance of American are flouted by online piracy and peer-to-peer file-sharing. studios and distributors and therefore compete for The coalition Government have accepted and are their investment. If Britain was not to do that, we implementing the Hargreaves recommendation, which would be removing ourselves from the market altogether. it is estimated could add £750 million a year to the UK There are a range of areas that the Government economy. should examine to see what further practical help can Finally, and in my view most importantly, a Creative be given: encouragement for independent British film- Industries Council has been established, chaired jointly makers and animation companies, where we already by the Business Secretary, Vince Cable, and the Minister do very well and could potentially do even better; an for Communication and Creative Industries, Ed Vaizey. examination of the video games industry, which competes Its remit is to engage with the industry in—this is internationally with countries that give tax incentives; crucial, and here I steal a new Labour term—a joined-up and in television I strongly support those who argue way. I am sure that my noble friend the Minister agrees for exploring ways to help British children’s programmes. that we must ensure that its recommendations are There is a temptation in these debates simply to set implemented. The creative industries make a significant out a shopping list for government aid, which is not contribution to the UK’s economic growth. NESTA currently a hopeful area in any event. Not everything argues that this contribution could grow to £85 billion needs to be government money, and television is an by 2013 creating 150,000 jobs. Let us prove it right. example of how progress can be made by taking off The creativity is here. Let us provide the skill and the restrictions, promoting change and creating more jobs will. and revenue. We are fortunate in this country in having a range of excellent television companies: BBC, ITV, 11.52 am Channel 4 and, to be fair, BSkyB, which now makes some excellent programmes. The choice was illustrated Lord Fowler: My Lords, first I congratulate my a couple of weeks ago when, on Sunday night, you noble friend on her speech and on securing this debate. had to choose between “Spooks”and “Downton Abbey”. In the glory days of the Communications Select Programmes like these are sold around the world—that Committee—that was when I was chairman and she is the point. was a member of it—we worked very closely together. BBC Worldwide is far and away the largest British Of course, we did carry out an inquiry into the creative distributor. It has built up sales of more than £1 billion industries as one of our last works. I also look forward a year, and a profit of more than £150 million a year. very much to the maiden speech of the noble Viscount, It has been an enormous success—there is no doubt Lord Colville. We all remember his father with enormous about that—and the question is whether that success affection. His own career has been with the BBC, and can be further improved. It is a company that is he will find in this House that most of us regard that capable of being a truly global brand. It can expand as being a very high recommendation indeed. In particular, further, increase revenue and create more jobs but it is in these years of phone hacking, the BBC has managed held back because, basically, it is in the public sector. generally to preserve standards that are the envy of It has to fund its expansion from its own internal the world. Not all my later remarks will necessarily be resources; it cannot borrow on the market. The BBC as obliging to the BBC, but we very much look forward Trust is in the background, saying that it should not to his speech. expand too much in any event. It is a typically British As my noble friend said, there is an enormous position. A company capable of being a world leader opportunity here. We already have a position where, in held back by a lack of ambition, not from within the terms of jobs, the television, film and games industries organisation, but by the corporation that owns it. are of vast importance. Of course, added to that is the There is an overwhelming case for a public/private revenue that is being earned, the taxes paid and the partnership. For those who think this is the view of national reputation which has increased in areas such some way out, right-wing think tank, the final report as theatre and music. We have truly important industries from Digital Britain, signed by two Secretaries of by any measure. The aim should now be to see where State from the last Government, said: government policy can aid in future development. My “BBC Worldwide has the potential to be a very significant global noble friend highlighted education and training—and rights business for Britain and the Government believes it would rightly so. She is absolutely right to stress the point be a missed opportunity to limit BBC Worldwide to a narrow that there are good careers for men and women with supporting role to the BBC”. skills in these industries. That is entirely my case. I should like to add one or two other essentials. On However, what has happened is, like in the worst of financial support from the Government, the great nationalised industries, that the corporation has replied issue is consistency. The film production tax credit that BBC Worldwide is not for sale and has made introduced in 2006 has been a great success and is other remarks of that kind. We should remember that absolutely essential. For those who argue that no the BBC is not a corporation owned by a set of government support is necessary, I would say that we directors or executives; it is owned by the licence fee need to recognise one central point about the film payers, who have provided the finance whereby it has industry. There is intense competition in seeking to developed. The question is not whether it is just in the 1355 Creative Industries[3 NOVEMBER 2011] Creative Industries 1356 interest of the BBC; it is what is in the national cent cut in its own costs, which cannot fail to reduce its interest, the British interest and the interest of the capacity to provide the leadership and support that, as creative industries. The decision here is an acid test of the noble Baroness, Lady Bonham-Carter, pointed our intention and policy and whether we are truly out, it exists to provide. serious about improving our creative industries. All in all, it is easy to be gloomy, but I have faith in the resilience of the arts. They will find a way to Baroness Garden of Frognal: My Lords, I remind survive and thrive. I am not shroud-waving or special your Lordships that this is a timed debate and when pleading. People in the cultural sector understand that the clock reaches six you have completed your six in dire economic times everyone has to take a hit. I will minutes. talk not about what we spend on our creative industries but about how we value them. How often do we pat 11.59 am ourselves on the back about the worldwide reputation Baroness McIntosh of Hudnall: My Lords, I shall of our artists and arts organisations? We all feel entitled endeavour to take that to heart. I start by thanking the to glow when the peerless Mark Rylance in “Jerusalem” noble Baroness, Lady Bonham-Carter, for securing or the National Theatre’s “War Horse” triumph on the debate. She is extremely assiduous in keeping the Broadway, or when Colin Firth or Helen Mirren wins importance of the creative industries before the House. an Oscar. However, we should remember that truly I, too, look forward to the maiden speech of the noble great artists, be they actors, puppeteers, musicians or Viscount, Lord Colville. I have no doubt that his fashion designers, do not spring fully formed from experience will be of enormous value to the House as television competitions. They are rare and wonderful time goes on. creatures whose skills take years to hone, and more often than not their talent and enthusiasm have been I should also like to mention the excellent note nurtured first in school and then through universities generated by the House of Lords Library for the and specialist training institutions such as arts colleges, debate. It is full of useful information and statistics drama schools and music conservatoires. that remind us of the economic and social importance of creative enterprise. It is a really good read. However, That is why it is so profoundly depressing that the it tells us only what most of us already knew and have higher education teaching grant has been removed shared with each other and with successive Governments from arts, humanities and social science subjects; that many times, contributing—I hope that the noble Baroness the much vaunted EBacc, which the noble Baroness, will forgive me for putting it this way—to a slight Lady Bonham Carter, mentioned, and which many groundhog day feeling to the debate. But some things schools will feel they have to prioritise, does not include bear repeating—and I am sure that they will be repeated any mention of music, design or drama; and that an as the morning goes on. artificial divide has thereby been created between the I have knocked around the creative industries—mostly so-called STEM subjects and everything else. The the performing arts—for a very long time, initially in message from the Government appears to be: creative executive roles but now exclusively in non-executive education, and by extension the industries that flow ones. I am currently a board member at the Royal from it, is not important but is a luxury and an add-on Shakespeare Company, the Roundhouse, the National that is not central to our lives. Opera Studio and the Southbank Sinfonia. I am also a director of Artis Education. I will explain what these As I know from reading the right honourable David organisations have in common; that is what I want to Willetts’s speech to the British Academy earlier this talk about. They are all committed, wholly or in part, year, the Government will protest that such an inference to education through developing the most talented should not be drawn from what they have done to young performers and/or by helping to develop in higher education and funding in the school curriculum. children and young people, often using trained, I think it is hard to sustain that position. Mr Willetts is professional performing artists, the confidence and an honourable man and I have no doubt that he meant skills—for example, communication and teamwork to give comfort when he suggested that taking away skills—that all employers, not just those in the creative the teaching grant from those in the arts and humanities industries, say that they need. was going to improve the position of higher education In my nearly 40 years in the performing arts there courses in those subjects. However, that is not how it have been some tough times—but none as tough as feels to all those who have worked so hard and for so now. First, I want to say how proud I am of the arts long to build our creative industries into the vibrant, sector as a whole, and in particular the organisations economic and social force that they are today. It feels that I work with—for which I take absolutely no like a slap in the face or, worse, indifference. credit—for the mature, imaginative and, I have to say, creative way in which they are facing up to the combined The world faces a huge array of challenges at the challenge of shrinking funding from all sources and moment. Some we hope are short term, but most are audiences with significantly less money in their pockets. long term, centring on issues such as climate change, Although this week Arts Council England announced population growth, migration and scarcity of natural a new strand of strategic funding, which is of course resources. We will have to apply every ounce of creative very welcome, it had to take some very difficult decisions energy that we can summon up to meet them. Solutions earlier this year. It did not shirk them, but their impact will not come, nor have they historically come, just on the sector will be felt in earnest next year and from scientists, engineers and mathematicians, much beyond. ACE itself is being forced to make a 50 per as we need them and creative as they are. They will 1357 Creative Industries[LORDS] Creative Industries 1358

[BARONESS MCINTOSH OF HUDNALL] to the creative economy. However, as Fintan Donohue, come from the boldness of those whose imaginations the principal of North Hertfordshire College was recently have been shaped and stimulated by a richly creative describing, it needs to make sure that, as well as the education. formal academic aspect, it develops the enterprise and I hope that the Government understand this, but it entrepreneurial skills of students in the creative arts is not clear to me from their policies that they do. sector. I commend the work of Skillset, the sector skills 12.06 pm council for some of the creative industries, such as advertising, animation, computer games, fashion, film Lord Clement-Jones: My Lords, I warmly congratulate and TV,and Creative & Cultural Skills, which represents my noble friend, not only on initiating this debate, but design, literature, music and performing and visual on her tremendous opening speech. We need to recognise arts. Both have identified that there is a significant that our creativity, ideas and intellectual capital are shortage of skills in their sector, and both are tasked what will increasingly drive our future prosperity. with ensuring that skills issues across the sector are Increasingly, technologies are converging, and technology properly tackled in a strategic way. However, there are and content are aligning, so it is possible to draw the still major issues, as the recent NESTA report on description of creative industry extremely widely, even video games and visual effects, which was referred to to include industrial design in areas such as aerospace, by my noble friend, shows. We need to make sure that automotive and advanced engineering. we have the right computer skills in particular. We We are pre-eminent in so many areas: in computer have a positive story in some respects, but I am baffled games and new media, architecture, design, fashion, why we have two skills councils for the creative industries. animation, music, film, radio, television and advertising. Should they not be doing more than simply working Just take music: in per capita terms, we are one of the together? Should they not be a single body rolling out top three recorded music markets in the world. UK programmes right across the sector? artists’ share of global sales is estimated to have been nearly 12 per cent in 2010, with one in 10 sales in the Then, of course, there is the vital question of intellectual US being a UK act. However, the fact is that other property protection through copyright, a subject of countries are making substantial investment in their increasing importance in the digital age. Combating creative industries. So today I hope that we can celebrate piracy should not simply be a crime and punishment some of the considerable achievements taking place to approach. We need to combat through education the develop our creative industries, while at the same time idea that copyright infringement is socially acceptable, combining this with further suggestions for action. and we need to make sure that there are legal ways of accessing copyright works. I was nominated for an Like my noble friend, I welcome the formation of Internet Villain award last year for my efforts on the the Creative Industries Council, co-chaired by the Digital Economy Act, but I am unrepentant about the Secretaries of State for Business, Innovation and Skills need to protect intellectual property over the internet and for DCMS, which, I think, has met once so far. and to ensure that creative artists and the creative Last year the Liberal Democrat policy document The industries can enforce their copyright. It is all very Power of Creativity emphasised the need for assistance well to talk about developing new models for exploitation with start-ups for many young creative industry companies of new work, but without the underpinning of copyright, by setting up a creative enterprise fund. Earlier this creative artists cannot receive the proper reward for year, Dr Stuart Fraser, in his report Access to Finance their efforts. There are some 50 different services giving for Creative Industry Businesses, commissioned by the legitimate access to recorded music, so there is no DCMS, identified that finance was much slower coming excuse for piracy. forward for creative industry business than in other sectors. The Treasury Plan for Growth in March this The Hargreaves report, commissioned by this year accepted this and the recent Demos report Risky Government, has some good aspects, but it seems to Business confirmed it. think that some creators’ rights should be weakened. With this evidence, I hope that the Creative Industries However, as pointed out by UK Music, its economic Council will press for more assistance and will spur impact assessment of the growth impact of its the Government to improve the enterprise finance recommendations is laughable and certainly a great guarantee scheme so that it can support new businesses deal more speculative than the cost of piracy estimates in the creative industries and take other steps proposed that Hargreaves criticised. For instance, how can format by the CBI to ensure that other schemes, such as the shifting add up to £2 billion to the economy? In R&D tax credit and the enterprise investment scheme, reality, format shifting has been rife for years. MP3 can be accessed. What plans are there to solve some of players have already been invented, and very few of these financing issues for the creative industries? them are made in the UK. Moving on to education and skills, we have some In that light, the Government’s commitment to great higher and further education institutions. Indeed, strengthen the IPO’s economics team and the fact that overseas students beat a path to our door. As the it has begun an ambitious programme of economic UUK report Creating Prosperity at the end of last research are very welcome. In the limited time available year makes clear, our higher and further education to me, I welcome the Technology Strategy Board and sector makes a major contribution to the development its research on metadata development, which may of skill and talent for the creative economy. It represents prove an extremely important development. I also hubs for innovation and centres for research. Some 16 mention the impressive story of how some of our per cent of our students are engaged in courses relevant major cities are becoming hubs. We have the East 1359 Creative Industries[3 NOVEMBER 2011] Creative Industries 1360

London Tech City, and Liverpool’s city of culture year The creative industries are open; they are flexible. resulted in an addition of £800 million to the economy They are tiny microbusinesses on the one hand and of that city. giants like WPP on the other hand. With today’s Finally, I cannot forbear to mention live music. I technology and communications, this industry is full very much hope that the Government will give a fair of companies that are really mobile. Britain is one of wind to my Private Member’s Bill in the House of the least competitive countries in the world when it Commons. comes to taxation, with our top rate of 50 per cent. In 1997, we were the fifth most competitive country in 12.13 pm the world in terms of taxation; now we are 94th. Not only is this a disincentive for our home-grown creative Lord Bilimoria: My Lords, if I were to list the areas talent, it is also a disincentive to the brightest from in which we are the best of the best in the world, it is around the world to come and work in our creative actually quite a long list for this tiny country of industries. 60 million people compared with, say, the United States with 300 million. I could go for higher education, I was taught at a very young age that I was not advanced engineering and the creative industries, where creative because I was useless at art and drawing. I still we are right up there among the best of the best in the am, but I have realised that in building a business, world. I thank and congratulate the noble Baroness, being an entrepreneur, one of the greatest strengths Lady Bonham-Carter, on initiating this debate. It is you need is creativity. What are the Government doing crucial. Whichever area of the creative industries you to encourage creativity in our schools to give children look at, we are world class—whether it is film, theatre, the confidence that we all have the latent, untapped art, design or advertising. The list goes on. potential to be creative? Britain is so good in this area is because we are an open economy, we have open It struck me when I was taken on a private tour of minds and we are always willing to question, to challenge, the Reichstag in Berlin that it was redesigned by none to push the boundaries. I was proud to write the other than our very own British architect, the noble foreword for Big Ideas for the Future, a report published Lord, Lord Foster. When in 2004, the Royal Society of by Universities UK and Research Councils UK, which Arts’ 250th anniversary year, I was privileged to receive has 200 world-changing ideas coming out of our its Albert medal, which was presented by His Royal universities. Many of those are in the creative industries. Highness the Duke of Edinburgh. The other medal The noble Baroness, Lady Bonham-Carter, spoke about winner was Jonathan Ive, the Apple designer, who won the link between universities and business. the Benjamin Franklin medal. The noble Baroness, Lady Bonham-Carter, spoke about him. He was Steve In building a business you need the four Ps of Jobs’s right-hand person. marketing: promotion, price, place and product. I Why are we so brilliant in creative arenas and how have three more Ps: people, passion and “phinance”. can we continue to remain the best? The question I ask Without the money you cannot do anything. What are the Minister is: are the creative industries really a top the Government doing to help supply finance for the priority for this Government? The creative industries creative industries? Unlike manufacturing, where you make up 5.6 per cent of the gross value added to our can provide bricks and mortar as collateral, creative economy, they contribute £17 billion of exports and industries can only provide brain power as collateral. services and almost 9 per cent of companies in this What are the Government doing to help finance things country in some way or another fall under the creative like the small firms loan guarantee scheme, which industries umbrella. They make such a substantial helped my company, Cobra Beer, in its early days? contribution. Are the Government doing enough to Two of those loans helped us get off the ground. Why support them? On the other hand, the huge Department are the Government not doing more to greatly enhance for Work and Pensions has £200 billion of spending. this scheme, which would be particularly useful for the Surely the Government should prioritise creative industries creative industries? to help them to grow and to receive even a fraction of I conclude by saying that today we are among the that £200 billion of funding. best in the world in the creative industries, but unless We all agree that the cuts the Government are we address these issues of uncompetitive taxation, making need to be made, but I just do not understand short-sighted cutting of funding for higher education, slashing higher education funding by 80 per cent when the introduction of a crude, self-destructing and self- there is a shortage of skilled and trained people in the defeating immigration cap and not doing enough to creative industries. Will the Government wake up to provide access to finance, how will our creative industries this? This is our core competence. We need the brightest be able to add value and stay ahead, with the emerging and the best academics and students from around the giants of China and India galloping ahead? We need world to come to our universities. Ten per cent of to be partners with these giants in the decades ahead academics in our universities are foreign; at Oxford with our creative brilliance but we can do this only if and Cambridge it is 30 per cent. Foreign students we have the support. For centuries we have provided bring in £8 billion to the UK and yet we have this many of the world’s greatest, most innovative and crude immigration cap dissuading the brightest and most creative minds, and I am very proud of that. the best from coming to our country. I know that from India applications have plummeted. As we rely on 12.18 pm brain power in the creative industries, we are being affected by these nonsensical policies. Will the Minister Lord Razzall: My Lords, I think it is common tell us whether the Government are going to wake up ground among all of us that the creative industries to this? now represent a significant part of our industrial 1361 Creative Industries[LORDS] Creative Industries 1362

[LORD RAZZALL] that happens, the Government do not use the opportunity effort. If you add together software development, to take back the contribution that has been made from film, music, theatre, broadcasting, architecture, industrial the Treasury, so that the Arts Council funding can be design, the creative arts and video games, it is quite maintained at least at the same level as it is today. likely that, in some statistics, the creative industries There must be no change in that. have passed manufacturing in their contribution to Another area where I think the Government need Britain’s GDP and are fast pushing the declining to take some action is on immigration. There is internecine financial services sector. This is an extremely important warfare, as noble Lords will appreciate, between the debate. Home Office and DBIS with regard to how we get First, my noble friend Lady Bonham-Carter indicated clever, talented people, who are necessary for the creative some of the problems faced by some of these industries, industries, into this country, often on a temporary but we ought to take a moment to reflect on some of basis. A company like BlackBerry, for example, is the triumphs. Let us look, for example, at the acquisition thinking of moving its European headquarters away of Autonomy by Hewlett Packard, one of the major from the UK into continental Europe because the worldwide computer companies. The sale was significant Home Office will not allow it to bring in the sufficiently but, more significantly, Hewlett Packard will base the talented people that it needs to maintain that important whole of its software development programme in centre for British industry. In my view, DBIS must Cambridge, based around the Autonomy structure. carry on that battle with the Home Office, which I That is a huge triumph for Britain’s software industry. hope it wins, so that that can continue. Look also at what has happened at Pinewood. No The third area, as my noble friend indicated, is, of doubt my noble friend Lord Grade of Yarmouth will course, education. As Eric Schmidt said in his famous share with us the secrets of how he did it. As the noble speech in Edinburgh earlier this year, it is slightly Baroness, Lady Bonham-Carter, indicated, Warner ludicrous that we are teaching our 15 year-olds to plug Bros’ investment is a huge triumph for the British film things into computers but not how to program them. industry. My noble friend Lord Clement-Jones spoke As the noble Baroness, Lady Bonham-Carter, indicated, about the record industry, which now represents 12 per we really need to change the educational structure in cent of global sales, notwithstanding the problems this country to ensure that computer science is in every about copyright infringement, to which other people student’s DNA. have referred. As my noble friend Lord Fowler indicated, In conclusion, as I indicated at the beginning, this is we have a hugely successful television production industry, now a very serious industry. When the DCMS was ranging from the BBC through to the independent started, it was termed “the Ministry for fun” and that sector, to Channel 4 and ITV, and even BSkyB is now was not only because David Mellor was the first making independent programmes. As this morning’s Minister but because it was thought that that was all Times editorial indicated, the television industry in the that it dealt with. That is not so. The DMCS is now UK, contrary to fears, has, responsible for a significant element of our industry. “dumbed us up, not down”. The noble Lord, Lord Fowler indicated that, no 12.24 pm doubt, a number of your Lordships would have a shopping list, which should be avoided. I have a shopping Viscount Colville of Culross: My Lords, I thank list of three things that I think the Government ought noble Lords for their kind words and I look forward to be doing. First, on subsidies, I take the point put to the establishment of the “Newsnight” party. It forward by the noble Lord, Lord Bilimoria, that the sounds like fun. I of course declare an interest: I work Government already provide significant subsidies for for the BBC as a producer in the science and history the creative industries. There is the grant, which no departments. I am very grateful for the honour bestowed one has yet mentioned, for people involved in research on me by the noble Lords who elected me to these and development through which companies can recover, Benches. My father loved this place and talked frequently from HMRC, the PAYE paid on such people’s salaries of his many friends here, which included both staff That is a very significant contribution towards the and noble Lords. Since I arrived, I have been very development of small software companies and it hat touched by the many people who have spoken so must be retained. I was very pleased that the coalition warmly about him. I hope that I will be able to make Government, notwithstanding one or two blandishments my own small contribution to the life of this place. I from my side of the political parties, have retained that should like to take this opportunity to thank everyone R&D grant. for making me feel so very welcome; in particular, as every noble Lord knows, we in this House are very Secondly, there is the film grant, the EADY money well served by the tremendous team of staff who look which was replaced by the current film grant: as long after us so assiduously. I thank them for helping and as a film contains sufficient UK content, there is a advising me in their wonderful, courteous way. cash grant which comes back to the makers of the film In 1989, I went to the Soviet Union to work on the from HMRC. That must be retained. first live television programme to be broadcast from Thirdly, there is the Arts Council. As we know, the Moscow by the BBC. My translator and fixer was an Arts Council suffered a cutback in the amount of amazing woman called Masha Slonim. She had been a money that it could make available to the arts this dissident in Moscow in the 1960s and was taken to the year. Presumably, next year, once the Olympics are West by Dr Henry Kissinger. From there, she broadcast over, there will be more money available from the on the English and Russian language services of the National Lottery Fund and it is important that, when BBC World Service and, for two decades, she talked 1363 Creative Industries[3 NOVEMBER 2011] Creative Industries 1364 into the ether. The Cold War meant that that she never In September, the Department for Business, Innovation heard any reply from her audience and did not even and Skills brought out guidelines called Common Best know whether there was an audience. Practice Code for High-Quality Internships. These specify that high-quality internships should last no longer Finally, in 1989, she returned to her home country than 12 months, although they say the internships last for the first time with us. As part of the programme we typically for three months. There are no recommendations filmed in the small city of Yaroslavl, a few hundred about whether the interns should be paid or not. kilometres north of Moscow. We met a priest and Masha introduced herself. When he heard her name, The present economic climate is putting greater he fell to his knees, kissed her hand and wept. When he pressure on small creative companies. The temptation had composed himself, he said, “Your broadcasts have to take young people on as unpaid interns as part of kept my mind and heart alive for these many dark the companies’ business model has never been greater. years. I can’t imagine what my life would have been However, the industry must take note. It is endangering without the sound of your voice and the information its future vitality and the creativity of one our greatest you gave me. Thank you, Masha. Thank you Britain”. exports by not recruiting as widely as possible from the very best talent from across our country and The noble Baroness, Lady Bonham-Carter, and the across society. noble Lord, Lord Fowler, have spoken of the huge Will the Minister say what the Government propose contribution that the British creative industries make to do to collect data on the number of internships, to our economy, and they are right. But I know that both paid and unpaid, and whether she is happy that the creative industries are so much more than just a the best practice guidelines seem to give little guidance business opportunity. They also have the power to on long-term unpaid internships? shine a light into the darkness—not just for audiences and authoritarian regimes but into the darker places of our own minds. However, I am concerned that this 12.31 pm extraordinary part of our economy is under threat. Lord Black of Brentwood: My Lords, it is a privilege The creativity of these industries depends entirely on to be able to follow the noble Viscount, Lord Colville the talents of those they recruit, but I fear that these of Culross, and to congratulate him on such an elegant, industries are increasingly restricting the range of new graceful and moving maiden speech. We have seen in entrants. his contribution today a glimpse of the wisdom, expertise and passion that he will bring to our proceedings. It is So many of these companies depend on unpaid a particular delight to me that in the noble Viscount internships for their pool of new talent. For a week or we have another colleague, along with many speaking even a month, they are a wonderful way to introduce today, with great expertise in the media. new recruits to the incredible opportunities promised by a career in the creative industries. But in recent As I am going to speak in a few moments about years there has been an explosion of long-term unpaid local newspapers, it was splendid to discover that the internships. I fear that these are not only replacing noble Viscount was once a reporter in the local press paid jobs but are driving many would-be recruits, who on those great publications the Ludlow Advertiser and are not just from poorer backgrounds but from the the Worcester Evening News. From there he joined the middle classes, away from the industry. As Tanya de BBC on “Newsnight”—a programme that has no Grunwald, who runs Graduate Fog, one of the many doubt caused many a vexed moment for Members of websites campaigning on this issue, told me, people this House, as he said—at the time of the fall of the can manage for three months, six months is quite Soviet Union. He stayed on that flagship programme difficult, but nine months is not an option. They run for many years before branching out to make his own out of money and many give up their dream. science and history documentaries for the BBC. One of them was called “The Incredible Journey”, a title In preparing for this speech, I spoke to many interns. that might reverberate with many noble Lords privileged One particularly struck me; she was a young graduate enough to be here. The noble Viscount has an exceptional from Cambridge with a good 2:1 in English who bank of learning and understanding on which we can wanted to work in journalism. She completed more draw, particularly in this vital area of the creative than 18 months of unpaid internships at three companies industries. We all look forward greatly to his part in in the creative industries. She was doing proper work, our deliberations. such as writing press releases and proof reading. I want to speak about one of the jewels in the crown Eventually, she decided that she could not go on of the UK’s creative industries—the local and regional working for nothing. She has given up her hope of press. I declare an interest as director of the Telegraph being a journalist and has gone elsewhere. She told me Media Group, accordingly. The local press, comprising that many of her friends who had also thought of some 1,200 newspapers, employs more than 30,000 people, going into the creative industries had decided that including 10,000 local journalists—more reporters on they could not work for so long without pay. They, the ground than any other medium. It delivers reliable too, have gone to other professions. local news to 33 million newspaper readers a week, The concerns are not just among graduates themselves; and 42 million online readers each month who consume at the very top of the industry, people are worried. Jo local news from 1,600 websites. Taylor, who runs 4Talent, which sets up paid internships Despite the difficult commercial background, local through Channel 4, told me that not paying people for newspapers are doing their utmost to invest in new work devalues the opportunities being offered and platforms and converged multimedia newsrooms and limits new recruits to a small homogenous pool. to utilise digital technology to find new ways to open 1365 Creative Industries[LORDS] Creative Industries 1366

[LORD BLACK OF BRENTWOOD] seven Northcliffe titles in east Kent. The OFT is up public bodies to the scrutiny that is vital to local preventing the changes in the local newspaper industry democracy. That remains the most vital role of the that will allow it to survive, undermining local democracy local press: holding local politicians and public services in the process. Enough is enough. to account and ensuring that the justice system is I believe that the Government understand the issues transparent. They provide in a fiercely independent here and are sympathetic. The relaxation of local fashion a watchdog role no other medium matches. cross-media controls has been an important step, but However, the local press is under serious commercial it means nothing without a more realistic approach to pressure. New revenue streams are not growing as fast local media mergers and to the assessment of competition as old ones decline. A punishing, prolonged structural in local markets by the competition authorities. Swift downturn in advertising, with once lucrative classified reforms to the merger regime are needed if further ads migrating to the web, and significant rises in deeply damaging decisions are to be avoided. They newsprint prices have produced a perfect storm of must ensure the OFT takes account of three factors: commercial challenges that is threatening the viability first, the changes that have taken place in the highly of many local titles. To survive this storm the local competitive local advertising markets as the result of press needs to make significant investments in services the growth of digital media; secondly, the changes that and content, product quality, training and digital. For have happened in the way people consume news, which an industry in real difficulty that is a tall order, especially means that it is now impossible to exercise a local news because the local press has such remarkably diverse monopoly; and, thirdly, that the creation of publishing ownership structures. organisations with scale and the ability to invest is the There are in fact 87 separate publishing group only effective way to protect the viability of local titles owners, many of them family businesses that may and maintain plurality of voice. never be able to make the significant investment in We all want local papers to survive and flourish, for new media that is essential for their future. On their they are at the very heart of our creative industries at own they are unable to capture economies of scale in local level, but in order for that to happen it is no good management, distribution, printing and sales that would just talking about it; we have to will the means, not allow them radically to overhaul their businesses. Local just the ends. Change to the merger regime is essential. publishing businesses must therefore consolidate to Let history not damn us with those dread words, “Too survive. If we value the local press, we are going to late”. Let us act instead to show that we understand have to ensure that such consolidation can happen. the importance of our local press in the creative economy However, it is now clear, following what can only be and in local democracy and set publishers free to described a dinosaur decision from the Office of Fair renew their businesses for a new age. Trading last month that torpedoed the sale of Northcliffe Media’s Kent newspapers to the family-run KM Group, 12.38 pm that local publishers are not being given such essential Lord Hollick: I congratulate the noble Viscount, commercial freedom. KM Group is the sort of family Lord Colville, on his impressive maiden speech. He business that needs to acquire other newspapers to reminded us of the important democratic role that the ensure that it can invest in the future. To help it do so, media can play. He also shone important light on what it proposed to acquire just seven titles from Northcliffe. is happening with internships. Ignoring the expert advice of Ofcom, which had rightly said that, I declare an interest as an investor in and director of “a merger may provide … a sounder commercial base from which companies involved in broadcasting, television and to address long-term structural change”, film production, music publishing and digital media, all of which are listed in the Register of Members’ the OFT decided, in a manner which the Independent Interests. All these companies, whether they operate rightly said made it, here, in Europe or the United States, benefit hugely “hard not to laugh out loud”, from the great pool of creative and entrepreneurial that the deal must go to the Competition Commission. talent that we have in the UK. This pool is not part of It said that such consolidation risked, a natural order of things. It must be replenished and “costlier advertising for businesses and higher cover prices for nourished by extensive provision of education and readers”. training, and there are several areas, some of which The OFT, which appears to be living in the last have already been referenced, where that essential century, had failed to appreciate that digital media nourishment is under pressure. had fundamentally changed the way local business To succeed in the digital economy, particularly in and advertising works and the way local people consume digital media and digital games, where I also have news. The result of this decision was that the proposal some interests, we need a strong supply of people who was withdrawn because the costs of a Competition are skilled at writing computer code. As Eric Schmidt Commission inquiry were too high to bear. pointed out, that is not a part of the curriculum in this The same thing happened a few years ago when country any more. That is an absolutely essential Trinity Mirror proposed to sell eight free weekly change that must be made, because we desperately newspapers in Northampton and Peterborough to need to regain our position in the computer games Johnson Press. A ruling from the competition authorities industry. meant the sale had to be abandoned. The shocking Our art colleges, which are now universities, have a fact is that seven of those eight titles have now closed. long track record of nurturing home-grown talent, be I very much fear that the same will happen to those they James Dyson, Ridley Scott, Paul Smith or Keith 1367 Creative Industries[3 NOVEMBER 2011] Creative Industries 1368

Richards. Today’s students, many of whom come from Creativity is one of the key attributes that defines disadvantaged backgrounds, have to take on very humanity. Since Stone Age people painted visions of significant debts to fund their fees and may be reluctant their world on the walls of their caves, sang laments to to do so because of the high level of risk in the creative the moon and the stars to express wonder and fear, or industries. In the past, the BBC, independent television, danced joyfully in the flickering orange glow of their the regional and national newspapers and news campfires, there has been creativity. Through the ages organisations have provided training schemes for aspiring such acts have provided nourishment and hope for the journalists and programme makers. Today, unfortunately, souls of humans. Art, music, dance, literature as well only the BBC continues to provide training of any as theatre have defined civilisation and human progress. significant nature, and the director-general made it Today, of course, we have television, which is probably clear yesterday that the training budget was not immune the primary creative portal through which the vast to cuts. He added that he was hopeful that the reduced majority of people see the world around them. So it is level of funding could be stretched further. We shall vital that television reflects Britain’s culturally diverse see. Against this background, it is vital that the media society and communicates accurately the views and industry, academia and the Government work together perceptions of all communities. This can only be achieved to ensure that there is adequate and affordable provision if the workforce that makes the products is drawn of training at universities, specialist institutions and in from all communities and not limited to just one the workplace in order to maintain the flow of talent. sector of the population. The development of great content and the ability to For example, there is a huge diversity problem in own and exploit its value over time is the cornerstone employment in the film and television industry, both of many creative businesses, and that requires a steady in front of and behind the camera, and the ones who supply of risk capital and investment. The TV are lucky enough to get the opportunity of employment programming business is coping with an uncertain often get pigeonholed and have little job advancement advertising market and a declining spend by the BBC. prospects. The BBC and Channel 4 have made outstanding Sky’s welcome decision to increase its spend on original efforts to correct this and should be applauded, but UK content and the growing importance of BBC the rest of broadcasting industry is lagging far behind. Worldwide as a funder, which was referenced by the Often the adverts on commercial channels contain noble Lord, Lord Fowler, has helped to sustain more diversity than the programmes themselves. In programming investment. BBC Worldwide is one of the past, the UK Film Council actively promoted the few genuine international players that we have in equality and diversity within the film industry through the UK. It has unrivalled power in global distribution its training and employment schemes, but I am still and a growing and impressive track record in investing waiting to hear what plans the BFI has to make sure in successful and original programmes. It has invested that people from culturally diverse backgrounds get a over £1 billion over the past five years, working with fair and equal chance to actively participate in all both the BBC itself and over 200 independent production aspects of the film creative industries. companies. It needs to increase its investment firepower if it is to provide the required level of funding to Transparency and accountability are essential, especially support broadcasters and independent programming when companies are in receipt of public funding—and investment. that includes art galleries, museums and theatres. So I An increase in the flow of risk capital to the TV and would like to ask my noble friend the Minister this. film production industries, and to digital media What are the Government proposing to do to ensure development, is of critical importance to the health of that we have transparency and accountability when it our creative sector. Our tax system generally prioritises comes to equality and diversity in employment in the the use of debt financing, and we are living with the creative industries, so that the public can see for themselves consequences of that today.The interest on debt financing how well we are being served and how organisations is fully offsettable against taxable profits, and of course are implementing diversity and inclusion? that makes it more attractive than equity. But it is risk As noble Lords know, I am passionate about the capital that is required, and that needs to be equally well-being of children and young people and I cannot encouraged by the tax system. The Government’s welcome help but draw attention to the need for children, increase in the level of enterprise investment scheme especially those from poor backgrounds, to be included investment that can be offset against personal tax is a in all aspects of the creative landscape. We must step in the right direction, but a much more significant provide them with every opportunity to take part in, and bolder increase is required if the creative industries be exposed to and develop a love for all things creative, are to raise the level of risk capital they need and can so that they can achieve to their full potential. But the successfully deploy. cuts in the arts are threatening this. Many of our young people feel disconnected from society, from the 12.43 pm world of politics and finance. They are surrounded by war and conflict and overwhelming doom and gloom. Baroness Benjamin: My Lords, I cannot congratulate No wonder they lash out at society. It is the role and my noble friend Lady Bonham-Carter enough on duty of the creative industries to reflect the changes securing this important debate. I also congratulate the and moods of society and include everyone in that noble Viscount on his excellent maiden speech, and I process. This is so important. look forward to working with him as he has already volunteered to be a part of the All-Party Parliamentary However, young people themselves are redefining Group for Children’s Media and the Arts. I welcome creativity as modern technology changes the way they him. create. Graffiti and rap music have become art forms 1369 Creative Industries[LORDS] Creative Industries 1370

[BARONESS BENJAMIN] survey, business leaders cited the provision of arts and in their own right. Online sites such as YouTube allow culture as a critical determinant in investment location them to participate in creative projects independently decisions—even more important than a favourable tax and reach millions across the globe. Computer games regime. are now also part of the modern creative landscape, I am pleased to refer to some recently published spawning an entirely new creative industry that young NESTA work which is the outcome of a two-year people are exploring and taking advantage of. However, collaboration between the Universities of Birmingham more needs to be done. and Cardiff. This work seeks to identify and understand Before I finish I must refer to the decline in children’s the dynamic of regional hotspots in creative excellence UK television production. I believe that childhood and activity. NESTA reinforces the contribution that lasts a lifetime and that exposure to television programmes, the creative industries make of more than £50 billion which stimulate creativity in young children, especially to the economy each year. NESTA identified a special as early as possible, is critical. But, sadly, the percentage case for media production in Cardiff and states: of home-produced children’s programmes is shamefully “Cardiff should … be seen as the locus of a Media Production low, at around 1 per cent according to Ofcom figures. cluster where production for broadcasting is tightly integrated This is simply not good enough. The BBC is virtually with digital media services”. the sole provider of PSB children’s programmes but Such recommendations dovetail in a most helpful way there are only so many writers, performers and directors with the review of the creative industries, The Heart of that the BBC can employ. If we do not sustain a Digital Wales, led by Professor Ian Hargreaves for the vibrant children’s television sector producing dramas Welsh Assembly Government in March last year. and factual programming rather than importing cartoons, we will be squandering the talents of our creative HSBC’s report, The Future of Business 2011, has people and denying our children high-quality, relevant independently identified Cardiff as a possible hub for programmes reflecting their world. Britain’s creative industries. This report also claimed that the UK’s creative industries now represent 6.2 per The whole of our creative landscape is linked together cent of the total economy, a sector which, it states, is like a shimmering spider’s web of interaction, each proportionally the largest of any in the world, with thread supporting and enhancing the other, giving us 2 million people employed across a broad range of relief from tedium, acting as food for the soul and activities from video games to the performing arts. often bringing joy and happiness into our lives. So, in Britain’s leading position is reflected in the fact that these days of austerity and economic fear, the creative over two-thirds of international advertising and branding industries and those who work in them are vital to the agencies have their European headquarters in London. well-being and spiritual health of our nation. Can the Minister assure the House that the Government will I am happy to join the commendations made earlier be creative in their thinking in finding ways to ensure about the BBC. The BBC has taken an important step that we sustain and celebrate our creative industries? in Cardiff by completing construction in September of 175,000 square feet of HD-ready film studios, which will provide a permanent, purpose-built home for four 12.49 pm of its flagship dramas—“Casualty”, “Doctor Who”, Lord Rowe-Beddoe: My Lords, I declare my non- “Upstairs, Downstairs” and “Pobol y Cwm”. Some pecuniary interests as president of the Royal Welsh 500 or more people will be working on site, of which College of Music & Drama, which has some 600 students, some 20 per cent are new jobs. 15 per cent of them from overseas, and as president Equally exciting in these times of very high youth of the Wales Millennium Centre—a workplace of unemployment is the BBC’s commitment to start an 1,000 people. apprenticeship scheme in the next month, in partnership It is apparent from the interest displayed this afternoon with the independent sector and Skillset Cymru. The that many of your Lordships fully appreciate the BBC will select 24 apprentices and provide on-the-job significance of the cultural industries in the UK, measured practical training and experience as well as classroom- in terms of economics, employment, education, cultural based college learning leading to a level 3 certificate in impact and social well-being. It is also pleasing to note creative and digital media. Twelve-month work placements some of the supportive activities that have taken place will also be available with BBC Cymru Wales and with since our last debate on the topic in your Lordships’ independent film companies. House over two years ago. One example has already Finally, perhaps I may say a brief word on been mentioned—the Government’s establishment of Conservatoires UK, another vital factor for employment the Creative Industries Council in September. The within the creative industries. The eight members across economic impact of the creative industries has been the United Kingdom provide world-class training in clearly recognised in that council through the joint music, and two or three of them in drama and dance chairmanship of the Secretary of State for Business, as well. I mention it because a key objective of these Innovation and Skills and a Minister from the Department conservatoires is to produce performers and other for Culture, Media and Sport. professionals across the sector, which is vital to the DCMS figures relating to the third quarter of 2010 continuing global recognition of the quality and reputation state that some 1.3 million jobs are to be found directly of the UK’s creative skills. Their work is not only to be within the creative industries. We also know that the applauded but measured by their importance in terms export of services in 2008 totalled £17.3 billion—some of employability.Graduates from these special institutions 4.1 per cent of all goods and services exported from are among the most successful in terms of their the UK that year. In a 2009 UK Trade & Investment professional engagement. The continued level of funding 1371 Creative Industries[3 NOVEMBER 2011] Creative Industries 1372 by both central and devolved governments is vital to investment in original British production. The commission the ongoing extraordinary contribution made by this refused to acknowledge that there is any public interest small sector. in programme investment. So long as advertisers can continue to enjoy the 12.55 pm cheapest airtime in Europe, through the artificial deflationary remedy imposed 10 years ago, all is well Lord Grade of Yarmouth: My Lords, the noble in the rarefied world of economic market theory inhabited Lord, Lord Rowe-Beddoe, is to be congratulated on by the people at the Competition Commission. By the cramming so much into two-and-a-half minutes. Because way, they also chose to ignore the fact that the Google- time is so limited and my interests both past and dominated internet is now a fully grown, head-to-head present so numerous and duly disclosed, I hope that competitor for advertiser-supported television. Nor noble Lords will allow me to proceed by taking them did it occur to them that sustained investment in all as read. Thank you. British content is also in the advertisers’ long-term In a period of seemingly relentless bad news, my interests. Could the CC have got it more wrong? The noble friend Lady Bonham-Carter is to be congratulated Government must look at the CC’s terms of reference on securing time for the House to discuss, or celebrate, in this market and require that they take account of one precious good news story for our time: Britain’s the public interest in programming investment, and creative industries. If the Chancellor of the Exchequer the new wider online market. Recalibrating the is looking for the elusive G-word—growth—he need competition authority’s outdated remit will pay handsome look no further. As we have heard this afternoon, dividends in jobs and exports. Please spare us one of Britain is enjoying a golden period of creativity and those ludicrously long three-year market review solutions commerce both at home and abroad and in every beloved of economic regulators. single one of the creative disciplines. The other leak in the investment bucket comes with British television is enjoying the most sustained a health warning: it is not for those of a nervous success. Our programmes, programme makers and disposition and may come as a shock to some listeners. ideas and formats are in demand throughout the world All of the free-to-air public service broadcasters currently as never before in my lifetime. This success is the direct have to pay Sky to transmit their billions of pounds result of the investment made by both the public and worth of British hit programmes each year. There is private sector public service broadcasters: BBC, ITV not time today to explain how this comes about, and Channel 4 and Five. The licence fee and the suffice it to say that a lethal cocktail of statute, competition advertising revenues collected or earned by these channels law and regulation, both UK and European, and are invested into British content to the tune of some political and regulatory apathy is ensuring that an £3.5 billion annually. I will restrict my remarks today estimated £15 million a year currently flows out of to some areas of nonsense regulation that threaten UK production jobs and exports and into the coffers and erode this investment. of Sky. In no remotely comparable television market First, a few facts: British television employs more anywhere in the world is this allowed to happen. than 130,000 people and has grown consistently by Since these arrangements were put in place, I estimate 4 to 5 per cent in each year of the past decade. A hundreds—yes, hundreds—of millions of pounds have recent report concluded that Britain spends more per been drained out of UK public service programming capita on original programming than any other country investment and across to Sky. Clearly there is an in the world. According to Ofcom, public service, importance to Sky viewers in being able to watch free-to-air channels contribute 90 per cent of the “Coronation Street” and “EastEnders”, and clearly whole industry’s £4 billion total annual investment in there is an interest for the PSBs in reaching the Sky UK production. This investment is declining, and that audience. So, the simple question for the Minister is: must in part be due to the depressed advertising market why does any money need to pass between two mutually and BBC licence fee pressures. These factors are unlikely dependent media sectors? I suspect the economists’ to reverse, so we must do whatever we can, short of answer would be that it that is all very well in practice, further public intervention, to maximise this annual but it does not work in theory. investment and maintain our world lead. This certainly Fairness demands that this arrangement should be calls for ever greater efficiency, particularly at the neutralised as a matter of urgency so more jobs can be BBC, but also means plugging those leaks in the created, more exports earned, more economic activity revenue stream caused directly by damaging regulation. generated and more wonderful home-grown programmes There are leaks in the investment bucket that are enjoyed by everyone—everyone except, that is, the easily within government’s power to plug. As we heard competition commissioners. Both of the issues to which from my noble friend Lord Black, the first is the I have drawn your Lordships’ attention today, belong competition regime that regulates, in particular, my to that file of free market economic theory that I have former employer ITV.When ITV recently sought to be labelled “Ongar” which, as your Lordships well know, released from the stranglehold of the airtime sales is the station on the Central line just beyond Barking. remedy imposed by the Competition Commission as the price for its consolidation in 2003, the CC found 1.02 pm against it. In the course of the inquiry, I found it profoundly depressing that the commission felt unable Baroness Jones of Whitchurch: My Lords, I thank to engage with the argument that there is any public the noble Baroness, Lady Bonham-Carter, for initiating interest in ITV being free to charge even a fair market this debate. She has been a tireless and vocal agitator price for its airtime in order to sustain and increase its for greater prominence for the arts and has once again 1373 Creative Industries[LORDS] Creative Industries 1374

[BARONESS JONES OF WHITCHURCH] A number of noble Lords have referred to education made a compelling case today. I would also like to add in the debate. There is nothing I have read in the my welcome and congratulations to the noble Viscount, Government’s education plans that leads me to believe Lord Colville, who has demonstrated today that he is they understand the need for creativity in education. going to be a talented and effective new recruit to the Michael Gove prefers formal teaching and a concentration growing band of us who care about the arts. on learning facts and dates. As several noble Lords As I reflected on what I might say today, it occurred have said, the English baccalaureate does not include to me that I had not read or heard much from Jeremy one creative subject: art, design and music studies are Hunt on this issue for a while, so I thought that I sidelined. It was reported in the press at the weekend ought to check. I looked on the DCMS website under that applications to do creative art and design courses the creative industry section and there was nothing. are down 27 per cent, and universities report that There were no speeches or press releases from the many of their humanities courses are under threat of Secretary of State celebrating the arts, no messages of closure. We are in danger of squeezing out the creative congratulation to our film-makers, our actors, our forces that make Britain unique. playwrights, our authors or our artists for their recent It is time that we took a cold hard look at what the successes. There was nothing to welcome the blockbuster UK economy will look like in 10 or 20 years’ time. achievements of exhibitions at our great museums and What will be our unique selling point? What will be galleries, no words of encouragement and nothing to our fields of excellence in the global economy? Many thank the sector for the continuing contribution being of our industries and services can no longer compete made to the economy at this difficult time. with the continuing expansion of the Asian economies. To be honest, I was not surprised because that is What will we have left to sell? We cannot assume that what it feels like on the ground to those of us that take the UK will always maintain its reputation for creative an interest in, and support, the arts. The sector feels excellence in the world. Other countries are waking up unappreciated and unloved. Regrettably, the Secretary to the need to invest in the creative industries, particularly of State has pursued a single-minded agenda of cuts at around design and innovation. It would be all too easy the expense of any other considerations. He was, of to lose our edge in the global market, and we will not course, one of the first Cabinet Ministers to seek the be able to retrieve it. favour of the Chancellor by offering up cuts in his own Meanwhile, for example, we know that the Chinese department of 20 per cent. This has been followed up look upon our culture with respect and admire our by a rushed financial squeeze on the BBC, the axing of heritage and our artistic tradition. Over 100 million the much respected UK Film Council and the closure students are learning English in Chinese schools. A of hundreds of libraries around the country. As we colleague who is a second-hand book dealer says there know, he wants the sector to stand on its own feet, is now a vast demand for English textbooks in China. backed up by private giving where necessary, without Meanwhile, India has the second-highest number of fully understanding how central the arts are to the English speakers of any country in the world. We need future growth of the economy. to capitalise on these trends so that we have something The noble Baroness, in her opening speech, quoted of value to exchange in the global marketplace of the some figures on the creative industries’ economic future. I hope the Government wake up to these needs contribution. There are a number of ways of calculating and demands. this, but even the DCMS website acknowledges that A number of noble Lords talked about needing to they contributed 5.6 per cent of the UK’s gross value avoid shopping lists in the debate, so I have a simple added in 2008 and exported over 4 per cent of the total request—a simple expectation—which is that I hope goods and services. Under the previous Government the Minister will agree to have a word with her boss these figures continued to rise. In addition, undoubtedly about how he might signal to the arts in this country the main motivation for many overseas visitors coming that, belatedly, they are loved and valued again. to Britain is the theatres, concert halls, museums, country houses, festivals and historic buildings. These 1.08 pm visitors bolster our economy and create jobs, not only for those employed directly in the sector, but for the The Earl of Glasgow: My Lords, I too congratulate hundreds of thousands working in hotels, restaurants, my noble friend Lady Bonham-Carter on not only transport and retail outlets. setting up the debate but also her important speech, However, this is not just a debate about visitor which I hope will be followed up or taken very numbers and export successes; it also raises issues seriously by the Government. I also congratulate the about the sort of country we want to inhabit. We are noble Viscount, Lord Colville, who is not in his seat all rightly proud of our cultural history, but a vibrant at the moment, on his maiden speech. It looks as if culture is more than just history—it is about the way he is going to be a great credit to we rather sad number we live now. Our lives are enriched by the artists, of beleaguered hereditary peers—there are not many designers, writers and composers who are working of us. today. As my noble friend Lady McIntosh highlighted, I want to say a few words about the British film these are not born successes but need opportunities to industry, particularly because I bring tidings of good build and develop from small-scale local theatres, galleries, news at a time when there seems to be a diet of bad studios and publishers. They often need grants or news. The British film industry is bucking the trend. loans or funds to help them break into the sector, and In fact, 2011 could be the British film industry’s they need encouragement from a young age to develop most successful year of all time. Already this year, their imagination and creativity. $3.3 million of foreign sales have been achieved, and 1375 Creative Industries[3 NOVEMBER 2011] Creative Industries 1376

£311 million in domestic sales. This has been caused As an entertainment is probably how most noble by a certain number of films that have come out this Lords will think of film. As an industry, of course, it is year. Practically everybody has seen “The King’s Speech”, very important to our economy, which is one reason which was very successful: it won 65 awards, including that we are talking about these things at the moment. four Oscars and seven BAFTAs. It was only beaten by It employs many people. British technicians are widely another British film three years ago, “Slumdog regarded as the best in the word. However, can this Millionaire”, which got eight Oscars and 104 awards. present success really be maintained? That is the important Rather surprisingly to some of us, “Tinker Tailor thing. There have been many false dawns. There was a Solider Spy” is becoming a very successful film. It is time when Colin Welland announced that, “The British surprising to me because I thought that people under are coming!” after the success of “Gandhi” and one or 40 would not understand or be interested in the Cold two other very good films. But then it all went pear-shaped War, but apparently it is appealing to them. with Goldcrest Films, which was once thought of as The most successful British film in Britain this year the flagship of British cinema. is something that I doubt any of us here will have seen, This time, the BFI believes that a successful British called “The Inbetweeners Movie”. It is about a whole film industry is sustainable. After the Olympics, more lot of young people behaving very badly. It is what is lottery money will be invested in British films. Traditionally sometimes called—oh dear, I have forgotten the name and historically, the film industry always does better in now, but there is a certain type of word for that a time of recession. It is currently a success story. particular type of film. It tends to be all about people When there are so few other silver linings on the behaving badly. What is the word for it? I cannot horizon, the Government should get behind the film remember now. industry, as the French Government have always done with theirs. Baroness Benjamin: Anti-social? 1.15 pm Lord Bichard: My Lords, I, too, thank the noble The Earl of Glasgow: No. There is a word for it. Baroness, Lady Bonham-Carter, for allowing and enabling Damn it; I should have written it down on my bit of this debate, and congratulate the noble Viscount, Lord paper but I did not. Colville, on his excellent maiden speech. Anyway, “The Inbetweeners Movie” has made My early encounters with creativity were no more £45 million at the British box office, which is an successful than those of the noble Lord, Lord Bilimoria. extraordinary achievement. Another film, which got My art teacher said that I was the most boring pupil very bad reviews and has been running for two weeks—I he had ever had; I thought that that was a bit excessive doubt whether any of your Lordships have seen it—is at the time. He went on to describe some of my work called “Johnny English Reborn” and, of course, stars as “derivative”; I now realise that that is the biggest Rowan Atkinson, who is incredibly popular. That may insult you can pay to any artist. So it took some be one of the reasons it has already got £17.5 million recovery from that, but I went on to spend several in two weeks. These are quite extraordinary amounts. wonderful years as vice-chancellor of the University It is rare that the British film industry does as well as of the Arts London, and as chairman of the Design this. Council. I learnt a lot from that experience. I learnt, of There is also what they call an art film, which is course, about the economic importance of our creative very depressing and gloomy but very good, called “We industries, not least in London, which is now vying Need to Talk About Kevin”, which came out two with financial services as they most important economic weeks ago. That has already taken £1.5 million in sector. Britain. It is strange and surprising for an art film to I also came to understand the sheer excellence of achieve that. our creative industries, which are quite simply world The most extraordinary film this year is the leaders. Since we rarely mention fashion in this House, documentary “Senna”. I am told that it has made let me mention it as an example. Fashion designers more money than any other feature documentary in like Hussein Chalayan, Paul Smith, Vivienne Westwood, British history. It has already made $3 million, which the late, lamented, Lee McQueen, Stella McCartney is amazing for a documentary. and Phoebe Philo dominate the world of fashion. Noble Lords have already heard, so I am not going I also began to appreciate the way in which our to talk much about it, that British film studios have creative industries define the UK in the eyes of the never been busier; they are doing very well indeed. world. For many overseas, it is what we stand for. I Also, of course, a lot of foreign companies are coming came to understand the huge impact which our creative over to Britain to make films in this country. An industries can have on individuals. I often say that the interesting one with Brad Pitt was happening up in film which changes my professional life was Ken Loach’s Glasgow, which for one weekend suddenly was made fantastic “Kes”. I vowed, having watched “Kes” and into Detroit, which was very strange. Glasgow was the way in which Billy Casper was dealt with by public completely closed down. In 2012, £935 million will be services, that I would never want to lead a public spent in Britain. service that dealt with anyone like that. Of course, we Film can be judged in three different ways. It can be all understand, and I learnt, the huge impact that the judged as an art form, it can be judged as entertainment, creative industries can have on the quality of people’s and it can be judged as an industry. As an art form is lives, transporting them from the mundane to the how I judge it most, as the French have always done. magnificent. In every possible way, the UK would be 1377 Creative Industries[LORDS] Creative Industries 1378

[LORD BICHARD] 1.21 pm poorer if it failed to sustain the success and the quality Lord Shipley: My Lords, I, too, thank my noble of its creative industries. Our competitors and those friend Lady Bonham-Carter for initiating this debate, who admire our country and culture would be astonished in part because it gives me an opportunity to speak if we allowed that to happen. about the impact of creative industries on north-East Yet that is exactly what is now in danger of happening. England; and here I declare my board membership of Art and design education, on which the success of our One North East, which pump-primed quite a bit of it. creative industries is in many respects built, faces a Last Friday, Radio 4’s “Any Questions?” was broadcast perfect storm of initiatives and policies which threaten from Hoults Yard in the Ouseburn Valley, on a tributary its future and, therefore, the future of our creative of the River Tyne in the centre of Newcastle. It used to industries. It is there that I want to focus my attention. be the home of Maling pottery, it then housed the I make no apologies for doing that; it has been mentioned Hoults family removal business, and now it is the heart by several other noble Lords today, but is so important of a major renaissance in the creative industries, with that it bears repeating. If we are honest, in our schools, 50 businesses generating some 400 jobs. The Ouseburn the development of creative skills and the appreciation Valley and Hoults Yard are living testament to the of the creative arts have had a chequered history. potential of creative industries to regenerate old industrial Currently, the renewed emphasis on the traditional areas. Hoults Yard, of course, is part of a more academic subjects and knowledge sometimes seems to buoyant general growth in the north-east’s creative be at the expense of the creative subjects. As others industries which recorded a 37 per cent increase in have mentioned, the introduction of EBacc has caused gross value-added in the five years from 2005 to 2010 many schools to rethink their curriculum, and they no and now contribute £90 million to the north-east’s longer see the creative arts as having a pre-eminent economy. The core creative sector’s growing importance place. Why is it that, in the recently introduced Scottish is reflected in the fact that there are 25 per cent more Curriculum for Excellence, the expressive arts are seen companies and 15 per cent more people employed in as one of its eight curriculum areas? In contrast, in the sector than there were in 2005. Overall, there are England I have heard few Ministers for Education some 6,000 companies in the creative sector in the since the election even advocate the importance of region, with 1,000 now in the core creative sector. creative art education. The review of the curriculum How can this be built on? A good example is based may well see design and technology lose its status as a in the Ouseburn Valley: Northern Film & Media, a compulsory subject. creative industry development agency with the vision to create a strong commercial creative economy in the The position is even more grievous in higher education, north-east by commercialising talent and ideas. To in which hitherto Britain has undoubtedly led the date, it has generated £4 for every £1 of public money world. A series of policy initiatives, which individually invested, and aims to provide the link between talent, might be justified, together pose very serious threats experts and the market using seed investment, leverage, for the future of art and design in higher education. industry expertise and partnership working to make Higher fees for students may be unavoidable, but they an impact in film, television, games, web, mobile and hit art and design students particularly hard. Many music. I hope that experience, and expertise and that who come from state schools and working-class of similar organisations elsewhere in the country, can backgrounds, in addition to the fees, have to bear the be built on, given the establishment of the Creative cost of making artefacts for assessment or funding Industries Council and the Creative Industries Network their final shows. The loss of teaching grants means and their aim to boost growth. that all costs have to be met from tuition fees, which The creative sector in the north-east is part of a barely meet the cost of course delivery let alone provide much wider cultural renaissance. I pay tribute to the investment for the expensive kit that is now needed, Vision of Gateshead, The Sage Gateshead and the such as body scanners for fashion schools and foundries, Baltic art gallery, where recently many thousands of and rapid prototyping equipment. people queued on the first five days to see the Turner Prize exhibition. On the Newcastle side of the river, Finally, the fact that international postgraduate there has been major capital investment in theatres, students are no longer able to work for two years after dance, film, the centre for children’s books, and museums, completing their Master’s course means that Britain is all of which have contributed enormously to changing now a much less attractive destination. Art and design the imagine of Tyneside and its industrial heritage and colleges need those students not just for the money but generate wealth both directly and indirectly. because they bring the rich cultural mix that is so important to successful art and design education. Is it What do we need to do now to increase the potential not ironic that all this is happening just at the time for our creative industries? First, to grow, some firms when our global competition has realised the critical need more help and advice to overcome barriers to importance of art and design education and is investing growth—how to win contracts, how to secure skilled so heavily in those subjects? workers and how to access finance, particularly bank loans and venture capital. The problem with success is that you can begin to Secondly, there is the role of the BBC from Manchester think that it is inevitable; but it is not. Our creative as it moves increasing north. There is clear research industries matter, they depend on the quality of our evidence that the growth of creative and cultural industries creative education, and we are in danger of seriously in Bristol and Manchester has been supported by the damaging that. extent of commissioning by the BBC. I hope we can 1379 Creative Industries[3 NOVEMBER 2011] Creative Industries 1380 ensure that the move to Salford Quays is genuinely There is a thriving small-scale recording scene among accompanied by an increase in commissioning across British jazz musicians with widespread and growing the whole of the north of England, because it could use of the internet to sell recorded music. A different make a very significant difference indeed. kind of jazz venue has emerged, located in a church, Finally, I turn to the importance of the universities library, museum or community centre in response to because they create a strong pool of potential talent. the red tape challenge to pub gigs imposed by the new Joining the needs of companies, particularly those licensing laws. Jazz festivals have also expanded and requiring high-level skills, with the courses that are brought new money. being followed at those universities is extremely important, My noble friend Lord Clement-Jones has been because working together they help to drive successful with his Live Music Bill, which has completed commercialisation and expansion. Of course, many its passage in this House, but the current situation northern cities have large numbers of incoming students. over the licensing of live music, which has such a Indeed, one of the causes of successful regeneration of detrimental effect on young musicians, is utterly confusing. cities across the north of England has been the large Licensing Minister, John Penrose, has described live number of students who come to undertake courses music restrictions as “mostly bonkers red tape” and and then stay on. Getting them to stay in those cities suggested that plans to cut red tape for live music are on graduation, to set up businesses or to join other essential but out of his hands and dependent on businesses makes an enormous difference to the speed consent from the Department for Work and Pensions and extent of growth in those cities. and the Home Office. Creative industries account for some 5 per cent of The only arguable justification for a licensing regime the UK’s economy. The figure is broadly similar in pre-emptively criminalising the provision of live music, parts of the north. It is a bit lower than 5 per cent subject to prior consent from the public or the local across the north-east as a whole, but it is rising. authority, or both, is where there is the potential for a However, it is clear to me that, with proper nurturing, significant negative impact on the local community our creative industries sector, both across the UK and that cannot be adequately regulated by existing legislation. in my region, can grow so much further. This is clearly not the case for the vast majority of small gigs taking place within reasonable hours. It is 1.27 pm gradually becoming clear that the red tape is being retained for small gigs in bars and restaurants under Lord Colwyn: My Lords, I, too, thank my noble the Government’s sweeping “deregulation” proposals friend Lady Bonham-Carter for initiating this debate. published in September. I take this opportunity to remind your Lordships of It would be helpful to have a definitive statement on the significant contribution of jazz to economic, licensing and small venue exemption. Even if the educational and cultural life at all levels. I declare an entertainment licensing requirement is abolished, it interest as co-chairman of the All-Party Jazz Appreciation seems to me that live music licence conditions will in Group. We are hosting the start of the London Jazz fact remain in pubs, bars, restaurants and any other Festival with some live music on the Terrace next premises with an alcohol licence, however small. Such Wednesday. I am also a very occasional player, a conditions often include restrictions on performer patron of the National Youth Jazz Orchestra and numbers, genres, times or days of performance, with a member of the Musicians Union. the onus on the licensee to pay to apply to have these There is an active jazz scene in all major UK cities. removed. It can cost £89 for a minor variation or Musicians with established reputations and young several hundred pounds for a full variation, with the musicians, many with great flair and originality, seek a final decision remaining with the council. The promise serious audience that can understand and enjoy their is to get rid of the red tape. The Live Music Bill of my music. They perform in a variety of settings, from noble friend Lord Clement-Jones represents the only pubs, clubs, arts centres, hotels, ballrooms, village genuine deregulatory measure in the legislative pipeline halls, restaurants and local arts festivals to high-profile for small-scale performances of live music. Earlier this events at the nation’s most prestigious concert venues. year, I asked my noble friend the Minister whether she Many UK jazz musicians have developed international could clarify this situation. May I repeat my request reputations for live performance and have recordings for clarification? that are seen and bought by a worldwide audience. The annual turnover of the jazz sector of the British Every year there are jazz festivals all over the country, music industry is in excess of £88 million. The report many featuring some of the finest jazz musicians in by Jazz Services, as part of its Arts Council development the world. More than 3 million people patronise these project, found that sales of CDs through shops, websites events, with five times that number expressing a definable and at gigs reached almost £40 million, while ticket interest in jazz. sales for jazz concerts and festivals were worth While jazz continues to attract these audiences, £22.5 million. That makes it an important creative 80 per cent of jazz musicians earn less than £25,000 a industry and one that would benefit from an year. This is not helped now by the current economic understandable licensing policy. climate, when there seems to be an increasing public reluctance to pay for music. Yet falling CD sales in a 1.33 pm download culture are having a smaller impact on jazz income than might have been expected, and ticket Lord Macdonald of Tradeston: My Lords, as I recall, sales and public and private subsidy have all showed the term “creative industries” was first coined by the modest but significant increases. new Labour Government back in 1997 to define activities 1381 Creative Industries[LORDS] Creative Industries 1382

[LORD MACDONALD OF TRADESTON] Glasgow Caledonian University is the first Scottish that deserved strong support. The subsequent growth university to open a campus in London. Our postgraduate over the years until 2010 was, I believe, among the applicants told us that they liked the creative courses finest achievements of Labour in power. No doubt that we offer in fashion, marketing and finance but this debate—I congratulate the noble Baroness, Lady that they were also irresistibly attracted by the lure of Bonham-Carter, on initiating it—will help make the London, with its unique cluster of creative opportunities. measure of Labour’s success more familiar to your Already our overseas applications surpass all expectations. Lordships. That is a small benign example of the convergence of The creative industries now provide more than 2 million universities and creative companies in the digital economy jobs and their growth rate over the past decade has promoted by my noble friend Lord Hollick. been nearly twice that of the economy as a whole. I hope the Government come to appreciate all the Indeed, Labour’s legacy is that the UK now has the complex factors that have helped make the UK’s creative largest creative sector in Europe, and perhaps the industries so successful. I urge the Minister to ask the largest of any country in the world relative to GDP. Government’s Creative Industries Council to move to Yet what we see now is that success being threatened repair the damage being done across so many areas of by cuts across our creative industries: witness the cultural activity. My concern is not just for growth and 20 per cent cuts imposed on the budget of the world’s jobs but for the enrichment that has made life for most respected broadcaster, the BBC; the abolition of ordinary people so much more stimulating and enjoyable the UK Film Council; the failure to incentivise the than it once was in that rather dreary Britain in which video games sector; the cuts suffered by the Arts somanyofusgrewup. Council and the lack of progress on the protection of intellectual property in our creative industries. 1.38 pm Like the noble Baroness, Lady Jones, and other noble Lords, I fear that the foundations of creativity Baroness Randerson: My Lords, we should do this are being undermined in our schools. In schools the more often; that is, spend three hours talking about Conservative focus on so-called traditional subjects the creative industries. Indeed, we could spend three will be at the expense of more socially useful, creative hours speaking about each of those creative industries and cultural subjects. Does the Minister recognise the given their importance to our economy. Many noble transforming role of creative activities in encouraging Lords have talked about the economic importance of the assimilation of many young people from the sector. It is worth pointing out that the CBI disadvantaged communities into the mainstream of predicts that by 2013 the sector will employ more British life and culture? This educational process has people than the financial services industries, although brought great vitality, breadth and diversity to our I imagine that the average rate of pay might be slightly hugely successful cultural sector, yet in higher education lower. government reforms will hit the arts and humanities The term “creative industries” came to prominence hardest. Design and media courses will suffer, especially at the time of the Tony Blair premiership. I am pleased in those universities in deprived areas which recruit that the noble Lord, Lord Smith of Finsbury, will from lower-income families. These are not policies speak in the debate given the contribution that he that encourage our creative industries. made to this sector at that time. Creative industries are However, the Government deserve credit for investing a very broad church. It is the strength of the creative in success in one sector of great significance—the industries that they are such. From advertising to digital economy. We know the astonishing success of fashion and design and from publishing to the arts the digital cluster in California’s Silicon Valley. Now and music the contrasts within the sector are unlike Britain’s digital businesses are being encouraged to any other sector of industry and that is its strength. It cluster just next door to London’s most famous existing means that when one sector is not doing so well, cluster—that of financial services in the City of London, another industry will still be motoring on very well which is beleaguered at present but still of great importance indeed. to the UK economy and world markets. As befits a One of the advantages of the creative industries is truly global city, London also has other creative clusters that they are often not capital intensive and it is of international renown in television, journalism, therefore relatively easy to establish a new business. publishing, advertising, marketing, performing arts, Indeed, the sector is dominated by SMEs, although fashion, video, software and digital companies—a some sub-sectors are the exception to that. Publishing, cluster of creative clusters. for example, involves very large businesses. Creative The Government’s commitment to the capital’s digital companies of similar types tend to cluster together to economy is through its East London Tech City initiative, feed from each other and to establish concentrations whose hub is Old Street “Silicon Roundabout” in of specialised skills. When I was Minister for Culture Shoreditch. The initial signs are positive for Tech in Wales for three years, I recognised the immense City with 170 start-up companies attracted last year, potential of the creative industries in a country which 340 start-ups forecast for this year and a new Google continues to suffer from the decline of its manufacturing. headquarters planned at its heart. Oddly enough, as As a result I produced the first strategy for Welsh Chancellor of Glasgow Caledonian University, I take culture and the creative industries called Creative Future. a particular interest in Tech City and its adjacent That was as much about economic development as creative clusters. Indeed, we have our own start-up in national cultural identity. I wish to pay tribute to the Tech City. Yesterday, Her Royal Highness the Princess tremendous contribution of the noble Lord, Lord Royal launched our new London campus in Spitalfields. Rowe-Beddoe, to the achievements that we had following 1383 Creative Industries[3 NOVEMBER 2011] Creative Industries 1384 that strategy. The noble Lord, Lord Rowe-Beddoe, has “We define the creative industries as businesses that ultimately spoken about the importance of the creative industries seek to make a profit through the sale of something that is based to Cardiff but it is important to emphasise that Cardiff on an original creative idea, and the surrounding businesses that has the largest concentration of media employment enable this”. outside London with the big broadcasters BBC, ITV The Demos report tries to draw a distinction between and S4C, of which your Lordships have heard a great what it terms “creative businesses”, such as Studio deal recently. We also have a cluster of content-driven Lambert which makes television shows to sell at a providers, including in animation, design, gaming, TV profit, and “creative organisations”, such as the National production, film and music. The Drama Village has Theatre. It quotes the owner and designer of a fashion been mentioned. It is one of the interesting pastimes business as saying: of citizens of Cardiff to watch “Doctor Who” in order “You build a company because you have a vision but you also to spot the streets they know masquerading as being want to make money out of it … If you don’t—there is no point from another world. The important thing is that there in doing it”. are 7,000 workers in Cardiff engaged in the media sector. That is 3.5 per cent of the workforce and it is That is a long way from the belief of many artists, growing rapidly. including fashion designers, that their work is the With so many of the creative industries heavily prime consideration irrespective of financial gain. dependent on IT, it is a major problem in Wales that It is useful at this moment in time when there broadband speeds are still so poor across much of the appears to be a crisis in the way the political sphere country, as indeed they are in Scotland. I draw noble treats the arts to take a look at the terminology that is Lords’ attention to the report out this week from being used by both the Government and the Opposition Ofcom on the broadband network which has highlighted in respect of the arts and the creative industries. I have this problem of very low 3G speeds in Wales and long held the belief that the worth of art is not Scotland. I urge the UK Government to work closely through exchange into money or art for art’s sake, with the devolved Administrations to overcome these which is an insular argument, but that the artist’s work problems. Throughout the world the ebb and flow of is itself the contribution to society. What, then, is the economic prosperity depends in large part on the relationship between art and the creative industries? speed with which each country can seize the technological Do this Government see the two terms as interchangeable initiative. The economic prize goes to the area which or is “creative industries” a blanket term that contains, picks up the newest technology and runs with it, so it or has perhaps even subsumed, the arts? Does the new is vital that we stay ahead and lead the field. Our video shadow Culture Minister Dan Jarvis’s repeated use games industry, which has been mentioned by several yesterday on his blog of the term “arts and cultural noble Lords, is the largest in Europe with a projected sector” signal a differently nuanced approach from the growth of 7.5 per cent over the three-year period Opposition? After all, “creative industries” was a term ending in 2012. It has many thousands of highly which emerged partly in response to the need to skilled jobs and 80 per cent of employees in that democratise the arts and the battle between high and industry are graduates. But there are still problems low art is now largely over. These are legitimate questions. with the skills that our young people are being provided David Cameron has pledged to help the creative industries with not being relevant to that industry. I repeat what which Demos defines as “strongly market-orientated”. many noble Lords have said about the importance of This is happening through Creative England. But he computer science courses—not standard office-based has not pledged to help the arts unless they are prepared IT courses but courses involving programming and to become businesses and creatives. I say this with software skills—up to and including university level if great respect for the significance of the commercial we are to stay ahead. sector. It is impossible to seal off the creative industries Finally, I wish briefly to mention the importance of from the significant background story of continuing providing good finance for these industries. They are cuts to the arts. As ever, it is outside London where the not, as Demos has pointed out, risky businesses any cuts are felt most. The noble Lord, Lord Shipley, has more than those in any other sector of the economy. pointed out that the Baltic in Gateshead has had huge crowds to see the Turner Prize exhibition. Entrance to 1.44 pm the exhibition is free and that is an investment in the future. That prompts me to ask the Government: are The Earl of Clancarty: My Lords, I, too, thank the they still committed to free admission for the national noble Baroness, Lady Bonham-Carter, for initiating museums, considering that the National Maritime this important debate. I very much enjoyed the excellent Museum continues to charge for some of its sites? and passionate maiden speech of the noble Viscount, Lord Colville. The noble Lord, Lord Clement-Jones, The distinction should be kept and preserved between and the noble Baroness, Lady Randerson, mentioned those art forms which are inherently commercial and the Demos report, Risky Business, on the creative those which are not commercial—either because industries, which has just been published. The title is they are not yet commercial or because they never slightly ironic since the report compiled by researchers should be commercialised—whether we are talking close to government and with an introduction by Ed about the BBC or small performing companies. The Vaizey seeks to puncture the idea that creative people non-commercial, subsidised arts, when properly funded, are primarily preoccupied by their art to the exclusion provide a public space or arena, both geographical of a concern for business. Consequently, Demos gives and mental, in which the public meet and where artists a stronger definition of the creative industries than are able to experiment and have the right to fail, as DCMS in 2001: Julie Walters pointed out in the Guardian this week. 1385 Creative Industries[LORDS] Creative Industries 1386

[THE EARL OF CLANCARTY] out, the creative economy represents a larger percentage But if we remove this non-commercial component of of GDP in the UK than anywhere else in the world. It the landscape we greatly narrow our horizons and is twice as big as its nearest competitor in Europe. impoverish the culture as a whole. Paradoxical as it may seem, the advertising sector is in It is true that the success of the commercial creative many ways an unsung hero of the UK creative economy. industries depends, and has depended in the past, on Its products are highly visible but the industry itself is the subsidised arts and other areas, as countless rock often not. This is in part perhaps because the industry stars and fashion designers have confirmed. A good has a strong tradition of self-reliance and self-regulation example of this creative symbiosis is the hugely and does not attract or seek public subsidy. commercially successful Frieze Art Fair started in 2003, which was made possible only by the opening of In fact, the Secretary of State for Culture, Media Tate Modern. Tate Modern has also benefited from and Sport addressed a gathering of senior advertising this relationship, not least through purchases from the people recently and spoke eloquently and forcefully fair. By the same token, recent cuts to the subsidised about the importance of the creative industries without sector, such as S4C, have resulted directly in 10 per once mentioning advertising itself. Advertising is a cent cuts to the staff of Boomerang, one of the largest driver of growth in the creative economy. Its gross independent production companies in Wales. value added—at around £7.8 billion in 2008—was bigger than the film, TV, radio and designer fashion I want to make it clear that my defence of a sectors combined, and does not include the multiplier subsidised sector for the arts is not a rearguard defence effects of indirect and induced economic impacts. of old technology opposed to new. The great majority of artists, as the Design and Artists Copyright Society Other than the public purse and the BBC, if those backs up, strongly supports the proper teaching of can be said to be two different things, the advertising ICT in schools, as the noble Lords, Lord Puttnam and industry is the single biggest funding stream for the Lord Willis, passionately spoke to during proceedings core arts, the film production and post-production on the Education Bill last week. The Government also industries and the cultural industries such as commercial need properly to reassess their commitment to the TV and radio. According to the Institute of Practitioners teaching of the arts and creativity at both school and in Advertising’s Bellwether report last month, every higher education level, a topic that is worthy of a year around £30 billion of marketing and media money debate on its own. Whatever money the Government circulates around the UK economy. For every £1 spent, allow for the newer industries will in the end mean company turnover increases on average by £3 to £5, much less if those industries are not supplied with and profitability by £1.50 to £3. These are truly remarkable a workforce that is untrained and unknowledgeable. figures and show clearly the key economic significance Many of the most interesting artists of today are and contribution of the UK advertising industry. able to arm themselves with a panoply of techniques. It is true, too, that the art, music and fashion scenes Advertising in the UK has another less direct effect. have been hugely invigorated by students from abroad. It provides access to corporate brand budgets, which Wolfgang Tillmans, Tomma Abts, both of whom are can be and frequently are directed towards the funding Turner Prize winners, and more recently Thomas Zipp, of music venues, film and book festivals and independent are just some of the remarkable artists who spring to programming. Without advertising, ITV and Channel mind. The current Government’s insular attitude towards 4 would not be in business, and nor, perhaps slightly foreign students may well, unfortunately, change this. more equivocally, would the Millennium Dome. Of course, the diversity, range and freedom of our press would be directly threatened. All this is to speak about 1.51 pm the quantitative aspects of our advertising industry. Lord Sharkey: I, too, thank my noble friend Lady The qualitative aspects of the industry are just as Bonham-Carter for providing the opportunity to debate important, perhaps even more important. I am not such an important issue, and I congratulate her on her entirely impartial here and should perhaps declare a forceful and insightful analysis of the creative industries by now somewhat historic interest. I have spent 30 years and their contribution to the life of the United Kingdom. of my commercial life working in and around the I will focus my remarks on one particular sector of advertising industry. I am proud to have been managing our creative industries: advertising. In April this year director of Saatchi & Saatchi here when it was the Alexandra Albert and Dr Benjamin Reid produced a largest advertising agency in the world and producer report under the auspices of the Work Foundation, of the highest quality creative work. But even allowing entitled The Contribution of Advertising to the UK for a slight partiality, I believe it is true that we have Economy, a creative industries report. The executive here in the UK one the two best advertising industries summary of this report says, in part: in the world. External rankings consistently put the “The advertising industry has been a UK success story for US or the UK in the No. 1 or No. 2 positions. Given much of the 20th century, developing as a base for globe-spanning our relative sizes, this is a truly astonishing achievement. organisations, and taking a central role in the broader creative In the UK, the advertising industry is a truly world-class industries sector. The 21st century advertising industry makes a industry. major contribution, both directly and indirectly, to the UK economy”. The figures, as we have heard this morning, bear The advertising industry has undoubtedly been very that out. The creative industries as a whole represent successful in the UK, but as with other leading creative 8.7 per cent of all UK businesses and employ 1.3 million industries it faces new and very fierce challenges. The people. As the noble Lord, Lord Macdonald, pointed Work Foundation report notes that: 1387 Creative Industries[3 NOVEMBER 2011] Creative Industries 1388

“It is likely that the global centre of advertising creative and If the Chancellor of the Exchequer is looking for production gravity will continue to shift away from the western where the growth in the economy is going to come countries and towards the BRIC and SE Asian markets”. from in the next few years, this is above all the area The industry is alive to this challenge and so I believe, that he should be looking at. Over the last 20 years, the very largely, are the Government. creative sector has consistently grown at a faster rate The industry is proactive in positioning itself as a of growth than the economy as a whole, and that is creative and innovation hub to the largest and fastest still the case. The first and most important thing that a growing companies in emerging markets, with a view Government can do is recognise that fact and its to encouraging them to take their brands global. For importance. example, the Institute of Practitioners in Advertising Two other things are also vital and both have been has just launched a new consumer R&D service in touched on in the course of our discussions. The first China. Speaking of China, the number of IPA member is the importance of education for the success of the agencies with offices in China has risen from 23 to creative sector. That starts with the nurturing of creative 62 in the past three years. With the active support of spirit in our schools. That does not just mean the the DCMS and UKTI, the industry runs trade missions chance to absorb, enjoy and develop a passion about to promote our skills, our expertise and our companies. dance, drama, the visual arts and the richness of our There was a mission to China at the end of September, museums, film and music; it is also about giving every and there will even be a mission to Silicon Valley and pupil in our schools the chance to play music, to direct Hollywood, which is due to leave next week. a play, to make a movie, to be part of the creative The UK is a collection of world-beating industries. process and not just the enjoyment of the creative Our future prosperity will depend more and more on process. our ability to sustain and develop our creative leadership We need to ensure the development of skill and in advertising as in all creative industries. As someone talent is taken forward not just in our schools but who has dealt professionally with creative people for post-school at higher education and further education 30 years or so, perhaps I may close by saying to my level. If we are not training the new generations to noble friend the Minister that I have always found it become the directors, the designers, the lighting specialists, useful when dealing with creative people to bear in the wizards at special effects, we are not going to have mind two key principles: first, be very supportive, these industries to cherish at all in the future. Education especially at an earlier stage; and, secondly, keep well also needs to consider how to encourage and assist the out of the way. people who are developing their creative talents and skills to learn business skills as well, because they have to be able to become entrepreneurs as well as hone 1.58 pm their creativity. Lord Smith of Finsbury: My Lords, I warmly The second hugely important area in relation to the congratulate the noble Baroness, Lady Bonham-Carter, creative sector is the protection of intellectual property on securing this important debate, which has led us value. This is, after all, where the economic value, the into a fascinating and illuminating discussion from all creation of wealth, in these creative sectors comes parts of the House. I have a especial word of from. The creator has to be properly remunerated for congratulation for the noble Viscount, Lord Colville, their talent and skill. I cannot emphasise too strongly on a very moving and interesting maiden speech. I how important this is. It is especially important should, of course, note a number of interests: I am in the digital world where online communication is chairman of the advertising standards authority, a simultaneously the creator’s best friend and potential non-executive board member of Phonographic foe. We need to ensure that value can be properly and Performance Ltd, and the person who has been asked legitimately realised and returned to the creator. That by the Government to lead the review of policy on the is why I urge the Government to press ahead urgently film industry that is currently under way. with the implementation of the Digital Economy Act. When I became Secretary of State at DCMS in The Hargreaves report was all very well—Hargreaves 1997, and looked at the creative sector of the economy— got some things right and some things wrong—but we those activities that depend for their economic value must not forget the Digital Economy Act in the process. on the product of individual creative skill and talent, The creative industries add enormously to the wealth ranging from music film and the high arts at one end of the economy and to the richness of our lives. That through to advertising, architecture, design and many needs to be recognised not only in the heart and soul other enterprises at the other—I sensed that this was a of DCMS—and I know the noble Baroness absolutely body of activity that was not just of great aesthetic understands this—but in the heart and soul of the importance but of huge economic importance to the Secretary of State for Business, the Secretary of State country. I discovered, however, that no one knew for Education, the Chancellor of the Exchequer, and the exact extent of those industries. No one knew what the Prime Minister as well. the trends or challenges were or what was happening to them, and more importantly, the rest of Government 2.04 pm did not acknowledge that they were important. Lord Stevenson of Balmacara: My Lords, I thank The picture has of course changed since then. A lot the noble Baroness, Lady Bonham-Carter, for securing of work from a succession of Ministers and departments this debate. As the noble Lord, Lord Grade, quipped, in both Governments has been put into establishing at a time of bad economic news it is a chance to the importance of the creative industries, but perhaps celebrate a success story, and not just in TV. As the that importance is still not recognised sharply enough. noble Baroness, Lady Randerson, said, the time has 1389 Creative Industries[LORDS] Creative Industries 1390

[LORD STEVENSON OF BALMACARA] comparisons are complicated, Eurostat data appear to passed far too quickly and we could have gone on for confirm that the UK is now the European leader on much longer to discuss this. I also add my congratulations most indicators, while UNCTAD data show that this to the noble Viscount, Lord Colville, on his excellent lead extends to the rest of the world, with the UK maiden speech. I think it is one of the best of the year. currently the second world exporter in cultural goods It was gracious and wove personal experiences with and services after the USA, which is an impressive wider perspectives, elegantly moving from a wide shot achievement. However, as has been said in this debate, to a tight close-up when he pressed the case for looking the UK’s position is under threat, with emerging again at internships and the whole question of cherishing economies in particular showing fast growth in all our talent in this sector. global sectors as a result of the major priority they It is about two years since your Lordships House gave to becoming new centres of growth for these last discussed this topic, when my noble friend Lord sectors. In addition, the UK is vulnerable in globally Bragg introduced a similar debate. As then, we have mobile sectors, such as film, and in areas where world had a very high quality discussion, much enhanced by leadership rests elsewhere: for example software, which the contributions from noble Lords with direct experience remains dominated by the US, and specialist sectors in these industries, as well as from those with a passionate such as fashion. engagement with the sector. The main themes that Some noble Lords spoke about the wider economic seem to have emerged this morning are: a continuing and social challenges facing our country, and one of concern to improve skills and training; worries about the main themes that emerged this morning was the the way creativity is being squeezed out of the core need for an economy in the UK that looks and feels curriculum, with particular reference to the EBacc; a very different than what we see today, with more decline in the arts and creative courses being taught in opportunities for more people to get better jobs in higher education because of the cut in the teaching good companies. There is every reason to believe our grant; the need for an appropriate solution to stimulating cultural industries can play a major part in this finance for these high risk businesses, not that they are recalibration. If that is to happen, we need an active any more risky than others, but the risk is of a different intelligent Government who support an industrial strategy quality—it is a “hit”industry that needs specific attention; to foster good, high growth, high productivity companies how deregulation of the BBC and ITV might help; the that create great jobs. The challenge, and the opportunity, need to preserve diversity on and off screen; the need is significant. We need to equip ourselves with an to preserve live music and the performing arts more understanding and commitment to those things that generally as the seed-bed of all these creative industries; will drive creative, competitive success in a global and, as we have just heard, concern about preserving context. and ensuring that the IP that is created is well used and able to provide a return that is appropriate for its The last Government can be proud of their record investment. on the creative industries. They recognised that the creative industries would quickly become an increasingly My noble friend Lord Macdonald of Tradeston vital source of skilled jobs and economic growth. The raised the question of when the term “creative industries” coalition Government have said repeatedly that they was actually coined. It was certainly not around when view the creative industries as key drivers of jobs and I was working at the British Film Institute in the 1980s growth, but on a number of critical issues they have and 1990s. It seemed to arrive fully formed in 1997, so been accused of failing to respond to the challenges perhaps the then incoming Secretary of State, the threatening the future strength of the sector. noble Lord, Lord Smith of Finsbury, had more to do with it than his natural modesty permitted him to say. I will give three or four examples. The announcement Success has many parents so we will probably never of a creative industries council in the last Budget was know, but by any measure the UK creative industries welcomed, but it remains to be seen whether it is just a grew considerably as an industrial sector between talking shop or a focal point for action in areas other 1997 and 2010, sometimes growing at twice the rate of than training and skills. This seems to be the one area the national average. In London and in several other that is making good progress, although it is hampered—as major cities such as Cardiff, Manchester and Salford, the noble Lord, Lord Clement-Jones, said—by the as we have heard, it has become a significant economic fact that there are two sector skills councils operating sector in its own right and is at the forefront of the in a limited space when perhaps Skillset should be in UK’s international competitiveness. Data show that the lead. exports of services for radio and TV, advertising, Why has there been such a delay in the rollout of architecture, film, video and photography doubled universal broadband and a lack of progress in between 1997 and 2007, and almost quadrupled in the implementing the Digital Economy Act? As many case of publishing and software, computer games and noble Lords argued, intellectual property is at the electronic publishing. Other figures are just as impressive. heart of all that the sector has to offer and do. It must The sector as a whole saw an average GVA growth of be supported. The Government’s higher education 5 per cent per annum over that period, with computer plans are resulting in significant cuts in art and design games and electronic publishing rising annually at an education, and the changes to the EMA are denying average of 9 per cent, representing an increase in GVA many young people the chance to develop education of nearly 200 per cent over the 10 year period. and training opportunities linked to the creative industries. Mention has also been made of the fact that the Britain’s immigration rules are making it difficult to UK has a strategic international lead in the production bring in artists and performers to study, perform and and export of creative goods and services. Although teach. Something must be done about this. 1391 Creative Industries[3 NOVEMBER 2011] Creative Industries 1392

There must be some doubt about whether current Perhaps I may especially commend the maiden government policies will nurture talent, foster growth speech of the noble Viscount, Lord Colville. It was and widen opportunity in the cultural industries. Clearly, delivered with great modesty. He highlighted the issue DCMS cannot do this on its own. It is a cross- of unpaid internships, which is certainly a pressing departmental challenge that requires bold leadership challenge for these industries. The key will be to find a from DCMS. As the Minister is about to respond, balance between making these valuable opportunities perhaps I may suggest that these are the key questions available to young people and making certain that that she and the department should address. they are not exploited and that these are genuine The skills required for the creative economy are learning experiences. It is already clear that your Lordships’ changing. We must assess the suitability and impact of House will benefit from the noble Viscount’s wide current schools policy for the creative industries. Can experience in areas ranging from his work as a BBC DCMS re-engineer the relationship between our education producer on “Newsnight”in Moscow during the collapse system and our support mechanisms for arts and of the Soviet Union to his current projects, one of culture so that we grow and nurture talent for the which is a programme about the physics of the climate. creative economy? The UK has a strong talent base We wish him luck and look forward to hearing him but lacks some of the technical and business abilities very frequently in this House. required for a digital era, particularly if we want to see My noble friend Lord Grade, in his eloquent and more microbusinesses grow. Can the DCMS bring naturally well informed speech, raised an important forward an apprenticeship scheme, building on the point about television advertising and the continuing work of the BBC in Wales that was described by the competition remedy known as contract rights renewal. noble Lord, Lord Rowe-Beddoe? It might be tailored CRR has formed a major part of the recent more appropriately for companies operating in the Communications Select Committee’s inquiry and creative economy. subsequent report on the regulation of TV advertising, A major challenge for public policy is a shortage of which we will debate later today. I hope that my noble risk capital for creative companies in the content friend might be able to speak in that debate as he sectors. There will be inevitable consequences for UK knows so much about the subject. My noble friend competitiveness if we fail to address those issues also raised the issue of “must carry”. I relished the successfully.My noble friend Lord Hollick drew attention reference to Ongar, which was part of my old Essex to the predisposition towards debt finance. This structural South West constituency, being “one station beyond weakness prevents us from acquiring or owning the Barking”. A number of responses to the Secretary of economic benefit of creative output, and confines us State’s open letter on the communications review raised often to service company status. Will the DCMS work the issue of transmission charges paid by the BBC and with the Treasury to ensure that appropriate new other PSBs to satellite operators. No doubt we will schemes to bring in risk capital are introduced, and to consider the issue in the communications review Green ensure that the current support through the tax system Paper. is not curtailed by the threatened introduction of new I listened with great interest to my noble friend eligibility rules? Thirdly and finally, what can DCMS Lord Black’s concern about the local press. The question do to widen the UK creative talent pool? Without we must consider is whether one reference decision by that, there may be significant detrimental impact in the Office of Fair Trading is enough to undermine the the longer term on a sector that prides itself on the whole merger regime. Obviously this appears not to generation of diverse creative content. work for local newspapers, and I believe that the The Government need a coherent strategy for the answer should be no. creative industries. They are a key sector for jobs and growth, and the UK needs a framework that underpins The noble Lord, Lord Smith, answered many noble confidence, investment and innovation. British young Lords’ questions regarding the film industry’s role people in the creative sector have extraordinary talent. within the creative industries. We are grateful to him We must make it as easy as possible for them to for chairing a body with an eight-strong independent flourish, if only to aid growth. I look forward to the panel of industry experts. I will come back to further Minister’s response. points made by the noble Lord later. In answer to the question of my noble friend Lord Clement-Jones about economic contribution, the UK’s 2.13 pm creative industries are part of the digital economy to Baroness Rawlings: My Lords, I start by adding to which we can look with confidence for growth in the sentiments of all noble Lords who spoke in future. In these challenging economic times, that makes appreciation of my noble friend Lady Bonham-Carter them particularly important. I will mention later what having given us the opportunity to discuss the role of the Government are doing on this. However, the figures the creative industries in the United Kingdom. As we speak for themselves: the creative industries contribute heard, not since the debate on the same subject in June 5.6 per cent to the UK economy as a whole—around 2009, secured by the noble Lord, Lord Bragg, have we £59 billion a year; 1.3 million people are employed been able to debate at length the importance of their in creative jobs; and UK creative exports were worth impact. In 2009, it was clear that there was a vast £17 billion in 2008, which represented around 4.1 per knowledge and commitment in your Lordships’ House; cent of all goods and services exported. Over the today, it is evident once again that your Lordships are past decade, the creative industries have grown faster as passionate and committed as ever to the creative than the rest of the economy. Recent forecasts by industries and their contribution to the UK economy. PricewaterhouseCooperssuggestthattheUKentertainment 1393 Creative Industries[LORDS] Creative Industries 1394

[BARONESS RAWLINGS] Lady Jones, felt a need to criticise the Secretary of and media market will grow by an average of 3.7 per State. Perhaps she needs to improve her computer cent per year for the four years to 2014, compared with skills as both the Secretary of State and the Minister 2.6 per cent over the same period for the economy as a Ed Vaizey are constantly producing new ideas and are whole. on the wavelengths. As our Secretary of State Jeremy My noble friend Lord Fowler asked whether BBC Hunt set out in his superb speech at the Royal Television Worldwide should be considered in the forthcoming Society conference this year, which is on the web, our communications Green Paper. We are discussing this first priority must be to capitalise on the extraordinary and I hope that the Green Paper will be produced opportunity presented by our digital and creative industries soon. It will look at whether any change is needed to to drive economic growth. the law. The Communications Act 2003 has held up The noble Lord, Lord Bilimoria, wanted to know well, but we need to give it a proper check-up, which whether the Government had given this area top priority. will take into account works such as Hargreaves and I can say to him yes. In March this year The Plan for the Leveson inquiry. Growth included a package of support for the digital I would like to outline just a few areas where the and creative industries. These measures are designed UK has demonstrated its particular strengths. The to achieve strong, long-term, balanced growth that is status of English as a global language has made more evenly shared across the country and between the UK a world leader in creative content, giving UK industries. The Government have established the Creative producers a huge advantage in global markets. This is Industries Council to be a voice for this most important illustrated by the strength of our publishing and music area, and to be a place where Government and council industries, and the value of TV programming, both at members, who are leading figures drawn from across home and especially in export sales. In 2010, the UK the creative and digital industries, can work together strengthened its position as one of the only two net to tackle barriers to growth facing the sector. exporters of music, growing its trade balance three times faster than the US. British talent is behind many My noble friend Lady Benjamin stressed the challenges iconic, globally successful games titles too. I am told identified by the council, including lack of access to that these include “Grand Theft Auto” and the UK finance, skills shortages, the need for better access online video game “Moshi Monsters”, now with 50 million to export markets and the need to improve the intellectual users and one of the fastest growing children’s property regime. I know of the noble Baroness’s entertainment brands in the world. preoccupation with children’s programmes and I note Among other topics, my noble friend Lady Randerson, her concerns. We have discussed this frequently and no the noble Earl, Lord Clancarty, and the noble Lord, doubt we will come back to it. The council has established Lord Bichard, mentioned the importance of fashion. I working groups on skills and access to finance as a agree with them. The UK is at the cutting edge of first priority and it will report in 2012, so I agree with international fashion and this year industry forecasters the noble Lord, Lord Bilimoria, and the noble Lord, named London Fashion Week the number one fashion Lord Hollick. week in the world, overtaking Paris, New York and My noble friend Lord Clement-Jones rightly lays Milan. The noble Lord, Lord Bichard, referred to emphasis on skills. In tandem with the skills working Vivienne Westwood. She even designed the graduation group of the council, a number of actions have been robes for King’s College, London. taken forward to improve skills in the digital and Britain is one of the few countries in the world to creative industries. These include identifying 360 science, have not one but five dedicated PSB broadcasters: technology, engineering and maths—STEM— BBC, ITV, Channel 4, channel Five and not forgetting ambassadors from the creative and digital industries, S4C. British television produces programmes that are and encouraging graduates from the sciences, technology popular around the world, such as “Doctor Who” and and maths to seek out careers in these sectors. “Downton Abbey”. My noble friend Lord Razzall talked of our success I have great sympathy with the worries of my noble in Cambridge. He is right about our many creative friend Lady Bonham-Carter and of several others industries there. As we heard on the “Today”programme about not including the arts, such as music, and computer this week, ARM Holdings, a global company with its sciences in the EBacc. This is a matter for the Education headquarters in Cambridge, is the world’s leading Secretary, but it does not stop these subjects being semi-conductor intellectual property supplier and as taught in schools. such is at the heart of the development of digital My noble friend Lady Randerson and several noble electronic products. We need consistently to work to Lords were concerned about superfast broadband. maintain these successes, and continue to retain our Superfast broadband is a key business growth enabler, share of the growing global market, estimated by and £530 million is being invested over the next four UNCTAD to be worth nearly $600 billion, for creative years in order to create the best superfast broadband goods and services in an increasingly competitive world. network in Europe by 2015. We heard the other day I can reassure the noble Baroness, Lady Jones, that that one of Italy’s problems is that it has fallen behind the Government and especially the Secretary of State with broadband compared with what we are doing fully understand the importance of the arts, both here. The Government have taken further action towards culturally and economically. I suggest that the Arts the goal of making certain that all businesses in enterprise Council’s settlement was not bad in the current zones have access to superfast broadband by 2015, circumstances. I am sorry that the noble Baroness, with Broadband Delivery UK considering and addressing 1395 Creative Industries[3 NOVEMBER 2011] Creative Industries 1396 where there are gaps in local broadband plans. I know by my noble friend Lord Fellowes, winning four Emmy this is an area in which the Secretary of State is awards, the Frieze Art Fair bringing the world’s collectors particularly interested. to London or the film “The King’s Speech” sweeping The noble Lord, Lord Rowe-Beddoe, mentioned the board at the Oscars. the importance of the Hargreaves review of intellectual My noble friend Lord Glasgow and other noble property and growth, which set out recommendations Lords asked about the film industry. It is a cultural for how the UK’s intellectual property framework can achievement of which we should be proud. It illustrates further promote entrepreneurialism, economic growth the strength of the UK’s creative industries. and social and commercial innovation. The Government The noble Lord, Lord Stevenson, asked about games published on 3 August its response to the Hargreaves tax relief. I will write to him with the details. report. This included a commitment to establishing As we have heard in your Lordships’ House today, licensing and clearance procedures for orphan works. the creative industries are a sector that we ought to Government will shortly consult formally on proposals celebrate as a nation. The Government will continue taking forward the Hargreaves recommendations. I to play their full part in making certain that they am happy to address the noble Lord’s concerns on remain a global success story. I thank all speakers in music and congratulate him on stressing the importance today’s extensive debate who have shown such an of the conservatoires. interest and offered such well informed views. I have The national plan for music education will be published certainly learnt a great deal, and in this short time shortly and will set out new arrangements for creating I hope to have answered most noble Lords’ questions. local music hubs expected to support all young people’s I ask for forgiveness from the noble Earls, Lord Glasgow music making and offer routes for progression. These and Lord Clancarty, and the noble Lords, Lord might include music industry-based provision and Macdonald, Lord Sharkey and Lord Stevenson, if I information. I am also fully aware of the importance have not answered all their questions. I will read of the jazz industry, mentioned by my noble friend Hansard, and I will, of course, write to any noble Lord Lord Colwyn, and I hope his suggestion of jazz will be who has not had their points addressed and put a copy included. of the letter in the Library. My noble friend Lord Colwyn also pointed out the In conclusion, I once again thank my noble friend need for clarification around the licensing of sites for Lady Bonham-Carter, who has brought this important live music. The Government remain committed to topic to the House. scrapping unnecessary red tape. We support the Bill introduced by my noble friend Lord Clement-Jones Lord Clement-Jones: My Lords, I apologise for and are consulting on a broader approach. I will make interrupting the Minister but, specifically, I wonder sure that my noble friend’s concerns are made known, whether she will write on the question of finance for and I will take them back to my department. However, start-ups in the creative industries. I did not hear I must not pre-empt the consultation, and there are anything specific on that, and that question was asked concerns on the other side. by a number of noble Lords and is crucial to the creative industries. This debate has highlighted the fact that the creative industries make a strong contribution to the UK economy. Baroness Rawlings: My noble friend raises the point They are worth £59 billion to the economy, and a at a very opportune moment, with my noble friend significant number of people are working to create Lord Sassoon sitting next to me. No doubt it will be a dynamic and innovative part of our economy. I taken into account. wholly agree with the noble Lords, Lord Smith and I applaud again the maiden speech by the noble Lord Stevenson, about the importance of the value of Viscount, Lord Colville, on this important topic that intellectual property in a digital world. We are committed my noble friend Lady Bonham-Carter raised, which to implementing the Digital Economy Act, and we has afforded your Lordships such a constructive and hope that the initial obligations code will be abolished creative debate. shortly. The noble Lord, Lord Smith, also mentioned that it 2.34 pm would be wrong to see the creative industries in purely Baroness Bonham-Carter of Yarnbury: My Lords, I economic terms. My noble friend Lord Shipley also am grateful to the Minister for her response and to all explained this point very clearly. The creative industries noble Lords who have taken part in this debate. In make an enormous cultural contribution to this country particular, I am grateful to the noble Viscount, Lord and to the wider world, and what is being developed in Colville. Listening to his speech, I was reminded of Salford and the north-east is also important. Indeed, the advice that he gave me when I was being sent off to the creative industries enhance our reputation as a the Soviet Union. He said, “You’llknow how important global creative and cultural leader. It is vital that we the person you’re interviewing is by the number of understand and continue to make the case for the telephones on their desk. They won’t ring, but it is a importance of the close relationship between the arts status symbol”. Of course, the creative industries have and the creative industries. got rid of that status symbol, and I would be interested I quite rightly pay tribute to our recent successes in to hear from him what he thinks the new one is. the cultural sphere, which were mentioned by the As our time is running out, I will just say that I noble Baroness, Lady McIntosh, whether they be the agree wholeheartedly with what the noble Lord, Lord successes of UK-produced plays such “War Horse” or Smith, said. This is something where all government “Jerusalem” on Broadway, “Downton Abbey”, written ministries must get together in order to ensure that the 1397 Creative Industries[LORDS] EU:FinancialStability/EconomicGrowth 1398

[BARONESS BONHAM-CARTER OF YARNBURY] last week, our position was far from ideal. The Labour creative industries can provide the economic growth Government’s approach to Europe often sounded very that we need so much. This has been a good debate, positive, particularly when articulated by Tony Blair in and I beg leave to withdraw the Motion. his early years as Prime Minister, but his failure to match deeds with words, coupled with years of supercilious Motion withdrawn. neglect by Gordon Brown, meant that Britain’s traditional posture, more like a sulky teenager than a constructive adult, resulted in a disproportionately low degree of EU: Financial Stability and Economic influence. This lack of influence at government level Growth has been compounded by the decision of the Conservative Debate group in the European Parliament to withdraw from the EPP and set up a small ragbag of a group. This has resulted in its influence in the Parliament being significantly 2.35 pm weakened at a time when the Parliament itself is Moved by Lord Newby exercising greater influence, which is a trend that is set to continue. To call attention to the Government’s role in supporting financial stability and economic growth The UK’s increasingly unsatisfactory position was in the European Union; and to move for papers. exemplified by the recent announcement of a financial transactions tax by the European Commission President. This measure would bear predominantly on the UK: Lord Newby: My Lords, when I first suggested that in some estimates, up to 80 per cent of transactions we have a debate on Britain’s role within the EU, I covered by the tax take place here. Both the previous knew that because of the crisis within the eurozone, it Government and now the coalition have made it would be topical. What I did not realise was how this abundantly clear that they would oppose such a measure crisis was likely to develop, nor quite what demons it unless it were introduced globally, which is at present a would unleash within the UK. It is now clear that we very slim possibility. Nevertheless, President Barroso are at a more critical juncture in our dealings with the went ahead and unveiled the plan. It is inconceivable EU than at any point since 1975. I believe it is decisively that the Commission would vigorously promote a in our national interest to play a positive European proposal that would predominantly affect France or role. Germany if he knew that those countries opposed it. Of the many illusions of those who believe that we It would be a futile gesture and bad politics. However, could have a more successful future outside the EU, no such inhibitions apply to a snub to the UK. This the one which is, in my view, the most misconceived is only happened because Barroso knew that we were that without participating in the world’s largest single relatively isolated and unpopular and that a populist market, the UK would on its own have an influence proposal aimed at London would win him many more which would satisfactorily protect our national economic plaudits than brickbats. interests. I can only assume that when the antis travelled to, say, India, they hear heard businessmen speak with This far-from-satisfactory situation was where we passion about their future relations and trading prospects found ourselves before last week’s eurozone summit. with Brazil, China and the rest of south and south-east That meeting not only agreed the package of measures Asia and mention Britain almost as an afterthought; to try to sort out the Greek debt problem, recapitalise or speak to American bankers who see London’s eurozone banks and enhance the bailout fund, just as strength as being largely dependent on being part of importantly it also agreed a step change in co-ordination the single market; or to South Korean manufacturers, of the eurozone. In addition to greater co-ordination who put their European production plants in eastern of economic and fiscal policies, and in order to give Europe, but have a European head office in London greater political impetus to the process, it established a only because we are part of the EU. new eurozone governance structure. This will involve The EU brings many benefits in terms of helping regular summits presided over by a new euro summit the UK to promote its values and interests globally, president and it also includes the possibility of the but our relationship with the rest of Europe stands or president of the eurozone being a full-time post based falls on the economics. Here, despite the growing in Brussels. For non-eurozone members, there is only a importance of the BRICs, the EU remains our commitment that the president of the euro summit predominant trade partner: over 40 per cent of our will keep us informed of the preparation and outcome external trade is with the EU. Despite the importance of the summits themselves. This is not very reassuring. which we are now rightly attaching to expanding our Arguably these measures by the eurozone countries trade with the BRICs, it is the case that, at present, should have been put in place when the euro was trade with China, India and Brazil combined is but a introduced in order to avoid some of the current mess. small fraction of our trade with Europe. So while However, having belatedly begun to get a grip on the those countries have tremendous potential, even if our crisis, there is a strong chance now that the eurozone performance improves dramatically, they will still be Governments will implement this new plan. What is lagging behind trade with Europe for a very long time. their plan B? The truth is there is none. If this happens, If we judge that our interests remain best served by the UK is in danger of moving from being a central if staying in the EU, how well are we currently placed to quarrelsome core EU member to being marginalised. promote those interests and what should we do to Therefore, what should our response be? We are clearly strengthen our position? Before the eurozone agreement not suddenly going to apply to join the eurozone. 1399 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1400

Of course, we are one of 10 countries in the same must do more to promote the benefits of free trade by position. However, we should not be fooled into thinking pushing for the conclusion of the Doha round, as well that the euro-outs are a credible long-term alternative as trade agreements with some of our fastest growing power structure within the EU. It is worth listing the trade partners. All these measures sound a bit like non-eurozone members: Bulgaria, the Czech Republic, motherhood and apple pie but they are absolutely Denmark, Hungary, Latvia, Lithuania, Poland, Romania central to a positive agenda for growth. Thirdly, the and Sweden. Leaving aside the fact that some of them Prime Minister suggested that we need to reduce the are keen to join the euro—including the most important, costs of doing business across the EU. Fourthly, we Poland—there is clearly no particularly broad must do more to make the EU more attractive as a commonality of interest among the outs. If we were to hub for innovation. list those member states with which we have the greatest Those measures have been amplified and supported economic and political ties and interests, few of these by the Deputy Prime Minister in recent days. It is a countries would be near the top. I hope that British constructive agenda. The question is how to ensure Prime Ministers in coming years enjoy their dinners that it is taken forward positively. This now needs with the group of outs, but I cannot help feeling that, detailed, consistent and concerted follow-through, which as they look across at the somewhat larger eurozone should be led by Ministers and involve building coalitions table, they will feel slightly queasy. involving both the euro-ins and the euro-outs. I believe So far I have been pretty gloomy about our position that the Government are now adopting this strategy within the EU and I am well aware that simply moping with some success and are finding that there is a about our lot will not promote our position. Nor do I broader degree of support for some of the lines that think adopting the attitude of vultures waiting for the we are taking than might originally have been thought opportunity to pick at the European treaties and take to be the case. If we adopt a less hectoring tone and back the odd morsel of power here and there is a promote a growth strategy that wins widespread support, substitute for a credible strategy to help support stability I hope that we will create an atmosphere in which our and growth across Europe and therefore within the voice will carry a more proportionate weight. UK. What should we do, and what is it credible to do However, I am realistic enough to believe that it is within the confines of current British politics? not quite as simple as that. For all member states, the First, we need to continue making it clear that we importance of promoting their interests within the EU support the eurozone countries in the action they are as well as promoting the EU as a whole is critical. A taking, including their plans for greater fiscal key way in which they all seek to do this is by making co-ordination. Our ability to affect that process is in sure that their voice is heard as often and effectively as any event extremely limited, but in doing so we should possible within all the EU structures. That requires try to avoid lecturing them on the need to sort themselves them to have as many effective people in place across out and get on with it. I can understand why Ministers these institutions as possible. For years, some countries, find that a very attractive line but even if it were particularly France and Ireland, have recognised this appropriate before last week’s decisions, those decisions and gone to great lengths to ensure that as many of mean that it is doubly inappropriate now. I agree that their compatriots as possible are in position in the it is very much for the eurozone to deal with the Commission and other EU institutions. Not so the problem which, as it were, it has created, but I hope UK. The view too often has been that the best officials that the UK will play a positive role in supporting the would do their careers harm, rather than good, by IMF in this respect. When the statement was made moving to Brussels either permanently or on secondment. last week, I felt that the Government went to inordinate That view has definitely been held in the Treasury and lengths to try to put the brakes on the IMF supporting the Bank of England over many years. sensible measures to sort out the eurozone mess. It is now extremely important that we place as Statements by the Prime Minister over the last 24 hours many top-quality officials as possible, not just in the suggest that perhaps I misread what he had in mind, Commission, but given the importance of the financial and I would be extremely grateful if the Minister services sector to the UK, also in the three European could say this afternoon what now the British supervisory bodies for banking, insurance and securities Government’s position is on providing additional support and markets. I believe that the Foreign Secretary recognises for the IMF, which, however generally it may be this and is taking steps to encourage more UK high couched, could mean that we would be supporting flyers to spend time in Brussels on secondment or on a greater IMF involvement within the eurozone. permanent basis, which is very much to be welcomed. If we adopt a sensible tone, we need to articulate a If we adopt the agenda that I have outlined, we will growth strategy for the whole of the EU that will stand a better chance of playing the kind of constructive resonate widely across it. Obviously this has to be built role which is vital for the development of the UK on strengthening the single market. The Prime Minister economy within the EU. The stakes are very high, but produced a pamphlet on this subject in March, which so is the prize. I beg to move. had four key pillars. The first was completing the single market, particularly by further liberalisation of 2.50 pm services and the creation of a single digital market. It has been estimated that if it were possible to do this in Baroness Noakes: My Lords, I congratulate the full, it could be worth up to £3,500 for each household noble Lord, Lord Newby, on securing this debate. I in the UK. That figure seems somewhat large but even suspect he little thought how topical it would be when if we were to achieve only a significant proportion of he did so. The noble Lord, Lord Newby, and I agree that it would be a prize worth having. Secondly, we on many things but I do not think that we shall ever 1401 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1402

[BARONESS NOAKES] discussed as that would be better for both. That would agree on Europe. I am proud to be on the Eurosceptic allow the eurozone to concentrate on the rest of its wing of my party and thus I find myself in agreement problems. with the majority of my party and with a clear majority So what should be the UK’s role? I completely of the country at large, as many polls have shown. support our Government in refusing to put money into the European stability fund, whether directly or Let me start with some basics. It is undoubtedly in via the IMF. We have enough problems of our own the interests of Britain as a trading nation that there is without paying for those of other countries. I support both financial stability and economic growth within our policy that the problems are for the eurozone the community of trading nations. Exporters need countries themselves to solve; it is no business of ours growth in the global economy and growth, in turn, to tell our trading partners how to run things. On the needs financial stability. That is also true at the level of other hand, we must be ready to seize any opportunities the individual countries with which we trade. Countries to improve our position in Europe, which is not good. in financial turmoil that show little or no growth are If the eurozone needs a treaty change to sort itself out, not good trading partners. So I can go along with the we must grasp that opportunity to gain greater freedoms argument that says that to the extent that the UK for the UK. We must focus on our growth and prosperity. needs or wants to trade with countries within Europe, The health of our trading partners is an indirect it is certainly better for us if those countries are interest derived from and limited to their impact on financially stable and growing. But how important is our economy. the EU, and therefore financial stability and growth in the EU, to the UK? A claim often made by the Our agenda in Europe should be directed at the Government is that the EU is one of the most important UK’s interests. We must cut the budget; we must roll trading zones to the UK, giving access to hundreds of back the encroachment of the EU into our financial millions of consumers. But that is at best only a partial services industry; we must gain control over things like truth. To start with, only around 10 per cent of the the working time directive; and we must reduce the UK economy is actually involved in trading with impact of EU rules and regulations. It is our growth, businesses in other EU states. Most of our economy is and no one else’s, that should be the subject of our focused on the UK or on trade outside the EU, and policies and, in forming their policies, the Government the USA is by far the largest single country, in value must always remember that our history and destiny terms, with which we trade. are global and not European.

We are a deficit trading nation, with a significant 2.56 pm deficit on goods offset by a surplus on services. Two of our five largest deficits are with Germany and France Lord McFall of Alcluith: My Lords, I congratulate so, although we might have a need to trade with the noble Lord, Lord Newby, on securing this hugely Germany and France and other EU countries, the fact important debate. My contribution has two themes: is that our European neighbours need our markets honesty and clarity. Honesty refers to the fact that this more than we need theirs. On the other hand, we have is part of the global financial crisis, which started in a trade surplus with the USA. August 2007 with BNP Paribas stating that it had suspended three funds related to subprime. At the Focusing on exports, the EU accounts for around time, I said that we had a banking crisis; that went on 40 per cent of our exports of goods and services; put to become an economic crisis, which became a political another way, the rest of the world is more important crisis and a social crisis. The latter two now have equal to us. Of course, 40 per cent is not unimportant but resonance with the former. The political crisis that we the EU, even without its current problems, is not a see in Greece, where the Prime Minister has lost his source of massive growth. The plain fact is that global nerve, is now a straight choice between in or out, and growth forecasts are concentrated outside the EU. If the sooner that choice is made the better, so that we our exporters waste all their energies on the economies can get on with business. of mainland Europe, that will be a real tragedy for our The big question is how to maintain the integrity of future share of global trade. the eurozone and stop contagion. We must remember that Italy’s bond yields are almost 6.5 per cent compared As I said earlier, it is important that those countries with Germany’s at 0.3 per cent. That is unsustainable with which we trade are financially stable and offer and cannot go on. If you remember, Portugal and prospects for growth. But that is a long way from the Ireland went to the fund for help when their bond proposition that the UK Government have a particular yields were around that price. role in supporting that stability and growth. That is subject to one overriding concern: namely, the impact On the social side, the International Labour of eurozone financial instability on the international Organisation undertook a study and stated very clearly banks, including our global banks. I declare here an recently that the world economy is on the verge of a interest as a director and shareholder of the Royal new jobs recession. In 45 out of the 118 countries that Bank of Scotland. were examined, the risks of social unrest were there. When the leaders meet at the G20 today, that social It is very much in our interests to ensure that the dimension should be in the background. problems of the eurozone do not, through On the issue of honesty, our own Government have interconnectedness, spread through the financial system to be honest. The Prime Minister has said that he is more widely. That is why it is encouraging news that not going to contribute to a eurozone bailout, and the the exit of Greece from the euro is now being openly Chancellor has said that he is not going to contribute 1403 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1404 to an IMF bailout if it is to be used for Europe. Given 3.02 pm that £130 billion of exports are made to Europe every year, that is a false choice and the sooner the Government Lord Razzall: My Lords, in thanking my noble are honest with the people and say, “We support the friend Lord Newby for introducing this important IMF because it is in the interests of the larger global debate, it goes without saying that I agree with everything community”, the better. he said. It probably will not surprise noble Lords that I disagree with almost everything said by the noble There is a growth crisis in Europe at the moment. In Baroness, Lady Noakes. the last year, unemployment has increased in Germany, which has not happened for two years, and its When the eurozone was established, it was clear manufacturing sector has contracted as a result. We that its members could not have the benefits of the must remember that Europe as a whole is heading for euro without the drawbacks of losing domestic control a recession. In a sovereign debt crisis, where private over their currency, which meant ceding fiscal powers debt has been transferred to government debt, slow to the centre. At that time, rules were established growth and deflation are the biggest risks for solving regarding fiscal policies to be followed by members of debt and it will exacerbate the situation if we do not the eurozone both to qualify for admission and to have growth. maintain those rules when they became members. The first thing that happened of course was that for political The issue facing us today is a lack of demand. My reasons the numbers were fudged for Greece, Italy, successor as chairman of the Treasury Committee, Spain and probably Portugal in order to allow those Andrew Tyrie, put it quite clearly and succinctly when countries into the eurozone. Even worse, when things he said that the Government lack a “coherent and got a bit rough in France and Germany, those fiscal credible” plan for growth. If that is the case, we need rules were scrapped and France and Germany were clarity on that. allowed not to obey the long-established rules. That, Yesterday, along with the noble Lord, Lord Skidelsky, inevitably, has led to the situation in which the eurozone and others, we looked at the issue of a national finds itself today. investment bank, which would invest in large infrastructure It would be easy to conclude that that is just Europe’s projects here. By the way, such a bank would serve the problem and, “Aren’t we lucky to be outside the interests of the country, because as far back as 1931 eurozone?”. Unfortunately, as the noble Baroness, Lady there was what was identified as the Macmillan gap. Noakes, touched on, we have a problem as to what the The Macmillan commission said that there was not crisis in the eurozone does for our UK banks and adequate resources for British industry and small financial institutions. She disclosed the fact that she is businesses. We have still to tackle that, and the present a non-executive director of the Royal Bank of Scotland. crisis is crying out for that. Adam Posen, a member of I do not know the details of the RBS’s loan portfolio the Monetary Policy Committee, says that the UK to eurozone countries. But, clearly, were those countries lacks a “spare tyre” and that we have to get on with to default, that must have a significant impact on the that issue. UK banks which have lent money to those Governments Why do I say that manufacturing industry is in such or institutions in those countries. That will have an a serious situation? In the past three or four years, we ongoing effect on the ability of those banks to lend in have seen devaluation of the currency by about 30 per the UK domestic market. cent. In a normal situation, that would lead to an export-led manufacturing boom. It has not done so, Perhaps I may introduce your Lordships to the and therefore we need to ensure that we have organisations arcane topic of credit default swaps, which is an even and facilities that mirror those of the German Mittelstand. greater danger for UK financial institutions. Credit A time of cheap capital, real negative interest rates default swaps are a mechanism that has been invented and spare capacity in employment is when to invest in by banks and financial institutions to make money, of growth so that we come out of recession in the proper course, which basically means that loans to eurozone way. countries or other countries throughout the world are insured by this mechanism. Credit default swaps involve When I talk about employment and capacity, that parties that are not only UK banks but UK pension capacity is available not least among young people. funds and UK hedge funds, all of which are involved There are 991,000 unemployed 16 to 24 year-olds. I in this market. If the eurozone countries start to know from when I was a school teacher in Glasgow default in relation to loans, it is not only UK banks what the decimation was like in society when jobs were which have to write down the loans that they have not available for young people. It is very important made but there are significant losses in the credit that we take on that issue. Today, a very depressing default swap market which affects those institutions. report from Barnardo’s says that, Not only the banks will be affected. “49 per cent … agree that children … behave like animals”, What is worse is that, under the new accounting and that society views children in a negative way. That rules that were brought in on the mark-to-market message is wrong in fact and in principle. If we give requirements for financial institutions, even if countries out the message that society has given up on young have not gone bust but it looks as though the rating of people, young people will certainly give up on us. It is those credit default swaps is worth less than they an overwhelming economic need, as well as a would be when they were originally taken out, those humanitarian need, for society to treasure young people. banks or financial institutions also have to write down Let us show that today, with increased urgency, by the effect of that mark-to-market valuation. That has factoring young people into our economic stability a very significant effect on the balance sheets of our and growth agenda. UK banks and financial institutions, which will have a 1405 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1406

[LORD RAZZALL] crosses my mind that that cold shower of disapproval serious impact on the ability of all those financial directed towards the IMF was merely offered to placate institutions to provide the engine for growth that the the critics on the Benches behind the Chancellor. I UK economy needs. hope that I was wrong and that the Minister can say a We have no alternative but to continue the engagement little in a positive turn today about how the rest of the with our European friends. It does not mean that we international community, including this country and have to rush into the eurozone, although, interestingly, the IMF, can help the eurozone countries achieve their I see that Poland and Lithuania as we speak are very objectives. anxious to join. I am not suggesting that, but we That thought brings me to the role in all this of the absolutely need to engage in Europe. I commend the single market. Far too often the single market is portrayed initiative of the Department for Business, Innovation as a kind of alternative to the policies being pursued and Skills, which has put together an informal like-minded by the eurozone countries. That is surely wrong. If you group for growth. It consists of 14 states in Europe, look at the prescriptions being given by the Commission, half of which are eurozone countries. That group is the European Central Bank and IMF to the countries trying to work together to develop policies for the being bailed out—Greece, Portugal and Ireland—and development of growth in Europe and the United the advice being given ever more forcefully to Spain Kingdom. It is now the time to engage in Europe and and Italy, those prescriptions and that advice are not to walk away in order to secure policies for growth. replete with issues which are at the heart of the single market programme, which is at yet incomplete, such as 3.06 pm removing restrictive practices in the professions, breaking Lord Hannay of Chiswick: My Lords, this debate up state monopolies or quasi-monopolies and freeing could hardly be more timely and topical, and for that I up labour markets. All 27 member states together thank the noble Lord, Lord Newby. The temptation to need, if they are to compete effectively with the great pronounce on the turmoil in Athens, and on the emerging countries—China, Brazil, India and others—to prospects for a Greek referendum and what might complete the single market measures in the fields of follow from its outcome, or indeed from a decision not services and energy. Only thus will they achieve the to hold a referendum, is strong. But I believe that for sort of growth and competitiveness that will enable those like us in this House who are not directly involved the whole of Europe to hold its own in the new in the decisions being made, a period of silence on multipolar world. It is often said that whenever the those issues would be the best contribution we can eurozone’s problems are discussed there is a need for make. “more Europe”. What should equally be being said is that there is need for “more single market”. It is a matter for regret and concern that so little of the debate on European issues in this country in recent That approach will not be everyone’s cup of tea. weeks has been about the Government’s role in supporting There are plenty of voices being raised calling for financial stability and growth across Europe and that more protection and deglobalisation—an appalling so much of it has been in denigration of the efforts of phrase. Just look at the recent debates within the the 17 eurozone countries to put their house in order French Socialist Party. If we are to carry the EU with and in angry demands that we should have nothing us we must engage that discussion now and try to lead whatever to do with those efforts. Yet, there surely it. We must do so in a credibly positive spirit. It is no have been few truer words spoken by a member of the good proposing an à la carte single market with each coalition Government than those by the Chancellor of country applying only the bits it likes. That will lead to the Exchequer when he said: 27 policies and no single market at all. That is why the “We are all in this together”. whole repatriation debate is not only a futile displacement I know that those words were spoken in a different activity but is actually inimical to the achievement of context but they apply every bit as much to Britain’s Britain’s and Europe’s objectives. strong national interest in the success of our European However, we will need more than just warm words partners’ latest package of decisions. I welcome the if such a positive approach is to be seen by our fact that the Prime Minister and the Chancellor have partners as a credible contribution to supporting Europe’s made our national interest in that emphatically clear. I financial stability. That is why I would like to hear wish only that I thought that their Back-Benchers from the noble Lord again some response about the were listening to them but there is little sign of that, euro-plus pact and the possibility, particularly if it including, I notice, in this House. could be renamed, of us being associated with it. I I confess I was a little puzzled—indeed, baffled—by hope he will say something when he winds up. the elaborate detail which the Chancellor’s Statement of 27 October on the European Council went into in In conclusion I have a point of tactics. We are in trying to block hypothetical ways in which the IMF some cases going to have to say a firm “no” to ideas might be involved in supporting the European package coming forward in Brussels. In my view the proposed of decisions. It is surely rather unwise to express such financial transaction tax is one such. I cannot anyway firm views on ideas which have not yet even seen the for the life of me see how such a tax, at least if it is not light of day. Should we really be trying to tie the applied worldwide, could possibly contribute to Europe’s managing director’s hands? I thought we were financial stability and growth. However, if our “noes” enthusiastically in favour of her appointment. Do we are not to be seen as single wrecking manoeuvres, we have no confidence that she will act in all respects are going to need to have a wider positive agenda to within the powers that she has? I fear that the suspicion accompany them. 1407 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1408

Earl Attlee: My Lords, we are doing quite well on The question of Europe’s competitiveness predates time but noble Lords need to be very careful. Otherwise the current crisis affecting the eurozone and is in many we will run out of time if we overshoot—even 30 seconds ways one of its underlying causes. For decades Europe on each speech will make a difference. has grown more slowly than other continents. However, there are remedies. These were set out and agreed in the Lisbon agenda of 2000 and the Commission’s recent European Union 2020 programme. What are 3.15 pm we to make today of the statement that Europe should be, The Lord Bishop of Bath and Wells: My Lords, I am “the most dynamic and competitive knowledge-based economy in grateful too to the noble Lord, Lord Newby, for the world capable of sustainable economic growth with more and better jobs and greater social cohesion and respect for the initiating this timely debate and inviting this House to environment”? look more broadly at the pressing question of financial European Governments have always found it easier to stability and economic growth in the European Union. sell the promise of this agenda than its content. Populism, Constraining public spending and securing financial nationalism and Euro-scepticism are on the rise. Even stability can be only part of the equation. Europe also if Europe’s politicians can agree the right policies to needs to embrace structural reform of its economic establish and to stabilise Europe’s finances and stimulate model to encourage growth. This means tackling the economic growth, there is no guarantee that public imbalances that currently exist within Europe and opinion will be sufficiently benevolent to allow them unless we do so we are likely to see a damaging to carry them out. outbreak of protectionism across Europe. One of the greatest achievements of the European European economies for the most part are shrinking Union has been to scrap non-tariff barriers. The biggest while unemployment is rising, in some cases alarmingly danger, however, is that the euro crisis will lead to a so. Austerity measures introduced in response to the two-speed Europe that fractures the single market. We financial crisis are biting. The soaring rate of interest need to be wary that the new bailout mechanisms on the sovereign debt of some countries underlines the agreed at last week’s euro summit do not sideline worry that much of the existing debt, even if partly either the European Commission or the European written off, is unaffordable. Parliament. A flawed single market that encourages Our public and political debate is understandably protectionist measures cannot be either in Britain’s fixed on the latest saga in the eurozone. However, are best interests or in those of Europe. A more protectionist we conveniently overlooking the pressing question of Europe will result in slower growth, thus fuelling the where growth will come from? This is not just a electoral fortunes of populist parties. A more fractured eurozone problem but one for the whole of Europe. A single market will see Britain disengage yet further stable euro requires more balanced trade and growth from Europe, a retrograde step in the hard fought fight among its members. The prevailing economic orthodoxy towards peace and prosperity for our region. holds that tough austerity and structural reform will ultimately lead to growth. The last two years may suggest that this orthodoxy is wanting. 3.18 pm Economists will of course point out examples of Lord Marlesford: My Lords, I want to suggest a fiscal austerity preceding economic growth but they specific course of action in the debt crisis, but let me all include currency devaluation and/or big cuts in first put it in an abstract context. The result of increasing interest rates. Neither option is open to the eurozone the size of a rescue fund is that it creates both a economies. It is hardly surprising therefore that household precedent and the expectation that it will be increased and business confidence is rapidly crumbling across again—or, as the jargon has it, a moral hazard. And if the currency union, depressing economic activity across that rescue fund is based on a central bank, which by Europe as a whole. On current trends a series of definition cannot go bust in the way that other banks sovereign and banking defaults looks unavoidable. can because it can turn on the printing press, that can A crisis that started on Europe’s periphery has been only have one of two consequences: either in an extreme allowed to grow into a threat to the core of the case it will feed through to inflation, if you believe as I eurozone and the future of the European project itself. do that inflation is a monetary phenomenon; or you Measures taken across Europe appear to invite economic may be able to achieve such a rapid rate of growth that stagnation and political dislocation, the effects of which the inflation is absorbed and subsumed in a gradual can be seen on even the marbled steps of St Paul’s. but slow drift upwards of prices at a lower rate than There are of course dissenting voices to this orthodoxy. the nominal rate of growth. Some talk of a Marshall Plan for Greece to stimulate Last week the European Financial Stability Facility investment in infrastructure and solar power. In Brussels, rescue fund was increased from its original level in the European Commission is working on schemes to May 2010 of ¤440 billion to a potential ¤1 trillion, and speed up the disbursement of the European Union there is already talk of it being necessary to raise it to regional aid funds to foster growth in the southern ¤2 trillion or even ¤3 trillion, larger than the GDP of countries and, if last year’s report on the single market Germany. Then remember that the world tends to be drawn up by the former Commissioner Mario Monti divided between those who save and those who borrow. to liberalise services and the digital economy had been The inclination of borrowers is, as the old advertising implemented, Europe’s growth might have increased. slogan has it, “take the waiting out of wanting”. There However, at the moment too little is being done to is normally, however, a fear of having to repay loans. boost growth across Europe. If a debt is forgiven or partly forgiven by the lender, 1409 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1410

[LORD MARLESFORD] the past. Some speak blithely of the euro collapsing, then there is sometimes the irresistible temptation—indeed, but that would cause social and political as well as the clear message—to borrow more. This is made even economic chaos. I fully agree with the remarks of more tempting if the lender apparently has an unlimited Germany’s Chancellor Merkel about the dangers of supply of funds. such an event, which must be prevented. Now we have Greece, which has been offered a However, I will talk primarily about economic growth bailout apparently with no enforceable strings attached. and job creation, on the premise that it is no good just That way lies contagion and thus a further crisis. I preaching austerity, even to beleaguered Greece. We believe that Greece should be required to leave the have to provide some kind of message of hope. We euro area, but certainly be allowed to remain inside have to think in the long term, not just the short term. the EU. Greece will then have the opportunity of This has to be coupled to practical plans for investment deciding whether to invent a Mickey Mouse currency, and renewal. Where will new net jobs come from? which it might choose to call the drachma, or to continue to use the euro. Greece outside the euro area In approaching this question it is important to will have no borrowing capacity underwritten by the recognise, as the right reverend Prelate hinted, that the European Central Bank. If it reinvents the drachma travails of the eurozone and—to some extent—the no one will take that currency seriously. Remember rest of Europe do not come just from the problems of that the three classical functions of a currency are as a the euro but from a failure to implement the Lisbon store of value, as a unit of account and as a medium of agenda. To put it more precisely, the Lisbon agenda exchange. A reinvented drachma is unlikely to have was implemented only partially and regionally within any of those. If Greece continues to use the euro it will Europe. Some countries, such as the Scandinavian be in the same position as any of us. It will only get the countries, the Netherlands, Germany and to some number of euros that it can earn by selling its goods extent the UK, followed some of the prime suppositions and services. Greece will have to devalue, which in this of the Lisbon agenda and are in a superior economic case would mean cutting pay and prices from previous situation to other countries largely situated in the euro levels. Without help, in the short run it will not be south, such as Spain, Portugal, Italy and Greece, strong enough to survive the political pressures this which did not reform. Instead they borrowed and would cause. these borrowings have conjoined with the debt in the banking system to generate the extent of the crisis that I am so glad that the noble Lord, Lord Hannay, we see now. drew attention to the important role of the International Monetary Fund in all this. I totally agree with him. In What policy should the Government support to fact, I would propose that Greece should become a promote growth and job creation in Europe? As I said, ward of the IMF. The IMF, which of course cannot to do this one has to think beyond the current crisis. I print money, will dole out to Greece such sums as it will mention four main elements. They are not exactly has provided over the decades to other economic the same ones as the noble Lord, Lord Newby, mentioned. basket cases to prevent them becoming failed states. First, it is possible to promote the return of There are plenty of precedents for countries in crisis manufacture to Europe. I ask the Government to pay using a currency other than their own. Yugoslavia, attention to the really interesting debate on reshoring—the after Tito died, used the deutschmark, and various opposite of off-shoring—that is going on in the United South American countries have from time to time States. It is quite a technical debate and the issues are used the US dollar. complicated; there is not a simple map that comes The other advantage of what I propose is that other from it, but it is important. Many companies suffer countries will not wish to leave the euro area and will from disruptions to their supply chains. Wages in therefore have a real incentive to accept the necessary China and India in core manufacturing sectors are tough political decisions in order to avoid a default rising rapidly. It looks as if it might be possible to that would have that consequence. First in line would recreate manufacture in certain core sectors in some be Italy. Germany, with 27 per cent of the euro area industrial countries, including European ones. It is GDP, is big enough to absorb all the debts of Greece, important to recognise that Europe is strong in which has only 3 per cent of the euro area GDP. Italy, manufacture—and not just Germany. For example, of course, represents 17 per cent of the euro area GDP even Spain has a higher ratio of manufacturing output and is therefore too big for Germany to swallow. That per person than the United States. The reshoring is why Greece should be treated in the way I am debate suggests that if you want to promote manufacture proposing, but I would say straightaway that Greece is it should be done not only in high-tech, cutting-edge historically and culturally central to Europe, and I areas. It may be possible to build on established strengths. hope that in due course, if these disciplines are used, it This is a different orientation from the past. would come fully back into the European family. Secondly, as noble Lords have said, we have to complete the service directive and increase competitiveness in service industries within the single market. I work in 3.23 pm higher education, where we are well behind on the Lord Giddens: My Lords, I also congratulate the possibility of standardisation which would promote noble Lord, Lord Newby, on initiating this debate on mobility of labour. Thirdly—we do have to do that. To such a momentous topic. The Government rightly have a flexible, competitive economy, you must have recognise that it is in the UK’s interest to achieve mobility of labour. How does that sit with the stability in the eurozone and, moreover, that this presumes Government’s strictures on immigration? Of course, much greater fiscal integration than has been true in movement of European citizens is not technically the 1411 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1412 same as immigration but mobility of labour is crucial the European People’s Party dominates in terms of to competitiveness. It is one of the main areas where numbers with more than 200 Members—it is the largest Europe finds it hard to compete with the United party—with the Socialist Group below that at 184, States. and then the liberal group well below that at 84. Those Fourthly, and finally, we have to concentrate on are the three parties with real control. As in this quality of growth and not just on quantity. This Parliament and any other Parliament, in the European means two things, the first of which is distributional. Parliament—unless one is in the point of balance—power What is the use of growth that only goes to 1 per cent depends on numbers. That is where influence is. I of the population? Not much. It also means an greatly regret that my coalition partners in Europe are environmental thing. Europe could be in a highly in a group that is roughly equal with the Greens, and competitive position vis-à-vis the United States or has absolutely no influence in the power structure of China, neither of which provide a sustainable, that Parliament at all. I would love to see it change. We environmental model out of which job creation can have to keep that influence in Europe to ensure the come. I would welcome the Minister’s comments on stability that we are looking at there. any or all of those points. The IMF has been mentioned. I was not going to talk about the IMF loans particularly in this debate, but I will spend my last minute on a short excursion on 3.29 pm that. I went to New England for the first time this Lord Teverson: My Lords, I welcome this debate as summer, though I have been to the United States well. The crux of it is the Government’s and the many times. I went to New Hampshire and, being a bit United Kingdom’s ability to help financial stability of an anorak and an economics student, I noticed that and growth in Europe. That is a natural role for us Bretton Woods, which is a minute settlement at the top because the United Kingdom is self-evidently part of of New Hampshire, was within striking range. I made Europe. We are part of it geographically and my own pilgrimage to the Bretton Woods Washington economically—as has already been described in the hotel. Give it its credit: it still has the pictures there of debate—and, absolutely, culturally. I was thinking about John Maynard Keynes and the other people who came this area in particular. Contrast with this country the together to put together the post-war financial system. Obama healthcare reforms in the United States and That system—the IMF side of it—has largely survived. how they have been received by the media culturally, It would be a great regret, as that change and that and all the difficulties that that has caused in terms of strategy was largely led by Britain, if we were not a ideas of socialism—and that is moving nowhere near participant in carrying forward those obligations. to universal healthcare. Here, we have a health Bill We have a great role in Europe. Ironically, during going through where even what are seen as contentious the Delors/Thatcher time we pushed Europe forward propositions guarantee universal delivery, free at the more than has been done over the last few decades. We point of need, and competition but not price competition. must, in this country, make sure that that momentum It shows that there is a big gulf culturally with the continues. We must not be marginalised. Atlantic, and that Britain is very much a European-style nation in the way that it looks at a number of things. 3.35 pm The only way that Britain can contribute towards that economic and financial stability is if it is able to Lord Bilimoria: My Lords, last week, the German have and promote that influence. My noble friend Chancellor Angela Merkel warned us that if the euro Lord Newby has already talked about some of that, falls there will be war in Europe. As the noble Lord, but I want to emphasise it in the financial regulation Lord Giddens, said, the repercussions would be area, which is part of the debate. I fully understand catastrophic. There is no question that, after World why the Financial Services Authority has to be abolished War II, the European Union has been fundamental in in that it was seen to fail very strongly in its strategic preventing conflict among the EU states over the past prudential regulation over the last few years. However, six decades. In terms of economic stability and growth there is concern that, in its division into the financial in the good times, the EU has been fantastic. But conduct authority and the prudential authority, we underlying the whole concept of the European Union could lose our single voice within the new economic is the question of where you draw the line. How far is and financial structures—in Brussels, the ESMA and too far? We have benefited from a zone of free people the banking authority. I am sure the Minister is also and goods, and that is fantastic. I am all for it, and I concerned about that area as a high priority. I would thank the noble Lord, Lord Newby, for initiating this be interested to hear the Government’s view. debate. As he said, almost 50 per cent of our trade is The other area I mention is the one my noble friend with European Union countries. But one of the best Lord Newby raised, which is parliamentary influence. decisions this country made was not to join the euro. In the last European elections, I would say there were In the good times, the euro has been very good. In the two major winners. One was the Conservative Party. bad times, as we have seen, the failure is terrible. Out of our 72 seats on an assembly of some 730 Members, It is illogical to expect that you have the same 26 Conservatives were elected, 13 UKIP Members—a currency and interest rates for countries that are never— great result for UKIP—with Labour equal on 13, and ever—going to be in sync at any one time. How can the Liberal Democrats slightly below with 11. Yet in you have that? Look at Germany at the one extreme the European Parliament itself, which post-Lisbon has and Greece at the other, let alone governance of these very literally equal powers with the Council of Ministers countries. How can the Chancellor, George Osborne, in terms of legislation and therefore British interests, possibly suggest increased fiscal integration among 1413 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1414

[LORD BILIMORIA] “The vehicle that’s supposed to borrow on behalf of the the eurozone countries? I cannot see how that can countries that can’t borrow, can’t borrow”. work. Increased fiscal integration is dependent on With regards to a referendum, the question should political and emotional integration, and a buy-in by be not about whether we are in or out of Europe, but all the citizens of each country. The last person to about how countries are in Europe and on what terms. achieve integration in Europe was the Emperor Under the worst of circumstances, where the eurozone Charlemagne in the eighth century. On the other hand, could disintegrate, we now have an opportunity to in a country like India where you have a truly federal redraw almost from scratch what the European Union state, you can have full integration—and the states in should be: a union of countries with democratic principles, India are far more diverse than the countries in Europe. with a rule of law and with shared values. Then we will Then you can have a central government. However, in have a European Union with peace, stability and Europe, fiscal integration without political or emotional growth. integration is a pipe dream. It has not happened in 60 years, and it is not going to happen. 3.39 pm Therefore, we have got to accept that the euro was a step too far. Our forays into political integration with Lord Flight: My Lords, I congratulate the noble the European Union have resulted in a system in Lord, Lord Newby, on bringing forward this debate at which we have MEPs who have absolutely no connection such an appropriate time, and I compliment the noble with their constituents, who in turn have no idea who Lord, Lord Bilimoria, on raising some of the really they are. There are constant complaints in our country grave aspects of this crisis. about the bureaucracy and red tape that come out of The first point I want to make is that it is no good Brussels, particular in the areas of business and tinkering around the edges. It is necessary to understand employment law. the cause of the eurozone financial and government I have spoken before about the domino effect that debt crisis. It is blindingly obvious. If very disparate has taken place in the past five years: of the sub-prime economies such as those of southern and northern crisis leading to the credit crunch, leading to the Europe share a currency for political reasons but they financial crisis, leading to the great recession, leading are in no way homogenous, and the south has become to the sovereign debt crisis, and leading to the eurozone 35 per cent uncompetitive against the highly efficient crisis. We are at a very precarious time in history. The north, it is not surprising that the southern economies people who say that Greece merely represents 0.5 per are in trouble. Their economies are dead in the water; cent of the world’s economy, or 3 per cent of the their government debt and borrowing go up. eurozone, miss the point: it only takes half a spark to Secondly, it is not surprising that the markets in the start a whole fire. rest of the world do not want to buy Spanish and What are the Government’s plans to deal with the Italian debts. The prospect is that these economies will possible disintegration of the euro and the eurozone? not recover without significant devaluation one way The Government refuse to have a plan B where the or the other. So who is going to buy their bonds when economy is concerned, but I credit them for having there is the fear, if not the threat, that sooner or later sent out the right signals to the global financial markets there will be substantial losses as a result of devaluation? by showing that we are willing to cut our GDP/public The fundamental problem has to be looked at and expenditure from 50 per cent to 40 per cent. That is addressed. good, but what are the plans for a euro-disaster scenario? There have been comments about the fiscal union Does the Minister agree that Britain should take a route of dealing with this. Indeed, there is truth in the leadership role to resolve this disaster that lies ahead principle that, if you are going to share a currency, you of us? Bailing out Greece—and other countries; we need to have common economic and fiscal policies. have heard about Italy, with ¤1.9 trillion of debt—the However, I really do not think that is the solution. I measures have gone from a sticking plaster to a bandage will go through some of the ingredients. Euro bonds last week, and now Greece has admitted itself into the are okay, but Germany effectively underwrites whatever operating theatre. We are only prolonging the inevitable. proportion of the debts of Italy and Spain it is responsible Can Britain play a leadership role with this doomsday for. Not surprisingly, Germany is not very keen to do scenario possibly taking place, rather than being told that. by President Sarkozy to stay out of it? Why does it The second, more traditional way is to make transfer take the noble Lord, Lord Wolfson, to offer a prize for payments from the more prosperous areas to the less a solution to a country disengaging from the euro? prosperous areas. In America, transfer payments amount Does that mean that the Government do not know to 30 per cent of federal tax revenues. Even in the UK, how this should happen? In my role as the president of in our little common currency area, they are £70 billion the UK India Business Council, I always say that we or £80 billion of public spending. The problem with are so perfectly positioned as a gateway to Europe. the sort of transfer payments that would be required What are the Government doing to deal with the from Germany to southern Europe is that they could negative impact of hedge funds and people taking be of the order of a third of Germany’s GDP. Anyone advantage of credit default swaps, accentuating the who thinks that Germany is going to consider such downward spiral scenario? Everyone talks about amounts is mad. Just supporting the former East the ECB saving Europe but look at the EFSF, which Germany depressed its economy for 15 years. The has not even been able to raise ¤3 billion out of the German answer is to say, “Right, effect an internal ¤1 trillion it is meant to. Gary Jenkins of Evolution devaluation”. That is fine, but does anyone think it Securities put it really well when he said: politically practical that Italy and Spain are going to 1415 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1416 effect internal devaluations of 35 per cent by slashing abide by the rules. That is even more true of the pay, employment and benefits? Even if they could do situation now than it was when we first published our it, the result would be a winding-down of their economies, report in March. The UK has a strong interest in increasing their deficits even further. Candidly, I do seeing the euro area stable and prosperous. The European not think that the standard route of transfer payments Stability Mechanism, which in 2013 will take over the that America and Britain have used offers very much. tasks carried out by the EFSM and the EFSF, will be Transfer payments have had the effect in America and compulsory only for members of the euro area. However, Britain of locking in dependent and rather failed we recognise that it might be in the UK’s interest to economic areas. The Deep South of America was a contribute to rescue packages for member states in failed economic area for 100 years after the Civil War, difficulties, as happened with Ireland. Our follow-up when it was stuck with the currency of the north. inquiry looks at what fiscal union might look like and Finally, as others have said, the whole political includes a consideration of euro bonds, the implications objective of the EU was to get rid of nationalism, and for the European Union and the UK of the Greek what do we see? We see southern Europe starting to default and the write-downs of Greek debt, the role of get very resentful about being bossed around by Germany, the EFSF, the case for recapitalisation of European as it sees it, and Germany starting to get extremely banks and the position of United Kingdom banks. uncomfortable about being able to pay for things. This I doff my chairman’s hat and return to the other is hardly good news for good relations. side of this matter—the growth aspects. I rebut the I would like to throw on to the Floor the idea that notion of the noble Baroness, Lady Noakes, that our the only workable solution is for the euro to divide interest is different from that of the European Union. into a hard currency for northern Europe and a soft The two interests may well coincide. I encourage the currency for southern Europe. It would be easy to Government to stop deluding others regarding some achieve, but I believe I know how it could be achieved. of the good work that they do. We should not disguise I think that it would be workable because there is a the fact that we had a self-interest in helping out commonality of economic characteristics between the Ireland. When we contribute to the IMF fund, we northern countries and the southern ones. I think that should not say—as the Chancellor did—that we are if the eurozone turns its back on this in the present just one of 80 countries that have done so. We have a climate, it will miss a huge opportunity to stop chaos. purpose in supporting the IMF and we may need to do the same with the ESM in the future. 3.44 pm The noble Lord, Lord Newby, spoke of the problem that will emerge for us if we find that more and more Lord Harrison: My Lords, in thanking the noble of the European Union 27 member states join the Lord, Lord Newby, for so cogently introducing this euro, as they are destined to do. Three countries in the debate, I don my hat as chair of the sub-committee of western Balkans already attach themselves to the euro. your Lordships EU Select Committee which concerns We may be like the children at birthday parties in the itself with economic and financial affairs and trade. Harrison household who always wanted a place at the We are dealing with a number of reports on financial bottom of the table, away from where all the adults stability. We look forward to the noble Lord, Lord sat. We may end up at that table, supping with a Sassoon, responding to our report on sovereign credit couple of others who are excluded from the adult rating agencies and a further report on the new EU conversation taking place higher up the table. financial supervisory framework under three new EU Finally, the secret to growth—I was interested to supervisory authorities. Our current inquiry is looking hear the comments of the noble Lord, Lord Giddens, at how a single mortgage market might be established in this respect—is the single market. In this we can throughout the European Union. A future inquiry will find a political consensus. As the noble Lord, Lord look at the topical financial transactions tax. Among Hannay, has illustrated, if we secure the single market our regular scrutiny items are the EU prudential regime it will bring the prosperity, growth and jobs which we and the reaction to Basle III and CRD4. can all enjoy. However, the most important reports that we have produced recently, in March this year, was on the 3.50 pm future of economic governance in the EU and the euro. We are now producing a follow-up report, which Lord Shipley: My Lords, I join with others in thanking involved interviewing Sharon Bowles, the excellent my noble friend Lord Newby for initiating this debate. chair of the European Parliament’s Economics My view is that a demand for a referendum on Committee, and the German Ambassador Boomgaarden. membership of the European Union was an unnecessary On a cultural point, the ambassador spoke absolutely diversion. It was misguided and mistimed. Referendums fluent English and showed a grasp of British history are not flavour of the month and would simply have that I do not think any British spokesman or politician added to instability across Europe and the eurozone. could match if they were to address a German crowd However, Europe and the eurozone are often seen by in such a way. the general public as the same thing, so I think that the In considering the future of economic governance reasons for our being in the European Union need in the EU, we looked at the Commission’s proposals much stronger explanation. for the so-called “six pack” in achieving enhanced Being part of a single market is central to jobs. The economic co-ordination. We think that it is going in UK has 500 million consumers in that single market. the right direction. We believe it is essential that the Ten per cent of our jobs in the UK—3.5 million political authorities of the EU take that seriously and jobs—rely on that single market. We export strongly 1417 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1418

[LORD SHIPLEY] never applied to the fund but that it is likely to be to it. My own region, the north-east of England, is the extended to December 2013. Will the United Kingdom only region in the UK to have a positive balance of support that extension? It might be necessary. payments, and we have it largely because of exports to the EU. We also have across the UK non-EU foreign 3.56 pm direct investment which has come here because we are Lord Pearson of Rannoch: My Lords, I welcome the in a single market. The case for leaving the EU and debate, if only because it allows me to point out why imagining that growth would follow from being outside no British Government can do anything useful to it is very badly put. It would be economic madness to support either financial stability or economic growth withdraw from the EU, and it would cause a major rise in the European Union. At root this is because the big in unemployment. Of course, collapse of the euro idea that gave birth to the whole project of European would devastate jobs, too, and so we have a responsibility integration has failed. The longer the political class outside the eurozone for helping to solve the eurozone tries to prop it up the more painful the result will be to crisis. It is central to what our Government should be the peoples of Europe. doing because it is in our national interest so to do. Let me remind your Lordships once again what But we have to be very careful. that big idea was. It was that the national democracies I agree entirely with what the noble Lord, Lord of Europe had been responsible for two world wars. McFall, said about institutions, particularly democratic They therefore had to be emasculated and diluted into institutions, needing to give hope to the people that a new form of supranational government run by they represent. We have to be seen to be capable of technocrats, with their national Governments and resolving the problems in the eurozone. I want to draw Parliaments largely powerless. The euro, about which two things from what the noble Lord, Lord McFall, we hear so much today but which is not the deeper said, which, broadly speaking, was similar to something point, was never an economic project. It was supposed I wanted to say myself. The first relates to youth to be the cement that would hold the emerging corporatist unemployment. It is untenable for youth unemployment state together. Those who designed it in the 1980s across Europe to stand at 21 per cent. It is 21 per cent knew perfectly well that a currency zone cannot survive in the UK but in Spain it has hit 46 per cent. Our for long without a federal budget and without the 21 per cent is almost a million young people and it is ability to tax and send money from richer and poorer simply too high. Secondly, we have to learn more parts of the zone. Anyone who doubts this should from Germany because its comparative stability and read that great book by Mr Bernard Connolly, The growth can set an example for other countries, not Rotten Heart of Europe. least ourselves. Germany’s organisation, partly through the So the euro was to complete the project of European Mittelstand but also generally through communications integration by handing the essential power of taxation and systems involving employers, the education system, to Brussels. All the other powers would have been put trade unions, and so on, has led to a highly integrated in place by a sly and a steady succession of treaty system based on long-term planning as opposed to changes ending with the grand, overriding constitution short-term gain. which has come to be known, thanks to the French I find it quite astonishing that, despite the billions and Dutch people who turned it down in referendums, of pounds that have been spent in the UK on education as the Lisbon treaty. Now, all according to plan, a and training, we still have a major skills gap. British Government have some 8 per cent of the votes Unemployment in the north-east of England runs at in the secret law-making process in Brussels, which 11 per cent at the moment, twice the level of the interferes in almost every aspect of our daily lives—a south-east of England. And yet a quarter of the process in which your Lordships’ House and the House north-east’s manufacturing, engineering and processing of Commons are entirely irrelevant. The more the companies cannot find enough skilled workers. I welcome people understand this, the less they like it. every initiative we can take to recreate a desire in That, very briefly, is why I say there is not much any young people to learn vocational skills around technology British Government can do about financial stability or and engineering. For that reason I welcome university economic growth in the European Union. But there technical colleges, places where people learn skills to are deeper reasons, even further beyond the reach of do real jobs. One has just been announced recently in any British Government. As to financial stability, in Newcastle upon Tyne. I am very grateful for the work the time available it is perhaps best to let events caused of my noble friend Lord Baker in supporting this by the euro speak for themselves. It remains to be seen initiative. whether the people of first Greece and then elsewhere It is fundamentally important that to compete in will go along with the austerity required by the grand the modern world our young people have to have the euro plan that has been imposed on them without skills with which to do it. The skills gap that we have their informed consent. In the mean time, I hope that I would not happen in Germany. A week ago the CBI can be forgiven for saying: some cement, this euro. issued a report urging the Government and the City to As to economic growth, the position is equally concentrate support on the forgotten army of middle-sized hopeless. Here I draw your Lordships’ attention to a companies of up to £100 million turnover a year with short new publication from Civitas called Time To Say up to 500 employees. I hope that we can learn from No, written by my colleague at Global Britain, Mr Ian that. Milne, with a foreword by the noble Lord, Lord Vinson, My final point is a question to the Minister about of Roddam Dene. It draws heavily on a number of the European Globalisation Adjustment Fund to which Mr Milne’s one-page briefing notes to be found at he may be able to reply. I understand that the UK has Global Britain.org, which are a very underused resource 1419 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1420 in our national debate about the facts of our EU not for cheap goods but for better-quality good, branded membership—particularly the economic facts. I have products and advanced technology. As the noble Lord, time now to draw your Lordships’ attention to only a Lord Newby, explained in his opening remarks, this is few. Briefing note number 69 is entitled, “The Coming a time of turmoil in the eurozone, but as ever in EU Demographic Winter”. Between now and 2050 the business, that is the time to invest in the spadework, as USA will gain some 36 million in working-age population my noble friend Lord McFall explained. while the EU will lose 55 million or 16 per cent. The Is it that the Government see devaluation as the UK will go against that trend, increasing our working route to our future, and if so, for how long? The age population by 3 million or 7 per cent. This scleroticism, pound has devalued by 30 per cent against the euro in or whatever you want to call it, is guaranteed by the the last five years and surely this devaluation is one European Union’s incurable propensity to overregulate, reason for the high inflation we have now. It is the less thus dragging all its economies down in the face of well-off who pick up the tab for this strategy. If we are rising competition elsewhere in the world. As the to seek economic growth within the EU it must be world’s fourth largest exporter, this hits us particularly more for the excellence of our business, and less hard. through devaluation. The booklet also explains how customs unions have So, with devaluation less of an option, how do we become redundant; how our trade, both ways, with the encourage economic growth? The Government want EU has been declining for some time while expanding to achieve it by returning powers from Brussels— with the rest of the world; and why you do not need to repatriation, as the noble Lord, Lord Hannay, put it. be part of the single market to export to it, underlined So, what are these powers? It seems to me that they by the fact that Switzerland exports three times more deal with the way in which we run our businesses: per capita to the EU than we do and Norway five terms of employment, labour relations, regulation. times. The theory is that we can compete better with a more In conclusion, if this debate does nothing else, I flexible labour market and less regulation. This argument hope it will stop the Government and Europhiles has been around for years—long enough for us to constantly pretending that we need to stay in the EU judge whether or not it is true. I put to the Minister in order to maintain our exports to clients in it and the that in practice the argument no longer stands up. jobs that depend on them. If the Minister does not So-called flexibility does not create more value. That is want to take my word for this, Channel 4’s “Fact why a lot of businesses have moved on. They are Check”section on 1 November reveals that the academics putting into practice the social values that help create who originally found that 3 million of our jobs depend the motivation and commitment that are acceptable to on the sale of goods and services to clients in the EU the markets and to people, and which make their have never said that any of these would be lost if we businesses more trusted and create longer-term value left the EU. Of course they would not, and the sooner for all. Withdrawal of powers will not make us more we do it, the better. competitive. I will say one more thing—this time to the noble 4.01 pm Lord, Lord Pearson. The big idea has not failed. For my generation the EU is more than economics. It is Lord Haskel: My Lords, during the referendum peace instead of war, as the noble Lord, Lord Bilimoria, debate on 24 October in another place, at col. 60, one said; it is shared prosperity instead of social divisions; honourable Member—a Conservative colleague of the it is mutual support in an interdependent world. Europe noble Baroness, Lady Noakes—asked why Members is certainly far more than the pleasures of driving a were worried about seeking a better deal with the EU. Mercedes car or drinking fine Bordeaux wine. If we did, he said, the French would still sell us their wine, the Germans would still sell us their cars. Do noble Lords opposite really think that this is why we 4.06 pm are in the EU, so that we can drive around in Mercedes Lord Liddle: My Lords, as many noble Lords have cars and drink fine French wines? said, the noble Lord, Lord Newby, was very timely in My concern is that if we are not in the EU, the choosing the topic for debate today. I agreed with French will stop buying our avionics, the Germans our virtually everything he said in his speech, although for pharmaceuticals and both will stop buying our insurance. the sake of the record I ought to say that I disagreed As other noble Lords have pointed out, half of our with his description of the previous Labour Government trade is with the EU. If we are not in the EU, will the as an awkward partner in Europe. He should go to French and Germans invest in the new power plants Brussels and ask what people today think of the that we so desperately need, and will Asian investors coalition. We should remember the influence the previous restart our steel plants and invest in our car factories? Labour Government had over the Lisbon strategy, Of course not, as the noble Lord, Lord Shipley, explained. European defence and climate change policy. There It is outrageous to risk all of these actual jobs and were three new treaties. We greatly increased British investments with some kind of imaginary option which influence in Europe. Our problem was that we did not probably does not exist in reality. make a strong enough case for Europe in Britain. This The opposite is true: we should be taking even more iswhatwenowhavetodo. advantage of our association, and the timing is right. The central issue in the debate is how Britain should With a weak pound, rising prices in Asia and supply keep its place among the adults, as my noble friend chain problems, the word near-shoring is beginning to Lord Harrison said, at the European dining table. be heard, as my noble friend Lord Giddens told us, Some people think that Europe is irrelevant. The noble 1421 EU:FinancialStability/EconomicGrowth[LORDS] EU:FinancialStability/EconomicGrowth 1422

[LORD LIDDLE] protectionism—destroying the single market in its Baroness, Lady Noakes, is among those who think wake—or going for a single currency. Europe chose that the single market is relatively unimportant. For the single currency. the noble Lord, Lord Pearson of Rannoch, it is a The noble Lord, Lord Teverson, mentioned Bretton complete waste of time. I will give one example of Woods, where Keynes’s essential argument was that something good that the Government did this week in free trade and open markets are far more important to my home town of Carlisle. They gave a grant to Pirelli economic dynamism than flexible exchange rates; and tyres, which employs 1,500 people in Carlisle, to develop it is very difficult to have both at the same time. That is innovation in new tyres. Why is Pirelli in Carlisle? why the present situation is such a threat to Britain’s Because it gives access to the European single market. vital interests. Let us not kid ourselves: if the euro People such as the noble Lord, Lord Pearson of Rannoch, fails, we will not see a return to the status quo ante. I would destroy those jobs. do not agree on this point with the argument of the noble Lord, Lord Bilimoria, for whom I have the most Lord Pearson of Rannoch: My Lords— wonderful respect and admiration. The likelihood is that if the euro broke up, the single market would Lord Liddle: I am not giving way. The single market break up as well, in a new Europe of competing is a difficult bargain. The Government say that they currencies. Member states would take protectionist want to promote it, but when a lot of people are measures against each other to prevent what they see worried about its social effects, how will they be effective as unfair competition. in promoting it at the same time as they are trying to For Britain, which conducts so much of its trade withdraw the United Kingdom from our social and and which has so much investment dependant on the employment obligations? This is a fundamental issue single market, this would truly be an economic catastrophe. for the coalition and a fundamental contradiction in It would not be just an economic catastrophe. The its policy. collapse of the euro would, as Mrs Merkel said, put I agree with right reverend Prelate the Bishop of the European Union itself at risk. I believe that the Bath and Wells and with other noble Lords who said single market is the foundation stone of the European that the single market in itself is not enough. We need Union and, as I have argued, the euro is its essential a European plan for growth. It is not difficult to put cement. Pull that away and in place of the remarkable that together. Hundreds of millions of pounds lie unity that we have seen in Europe since the Second unused in structural funds, many in the United Kingdom. World War, we retreat to a Europe of fractious nation What will the Minister do about that? The European states. Investment Bank already does far more to support This is what it would be: we in Europe decide to small businesses in Britain than anything the British become Westphalian pygmies at the moment that Brazil, Government do. We could expand that role very India and China become globalisation giants. What considerably. hope would there be for our ability to promote the Several noble Lords have said they think devaluation values that we share, with Europe and not with the is needed as part of growth. May I draw their attention United States, to back international development, reduce to an article in this morning’s Financial Times? Its world poverty, tackle climate change, advance democracy respected economics editor, Mr Chris Giles, points to and human rights and help to solve the problem of some striking figures, comparing the net trade contribution failing states? What would happen then in that disastrous to GDP since 2008 for the UK and Spain, both hit situation to the ideals of the founding fathers of the badly by the banking crisis. For the UK, with 30 per European Union who fought for a Europe whole and cent devaluation, trade has improved our GDP by free, at peace in a co-operative partnership of nations 2.5 per cent; for Spain, stuck in the eurozone single where elements of sovereignty were pooled in the currency, its trade contribution to GDP has improved cause of democracy, freedom, prosperity and social by 6.3 per cent. Devaluation is not the cure. justice? I said that this debate was timely and serious. It Britain will be an enormous loser if the European really is serious, because as the eurozone hovers on the project founders. It must not happen. We must strain brink of an existential crisis, we should recall the every sinew as a Government and as a Parliament to words of the German Chancellor Angela Merkel, that avoid that terrible catastrophe. In doing so, I say to the if the euro fails, Europe fails. For Germany, that noble Lord, Lord Pearson of Rannoch, that we are would be unthinkable. Such an outcome should be not traitors to our national interests but are giving a unthinkable for the United Kingdom, too. practical expression to modern patriotism. Let us recall that the euro was not conceived as a foolish political venture that took priority over the 4.15 pm single market, as some noble Lords appear to think. Instead, it was the only practical means to sustain the The Commercial Secretary to the Treasury (Lord single market once capital movements were liberalised Sassoon): My Lords, I am grateful to my noble friend under the 1992 programme that was so strongly advocated Lord Newby for initiating this debate. It has been a by the Government of the noble Baroness, Lady Thatcher. valuable and insightful debate on stability and growth Free capital movement made it impossible to continue in the European Union and comes at a particularly with the system of managed exchange rates under the good time. As your Lordships are all aware, it has been ERM. At the end of the 1980s, Europe faced a simple an incredibly turbulent few months, few days, and few choice between reverting to free-floating exchange rates, hours for the global economy. The euro area is at the which risked competitive devaluations and a return to epicentre of this instability. A decisive resolution to 1423 EU:FinancialStability/EconomicGrowth[3 NOVEMBER 2011] EU:FinancialStability/EconomicGrowth 1424 the crisis is in our vital national interests, a point that global institution is properly resourced to do its job. was vigorously underlined by my noble friend Lady That is in the UK’s interest. That is what we will do, Noakes. Such a resolution would provide the single but that is very different from entertaining suggestions biggest boost to the British economy this autumn. that the IMF should put its own resources into a Last week, good progress was made towards reaching potential euro area special purpose vehicle. I say to the a comprehensive solution for the euro-area crisis. It is noble Lord, Lord Hannay of Chiswick, that there has one that echoes the approach we have been advocating. indeed been talk about that. That is not within the First, there is the recapitalisation of European banks. remit of the IMF, which supports individual countries. As agreed last week, all major European banks will be The Government’s position is that we will support the required to hold at least a 9 per cent core tier 1 capital IMF in its mandate; that is not a mandate that does or ratio by the end of June next year. Importantly, the should extend to euro area or any other special area assessment by the European Banking Authority is that bailout funds, which are a completely separate matter. no British banks require additional capital. Lastly, I remind noble Lords that our support for the Secondly, there is the resolution of Greek debt. IMF does not add to our debt or our deficit and that There is a headline agreement to reduce the Greek no one who has provided money to the IMF has ever debt-to-GDP ratio to 120 per cent by 2020, with lost money. private holders of Greek sovereign debt being asked to Of course, the package that I have summarised is accept a nominal write-down of 50 per cent. I should not the answer to the longer-term reforms that are remind my noble friend Lord Marlesford that Greece needed to make the euro area work more effectively. is subject to an adjustment programme to which the All euro area members need to implement credible IMF is a party, so there are indeed very considerable plans to reduce budget deficits. That commitment was and appropriate strings attached. made in the very first section of last week’s agreement. Finally, in the package is reinforcing the firewall We will continue to ensure that our voice will be heard between Greece and other vulnerable euro-area countries, and our national interests protected. In response to a either by using the bailout fund to provide insurance question asked by the noble Lord, Lord Bilimoria, on new debt issued by euro-area countries, or by this will of course include planning to cover the widest creating special purpose vehicles to attract private and range of scenarios that may develop. public resources. As my right honourable friend the It is essential that matters that affect all 27 member Chancellor said, the immediate priority must be to states continue to be discussed by all 27 member implement the agreement that was entered into on states. This is the approach that we will take to protecting 27 October. and promoting the single market. We have agreement That is the particular and immediate. At the other and confirmation of that as a result of my right end of the spectrum we have had considerations of honourable friend the Prime Minister’s intervention existentialism and very broad future scenarios painted on 23 October. The noble Lord, Lord Hannay, asked by the noble Lords, Lord Liddle, Lord Pearson of about the euro-plus pact. The Government took a Rannoch and Lord Bilimoria, and my noble friend clear decision not to join the current pact as they Lord Flight. I should say at this point that I regret that viewed the pact as a response to the specific needs of I will probably disappoint them by not entering today the euro area and there has been no change in that into speculation about what will go on in the future. I position. The vast majority of decisions on economic will concentrate on the immediate practicalities of the and financial policy are made by the EU 27, not by the eurozone as we face them today. euro area. That will not change. We still have our The first thing I will address is the question about 29 votes, the same number as France and Germany, the IMF, UK resources and where we should put and we play an active and positive role in all Council them. The noble Lords, Lord McFall of Alcluith and debates. Of course, as noble Lords know full well, it is Lord Hannay of Chiswick, do not paint a fair reflection not a question just of the UK being outside the of the UK’s position towards the IMF and bailout euro-plus pact; the Czech Republic, Hungary and funds. My right honourable friend the Chancellor of Sweden did not join either. the Exchequer has been clear that building up IMF As noble Lords have recognised, because the single resources and building up euro-area bailout funds are market is one of the most powerful tools we have to separate issues. The UK has always been a strong promote sustainable, mutual and renewed growth in supporter of the IMF as a global backstop to the the UK and across the EU, we must continue to work world economy, and this support has been from hard to progress it. We have made substantial progress Governments of all political standpoints since the to complete the single market over recent years and IMF’s foundation. The Chancellor of the Exchequer the UK has worked hard to prioritise measures that has said that the UK, bring the greatest benefit to growth. That is why we “stands ready to consider the case … for further increasing the have strongly supported the liberalisation of EU cross- resources of the IMF to keep pace with the size of the global border trade in services, prioritising the passing and economy”. proper implementation of the services directive. Even That point was reinforced by my right honourable conservative estimates place the benefits of this at a friend the Prime Minister earlier today. very substantial 0.8 per cent of EU GDP. In recent years some of the biggest use of IMF There are huge gains to be had for growth and job funds has been for countries such as Mexico and creation, a point that my noble friend Lord Shipley Poland, both non-euro-area countries. In uncertain drew particular attention to, and those come from times, lots of areas around the world may need IMF even the smallest changes to protect and promote truly support and it is important to ensure that this key free and open markets within the European Union, a 1425 EU:FinancialStability/EconomicGrowth[LORDS] Television Advertising 1426

[LORD SASSOON] I turn next to financial services, an area to which a point underlined by the right reverend Prelate the number of noble Lords drew attention. In the past Bishop of Bath and Wells. I refer, for example, to that year the Government have demonstrated the same genuine single market in services, addressed by the resolve to promote an open and single market in noble Lord, Lord Giddens. A digital single market financial services. I say to my noble friend Lord Teverson could add ¤800 billion to EU GDP. The Government that I do not recognise that there has been any loss of have led the way in that. My right honourable friend voice in this area. Yes, we have to recognise that there the Prime Minister’s pamphlet, Let’s Choose Growth, is a change of architecture and make sure that within published in March this year, provides the blueprint to that architecture we maximise our voice, but I would realise that gain. I draw the attention of the noble suggest that the evidence is that we are being heard. Lord, Lord Haskel, to that pamphlet because that is For example, on the alternative investment fund managers the way in which the Government see growth in the directive, we completely reversed the Council’s position eurozone being driven forward. It has nothing to do to ensure that the directive is internationally consistent with repatriation of powers, as he seeks to paint it. and non-discriminatory. The Prime Minister also secured language, in the On the Basel III reforms, we are working with the 23 October European Council conclusions, which calls Commission to ensure that the capital requirements for an EU growth test to filter out EU legislation directive reinforces rather than weakens the single which is harmful to growth and jobs. That is positive market by having high, common and consistently applied and important. I am, of course, grateful for the ongoing standards for capital, just as we are doing at the G20 work of the noble Lord, Lord Harrison, in your to ensure that we do not distort international competition Lordships’ European Union Committee in discussing and markets. Likewise, we cannot undermine European and helping to promote these ideas. competitiveness by unilaterally implementing a financial In support of that, my noble friend Lord Newby transaction tax. At a time when we have to do everything asked about our positioning of UK officials in Brussels. we can to promote growth, a tax to undermine Europe’s I recognise that we have to work harder in this area, competitiveness is in no one’s interest. but I believe that the push on this, which the Foreign These continue to be turbulent, dangerous times for Office made last year and continues to make, has led both the European economy and the global economy. to success in the EU campaign. On the number of Within Europe, the decisions reached last week are a candidates put forward for EU positions, we have seen big step to resolving the crisis that has undermined the UK rise from a lamentable 19th place to a barely economies around the world since the summer. We respectable, but much better, 12th position last year. still have a long way to go to finalise the details of that That is one indication that we are making some progress, agreement and it is important that all parties to the butwehavetoworkharder. agreement deliver on their commitments. Beyond that, the UK will continue to be at the heart of that process In respect of this positive agenda, I am grateful to and the process of coming up proactively with pro-growth my noble friend Lord Razzall who talked about the policies for the UK and for Europe. At the same time, wider group of pro-growth member states, which regularly we will continue to protect and promote our interests meets with my honourable friend the Minister for across the EU. Employment Relations, Consumer and Postal Affairs and with counterparts from 13 other EU member states. In conclusion, I am very grateful to my noble friend There are lots of very practical things on the agenda Lord Newby for stimulating this debate and for the that officials and my ministerial colleagues are working constructive proposals and suggestions from all sides on, just as your Lordships’ committee is doing. of the House. That takes me on to the outward-facing aspect of this, to which a number of noble Lords have drawn 4.32 pm attention. We must remember that the gains to be Lord Newby: My Lords, I thank all noble Lords made from freer trade are not just a matter of completing who have taken part in this fascinating debate. I am the single market but are a matter of completing the sure that the one thing uniting all participants is that outward-facing trade arrangements under the Doha the issues we have been debating are of central importance trade round and out-of-trade bilateral agreements. to the future growth and stability of the UK economy. That is a critically important area to which my noble We will no doubt return to them frequently in coming friend Lord Newby drew attention. The Government months but, for today, I beg leave to withdraw the Motion. continue to support the Doha round. It is important Motion withdrawn. to complete Doha as a matter of urgency but we also should point to the importance of the EU’s bilateral trade deals with markets such as India, Canada and Television Advertising: Communications Singapore. On the point made by the noble Lord, Lord Giddens, about labour mobility within the EU Committee Report and outside it, of course those bilateral deals pick up Motion to Take Note important issues related to labour mobility as far as they link directly to trade. My noble friend Lord 4.33 pm Shipley raised a detailed point. There have indeed been very recent Commission proposals to extend the Moved by Lord Clement-Jones European globalisation fund. I can certainly assure That this House takes note of the report of the my noble friend that we are currently considering the Communications Committee on Regulation of Government’s response to those recent proposals. Television Advertising (First Report, HL Paper 99). 1427 Television Advertising[3 NOVEMBER 2011] Television Advertising 1428

Lord Clement-Jones: My Lords, I declare an interest advertisers and other broadcasters from what was as a sometime employee of London Weekend Television then perceived as potential and unhealthy market in the 1980s. First, I thank my fellow members of the dominance from a unified ITV. The other major form committee, those who gave evidence to us, Ralph of regulation of advertising on ITV is COSTA—the Publicover and Audrey Nelson who were successively code on scheduling of TV advertising—which specifies the clerks to the committee, and our expert advisers, an average of nine minutes advertising an hour on Professor Patrick Barwise, emeritus professor of satellite channels and seven minutes on commercial management and marketing at the London Business public service broadcast channels. School, and Professor Steven Barnett, professor of The committee inquiry considered a number of communications at the University of Westminster. questions: whether the current level of regulation of I also want to pay tribute to Michael, the late Earl television advertising is appropriate; what the financial of Onslow, who, if his health had permitted, would impact might be on television companies if changes have taken over the chairmanship of the Communications are made to the regulation of scheduling and sales of Committee for this its first inquiry after the general television advertising; and the extent to which current election. I took over the acting chairmanship as a arrangements reflect the public interest. It was not result. Despite ill health, as the House may imagine, he always easy—as committee members will testify—to contributed intermittently but vigorously—sometimes come up with a clear answer, and sometimes fine even on the telephone. He was a considerable individual judgements had to be made but if in doubt, when and we all miss him greatly. looking at particular proposals, we tried to give priority Let me set out the background to the inquiry. The to television viewers’ interests. UK television advertising industry has changed over The committee came to the following conclusions. recent years as a result of the growth in the number of First, the COSTA regulations should be harmonised commercial channels, competition for marketing budgets to level the playing field between public service and from internet advertising and the economic downturn. commercial broadcasters when digital switchover happens This has led to calls for changes in the regulation of in 2012. Research suggests that viewers would not television advertising. support an increase in the amount of advertising on Although there has been some deregulation within television, especially on ITV1, Channel 4 and channel the industry, there remain constraints on the quantity, Five. It was our view that a reduction in the quantity scheduling and content of television advertisements of advertising airtime that broadcasters are allowed to and additional constraints on the price of commercial sell may well improve the viewer experience and would airtime—on ITV1 specifically. During 2008-09 there certainly be fairer to those channels, which are limited was a sharp fall in the revenues earned by commercial more than all other commercial channels at the moment. television companies from the sale of advertising—some As I said, under the COSTA rules public service 16 per cent. This was, in part, a reflection of the broadcasters such as ITV1, Channel 4 and channel general economic downturn but it was also due to Five are permitted an average of seven minutes of other developments including the migration of advertising advertising an hour and a maximum of eight minutes from television to the internet. When we started the at peak times. On balance, our recommendation was inquiry there had been some recovery of ITV advertising that all channels should be allowed an average of revenues in 2010, which seems to have continued into seven minutes an hour, with an appropriate peak-time 2011, but the movement of advertising towards the maximum which would be determined after research internet seemed—and still seems—likely to continue. from Ofcom. If the advertising-funded model is in irreversible We also concluded that the CRR undertakings are decline this would have serious implications for the no longer the most appropriate mechanism for regulating future of commercial public service broadcasting. The how advertising airtime is sold on ITV1. YourLordships committee therefore decided to conduct an inquiry may have caught the speech today of the noble Lord, into the current regulation of the television advertising Lord Grade, in which he was exceedingly vigorous in market and how changes might assist the commercial his condemnation of the CRR rules and the remit of television companies to maintain revenues and output the Competition Commission. We took the view that to the benefit of the viewer. At the time, the Secretary the context in which CRR had been imposed had of State for Culture, Media and Sport was also reported changed sufficiently to justify this view and that the to have asked his officials to examine the case for Competition Commission when recently examining ending regulation of the rates ITV could charge for CRR had not been able to take more than a narrow, advertising. It therefore seemed a good time to look at competition-based view, which did not take account the whole question of advertising regulation but focusing of the wider public interest and in particular the on the regulations that do not involve advertising clearly understood preference of television viewers for content. UK-originated content, as well as the contribution that increased original production makes to the nation’s Television advertising in the United Kingdom is creative economy. subject to regulation in its scheduling and its sales arrangements. There is in particular a set of rules—the ITV still dominates the market for fast-build advertising contract rights renewal undertakings, or CRR—which in mass-market popular television shows, but even so regulate what ITV can charge for advertising. These the competition has changed considerably, with heavy undertakings were required by the Competition consolidation of the main media buyers into four Commission in 2003 as part of the arrangements for organisations. On CRR, the committee therefore the Carlton/Granada merger to proceed to protect recommended that these undertakings should be removed 1429 Television Advertising[LORDS] Television Advertising 1430

[LORD CLEMENT-JONES] find a more transparent system which includes a robust on the important condition that they are replaced with appeals process to address any outstanding industry binding undertakings devised and given by ITV plc to concerns. invest an appropriate proportion of any additional How have our recommendations fared at the hands revenues from advertising in increasing its investment of the Government and the competition authorities? in quality, wide-ranging original UK programming on Well, needless to say, we have not seen an instant ITV1, and in training. If the television advertising relaxation of the rules yet, but a victory took place regime is to be changed, we were insistent, however, almost before the ink was dry. In March, just weeks that the binding undertakings we recommended would after the committee’s report was published, Ofcom be rigorously upheld. All in all, the committee felt announced a review of the advertising trading model, strongly that changes are needed to the regulation of as we recommended. This will be a significant step in television advertising and that our recommendations assessing whether the CRR rules should be changed. would encourage our commercial public service The consultation document was launched in June this broadcasters to provide their viewers with quality year and covers many of the areas which the committee original UK television programmes. After all, even in was concerned with: transparency of pricing, signals, multichannel homes, over half of all TV viewing still bundling of airtime and lack of innovation in the goes to the five core channels. system. Above all, it is looking not only at the impact As we said, it is extremely difficult to predict how on advertisers, but also on TV viewers—an aspect that much ITV plc would stand to gain in additional advertising the Competition Commission was unable to consider revenue from the removal of CRR. However, the in relation to CRR in its review. I trust that the review available evidence suggested figures of around £30 million will be short and sharp. Ofcom also believes that more to £55 million per annum. This equates to roughly work is needed before changes to advertising minutage 5 per cent to 10 per cent of ITV1’s current investment are made—that is, under COSTA. It is examining the in original UK content. The public service broadcasters, potential economic impact and public interest arguments I must emphasise, are vitally important for original of different options. UK production. Despite the advance of multichannel The Government believe, and gave evidence to the effect, television and commitments from other broadcasters that they currently lack the power to lift CRR without such as BSkyB to spend more, the PSBs still account the competition authorities’ recommendation, unless for over 90 per cent of first-run original UK production, changes are made in the forthcoming Communications excluding sports rights. On the basis that they can be Bill. However, I shall be interested to hear what the held to their promises, this rebalancing of television’s Minister has to say because they seem to have accepted advertising money would therefore be seen on our that the Competition Commission was only able to television screens, to the manifest benefit of viewers take a narrow view when reviewing CRR in 2009-10 and the creative economy, and would partially compensate and have welcomed Ofcom’s enquiry into the advertising for the £500 million which has been lost from original trading system. They are somewhat doubtful about the UK production in the last six years. desirability of how to formulate and enforce any undertakings We noted that the changes to CRR may require of the kind suggested by the committee. primary legislation, but that it would be preferable to In summary, the Government seem to be attracted deal with these as soon as possible under the aegis of to a more deregulated environment but uncertain about the Secretary of State for Culture, Olympics, Media how to achieve it. This is understandable given the and Sport. We recommended that the proposed changes very different views that we heard about the impact of are implemented at the very latest as part of the next CRR, but with Ofcom’s advice they should be able to communications Act. come up with a practicable solution. There is clearly a A third extremely important element of our great deal of water to flow under the bridge. We did recommendations arose out of our view, in common not expect a quick response in terms of action. We are with the Competition Commission and Ofcom, that pleased that the committee’s report has had an important the trading system used for selling television advertising response from Ofcom and the Government. We look is complex and arcane. This traditionally is based on forward to further progress which will explicitly feed an annual “deal round”, often on a so-called umbrella into the forthcoming communications Green Paper basis between advertisers, media buyers and broadcast and the subsequent Bill. I beg to move. sales houses involving a negotiation over the price of “commercial impacts”, essentially the eyeballs of particular 4.46 pm types of target audience and unrelated to buying advertising slots in particular identified programmes, Lord Patten: My Lords, I hope that your Lordships based on the discounts off station average price available take close note of this report—it is a good one—and for particular share of advertisers’ budgets. We took in particular of the pressing need to clean up the the view that the lack of transparency within the system of contract rights renewal, or CRR, to which trading system favoured neither fair competition nor my noble friend Lord Clement-Jones has just referred. the viewer. We noted that for certain programmes By their own words in this report, Ministers do not called “specials”, such as the “X Factor” final or a fully understand the CRR system. I hope that once Champions League match, different arrangements were they do, they will take speedy action in the public put in place which could relate to the ratings of the interest to change it. That need is urgent. programme itself. We therefore recommended that I have no interests of any sort to declare. I have no there should be a short, focused review of the trading business or professional interests in TV or advertising. system for television advertising airtime in order to Rather insultingly, no person, company or body has 1431 Television Advertising[3 NOVEMBER 2011] Television Advertising 1432 lobbied me to make my voice heard in the debate. I try I think the CRR system should be reformed completely. not to take that amiss. I decided to take part as a It should be subject to enhanced public interest Back-Bench and serious non-expert. I read the report— undertakings, and subject to an equally enhanced sometimes a dangerous thing for anyone to do. Not adjudication process to help complaints about the way only do I declare no interest of a professional or advertising airtime is sold. This is because of my belief commercial sort, in the interests of transparency—to that—as ITV strongly and to a lesser extent channel which I shall return in a moment—I also declare that Five have argued—if CRR was removed then advertising at one stage in our lives down the road here in revenues would increase. If advertising revenues increase, Westminster, we had a deliberate and considered total this will enable broadcasters, by charging more for lack of interest: we brought up our daughter in a advertising, to invest more in programming and invest home without a television set. I hope that my coming more in the training of broadcasters. Better programming? out in this way does not overly shock those of your That is highly desirable. Better training? More training? Lordships of a delicate nature. Indeed, the fact that we Both are highly desirable. Both to be guaranteed by a brought her up in this way led to one notable occasion new public service broadcasting undertakings arrangement when she was asked in her primary school class to of a binding sort is a proper trade-off for the transparency name her favourite mid-week programme. She was and deregulation that I really thought our coalition forced to explain that she did not have one because she Government favoured. did not have a television set at home. I was told that This reform of the contract rights renewal system is that led to some debate later in the staff-room of the urgently needed. It is in the public interest. In the light possible need for social services to check up on the of the migration of advertising to the internet pointed manifestly cruel and unnatural lifestyle imposed on out by my noble friend Lord Clement-Jones, it is much her. Having left one of England’s ancient universities, needed as well to sustain good programming and good she has more than made up for lost viewing time training for good broadcasters. I congratulate him and subsequently. his colleagues on this excellent report, and for pinpointing If one refers to the excellent glossary at the end of the pressing need for CRR to be reformed as quickly this well produced report, one sees that contract rights as possible, something that I hope that Ministers will renewal is defined simply as: listen to. I ask my noble friend on the Front Bench not to respond in any detailed way to what I have said, but “A set of undertakings which determine the way in which ITV to draw my views to the attention of the Ministers plc is able to sell advertising airtime on ITV1”. responsible. That seems crystal clear and simple, but in practice it is not. CRR seems to lack much transparency of any 4.53 pm sort and is exceptionally hard to understand, at least according to the Ministers who have the responsibility Lord Lipsey: My Lords, I too very much welcome of understanding it. The Ministers giving evidence fell the report, which, besides its recommendations, contains over themselves throughout to stress their own lack of a wealth of information on the system. If I might, not understanding of the CRR system. As I ploughed having been a member of the committee, I join the through the report, I carefully noted their various noble Lord, Lord Clement-Jones, in saying that the descriptions of it. First, they described CRR as “arcane”; special advisers to the committee, Professor Barwise then, slightly revving up, it became “complex”. Getting and Professor Barnett, really deserve an accolade for a bit racier, it was termed reminiscent of the Schleswig- the work they have done, whether or not one agrees Holstein question. Warming to their theme, it was with them. “Byzantine”, then “highly complicated and Byzantine”, This debate has been long delayed. The report came before peaking with the truly wonderful “Byzantine out in February and only now in November are we and incestuous”, to be found on page 195 in all its debating it. However, that is quite desirable in one way glory. I look forward to being reassured that HMG are because Ofcom is now within a few weeks of making not in favour of incest whether in business or elsewhere. its decisions on these matters. Therefore, I hope that If your Lordships and Ministers apply that valuable the words uttered in this Chamber may have more old test, “If one cannot explain it, it should not exist”, effect on it than they would if it had had longer to the CRR system, which we have allowed to carry on, forget them. fails absolutely. I only want to make two points, in one of which I This is not some arcane administrative sideshow, disagree with the report. Its authors will not worry too for the public interest cannot be served nor the market much about that, but I also disagree with practically be perfectly informed about a cloudy system that everybody else in the world, a not-unfamiliar position determines how the approximate 80 per cent of annual in which to find myself. In the other point, I powerfully deals and the 20 per cent of short-term burst deals are agree with the report, and hope that it will bear fruit. agreed. It is right that the public—and best of all even The thing that I think that I disagree with the report junior Ministers—should be able to understand it. about is minutage—COSTA. As an economist, I find The CRR system should be reformed completely so I the concept that we should limit the number of minutes very much echo what my noble friend Lord Clement-Jones of advertising extraordinarily curious and hard to said earlier. Alas, I was not in the Chamber to hear my justify. It is a strange regulation to have introduced. noble friend Lord Grade of Yarmouth in an earlier When it was introduced, there was a powerful case for debate, but it sounds as though we agree pretty strongly. it, because ITV then had a monopoly; it was, famously, We have never discussed the issue; again, I say this in a licence to print money, and you had to do something the spirit of transparency. to restrict the amount of money it was allowed to 1433 Television Advertising[LORDS] Television Advertising 1434

[LORD LIPSEY] poll because it does not give the trade-off. If you ask print. Of course, the situation is completely different people, “Would you like more taxes?”, they are inclined today. Barely a minute goes by without my television to say no. If you ask them, “Do you want more taxes seizing up with me being asked whether I wish to add to pay for better health services?”, they might be additional channels; we are up to something like 1,200 inclined to say yes. Similarly, with television advertising, or 1,300. There are more porn channels today than if you ask the viewers, “Would you be prepared to put there were channels in total 10 years ago. A monopoly up with more advertising if you got more ‘Downton has turned into a properly competitive industry. It is Abbey’?”, they might well say yes. I do not know. very curious that the Government should seek to limit Certainly they would if you said more “Strictly” or the output of competitive industries, in this case one more of Simon Cowell or whatever they much like output being advertising. to see. Why do people cling to this? I think, in most people’s It really is not a valid argument to rely on what the heads, the reason is due to America. If you watch opinion polls show. We have to make our own judgments. American television—like other noble Lords present I In my judgment this is an indefensible piece of have recently spent some time in America—you will overregulation, which leads to all the things that know that it really is completely ghastly. Actually, in overregulation usually gets. Now we get competitive some senses, the ads are a relief from the bloody briefings from various organisations, all talking for programmes, but one ghastliness about it is the amount their vested interests as to whether they want this to of advertising. Therefore, there is a respectable fear change or to be put down to the same level for every that our television would become like that. However, broadcaster. As usual, what should be decided by the this fear is greatly overdone for two principal reasons. market is being decided by competitive political lobbying. The first is the BBC. If we do not like the amount of That does not seem to me, as an economist, to be very advertising on the commercial channels, we can turn desirable. to the BBC; sometimes the BBC itself is an offender That is where I disagree with the report. Where I because it contains so many trails for upcoming agree with it very much is that there has to be a programmes as to seem almost like a commercial relaxation. I quite agree with it on CRR, but I believe channel itself, but that is beside the point. The BBC’s that the benefit of the relaxation should go to viewers market share is roughly a third of the market: 33.1 per in the form of more spending on programmes and not cent, according to its latest annual report. Compare to anyone else. To use a fashionable phrase, there is no that with America. There are no exactly comparable case for giving the broadcasters “something for nothing”. figures because PBS—public broadcasting in America— Having been a director of an ITV company, London does not publish figures for its share but, thanks to the Weekend Television, I know how attractive it is to say wonderful work of the Library, I have established that that you want certain relaxations in order to provide a it is roughly 1.3 per cent: a 30th of the BBC’s share. better service to broadcasters and then hand the money The alternative of turning to public broadcasting if to the shareholders. The shareholders invested in these you do not like the amount of advertising is not there; companies knowing full well the limitations on them. you have to put up with what you get. It is a completely Some of them were no doubt hoping that the authorities different situation. would hand them a bonanza by lifting the advertising The second reason is of course that we have quite a restrictions, but we should not be falling over backwards lot of good television. Most of us now have DVRs. On to grant them a windfall gain from the removal of good days I can even work the DVR, thanks to Sky+, restrictions. which has transformed so many lives. Thanks to a I wholly agree with paragraph 47 of the report that DVR you can, if you want, watch a programme later any relaxation should be matched for viewers by an and accelerate through the adverts, so any channel enforceable commitment to spend more on programmes. that puts too many ads in is simply inviting people to Of course, the detail of that is complicated. It is not an postpone their viewing and rush through the ads. easy thing to do. However, I can think of a symbolic There is therefore a powerful competitive force which way in which this could be done: ITV could agree to says, “Do not put too much advertising on, otherwise restore “The South Bank Show”—so wonderfully you will lose your viewers”. compèred by my noble friend Lord Bragg—which it There is a complication, a European directive which cruelly and remorselessly butchered in December 2009 limits advertising to 12 minutes per hour. Pro-Europeans to the immense disbenefit of its more sophisticated will say, “Well, it’s great that we’ve got a limitation”, viewers and indeed of its reputation with the public. and anti-Europeans will be surprised that the limit is so much higher than those which we ourselves impose: 5.03 pm nine minutes for all channels and seven minutes for the public service broadcasters. The European limitation Lord Razzall: My Lords, following the remarks of is so far above our limitation that for practical purposes the noble Lord, Lord Lipsey, I ought to report that, as it does not preclude a sensible liberalisation of our a member of the committee, his noble friend Lord rules. Bragg showed remarkable restraint in not making the Why should we keep COSTA? The noble Lord, point that the noble Lord, Lord Lipsey, has just made. Lord Clement-Jones, gave the only argument there is: I think I speak for every member of the committee viewers do not want more advertising. It is true that who had not previously been involved in the television polling evidence contained in this report shows that industry when I say that when we started on this viewers do not want more advertising. However, I do inquiry we were to some extent extremely surprised not think that is a very sensible question to ask in a and in some cases shocked to discover the way in 1435 Television Advertising[3 NOVEMBER 2011] Television Advertising 1436 which TV advertising was sold. That very much content and training. Although ITV might not like to coloured our deliberations. As a relatively sophisticated be quoted on the exact detail, the representations that business person, I would have assumed, until I got to the committee received from representatives of ITV the first meeting of the committee, that advertisers showed that it was very open to do this. Obviously, were by and large able to choose which programmes there will be a question of definition and what is they would like their products to be advertised around. meant by improved programming; it cannot just be I was somewhat surprised to discover that that applies ITV making programmes that it would have made only to about 20 per cent of advertising, during big anyway. However, it is perfectly possible to measure events such as a cup final or “The X Factor”. I do not that. Those undertakings are very important. know whether that yet applies to the next episode of “Downton Abbey”, but no doubt the noble Lord, Lord Patten: Would my noble friend also add to his Lord Fellowes, who is not speaking in the debate, will list of desiderata in the matter of undertakings which tell us afterwards. That represents only 20 per cent of ITV says it is glad to give that a certain amount of the way in which advertising is sold. resources should be devoted to more and better training For the benefit of the people who read Hansard,it for more up and coming young broadcasters and is worth expanding a little on my discovery of the way producers? in which advertising is sold. People who do not appreciate the way in which it is sold might be interested to know Lord Razzall: The committee made that point. I am about that. Each year there is an annual deal round, not sure that in its representations to us ITV talked usually in the autumn, when media agencies negotiate about training but it certainly indicated its receptiveness an “umbrella deal” which will form the basis for to giving undertakings on UK programming. I entirely booking specific advertising campaigns for the year agree that that is a very important point. ahead. That surprised me. It was even more of a As regards the remarks made by the noble Lord, surprise to learn that those negotiations do not start Lord Lipsey, I do not think that the committee ever with a blank sheet of paper each year. The starting contemplated removing all the restrictions on advertising point each year is likely to be what was agreed in the minutage. The debate, which was lengthy—we had previous year, which means that there is likely to be representations from a number of different channels considerable consistency over time in the deals which on this—concerned whether we should bring in line are made. the minutage that ITV, Channel 5 and Channel 4 were In broad terms, media agencies agree to commit a allowed to have with that which the other commercial proportion of their television advertising spend to a channels were allowed to have. There was a long particular broadcaster. In return the broadcast sales debate about whether everyone should go up to nine house gives them a discount off the station average minutes or the nine-minute people should come down price. This is the price which the broadcaster charges to seven, but we never discussed whether the COSTA for a particular target audience or demographic group; rules should be abolished entirely. Even the noble for example, men aged 16 to 34. During the course of Lord, Lord Lipsey, indicated that there was a general the year, within the terms of the annual contracts feeling that the public really would not want to have which have been negotiated, advertisers then negotiate more advertisements. We had no detailed evidence to terms to reach certain target audiences for particular that effect; there was a general assumption that that advertising campaigns. The standard station average was the public’s view. Therefore, we felt that everyone price is calculated after the advertisements have been should be brought in line and come down to seven aired and varies month by month depending on the minutes. I will be interested in the response that the viewing ratings delivered by a broadcaster for a particular noble Baroness, Lady Rawlings, makes to this but no demographic group. The audience viewing figures for doubt there will be a recommendation by Ofcom in each advertisement are measured using an independent due course as to which of the two it should be. I will be industry metric and the overall revenues which it has very surprised if the noble Lord, Lord Lipsey, carries received. the day on a complete abolition of the COSTA rules. What I have just said eminently proves what my To go back to my first point, it is fundamental that we noble friends Lord Clement-Jones and Lord Patten have a comprehensive review as to the way television have indicated—that this is a completely non-transparent, advertising is sold. peculiar system. The most fundamental element of our report was that it should be reviewed. All members 5.11 pm of the committee were absolutely unanimous on that. Baroness Fookes: My Lords, before turning to the We were also unanimous that the CRR undertakings substance of the debate I want to add my own tribute should be removed. They were implemented in 2003 to that paid by my noble friend Lord Clement-Jones to and the broadcasting world has fundamentally our late chairman, the Earl of Onslow. He behaved changed since then. I was not in my place when the most honourably in relinquishing the chairmanship noble Lord, Lord Grade of Yarmouth, spoke in when he did not feel he could give it his full attention the previous debate but I understand that he expressed but remained an assiduous member of the committee the view that I have put rather more strongly than I as far as he could and despite increasingly debilitating have just done. illness. I admired greatly his resilience and his honourable Picking up a point that has been made, if these approach to the matter, and my respect for him increased concessions are going to be made to ITV,it is important by leaps and bounds. that binding undertakings are obtained from it on its This was the first inquiry that I had held as a new commitment to invest in further quality UK original member of the Communications Committee. Unlike 1437 Television Advertising[LORDS] Television Advertising 1438

[BARONESS FOOKES] Lord Fellowes of West Stafford: I shall interrupt to some of my colleagues I did not have that tremendous say one thing, if I may. ITV is a marvellous company experience of running a TV company or being a to work for. A drama is paid for by advertising. long-standing broadcaster, so I came to it very fresh Although I do not disagree with anything that people and new. I have to confess that for the first few weeks I have said about making things more transparent and was utterly confused. I felt like some explorer, stumbling so on, I do not think that anyone should ever see upon some ancient civilisation remote from the modern advertising revenue as a completely negative factor. world, where the language was strange and the customs We would have been unable to make the show, which I even weirder. It took me some time before any sort of cannot bring myself to name yet again, in that way at light dawned. Television in the history of the world is the BBC. We were left entirely free to make the show a very modern device and television advertising is even that we wanted to make because we had the funding of more modern. How could it be quite so obscure? I advertising to do it. It is wrong to present advertising remind my noble friend Lord Patten that I was the as a sort of hideous evil that wrecks the programmes it first to murmur the word “Byzantine” in relation to appears in. It also enables and makes them. this arrangement, which has been described by others. Whether your Lordships who are not members of the Baroness Fookes: I take the point that my noble committee are much the wiser for the descriptions friend has made. I was against the apparent wishes of given, I am not sure, because they are pretty impenetrable. the noble Lord, Lord Lipsey—to increase the amount There is a case for making the system for purchasing of advertising, to make it without limit and that there television advertising utterly transparent and clear. should be no rules. That was what I was concerned Who knows what goes on with all these strange, about. I entirely take the point of my noble friend convoluted arrangements that have been described Lord Fellowes that it is the advertising revenue that this afternoon? produces good-quality drama and other types of I certainly hope that Ofcom, which I believe is programme. going to report soon, will come up with some really good recommendations to cut through this obscure Lord Lipsey: I should correct the misapprehension, arrangement. Even if it does, it may involve the which is no doubt my fault. I did not say that we Competition Commission and the relevant government should increase the amount but that we should get rid department. I fear that between these three and possibly of the restrictions. It might go up; it might go down. other bodies nothing at all will happen or what does Who can tell? I am not in favour of restrictions on happen will not be as clear and decisive as it should be. competition in this field. I hope that my noble friend, if he is unable this afternoon to give detailed responses to what we have recommended, will give an indication that firm and Baroness Fookes: That is exactly what I thought the decisive action will be taken, particularly so that if it noble Lord had said, and what worried me was the does require any form of legislation we can latch it on thought that there might then be an increase in advertising. to the next communications Bill, which I believe will However, that is an academic point at the moment. All be brought forward within the next two years or in all, as I persisted in remaining on the committee maybe less. despite my initial reservations, I thought that we came out with a good, robust report. It is one that I hope the Looking at one aspect raised by the noble Lord, Government will take on board very seriously. Lord Lipsey, I have to confess that he is on his own as far as I am concerned. I look at it as an ordinary 5.19 pm television viewer and for me there is too much advertising already. I certainly do not want any more. I dislike Lord Macdonald of Tradeston: My Lords, I speak especially when advertising comes in the middle of a as a member of your Lordships’ Select Committee on particularly poignant part of a TV programme—I will Communications and as a veteran of 30 years in the not mention the one by my noble friend Lord Fellowes, advertising-funded side of public service broadcasting but I have it in mind. It is irritating and demoralising in ITV, Granada and Scottish Television, alongside six to have some adverts slotted in just when you are in a years moonlighting on-screen for Channel 4 in the real state of emotion. For me, the amount of advertising 1980s. I, therefore, vigorously applaud the sentiments on television that we have at the moment is quite expressed by the noble Lord, Lord Fellowes. enough and there is merit at least in making the I moved on from ITV in 1998, and since then the arrangements the same, either seven or nine minutes—for network has changed a lot. The old network structure me, definitely seven. of 15 independent regional companies has consolidated I cannot believe that restricting it will ensure that into ITV plc, based in London, and only Scottish and the whole arrangement for making TV programmes Ulster television are still independent. will go down the drain, as I think the noble Lord, The issue of contract rights renewal being debated Lord Lipsey, was implying. I understand that about today is a product of the most significant merger to £4 billion a year is spent on advertising. If I am create today’s ITV plc—the merger of Granada and incorrect on that I hope somebody will put me right. Carlton Television in 2003. The CRR regime in all its Anyway, it is a huge sum of money. I believe that for complexity was introduced to stop the merged ITV the final contribution of “The X Factor”, £250,000 from abusing its powerful position in the advertising was being charged for a 30-second slot. I will not shed market. We did not find any evidence of attempts to tears if there is some sort of reduction in the number abuse that position in the years since. Over the past of minutes that can be broadcast per hour. eight years, many new channels have offered advertisers 1439 Television Advertising[3 NOVEMBER 2011] Television Advertising 1440 niche options if they have problems buying airtime I do not wish to seem pessimistic, but after reading on ITV. For advertisers, targeting specific groups of the Government’s response to our report, I think that potential customers has become much more economical. the long grass beckons for our recommendation that Over the same period, a significant proportion of the amount of advertising permitted per hour should UK advertising has been switched on to the internet. be harmonised across all channels. I cannot conceal The internet advertising market has just overtaken some sympathy for the arguments put forward by my television advertising spend for the first time, as noble friend Lord Lipsey. The government response advertisers spent £2.3 billion on internet advertising in batted the recommendations on to Ofcom—but we the first half of this year alone, up 14 per cent year on should not hold our breath for that report. My political year. By contrast, the forecast for ITV earnings is not judgment, for what it is worth, is that if the hundreds too encouraging, falling along with confidence in the of satellite and cable channels lose revenue to a more economy. competitive post-CRR ITV,I doubt that the Government The Select Committee examined the relationship would want to see the sector hit again by a reduction between ITV,media buyers and advertisers, and airtime in its advertising minutage. As I said, I have sympathy trading mechanisms are complex and opaque, as has for the arguments of my noble friend, but in the world been said. We recommended a short inquiry by an to come it will be for viewers to zip through fast and impartial group of industry experts into the system. for companies to decide their own minutage. Our concerns about this operation prompted Ofcom Another smaller but for me more important interest to launch its own review of the way television advertising must be the independent licensees. Scottish Television is traded, as our chairman said. I would be grateful if and Ulster TV must still be protected. Both exist on the Minister could update us on Ofcom’s progress, channel 3 alongside ITV plc. Together, the two of when it is expected to report, and whether it will them make up just a small percentage of ITV’s advertising report in time to influence trading before the next revenue. Their airtime is sold largely by ITV’s sales communications Bill comes to your Lordships’ House; house under another arrangement that was put in or will all the committee’s concerns be rolled into that place in 2003. The undertakings inhibit ITV plc from legislative process that presumably starts with a Green flexing the rates on its digital channels—ITV2, ITV3 Paper next year? and ITV4—to the detriment of the sales income of Given all the debates and reviews about the contract channel 3 proper, better known as ITV1, on which rights renewal mechanism over the years, it is something Scottish and Ulster depend. These undertakings are of a surprise that the value put on CRR is only covered by airtime sales rules. Removing CRR would between £30 million and £55 million a year, which is a give an incentive to ITV to bundle together channels small percentage of a total UK advertising spend of and break those sales rules—an incentive that does between £8 billion and £9 billion—much less than not exist at present. It will be for Ofcom to ensure that 1 per cent by my count. If that was spread across the two unconsolidated companies are dealt with corporate advertising budgets, the queues at supermarket transparently and fairly if CRR is eventually removed. checkouts would remain calm. When customers got I am sure that the Minister, too, will want to protect home and turned into viewers, they might welcome the interests of Scotland and Ulster in this regard. seeing the improved ITV programme that CRR money I greatly enjoyed the description by the noble Lord, might put on their screens. As the noble Lord, Lord Lord Patten, of ministerial mystification. Like him, I Clement-Jones, said, it might be a 5 per cent boost to will make a confession. During my 30 years in ITV I ITV’s programme spend of around £1 billion. I say never quite understood the dark art of airtime sales. “might” because ITV could use the extra revenue to For that reason, I look forward with great curiosity to enhance dividends for shareholders but, to thwart Ofcom’s review of the television advertising market. I that, our committee linked the removal of CRR to hope that it will come sooner rather than later. I, too, undertakings that would be required of ITV to put the conclude by paying tribute to our late chairman, the money on the screen. Earl of Onslow, and by thanking our chairman, the Given the nine months since we published our noble Lord, Lord Clement-Jones, for his comprehensive report, it now seems more likely that the spending of and clear introduction to the key concerns of our any post-CRR gains would be left to the discretion of report. the management. ITV’s chairman, Archie Norman, complained that the CRR mechanism helped drive a 5.28 pm “ratings rat-race”. ITV does seem to be committed to Lord Stevenson of Balmacara: My Lords, I was improving its schedule with quality, popular programming. briefly a member of the Communications Committee. In the first half of this year, ITV launched eight of the By a curious coincidence, my time encompassed almost 10 most popular new dramas on television, and the all of this inquiry, although I was not a member when second series of “Downton Abbey” has held its huge it started or when the final draft was approved. audience—despite complaints of the advertising breaks The noble Lord, Lord Patten, in his entertaining being too long. speech, was right to focus on the CRR and the advertising I support the removal of CRR primarily to encourage selling system. Like the noble Baroness, Lady Fookes, more investment in ITV programme production. If I found some of the issues we were probing, in particular ITV gets CRR removed and any unprincipled diversion the trading system for selling TV advertising, to be of that gain can be identified, the danger will be of extremely complex and arcane. The comparison to the reputational damage. That would be a real risk. It is Schleswig-Holstein question was not far-fetched. I probably the most feasible incentive that we will eventually also have fond memories of our session with the CRR come to rely on—but I hope that I am wrong. adjudicator. Rereading the minutes brought back the 1441 Television Advertising[LORDS] Television Advertising 1442

[LORD STEVENSON OF BALMACARA] Lipsey argues that we should not keep COSTA and he committee’s sense of incredulity at the burdens he may be right, but Sky+ makes this sort of regulation said he was carrying, given the relative lack of activity otiose. I suggest that more work is required and Ofcom on his patch. In the five years to 2008, he had only should carry out a review urgently. 15 disputes to deal with, and he had none between The current TV advertising market delivers many 2008 and 2010. benefits to advertisers and viewers. It is alleged that Your Lordships’ House owes the noble Lord, Lord advertisers benefit from lower prices, and the price of Clement-Jones, a considerable debt of gratitude for TV advertising has certainly fallen steeply over the last chairing the committee and delivering this report. In 10 years. Apparently it has not been cheaper since an earlier debate, the noble Lord, Lord Fowler, said 1993. Having said that, I feel, like other noble Lords, that the committee went through a golden period that the system is almost impossible to follow. It is while he was chairman and the noble Baroness, Lady counterintuitive and arcane. On the other hand, it Bonham-Carter, was a member. I felt that was slightly seems to work. Again, I suggest that an urgent review churlish, but they are his memories and he may wish is required. to differ on that. It seemed to be a golden time when I The noble Lord, Lord Grade has fired off a broadside was on the committee. against the CRR regime. Again, the arguments seem Although the late Lord Onslow was present only to be finely balanced. ITV’s continuing market power, for a few meetings, he made a great impact and, like with 40 per cent of TV advertising revenue in 2010, other noble Lords, I want to pay tribute to his contribution suggests that whatever it says—and it said a lot in to the committee and to his memory. In his absence, evidence—a competition remedy ought to remain in and sometimes when he was present, the noble Lord, place. However, if the CRR undertakings were removed Lord Clement-Jones, was a tower of strength as our and the strict conditions imposed by the committee chair. Often he probed reluctant witnesses, including actually took place, there would be a great deal of Ministers, with supplementary questions that we could extra money to invest in UK content across the industry never have imagined, let alone deliver, particularly and in matters such as training. As that is definitely a with the Ministers, Messrs Davey and Vaizey. We were public good, we have to consider it as important. I brilliantly served by our advisers, Professor Steven agree with noble Lords that ITV’s commitments to Barnett and emeritus Professor Patrick Barwise, and I quality, original UK TV production, training and record my thanks to the clerks for their help and other PSB obligations would need to be held closely in support to a new member and during the inquiry. front of it and there might have to be additional regulation. Several of the committee’s recommendations affect Ofcom and the Competition Committee as well as For me, this has been a trip down memory lane and DCMS, and the situation is made more complicated I have enjoyed it. This has been a very good debate. by the fact that a lot of time has passed and action The committee system in this House is impressive and has been taken already in some areas and is it commands wide respect. This report does the committee continuing. As the Government’s response to the and your Lordships’ House great credit. I invite the committee made clear, this is a fast-moving policy Minister to respond. area. On the other hand, as we have heard, we are promised a communications Green Paper and presumably 5.34 pm legislation will follow, so in some senses this debate Baroness Rawlings: My Lords, I am most grateful will feed in very well. to my noble friend Lord Clement-Jones for elevating The key points are that by and large, British television the last part of this afternoon, which has given us the benefits, as it always has done, from the main channel opportunity to discuss the importance of the regulation groups having separate funding streams. Satellite, licence of television advertising through the report he chaired fee and advertising supported channels are freed up to following the untimely death of my noble friend Lord compete on quality. This has been for the public Onslow. As my noble friend Lady Fookes, the noble benefit ever since ITV was introduced to break the Lord, Lord Stevenson, and my noble friend Lord BBC monopoly.However, in today’s broadcasting ecology, Clement-Jones all said, we miss him and his contributions. TV advertising supports hundreds of channels and This debate has confirmed something that is obvious underpins investment in high-quality, UK-originated and known to us already, but I repeat it. There is a content, in particular from the commercial PSBs, ITV, staggering accumulation and store of informed expertise Channel 4 and channel Five. As a matter of public and experience available in this House that can be policy, we want this to continue, albeit technology may marshalled and focused upon in this area. I am grateful in the end subvert this desire. to the chairman and members of the House of Lords As my noble friend Lord Macdonald says, the Communications Select Committee—six noble Lords—for growth in internet advertising needs to be taken into contributing today and for undertaking this inquiry account and may upset the entire way in which we into the regulation of television advertising. I thank approach this. Our report argues that the current all noble Lords who have contributed to a most interesting advertising minutage rules create an uneven playing debate. I read the report with interest and rather field between the commercial PSB channels and the wished I had been on the committee. satellite and cable channels. This may have been As the report points out, many of the recommendations appropriate 20 or 25 years ago to help the satellite and are matters for the competition authorities, but there cable channels when they were starting out, but the are also recommendations for ways that the competition situation is very different today. My noble friend Lord regime could be changed, which would require legislation. 1443 Television Advertising[3 NOVEMBER 2011] Television Advertising 1444

It therefore falls to the Government to consider these audiences with programmes such as “Coronation Street”, points. As my noble friend Lord Patten expressed so my noble friend Lord Fellowes’s Emmy award-winning clearly, despite not being involved in the television “Downton Abbey”, and “The X Factor”. world, the operation of the television advertising market is highly complex. I agree that it is so complex a Lord Patten: My noble friend and other noble subject as to compete, as several people have said, with Lords might wish to be aware that at the close of the the complexity of the dreaded Schleswig-Holstein London Stock Exchange at 4.30 pm, the biggest riser question. We have, of course, carefully considered the on the stock market was indeed ITV, up by 5.94 per recommendations and, even where we do not always cent. I am not a shareholder but it may well prove that agree with the solutions, we strongly support the aim the mentions of ITV in your Lordships’ debate this of trying to encourage investment in high-quality UK afternoon have indeed moved markets. programming. There is no doubt about the importance of television Baroness Rawlings: I thank my noble friend Lord in most people’s lives. We must therefore make certain Patten for keeping us up to date. Unfortunately I have that the regulation is correct. That will allow for been in the Chamber for most of the day and have not innovation and growth but will still provide a degree seen that, but thank you very much. of protection where necessary. The continued success of television broadcasting in the United Kingdom and It is precisely these kinds of successes that were a abroad suggests that the existing regulations are, broadly key consideration in the Competition Commission’s speaking, fit for purpose. review of the CRR, which led it to conclude that it should be retained, notwithstanding the changes in Let us briefly consider the state of the market, since the market since the original review. It cannot be the it is against this backdrop that calls for change must be right time to be making the TV advertising market less considered. Time prohibits me from reeling out a competitive, which would be the inevitable effect of series of statistics, but 2010 was a good year for removing the CRR undertakings. I am most grateful television. Viewing figures were up, revenue was up for the intervention of my noble friend Lord Fellowes, and investment in content and first-run originated which came from his highly successful professional programming for the five main PSB channels also viewpoint. increased. Despite the growth of multi-channel TV, I remind noble Lords that Ministers themselves the highest percentage of this viewing remains with have no power to lift the CRR, which is a competition the PSBs and their extra channels. remedy that only the Competition Commission has I commend the Communications Committee for its the power to lift. Although we have some sympathy diligence in examining the complexities and regulation with ITV’s position, we should not forget that the of this market with a view to simplifying and improving CRR undertakings were offered by ITV at the time of it. The committee quite rightly concentrated on identifying the merger of Carlton and Granada when the Competition ways of maintaining the commercial PSBs’ revenue Commission had concerns that the new company, potential so as to encourage more investment in ITV, would have a dominant market position. We are programmes which have high standards. aware of the important contribution that ITV makes I now turn to the CRR. Many of the recommendations to public service broadcasting. It produces high-quality in the committee’s report concern the removal of programmes which also act as a spur to the BBC to contract rights renewal and replacing it with the imposition produce equally good television. This competition is of undertakings to make certain that ITV invests an good for all of us. appropriate proportion of any additional advertising We do not believe that it is in anyone’s interests to revenue in high-quality programming. While we would allow ITV to abuse its dominant position in the television welcome any increase in ITV investment in more diverse advertising market. This would be bad not just for and new high-quality programming, we are not persuaded consumers and advertisers but would also have a that this is the right way of achieving that. detrimental effect on other broadcasters’ ability to produce high-quality content. Even if we could construct First, there are a number of potential practical a watertight system for making certain that the additional problems with introducing such undertakings revenue that ITV could raise as a result of the removal which need to be looked at. For example: how is of the CRR was spent on additional high-quality high-quality programming defined and by whom? How content, it surely cannot justify making the TV advertising can it be determined whether the programmes would market less, rather than more, competitive. have been made anyway? In other words, how do you The Competition Commission believes that its review avoid deadweight? Is a decision taken in advance of of the CRR was constrained by not being able to broadcasting, so programmes have to be vetted in consider the wider advertising market. This was something advance to see that they fit the criteria, or is the it felt Ofcom could do. Many noble Lords, including decision taken retrospectively? Aside from the practical my noble friends Lord Razzall and Lady Fookes, and issues, some of which could possibly be resolved, there the noble Lord, Lord Lipsey, have pressed for the are bigger problems around the operation of the removal of CRR. The Government hear their case, competition regime. and we welcomed Ofcom’s announcement in March ITV remains by a long way the most popular that it would review the way TV advertising is traded. commercial channel in terms of audience. As the This review is currently going on and we await its committee’s report noted, it is the only commercial outcome with interest. I wish I could answer the broadcaster able consistently to draw in large peak-time question asked by the noble Lord, Lord Macdonald, 1445 Television Advertising[LORDS] Television Advertising 1446

[BARONESS RAWLINGS] I should like to end on a more positive note. As I about the timing of this review. Alas, we have no date touched on earlier, with revenues, investments and as yet but we hope it will be soon. If Ofcom concludes viewing all up, television is one of the UK’s strengths that there are reasons for concern, it can refer the and its quality remains the envy of the world. matter to the Competition Commission. The results of Ofcom’s review, or recommendations coming from 5.46 pm any further review by the Competition Commission, Lord Clement-Jones: My Lords, I thank all noble will feed into our communications review and be Lords who have taken part in the debate, including carefully considered in that context. members of the committee and the two non-members, Perhaps I could answer the question put by my the noble Lords, Lord Lipsey and Lord Patten, who noble friend Lord Clement-Jones on harmonising have plunged into the debate so effectively. As a result advertising minutage for commercial PSBs and non-PSB of his Front Bench duties, we miss the noble Lord, commercial channels. I recognise that there is a Lord Stevenson, just when he was making a major debate about commercial PSB channels having different contribution to the debate. rules to non-PSB channels. However, that is an issue The debate has not been at all Byzantine or incestuous. for which the independent regulator, Ofcom, is We appreciate the noble Lord, Lord Fellowes, keeping responsible, taking into account representations and a watchful eye over the future finances of ITV. That the requirements of the AVMS directive. Ofcom is has been very helpful. None of us expected a Damascene currently reviewing this. conversion from the Government in the light of their On the question of the noble Lord, Lord Macdonald, original response. I am sure that ITV’s share price will on revenue arising from internet advertising, Ofcom go down tomorrow morning as a result of today’s has concluded that that is a different market. Of debate, even if it went up earlier. course, I shall pass the clear views of my noble friend We have heard significant differences about whether Lord Patten to the department. CRR is fit for purpose. We have a common interest in I close by thanking all noble Lords who have believing that it is the viewers’ desire to have original contributed to the debate. If I have not answered all UK programming. That is paramount. How you judge the questions, I shall of course write, placing a copy of that and what kind of regulation over ITV advertising my letter in the Library. I am grateful again to my is adopted is crucial. I hope that the debate will noble friend Lord Clement-Jones for undertaking this continue with the Green Paper, when that is produced, inquiry, for his chairmanship of this difficult subject and that the Government are persuaded by the outcome area and for bringing this debate to the House. It may of the Ofcom review that the trading system needs to be that as the market develops and circumstances change. change, the Competition Commission concludes that the CRR is no longer necessary, as felt by so many of Motion agreed. your Lordships today. I shall take noble Lords’ views back to the department. House adjourned at 5.49 pm. GC 457 Arrangement of Business[3 NOVEMBER 2011] Welfare Reform Bill GC 458

I hope that having listened to the arguments the Minister Grand Committee might go a little further than what he said in our previous sitting. Thursday, 3 November 2011. It is true that second earners are now the only group whose earnings will be subject to the taper from Arrangement of Business the first pound when the disregard for the couple has been exhausted by the first earner. In a means-tested Announcement system based on the joint resources of a couple, some disincentive for second earners is inevitable, and I 2pm accept that this is a long-standing problem and is one The Deputy Chairman of Committees (Lord Brougham reason why some of us would like there to be less and Vaux): Good afternoon, my Lords. Welcome to reliance on means-testing. However, the problem is the 10th day of the Committee on the Welfare Reform being made worse under universal credit, and the Bill. I have been asked to remind noble Lords to speak judicious use of disregards could mitigate it. up a bit because the microphones are not what they A second earner’s disregard would enhance the are in the Moses Room. Please do not touch them. architecture of universal credit by addressing the increased disincentive that most—not all, I acknowledge—second Welfare Reform Bill earners within the universal credit system will face. This is primarily because of the higher taper rate for Committee (10th Day) those whose household income disqualifies them from Relevant document: 17th Report from the Delegated housing benefit and council tax benefit under the Powers Committee. present system. On top of that, those with childcare 2pm costs who are working more than 16 hours a week or more will, as a result of the reduction in the limit from Schedule 1 : Universal credit: supplementary 80 per cent to 70 per cent, have to pay more towards regulation-making powers their childcare costs than previously. The reduction is already in force, although I welcome the fact that those working fewer than 16 hours a week will benefit Amendment 52C from the extension of help with childcare costs. Because Moved by Baroness Lister of Burtersett even small changes can tilt the balance of advantage 52C: Schedule 1, page 107, line 26, at end insert— of working for second earners, the introduction of a “( ) In the case of joint claimants, regulations under this separate disregard for them could prove to be a cost- paragraph must specify that a particular amount of the earned effective innovation. income of a second earner should be disregarded.” Policy briefing note 5 analyses participation tax Baroness Lister of Burtersett: My Lords, the purpose rates—or PTRs, which measure the incentive to enter of the amendment is write into the Bill a requirement paid work—and marginal deduction rates, or MDRs, to provide an earnings disregard for second earners, which calculate how much of a small increase in the majority of whom are women. The Minister will earnings is lost through a combination of benefit no doubt say that this is not necessary because, as the withdrawal and taxation, and therefore measure the Minister of State confirmed in the other place and incentive to increase earnings once in paid work. In the Minister here confirmed at our previous sitting, both cases, the lower the rate the higher the incentive. the Bill’s regulation-making powers enable this or a The briefing note shows that around 900,000 or three- future Government to introduce a disregard for second quarters of potential second earners whose householders earners at a future date, if they so wished. I welcome qualify for means-tested support under universal credit that flexibility. will face a lower incentive to take employment than Nevertheless, there are important issues of principle under the current system, with an increase in their here that need to be debated—not all of which were average PTR from 35 per cent to 65 per cent. covered in our initial skirmish in the previous sitting. It appears that all the nearly 1.5 million existing I once again apologise for the length of my remarks second earners will see an increase in their PTR from but there are important points to be made. However, 30 per cent to 45 per cent on average. The note the Minister can relax because I will not this time concedes that this may reduce some existing second quote any e-mails from Conservative supporters. earners’ incentive to work. Where this leads to a The treatment of second earners is an important withdrawal from the labour market will presumably question that has caused concern among anti-poverty increase the amount paid out under universal credit. organisations such as Save the Children, and women’s With regard to incentives to earn more when in work, organisations such as the Women’s Budget Group that approximately 300,000, or three-quarters, will face an thinks that this is one of the most important issues in increase in their MDR and, therefore, reduced incentives. the Bill that affect women. I am grateful to members According to a Written Answer in the other place, five of the group, of which I am a member, for helping me out of six of these have children. to think through some of these issues. The treatment These calculations, and the worked example we of second earners also threatens to undermine the have been given, take no account of childcare costs, Government’s claims to be substantially improving although we are promised that these will be factored in work incentives. The Government have sent out rather at some future point—I trust before Report. Will the mixed messages on incentives for second earners and new calculations take account of the reduction from we would welcome a clear statement of the position. 80 per cent to 70 per cent on the debit side, as well as GC 459 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 460

[BARONESS LISTER OF BURTERSETT] remain in the labour market should that relationship the extension to parents doing mini-jobs on the credit break down and should she then form a lone-parent side? I suspect not, because this is one of the cuts family household—that family is then less likely to be already implemented, which can conveniently be ignored in poverty. She is also better equipped to respond in impact statements. positively to the extension of conditionality to lone As the policy note acknowledges, childcare costs parents with young children. A second earner disregard are a substantial consideration for parents considering could thus help achieve the Government’s aim of employment. Thus we need to bear them in mind reducing so-called welfare dependency among both when debating the work incentives facing parents. two-parent and lone-parent families, because ultimately Their significance was emphasised in the OECD report it offers a potential route out of universal credit as Doing Better for Families, which highlighted the extent well as out of poverty. to which unusually high childcare costs represent a Secondly, there is the question of implications for barrier to dual-earner families generally in the UK. shared parenting, a Government goal articulated in The importance of childcare is something that we have their consultation on modern workplaces, which I already debated in Committee. very much welcome, even if its recommendations on Fortunately my colleague Donald Hirsch, of the parental leave look to be under threat according to Centre for Research in Social Policy, has done some recent newspaper reports. The equality impact assessment calculations for the Resolution Foundation and acknowledges that, Gingerbread which take account of the cut already “it is possible that in some families, second earners may choose to made in support for childcare, as well as the policy reduce or rebalance their hours or leave work”. announced recently. He has kindly allowed me to use However, it reassures us: them, even though I do not believe that they are yet in “In these cases, the improved ability of the main earner to the public domain. One example illustrates well the support his or her family will increase the options available for nature of the disincentives faced by some second families to strike their preferred work/life balance”. earners. He calls it the “hours trap”. He gives the This, it suggests, could be a “dynamic result” that example of a parent with a low-paid partner. She takes improves family life. a job at the minimum wage of £6.08 an hour for It appears that what exponents of nudge like to call 16 hours a week to supplement the family income. In the architecture of choice is being tilted towards a 2010, of the £97.28 she earned, she retained £46.19 more traditional male-breadwinner model, which may after taking account of deductions and net childcare not necessarily reflect the preferred work-life balance costs of £11.20. This represented a withdrawal rate of of both members of a couple and could weaken 53 per cent. Under universal credit, the much faster women’s labour market positions. According to the withdrawal of support for second earners, together equality impact assessment, this traditional male- with the recent cut in childcare support, means that breadwinner model apparently improves family life. much more of the extra income will be lost—she will Indeed, at a Social Security Advisory Committee retain only £17.25 of the £97.28, i.e. an 82 per cent stakeholder event, held at around this time last year, I withdrawal rate. questioned the Secretary of State about this. He answered Admittedly, for those working fewer than 16 hours in terms that suggested he regarded a return to such a a week, an 82 per cent withdrawal rate is an improvement model as a good thing, although I accept that this may on the current situation, because of the extension of not be the Minister’s view. help with childcare—but, as Donald Hirsch observes, Moreover, I question the impact assessment’s assertion, it is not an improvement that is likely to get many made in this context, that universal credit policy is second earners out to work. gender-neutral. It states: There are three main reasons why I believe we “Where men and women are in the same circumstances they should do what we can to maximise work incentives are treated equally under Universal Credit”. for second earners. The first concerns the Government’s We should hope so but in a gender-unequal world men own anti-child-poverty strategy. It is clear from the and women are often not in the same circumstances in statistics that two-earner families with children are either the family or the labour market, so the effects of much less likely to be in poverty than single-earner denying second earners a disregard are not gender-neutral. families. Without a separate disregard, it will be very Therefore, I am not convinced that the Government difficult for second earnings to fulfil their potential as are fulfilling their legal duty to promote gender equality a route out of poverty. The latest analysis of the here. Perhaps the Minister will tell us what advice the official statistics by the Institute for Fiscal Studies department has taken on this. shows that the child poverty rate after housing costs Thirdly, the Government nevertheless seem quite drops from 18.9 per cent in couples with one full-time sanguine about the position of second earners as they worker to only 5.1 per cent in couples where there is consider any such risk of decreased work incentives to also a part-time earner, and 2.1 per cent where there is be justified. The Government are concerned only with a second full-time earner. Moreover, if we take a incentives at the level of the household, rather than dynamic perspective, as Ministers encourage us to do, the individual. Indeed, they tend to conflate the two. it underlines the potentially protective function that In an Oral Answer in the other place, the Secretary of second earners can play in two main ways. If the first State stated that, earner—usually, still, a man—loses his job, a partner’s “universal credit will provide much better incentives for the first earnings can help the household cope while he looks earner, giving a greater choice to the household about how it for another job. When the mother is in paid work wishes to spread its income”.—[Official Report, Commons, 28/3/11; when living with a partner, she is better equipped to col. 2.] GC 461 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 462

This, together with the quotation that I read from the other words, do they take account of the increased tax equality impact assessment is an example of what and national insurance and reduced universal credit some economists called a unitary household perspective. payments that could flow from more second earners It ignores the fact that couples are made up of two moving into paid work? people and that the autonomy of each is important. The Minister also said that this is not a matter of Improving incentives for a first earner, even if on principle, but affordability. I hope that I have convinced behalf of the couple, does not compensate for worsening him and the Committee that there are important principles them for a second. The choice of one partner is being at stake and that he will therefore go further than enhanced at the expense of the other. In an earlier before in accepting the case that has been made in sitting, the Minister observed astutely: principle and assure the Committee that he would “Effective choice exists only when the balance of power is look favourably on such a disregard as and when the equal between tenants and landlords”.—[Official Report, 20/10/11; resources are available, taking into account the point col. GC 169.] about net and gross costs. I beg to move. The same is true within those households where an imbalance of power exists, often reflecting the economic 2.15 pm power of each partner. Baroness Howe of Idlicote: My Lords, I congratulate A study of BME maternal poverty conducted for the noble Baroness on the detailed and effective way in Oxfam found that the women interviewed were keen which she has presented the case for her amendment. to take paid work as it is the best way to improve their I spoke firmly on the equality issue at Second Reading. household finances. However, in addition to the usual I am most concerned about the extent to which the barriers, such as childcare, some of them faced their majority of second earners are women. Their very husbands’ attitudes. For the women who were in work, delicate position may be fine if they have a fully their jobs were an important source of self-esteem and understanding husband, but we know that some families independence, and they often had greater access to face situations that are far removed from this. I understand household resources than those without paid work. the point about mutual parenting, but if the Government Although more traditional attitudes to gender roles put more emphasis on companies providing enough might be more common in some BME households, flexible working for both sexes, this situation would be they are not confined to them. much easier for families. My main concern is the Consider the situation of a couple where the man is vulnerability of the woman at home who, as we have in low-paid work and receiving universal credit. He heard, does not have a very good argument if she is prefers his partner to be at home, looking after the not going to earn, as a result of her extra hours, house, the children and him. She would like a part-time enough to make any difference at all to the joint job, perhaps to achieve a modicum of financial autonomy, income. I therefore support what has been said. to enjoy the sociality of paid work or to improve the household finances. Her bargaining position is not Baroness Hayter of Kentish Town: My Lords, this strong if taking paid work will reduce his universal amendment seeks to tackle the introduction, under credit and he can point out that her earnings will not UC, of a poor work incentive for second earners who, bring much extra money into the household. If she as the noble Baroness, Lady Howe, has said, are could say that she and the household can keep a chunk mostly women. As my noble friend Lady Lister said, of her earnings before they are affected by the taper, it 300,000 second earners will see increased marginal would increase her bargaining power and make her deduction rates as opposed to only one-third of those choice to take paid work more effective, following the who will see reduced MDRs. The policy to make work logic of the Minister’s own argument about choice and pay does not appear to extend, therefore, to a third of power imbalances. these affected second earners. According to the impact Finally, there appears to be something of a tension assessment: between the Government’s apparent lack of concern “It is possible that in some families, second earners may about the reduced incentives faced by second earners choose to reduce or rebalance their hours or to leave work. In these cases, the improved ability of the main earner to support his and the treatment of this group in the new conditionality or her family will increase options available for families to strike rules, which we have discussed. In particular, the in-work their preferred work/life balance”. conditionality rules will require a couple to earn twice As my noble friend Lady Lister has said, it is not clear as much between them as a single person in order to how this will improve options for families who prefer escape sanctions. Yet if the first earner is unable to to have a more equal working relationship, where both earn enough to do so alone, a second earner’s wages partners combine work and child rearing. It also seems could be the most viable means of complying. to be in conflict with other bits of coalition policy, In short, whether looking at it from the point of such as the BIS modern workplace consultation, which view of the universal credit architecture, the Government’s sets out options for families to share parental leave child poverty strategy and its ambitions for shared more evenly between men and women. Perhaps, in parenting, or of financial autonomy for women and responding, the Minister can let us know what discussions effective exercise of choice for them with regard to he has had with BIS about whether the incentives paid work, a second earner disregard represents a within universal credit support the BIS policy. cost-effective enhancement to universal credit which, The reduced incentives for second earners to work arguably, could eventually pay for itself. In a previous come on the heels of the April cuts in childcare and sitting, the Minister gave some costings for a second therefore, as has been said, further reduce the incentive earner disregard. Are these gross or net costings? In for anyone with a child to take a job, not to mention GC 463 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 464

[BARONESS HAYTER OF KENTISH TOWN] The Minister may well be forgiven for wanting to other little things such as cuts to the baby element of reduce the number of working women on this side of the child tax credit, the health in pregnancy grant, the the Committee but perhaps he would make it clear Sure Start maternity grant and the freeze in child benefit. that that is not the intention with universal credit by As my noble friend Lady Lister said, the pay of ensuring that second earners really will be better off in second earners is crucial in keeping families out of work. poverty. If I may be forgiven for repeating her figures, which I hope I have right, child poverty is at 19 per Lord Freud: My Lords, I have enjoyed what we are cent where there is one full-time earner but it drops to calling the bevy of ladies on the other side. Their 5 per cent with two earners and down to 2 per cent intellectual prowess has left me stunned on my heels. with two full-time earners. Therefore, second earnings Let me go into this amendment, which proposes that are absolutely key to the Government’s objective of we create a disregard for the second earner in a joint reducing joblessness, child poverty, dependence on claim. This proposal was raised in Amendment 52DB, universal credit and increasing the tax take. I look which we have already debated, so I am going to be forward to the Minister’s answer to whether it was the reasonably brief. gross cost after taking account of tax take which led to the projected cost of this. First, this is not a matter of principle. We acknowledge that it would be desirable to incentivise both members Childcare has already been mentioned and is clearly of a couple to work. However, we have limited funding particularly important in two sorts of families. One is and we have chosen to focus that on creating a strong obviously lone-parent families, and the other is where incentive for at least one member of each couple to there is a second earner, with both parents tending to work, in order to limit the number of workless households. be out of the house at certain times. The disincentive This is clearly a difficult choice. We have discussed to work increases where there are child costs to be met. these choices, in response to the noble Baroness, Lady As has already been said, childcare will cover only Lister, with other departments on a regular basis, and 70 per cent of costs, and that leaves 30 per cent to be we are very aware of links to other programmes. found from earnings, which is already a high enough take from the second earner’s pay. Therefore, without Clearly, this is something that, if we had some an earning disregard of their own, the second earner money, we could revisit at a future point, but let me has a very high deduction rate where there are child give noble Lords the figures. If couples who were both costs to be met, effectively making the taking of a job in work were entitled to an additional disregard of financially unviable. Yet,as I have said, second earnings £700 a year, for example, the cost would be £240 million. are crucial in keeping households out of poverty. They will be even more important if, as we read today in the Baroness Hollis of Heigham: Could the Minister be Financial Times, there is any truth in the rumour that very detailed in his costings. When he says an additional when times get tough it is the poor whom this Government £750— will seek to make pay. According to these press reports, the Chancellor is looking at cutting further billions from benefits by scrapping inflation-linked uprates, Lord Freud: I said £700. even—this beggars belief—freezing some payments. We read in the same article: Baroness Hollis of Heigham: Is that as an addition “The Liberal Democrats will oppose anything that suggests to the second earner? the coalition is unfairly passing the burden of deficit reduction on to struggling families”. We look forward to hearing whether the Minister can Lord Freud: There was a question around that, so I say whether the Financial Times is accurate. Perhaps will endeavour to supply all the information I possibly he can also ask those sitting alongside him—maybe can. A sum of £700 a year in addition would cost they could pass him a note—whether they would like £240 million; if the disregard were £1,000 a year, the to place on record their opposition to any attempt to cost would be £350 million. We simply do not have the pass on any cutbacks to struggling families. They must money in our present envelope. There is no real difference know that the rich can pay far easier than the poor. between gross and net in those figures because they Are they going to use their bargaining power, such as are below the personal tax threshold, so there is no tax it is, in the coalition to protect the very weakest effect to set off. We are doing all sums on a non-dynamic in society? basis anyway, so there is not a dynamic effect. From These amendments are about reducing poverty and the point of view of the architects of the universal increasing the take-up of work, and it would be useful credit, we would have liked to incorporate more dynamic to know on which side the Lib Dem/Tory coalition sits effects, but there are certain other interests in the on this. Later today, we shall reach Amendment 75A Government that take a very straightforward view of to Clause 51 standing in the names of the noble Lords, money. Lord German, Lord Stoneham and Lord Kirkwood, Let me deal with the other issue—that making the and the noble Baroness, Lady Thomas, which effectively lack of a disregard for second earners makes the asks for an earnings disregard from the second earner universal credit bad for women. That is the underlying where the first earner is now too ill to work. We very argument here and clearly one that would concern us much welcome that amendment, but it would useful to very greatly. But it is clearly not the case. Universal know whether the same principle could be more widely credit has many features that will improve the position adopted, as this amendment seeks to do. of women, most obviously in support for mini-jobs GC 465 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 466 and childcare. We have a duty, as the noble Baroness, overall. All the moves between in-work and out-of-work Lady Lister, asked, to look at the impacts of policy benefits, the 16 hours and the extra disregards for lone changes on a range of particular groups, including the parents are all welcomed, but we are now talking impact on men and women, and we are satisfied that about partnered women and much of the noble Lord’s our policy here is the right approach and that we can response dealt with questions that we did not raise. justify the impact. That is why I was able to sign the Let me refer the Minister to page 6 of his own ECHR statement for this Bill. document. This is what happens if Bhavna also starts Our impact assessments and equality impact work for 10 hours a week at the national minimum assessments show that women in general are more wage of £6 an hour: she brings in an income of just likely to gain than to lose from universal credit, that over £60 a week, and the household has a net gain of this is also true for lone parents and couples with just over £20 a week. So she earns £60 and the two children and that lone parents benefit the most in both specific examples given by the Minister show that she absolute and relative terms from the likely increase in has a gain of £20. As my noble friend emphasised take-up. repeatedly, this excludes any childcare costs. I have been doing some sums. If her children are not of 2.30 pm school age and she is using a child minder at £2.40 an In terms of work incentives, our analysis shows that hour per child—which she may well do—and allowing female and male first earners in workless households an hour for travel at each end of the 10 hours that she have a similar pattern of PTRs under universal credit, is working part time over the course of two days, I but female first earners see a larger improvement as reckon that, out of that £20 gain—her 30 per cent—her they have worse PTRs in the current system. Around childcare costs would take up £19. So she is left with 1.5 million existing second earners will see an increase £1, out of which she has to pay her travel costs, let in their PTR. However, the mean PTR for this group alone extras such as lunches, food at work, different increases from 30 per cent to 45 per cent, which is still clothes and so on. Some £19 of that £20 could go on much lower than for many first earners and shows that the existing childcare costs, leaving £1 for travel—in there will still be considerable gains from work for other words, she would be out of pocket if she worked. most second earners. Around 900,000 potential second That is based on the Minister’s own figures, and that is earners will face an increased PTR when considering what concerns us. work of 10 hours a week. In 83 per cent of cases this is My noble friend was surely spot on when she said because universal credit is providing more financial that to have a second earner in the family is protective support to the couple than the current system. The of all family forms. This is what matters; it protects the PTR may be down but the overall financial support is existing family. We know a larger family will still up. Under universal credit, the distribution of MDRs remain below the poverty line on minimum wage for men and women are fairly similar. Women are unless you have a second earner in play—and it is the more likely to face lower MDRs than men, both now second earner who takes a working family out of and in the future, but this is partly to do with the fact poverty. It protects the family and it also protects the they are more likely to be working part time and are woman, should anything happen to her in future. below the tax and national insurance threshold. While I accept the fact that the Minister is up The second earners issue is therefore part of a much against cost ceilings—I certainly do not wish him to bigger picture that, overall, is very helpful to women. stop viring earnings disregards between the two members I add only that the Institute for Fiscal Studies has of the family—it would help the Committee if he was pointed out that the trade-off between first and second able to give an undertaking that this will be a priority earners is similar to that faced by the previous Government and that any additional resource would be aimed when they introduced working and families tax credit towards readdressing the issue of the earnings disregard in 1999. That also strengthened the incentive for couples for the second earner. Believe me, all the gains that he to have one partner in work and reduced the incentive is offering, in terms of mini-jobs and so on, are going for both to take employment. I hope this explanation to be wiped out because of the tougher treatment of will allow the noble Lord to withdraw Amendment 52C. childcare costs and the fact that, as a result, it will not be worth your working, even though the Government Baroness Hollis of Heigham: My Lords, I deliberately claim it is. did not follow my noble friend after such a full, strong and powerful speech; however, my name is also on the Baroness Sherlock: My Lords, I want to save the amendment. I appreciate the dilemma that the Minister Minister getting up twice, as I want to ask him a is in: there is a cash constraint and he is making policy question on a similar point. I have been trying to choices. The last thing I would wish to see is a diminution wrestle with some of the briefing that has come in on in the earnings disregard for the first earner in order to this issue. Can he answer two simple questions? Is it vire it across to a second earner because you are trying possible for somebody to face MDRs of higher than to see which poor people would be most hurt in that 100 per cent if they are, for example, a second earner situation. It is a dilemma and I would not wish to go with childcare costs? Secondly, if somebody would down that road. actually be worse off in work, would they still be The Minister is right to say that under universal sanctioned for failing to do it? credit the position of women improves for the most part. However, the position of partnered women does Lord Beecham: My Lords, may I ask what I hope is not. The distinction my noble friend was drawing was a final question? The Minister rightly referred to the about the situation of partnered women, not women fact that there would be no income tax income to the GC 467 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 468

[LORD BEECHAM] Lord Freud: Stop teasing me. The noble Lord, Lord Treasury to offset the cost. However, has the Minister Beecham, made the point about VAT; there is clearly a considered the likelihood of much of the income of a missing element there, and I acknowledge that there is second earner being spent in a way which would incur a difference between the gross and the net. VAT? Is that not a material consideration in terms of I thought I had answered the point made by the what would be offset against the cost? noble Baroness, Lady Hayter, on talking to other departments. Yes, we are talking to BIS. As to the FT Baroness Hayter of Kentish Town: Before the Minister story: as you would expect me to say—it is something stands up, as I think he might like to get everything between, “Pick the normal stuff”, “I do not comment together, there were two questions posed that he did on press articles” and, “It is a matter for the uprating not respond to. One was whether he had had discussions Statement”. Pick any one of those you want. I am not with BIS. I had also given him the opportunity to answering the question. [Laughter.] refute the story in the Financial Times. I hope he might use this moment to do that. Baroness Hollis of Heigham: I congratulate the Minister on his nimble footwork; it was very impressive. Lord Freud: My Lords, let me try to pick up some However, what happens to Bhavna in this situation, of those points. Picking up the point of the noble where her childcare completely mops up £19 out of Baroness, Lady Hollis, I hope that she is hearing that I her £20 addition to the family earnings? am sympathetic to this point. I hope that noble Lords have heard that this is about money. We do not have this money. We have a very sharp choice to make, Lord Freud: In this example, there is a 65 per cent about whether to reduce workless households or to taper. Thereby, extra earnings produce an increased look after second earners with a disregard. We have income of about £20. The effect of childcare costs taken this decision, and we have also taken a decision, would depend on the amount of the childcare costs. when we do find some more money, to do something Under our current proposals, the parent is clearly about childcare, which is another issue that I know expected to meet 70 per cent of allowable costs, and greatly concerns noble Lords. the state will cover the rest. There are two clear issues when we look to improve this system, as we see dynamic effects coming through Baroness Hollis of Heigham: I understand that. which are provable. We had a debate the other day on I thought that that was exactly the point I made. The why we need to test things. Two of the obvious things question was regarding the result of that calculation. to test will be second earner disregards and taper. She earns £60 and adds £20 net after universal credit, Those are the first two things that everyone in this and £19 of that will, on any reasonable estimate, go on room, I think, would like to know about as we get the her share of childcare costs. That is before you take system under way. Therefore, to the extent to which I travel costs into account. Why work? am being asked “Will we look at it?”, yes, we will be looking at this. I am not going to make any assurances, Lord Freud: We are going round in circles. We all because we should find the answers, but that is exactly know the point that is being made. We all know the the kind of question we want to have answered. reality of the iron triangle. We are wrestling with it. I shall take up the points of the noble Baroness, This is what we can afford to do right now. Some Lady Sherlock, on MDRs. You can freight all kinds of people may be caught in such a position and we make things on to MDRs if you want to, with different the point that some people will have higher MDRs—a costs, and I am sure that you can create a position lot will not. As we improve the position when we have where the overall costs come up to high MDRs. The funding, and have proof of the dynamic benefits that simple point that I would like to make is that with the may free up main funding, we will be able to apply universal credit itself, the MDRs come down. them. However, this is the best we can do right now. On whether we will force people to take a job which I would love to do more, but I cannot find any more leaves the household poorer, we made the point when money. we discussed this that we take these things into account when we set up the obligations of claimants. Baroness Lister of Burtersett: My Lords, I thank noble Lords who have supported the amendment with Baroness Sherlock: My Lords, I am grateful to the some helpful additions to the argument. I do not Minister. I hear very clearly his sympathy for this know whether any other noble Lords spotted it, but issue. If it is simply a question of money and therefore the Minister asked the “noble Lord” to withdraw the timing, one of the things he could do, to put everyone’s amendment. I do not know if he was making a Freudian minds at ease, is to say, “Until we can afford it, we will slip and trying to reduce the bevy of Baronesses not force a household to be worse off by forcing them opposite him. into work or sanctioning them”. He could then review I should like to make a couple of more critical the situation when he found the money down the back points before I come to a more positive one. I can of the sofa next time. understand the Minister’s frustrations that there are other parts of government that will not allow the Lord Freud: I will not give that kind of assurance to department to do its calculations on a dynamic basis, noble Lords. This is clearly— but I was a bit disappointed that the department’s thinking was not dynamic in relation to this matter Baroness Hollis of Heigham: You could, you know. and it was not prepared to acknowledge that there GC 469 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 470 could actually be positive dynamic effects through a The arguments for auto-enrolment and the 8 per second-earner disregard—whether they be anti-poverty cent base load of contribution included an analysis of or paid work effects, and all the things that the department financial incentives to save. It included the fact that is in favour of. I do not know whether these are just the this 100 per cent of contributions was allowed in the noble Lord’s own arguments or those that are simply deduction under working tax credit. That analysis was in the brief that comes from the various documents we carried out in three instances: once by the Pensions have been given, but it seemed to me that there was Commission—we were aware of it and it influenced still the unitary-household approach and an inability our thinking—and twice by the DWP in its research to understand that while couples are couples, they are report 403 Financial Incentives to Save for Retirement, also individuals within couples. I ask the noble Lord and its report on the savings incentive work programme. to go away and think about that a bit more and about The latter report was a very high-profile event; it was the importance of individual autonomy within the carried out in a rather heated environment around context of coupledom. I would have been even happier incentives to save and means-tested traps. The DWP if he had been able to go one step further and commit was full and transparent in its engagement with all himself on the second-earner disregard in the longer relevant stakeholders, sharing data and analysis. The term. report was widely accepted at the time. In all of these We have, however, made progress today. What the reports it was clear that the way in which pension Minister has said takes us beyond some of the other contributions were treated under the tax credit system things which have been said. I now take it as the was part of the incentive to save and the payback official departmental view that it will, in the fullness of analysis on every pound saved for low to moderate-income time, consider improving incentives for second earners, earners. either through a second disregard or through the I cannot do justice to the reports in moving an taper, as and when resources permit. I therefore beg amendment, but I refer to one or two selected examples. leave to withdraw the amendment. Looking at £1 of saving by a low earner under current benefit and tax credit rules, paragraph 4.5 of the DWP Amendment 52C withdrawn. Research Report 403 advises: 2.45 pm “the expected payback for a low earner per £1 contribution net of any offsetting benefit effect is £2.81, compared to £2.52 with no such offset”. Amendment 52D The same paragraph, in brief, goes on to illustrate, Moved by Baroness Drake admittedly for a very stylised individual, how receipt 52D: Schedule 1, page 107, line 26, at end insert— of working tax credit throughout working life by “( ) Regulations may specify that the pension contributions of someone on a lower level of income can increase the single or either of joint claimants are to be disregarded in calculating return on their savings to 4.1 per cent from 3.2 per cent their income.” after all the effects of these offsets. Even if tax credits are received only at certain points and not throughout Baroness Drake: My Lords, the purpose of this the whole working life, they still boost the net return amendment is to allow regulations to specify that on savings. If one were to take the difference between pension contributions made by single or either of joint 3.2 per cent and 4.1 per cent and express it in terms of claimants are disregarded in full in calculating their a percentage difference in a rate of return over 30 to income for the purposes of calculating entitlement to 40 years, what would that mean? It would mean a universal credit: in effect, that 100 per cent of contributions pension pot of the order of 20 per cent or perhaps made to an Inland Revenue approved pension are 25 per cent less than it would otherwise be. deducted from earnings that are brought to account in the calculation. The current tax credit rules disregard Then we come to those on the lowest incomes who the whole of any pension contribution, and housing are hit hardest. I come back to a point that I made in a benefit takes half of that contribution into account. previous amendment about the purpose of the tax Briefing note 3, which I read again this morning, credit, which was to make work pay. It made it easier states that only 50 per cent of pension contributions for people to get a real return from being in work and will be deducted from income under universal credit. accept responsibility. This is very important to those I find this decision to allow only 50 per cent of on lower incomes. Clearly, a very strong incentive to pension contribution to be deducted—as against the save will be lost by changing the rules on pension current 100 per cent—quite disturbing when we are on credit and, inevitably, it is going to trail through to a the eve of beginning to auto-enrol millions of people gender dimension. I always get very stressed when I into a workplace pension, many of whom will be look at these things in terms of the gender impact. modest-income earners and many of whom will be in Referring back to Appendix D of the DWP report receipt of universal credit. I find it disturbing for three on the savings incentive work programme, again this reasons. First, it will undermine the incentive to save—I shows that those on modest incomes in receipt of tax will come back to this. Secondly, it will impact those credits and housing benefit effectively pay 52p for an on lower incomes. Thirdly—and this is an argument to individual contribution of £1, which, with the employer which I will return on another occasion—it is another match, means that £2 is contributed to their pension. example of a government policy measure, of which That clearly enhances the payback from saving for there have been several over a short period, which these individuals. I know that there will be instances results in little or no asset accumulation strategy for where some people whose incomes are below the earnings low to moderate income earners. limit at which withdrawal begins will not get that GC 471 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 472

[BARONESS DRAKE] 50 per cent of which is taken into account, you cannot benefit. None the less, for significant numbers of people— take the gross earnings figure and you cannot take the and that number will increase in an auto-enrolled net earnings figure because the Inland Revenue would world—under the current arrangements the payback have given a more generous allowance for that pension would be much higher by allowing the 100 per cent. contribution. Therefore, you have to create another I come on to the broader point. It is very easy to figure for the 50 per cent allowance that you are going look at a piece of policy incrementally and say, “We to give on pension contributions. It just struck me as a have to make difficult choices. We can do this and save rather complicated calculation or procedure, so I should that”, but I am always really concerned when I see a like to understand how that will be done. I also dislike series of incremental policy decisions. When you look and disagree with the intention to reduce it from at their cumulative effect, they are quite exponential in 100 per cent to 50 per cent. I beg to move. their impact and much greater than the people who made the individual incremental decisions thought Lord McKenzie of Luton: My Lords, I do not want they would be. This is almost disassembling asset to add anything to the very full argument around the accumulation strategy. Policies focused on improving policy that my noble friend has laid out. I just re-emphasise the benefits system and policies directed at asset-building the issues about the practicalities and how they will by lower income groups are not alternatives. I get a work. I understand that employer contributions will feeling that there is a debate that says that they are. not be treated as income for universal credit purposes Certainly when I participated in the debate that led to but only 50 per cent of the employee contribution will the scrapping of the savings gateway, that was the be deductible. As my noble friend says, the data that debate that was running at that time. come from the system would be net of tax, net of It is not a matter of either/or; you address the low national insurance and net of occupational pension income policy and income redistribution or you address contributions, not the full contribution. Therefore, the asset accumulation strategy, but recognising that some adjustment would have to be made to that. How addressing inequality and enabling people to take does that sit with the collection through real-time responsibility, stay in control and be empowered, and income and the related point that my noble friend everything that we aspire to for people to achieve, have made about when those contributions are made directly and be, requires both sets of policies. Yet we see in this to personal pensions? Presumably there will need to be Bill and elsewhere other measures by the Government some additional reporting requirement. I guess this that have the effect of disassembling asset accumulation just emphasises that, in the world of universal credit, strategies. We have the one that I am talking about, all is not as simple as we would wish and sometimes where the amount of pension contribution deductions portray. that can be made is now to be halved. We saw the removal of the savings gateway. We are seeing the application of quite aggressive capital rules to the 3pm savings of those in work under universal credit. We are Lord Freud: My Lords, Amendment 52D would seeing the application of aggressive capital rules where take a power to disregard the full amount of any one partner has reached pension credit age and the pension contributions from the assessment of both other has not. We have seen the aggressive taking into single and joint claimants’ income. In the universal account of ISAs and assumptions about income flow credit White Paper, we set out our intention to disregard from ISAs, which were a product that was supposed to 50 per cent of contributions to an occupational private be targeted at lower to moderate-income earners. It pension from the income assessment. This balances was a high-advantage, simple, cash savings product. our commitment to encourage pension saving with Therefore, when one stands back, I have a general fairness to the taxpayer and it is the current treatment concern about the impact of a series of measures on in the benefits system. It is true that in tax credits the asset accumulation strategy for people on low-to- 100 per cent of pension contributions are ignored, but moderate incomes. I honestly do not know how one tax credits are based on gross income. This is not expects people to embrace responsibility and long-term therefore directly comparable with the 50 per cent saving, and think about preparing for retirement, when disregard in the benefits system. one of the significant things that contributed to the In addition to the disregard, universal credit claimants payback on your savings, apart from the employer will also have tax relief on their pension contributions. contribution, was the way in which your pension This means that for each pound that goes into the contribution interfaced with the benefits system. It is pension pot of an employee who is a basic rate taxpayer unfair and it is certainly inefficient as a piece of policy, and in receipt of universal credit, the take-home income either as pension policy or in helping people to exercise is reduced by only 34 pence after minimum employer more control and responsibility. contributions, tax relief and increased universal credit May I also ask about some operational issues that payments are taken into account. It would cost flow from this? It is not clear how personal pensions approximately an additional £200 million a year to that are not paid through the employer will be handled move from 50 per cent to a full disregard. While this when someone says, “I am not engaged in the auto- would no doubt be welcomed by claimants on low enrolment arrangements with the employer but I am incomes, not all taxpayers who do not claim benefits paying into a personal pension, so how do I get have the advantage of a private or occupational pension. account taken of that?”. Secondly, it strikes me that We must therefore take a balanced approach to the this will be quite a complicated procedure. If someone disregard of pension contributions, and we believe is on universal credit and paying a contribution, only that 50 per cent is the appropriate level. GC 473 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 474

Pension contributions are disregarded from the income Lord McKenzie of Luton: Can the Minister help us assessment in tax credits. We have taken the view that on one point? I am interested in the practicalities and this is one of several areas in which tax credits have operation. He said that we could not do all this been excessively generous to claimants when the position through the RTI system. I am trying to understand of the average taxpayer is taken into account. how much of it can be done, given that the RTI system On the operational point, we are already operating is going to produce either a gross income figure or a a 50 per cent disregard, including a payment towards net of tax and national insurance figure. personal pensions. The rules will operate in a similar way to the way that they do now, but clearly we will Lord Freud: My Lords, we had a session earlier not be able to do all this through RTI, so there will today trying to go through what the universal credit need to be some direct reporting. shows. Without being overprecise, a lot more information Picking up the point that the noble Baroness, Lady is available but effectively you need the net and the Drake, made about what we are doing for asset gross figures. Clearly, the personal pensions are not accumulation, I can point to a series of measures that captured on that payslip, but the pension contributions the Government are taking in that area, not least the through auto-enrolment, for example, would be captured. support being provided to lower-income houses to purchase a home. In universal credit, households are Lord McKenzie of Luton: I accept that you might able to save up to £6,000 with no impact on the have the net and the gross figures, but do you not now universal credit award. I should point out that an need another figure, which is half the occupational average household with a working-age adult has average pension payment? That is not readily thrown up in the savings of £300. pay-as-you-earn system or any other system. The convention is that “two Baronesses” makes “noble Lords”. If I made a mistake during debate on the previous amendment, I was possibly slurring my Lord Freud: Yes, we have commissioned that as part “s”. In this case, I can ask the noble Baroness to of the requirements. withdraw her amendment. Baroness Drake: I appreciate that the Minister has to give the Government’s reasoning behind this decision, Baroness Hollis of Heigham: I was slightly taken but I am absolutely aghast at the argument that it will aback by the Minister saying that he thought 100 per cost £200 million to restore 50 to 100 per cent of the cent disregards in tax credits were regarded as pension contributions being deducted. There was a overgenerous, when at the same time no mention is pension settlement, which said that the state pension made of what we are paying in higher-rate tax relief. age had to go up but the earnings-related element Currently, out of the £26 billion we spend on tax relief, would be removed from the state system and go flat some £8 billion to £10 billion is going to higher-rate rate, and that individuals, supported by their employer, tax relief. If we follow the Minister’s line, apparently would have to take on greater responsibility for personal we need only to incentivise the rich to save; the poor saving. They would be auto-enrolled, and that was are being overincentivised and we are being overgenerous. part of them taking responsibility for a sustainable pension system over the long term. As part of that, the Lord Freud: My Lords, I think I am caught being incentive to save had to be right; that was a huge slightly puzzled. I was strongly under the impression debate. In the third leg, between the state pension age that pensions were removed from the higher rates of going up, flat-rating the state system and moving tax relief. I hope I am not wrong on that. private savings up and earnings-related out of the state system, the incentive to save had to be right. At the time, there was a huge debate and a huge Baroness Hollis of Heigham: The noble Lord is argument that it would not work unless you got the wrong. incentives to save right. At the lower end, how the benefit system interfaced with the pensions savings system was a very important part of the payback. It Lord Freud: On that basis, I am probably the wrong was also a very important part of the explanation to person to interrogate on this matter. people—including shadow Conservative Ministers at the time, who were very vocal on this issue—that this Baroness Hollis of Heigham: There is a limit on how was what the payback would look like, with much of your pot can attract higher-rate tax rates, incentivisations to saving that came through the tax which is the £50,000 figure. There have been some credit system. This is what I mean about incremental changes, but £50,000 of pension contributions is still decisions. Now somebody says, “Well, we can just tax free. remove a chunk of the payback for a particular group of people and save £200 million by reducing the figure from 100 to 50 per cent”. I really struggle with that Lord Freud: I think we are now into the realms of because it is saying, “Never mind what the strategic minutiae. This has been subject to a substantial change. analysis was or where we are trying to go; this convenient It was unlimited. Noble Lords can see that my personal incremental policy will save us £200 million”—and interest in this is not as great as it might be. One can somehow it is a fairer deal for the taxpayer. Maybe in make comparisons and political points all over the 30 years’ time it will not be a fairer deal for the place; let us stay with the business in hand. taxpayer if more people present themselves for benefits. GC 475 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 476

[BARONESS DRAKE] (v) a local authority landlord or registered social I struggle with that line of reasoning for doing this for landlord in consequence of a function under that group of people. Okay, it is £200 million. I am not section 53 of the Housing (Scotland) Act 2001; avoiding the need to make tough decisions, but again (vi) a relevant English body or a relevant Welsh body in one stands back and looks at the contribution that the consequence of a function under section 242 of the taxpayer makes to the incentive to save across the National Health Service Act 2006; piece. (vii) a Local Health Board in consequence of a function under section 183 of the National Health My noble friend Lady Hollis is right. You can get Service (Wales) Act 2006; £50,000 per annum incentivised right up to 50 per cent (viii) the Commission or the Office of the Health tax relief. I know that the noble Lord is going to shout Professions Adjudicator in consequence of a at me that this will allow more people to keep their function under sections 4, 5 or 108 of the Health income and that it is a different analysis, but I do not and Social Care Act 2008; accept that, particularly in the context of a sustainable (ix) the regulator or a registered provider in pension strategy. We have all sorts of tax advantage consequence of a function under sections 98, 193 or savings arrangements that the well-off can take advantage 196 of the Housing and Regeneration Act 2008; of. You can fund a tax advantage stakeholder account (x) the National Institute for Health Research and for your child. You can fund a tax advantage ISA for Department of Health commissioning programmes; your child or your non-waged spouse. I have taken (xi) the National Institute for Health infrastructure advantage of some of these for my children. However, organisations including research networks, Research I struggle against the decisions on the incentive to save Design Services, Collaborations for Leadership and Applied Health Research and Care, University Research for low-to-moderate-income groups, which was Institutes and groups and other higher education inextricably linked to the in-work benefit system, when institutions, individual research studies, social care somebody says, “It saves £200 million. Just undermine bodies, charities and other not for profit organisations; the incentive to save and the payback for this or arrangement”. It just does not stack up intellectually. (xii) a public or local authority in Great Britain in It does not stack up when there is a consensus which consequence of a function conferred under any says that everyone should buy into a pension solution other enactment for the purposes of monitoring that holds over the very long term. We have just taken and advising on a policy of that body or authority which affects or may affect persons in the group or £10 billion from a group of women who should not be monitoring or advising on services provided by that bearing that level of savings, and we are now going to body or authority which are used (or may take £200 million out of low-to-moderate-income earners. potentially be used) by those persons.” My argument is losing subtlety because the quality of what I am pushing back on is unsustainable. It is Baroness Thomas of Winchester: My Lords, the £200 million for an irrational reason. Extremely reluctantly, wording of my amendment is taken straight from I beg leave to withdraw the amendment, although I am Statutory Instrument 2678, the Social Security Benefit sure I shall be coming back to this. (Computation of Earnings) Regulations 2009, with the additions of subsections 10 and 11. The reason I Amendment 52D withdrawn. have copied the wording of this SI will become clear in a moment. Amendment 52DA Old welfare reform hands may find my speech strangely familiar because I have been on this particular Moved by Baroness Thomas of Winchester soap box since 2006. The amendment is about the way 52DA: Schedule 1, page 107, line 26, at end insert— benefits are treated for service user involvement, specifically “( ) For the purposes of introducing Regulations under this the unresolved problem of those disabled people on section — benefits who help with NHS research, public health (a) earnings shall not include any payment in respect of research and social care research. The unresolved problem expenses wholly, exclusively and necessarily incurred in is the impact on their benefits of out-of-pocket expenses the performance of the duties of the employment. and, possibly, a small emolument paid by the organising (b) notional income shall not apply in respect of any body. Disabled people are asked to take part in research amount of income other than earnings, or earnings studies in these fields not just as subjects but as active derived from employment as an employed earner, arising partners in the research process. For many severely out of the claimant’s participation in a service user disabled people, this activity is the most important group; thing that they do, as they are uniquely placed to take (c) “service user group” means a group of individuals that is part and they know that their participation may lead consulted by or on behalf of— to better outcomes, both in the immediate future and (i) a Health Board, Special Health Board or the for future generations. Agency in consequence of a function under section 2B of the National Health Service (Scotland) Plans set out in the health Bill require clinical Act 1978; commissioning groups to base decision-making on (ii) a landlord authority in consequence of a function evidence-based research. However, unless the universal under section 105 of the Housing Act 1985; credit rule on the treatment of certain reimbursed (iii) a public authority in consequence of a function expenses as earnings is amended and the application under section 49A of the Disability Discrimination of the notional earnings rule is removed, disabled Act 1995; people on benefits will continue to be prevented from (iv) a best value authority in consequence of a function offering their assistance. Research in health and social under section 3 of the Local Government Act 1999; care will be used to commission our future healthcare GC 477 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 478 but, as matters stand, two nonsensical bits of red tape four weeks as a result of participating in research for in the benefits system will prevent the involvement of the benefit of the public. This is clearly unjust and many patients. The two obstructive benefit rules were irrational. designed for employment and are entirely inappropriate Universal credit policy briefing note 9 on the treatment for involvement. The first is the treatment of reimbursed of income other than earnings, which was published expenses for involvement in research. recently, seems to offer some hope that certain out-of- At this point, I should define what I mean by pocket reimbursed expenses may be ignored in some research. I am not talking about patients who are circumstances but it is unclear. The briefing note does entered into clinical trials as part of their treatment. not refer to the reimbursed cost of travel. It does not I am talking about those who, in the words of the differentiate between the circumstances of employment relevant HMRC circular, are, and the circumstances of involvement. It does not “invited to attend meetings to give their views on various matters refer to any plans to disregard the cost of travel to the to inform the research process and direction”. place of involvement. There is a long-standing rule Where people are paid a small fee for their help with about travel costs, which is based on employment. For this research and their expenses are reimbursed by the an employee, any reimbursement of travel costs between organising body, both amounts are totalled and treated home and work that is provided by the employer is as earnings. Where the total is above the benefit-earnings traditionally treated as earnings by both the DWP and disregard, the excess is deducted from their benefits. HMRC. However, involvement is not the same as This is because, as I said, the reimbursement of out-of- employment because it may be for one day or a few pocket expenses is treated as earnings. People may end hours in the month. A person who is involved in up with less money the following week or with no helping with health and social care improvement does money at all for living costs for several weeks. If this not have a wage, just a one-off small fee. The strict happens, they promptly and understandably withdraw limit on earnings for people on benefits means that the their help. fee is not likely to be sufficient to cover travel costs. The universal credit briefing note indicates that 3.15 pm while child benefit may continue to be disregarded as income, other reimbursed expenses may be treated as My noble friend the Minister has expressed his earnings and will lead to the 65p in the pound reduction belief that the earnings disregard for universal credit of UC. Expenses that are reimbursed to an employee will represent an improvement on the current earnings by an employer, such as those of a replacement carer disregard for people on ESA and IB, and that this or child carer, have been traditionally treated partly or improvement will resolve the problems that I am raising. wholly as earnings by DWP and HMRC. It is clearly However, the earnings disregard for the great majority inappropriate to treat a reimbursement of the occasional of people who will receive UC for health reasons—that but substantial costs of a personal assistant or a is, disabled claimants—is to be just £40 a week. This is replacement carer or child carer for a participant in a great deal less than the current earnings disregard of research as earnings for universal credit. However, £97.50 a week for those with the most severe health perhaps the universal credit policy briefing No 9 offers conditions on ESA or IB. It is still less than the a window for further clarification around reimbursements earnings disregard for others who are entitled to £97.50 for involvement. I would be grateful if my noble friend for one year, alternating to £20 the next. could shed some light on this. Where people who are asked for their involvement in developing public policy have a disability or restrictive The second obstructive benefit rule that has been health condition, they may require the help of a designed for employment, but which is entirely personal assistant with travelling and personal matters, inappropriate for involvement, is known as the notional accessible accommodation overnight or specialist earnings rule. The outrageous matter of notional earnings equipment. All these costs are significant and much means that if a person declines to take a small fee more than the £40 a week earnings disregard. because the amount offered is above the earnings disregard, they will be treated as though they had Under current benefit rules, where the participation taken the fee and they are likely to be out of pocket as is in NHS or social care research, all reimbursed travel a result of helping with NHS research as a volunteer costs are treated wholly as earnings. There is a benefit- and are not likely to repeat the experience. earnings disregard limit on their earnings, as I have already said. The small fee for their time and the travel As matters stand, there is no commitment to carrying costs are totalled and treated together as earnings. over the legislation introduced by way of SI 2678, the Any excess of the total sum above the earnings disregard Social Security Benefit (Computation of Earnings) leads to the person’s benefit being reduced or stopped Regulations 2009 in this House in December 2009 by entirely. In the future, 65 per cent of the excess will be the noble Lord, Lord McKenzie, which, to great rejoicing, deducted from universal credit. One example is that of removed these two significant barriers to involvement a wheelchair-user with high support needs travelling by allowing expenses to be disregarded when benefit from Leeds to London. His travel expenses and those entitlement calculations were made and by removing of his personal assistant come to £240. The personal the application of the notional earnings rule. These assistant costs for two days come to £380. Overnight changes were relevant only to those whose involvement accommodation in a fully accessible room comes was in the field of health and social care services and to £315. Specialist equipment hire comes to a not in research. We were disappointed to learn that further £235. This person would lose all his benefits this new and welcome change in the legislation applied for living costs for at least one week and possibly for only where the involvement was required by law, and GC 479 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 480

[BARONESS THOMAS OF WINCHESTER] to tackling it. It was in part, but it did not deal with so the entire NHS research programme had been the whole of the situation. There can be no doubt that omitted. The benefit changes apply to involvement engagement of those who actually use our services in with local authorities, landlord authorities, NHS trusts shaping how they are organised and delivered can be and health boards. They do not apply to involvement of enormous public benefit. This particularly applies with the work of the National Institute for Health to the multiplicity of research projects which can Research, public health and social care research. underpin innovation and vital developments in services. Will this amendment cost the DWP money? No, Service user engagement is to be strongly encouraged. because all we are asking is for a disabled person’s We are thoroughly supportive of this. benefits to be undisturbed by their participation in As the noble Baroness has said, it seems entirely NHS research, public health and social care research. reasonable, as we reflect on the introduction of universal I understand that my noble friend is willing to have credit, to see how far a legislative solution will cover a meeting to see whether we can sort out this complex the situation, rather than perhaps just relying upon matter. It may therefore help the Committee if we hear practice and guidance, as happens in part at the moment. from my noble friend at an early stage. However, as we have heard, that does not cover all of I end with a quote from a cancer patient who last the gaps, and there are a range of issues about whether year was asked to participate in a patient research payment just covers actual outgoings, about whether panel, which he did for a time. He said: there is an excess or profit, about the frequency of activity and about whether any spreading or averaging “My deteriorating health means I need to step down from the PRP, but this will not be the case for many people who could be rules would apply—we went down that avenue at one contributing to research panels if only these DWP restrictions did stage. There is also the issue of protecting those who not prevent them. What a waste of patients’ and carers’ knowledge decline a payment from the notional income rules. It and experience. Many of us are severely debilitated after cancer may be that the disregard regime in universal credit treatments and cannot do regular work, but we can contribute could help or could be made to help. On the basis of something as and when we feel able and it surely keeps us the noble Baroness’s figure, that may not be the case. sane—saving money on mental health services. As human beings, we still need to be useful, but the DWP expect us to sit and Turning to the specifics of the amendment, I have vegetate”. an issue about terminology. It refers to expenses, We must not lose this golden opportunity to put this “wholly, exclusively and necessarily incurred in the performance matter right once and for all. I beg to move. of the duties of the employment”. It is an interesting point to distinguish employment Baroness Wilkins: My Lords, I support the amendment and involvement. It is certainly the case in tax legislation, which has been so comprehensively introduced by the and I think in benefits legislation also, that the phrase noble Baroness, Lady Thomas of Winchester. I wish “wholly, exclusively and necessarily” precludes taking to make one additional point, which is that one of the the costs of travel from home to work out of the very dispiriting elements of having a long-term health arrangements. There has always been a distinction condition or a disability is the fact that you are so between the cost of undertaking travel as part of your often on the receiving end of help. It can almost get to work or involvement and putting yourself in a position the point where you are not expected to be able to do to do that, which is travel from home to work. Therefore things for other people. For example, I very rarely get I am not sure that the formulation is necessarily the leafleted in the street by charity workers. If I go to the right one. door to a charity worker, they apologise that they have This has been going on for a number of years. bothered me. It is as if you are not expected to be able Progress has been made, but it clearly has not solved to contribute to society in any way. However, one very the problem, as we have heard. It would not have a obvious way in which we can contribute is by sharing huge price tag, if any, to use this opportunity with the experience of our condition, making some value universal credit to deal with it absolutely. out of it and aiding research in this way. That can surely only be beneficial for future generations, for 3.30 pm medical professionals and for ourselves and our self- esteem. It seems nonsensical that red tape in the Lord Freud: My Lords, I am well aware of the work benefits system should stand in the way. of my noble friend Lady Thomas on this, although perhaps not quite as well aware of it as the noble Lord, Lord McKenzie of Luton: My Lords, I support the Lord McKenzie. Clearly, the amendment is intended thrust of the noble Baroness’s amendment. I do not to improve the position of disabled people on benefits think that there was much that I ever did as Minister who participate in service user groups. Changes in the which was the cause of great rejoicing, but I was regulations to do just that were made towards the end grateful for at least one memory. I recall several meetings of the last Parliament, and universal credit will carry that we had together, trying to see that we ended up in these forward. Nothing in universal credit will worsen a situation where amounts paid to service users did the position of participants in service user groups. not inadvertently affect their benefits. I have been Looking purely at the earnings element—the fee trying to recall all of the detail of that. I am not sure element, not the expenses element—the structure of that I can, but I am sure that the Minister will be able universal credit will improve the general position for to bring us up to date or remind us. participants. The earnings taper will ensure that any Part of what we were trying to do then was to see if fees which are beyond the claimant’s earnings disregard a sensible application of the current rules, by way of will still make the claimant better off overall. The clear guidance across Jobcentre Plus, would be a route removal of the 16-hour permitted work rule and the GC 481 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 482 personalised conditionality regime will see to it that a very modest sum per year to our tenant board the claimant will not fall out of the benefit if they members. One of them was on disability benefits and undertake a modest amount of voluntary or paid preferred not to take the very modest emolument activity.That is as far as the earnings element is concerned. because of the interaction with his disability benefits The amendments to the social security regulations and the problem that he would have of resuming them made in 2009 exempted individuals covered by the as and when the emoluments ended. However, because definition of service user from the notional income he could have drawn that emolument, it was assumed rules and ensured that any expenses they received under benefit rules that he had done so and he could would be disregarded in the benefit calculation. I not make that move. I ask the Minister to look at this think that all parties welcomed these improvements point. This was, after all, a sort of charitable housing when they were introduced. Therefore, my noble friend’s association and he was stuck. amendment seeks simply to build on those 2009 changes. This is a matter for regulations, and there will Lord Freud: My Lords, I will look at it, but I am not always be scope to make further changes where these sure I need to study it very hard. As I understand it, are needed. However, we need to ensure that any the fear of that individual is that if they earn too much definition is clear and can easily be applied by money they get taken off their benefit structure entirely. administrators. The current definition was drafted on Because they are earning too much, they are outside that basis. Like the noble Lord, Lord McKenzie, I am the disability benefit structure and they must therefore not convinced that it will be feasible to broaden the get on another one and they then have a terrible current definition in the way proposed by the amendment, problem. That does not apply under the universal but I am very pleased to meet my noble friend on this, credit. The worst that could happen is that the universal as she requested, and I think that we shall be able to credit goes down in the period, reflecting the emolument, get this right. but they are better off overall. That acute fear of being In the current regulations, the definition of service left stranded goes. In that particular case, and many user is limited to consultation for specified purposes. other like it, the desperate cliff-edge position which In all cases, the consultation with service users is currently exists is not there under universal credit. required by law. The intention here was to avoid extending the easements to the activities of commercial Baroness Thomas of Winchester: I thank the noble enterprises. We also need to ensure that benefit claimants Lord, Lord McKenzie, for his support, as does my are not able to deprive themselves of regular earnings noble friend Lady Wilkins. I would like to take up my and so remain on benefit while operating as consultants noble friend’s offer of a meeting before the Bill reaches to research bodies. These protections remain valid the next stage, because we were told specifically by the from the Government’s point of view, so any new officials of the noble Lord, Lord McKenzie, when he regulations need to protect the Government in some was Minister, that they could not extend this to bona of these areas. fide NHS research—nothing to do with commercial On the general question of expenses, we will apply interests—unless there was a peg in legislation on the same disregards in universal credit as in the existing which to hang the regulations. I therefore do not benefits. We would not want claimants in work to see accept my noble friend’s statement that everything can their universal credit fall as a result of their receiving be done by regulations, because we found that this payments as reimbursement for expenses that they particular matter could not be done. We are not talking have incurred solely in carrying out their job. To do so about people who can get a job; we are talking about would reduce the incentive to take a job, which would severely disabled people, who are a million miles from undermine the core purpose of universal credit. Briefing the job market, but they have specific conditions which note number 9 was intended to clarify that work-related are needed for vital research. I hope this can be sorted expenses could continue to be disregarded in the same out before the Bill goes any further. We need this peg, circumstances as apply now. and it is not too late to put it in this Bill. I will take up We also intend, as now, to exempt reimbursement the offer of a meeting, which I have done on many of expenses made to volunteers who give their time to occasions when I have withdrawn this sort of charities and voluntary organisations from the calculation amendment—and, of course, it finally bore fruit. of claimants’ unearned income. I hope that this account will reassure noble Lords Lord Freud: We do not need a legislative peg in about our intentions for the treatment of expenses in primary legislation to make changes here. That was a universal credit generally. I think that there can now reference to NHS legislation. How we define and work be a process of refining and enabling service user through the different types of income is something groups to make their valuable contribution in the which we are going to do in regulation. I can assure fullest possible way, and that is what I shall be aiming my noble friend that, although this is something which to do with my noble friend when we meet. However, is slightly complicated to do, it does not have the these are not matters for primary legislation; they are desperate urgency that requires it to be done in the matters to get right in regulations. That is what we will next couple of weeks. be aiming to do and I hope that, on that basis, my noble friend will be content to withdraw the amendment. Baroness Thomas of Winchester: I am caught between two pieces of advice: one is that we do need legislation Baroness Hollis of Heigham: My Lords, perhaps I and one is that we do not. I am somewhat conflicted, may ask the Minister a question. I chair a housing and I would like to get this sorted out before Third association, as I have declared previously, and we pay Reading. We have been told that for the rules that I GC 483 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 484

[BARONESS THOMAS OF WINCHESTER] read out from the statutory instrument, there was a Amendment 55ZA peg on which to hang it, and that is why they were there. We were told that because there is nothing for Moved by Lord McKenzie of Luton NHS research we could not extend it. I shall withdraw 55ZA: Schedule 4, page 123, leave out lines 18 and 19 the amendment now, but hope that we can resolve this before Third Reading, if not Report. Lord McKenzie of Luton: My Lords, this is a probing amendment to seek the best understanding we can Lord McKenzie of Luton: Could the noble Lord about how support for housing will work for someone arrange to send us copies of the earlier advice, because on pension credit. Because housing benefit is to be there is some confusion and I am not clear in my abolished, housing support for those on pension credit, mind? and thereafter outside universal credit, will be by way of a housing credit. It is accepted that there will be a Lord Freud: My Lords, I will have an early meeting lot detail to work through, but perhaps the Minister with my noble friend on this, and we will take it from can give us an update on progress. there. Subject to that meeting, I will provide that The system will also provide support for children particular advice, otherwise we may go round the via a similar route, where this is applicable for those on houses on this very technical matter. I hope it is one pension credit. This will often be in circumstances we can resolve pretty fast, with a letter. where grandparents have responsibility for their grandchildren. Assurance was given in the other place Baroness Thomas of Winchester: I beg leave to that the Bill does not need to make special provision withdraw the amendment. for this, because existing powers are sufficient. We accept that position. Therefore, the prospect of there being three strands or components of payments in Amendment 52DA withdrawn. these circumstances will flow from the Bill. Amendment 52DB not moved. The points that arise are as follows: will the basic housing allowance follow the local housing allowance regime as for universal credit claimants? Will the 30 per Schedule 1 agreed. cent percentile, the local housing allowance caps and non-dependant deduction increases be applied to this Clause 32 agreed. regime? Will those on guaranteed credit be able to access support for mortgage interest? Is it envisaged that there will be a composite and interlocking calculation Schedule 2 : Universal credit: amendments of the pension credit, housing and possible child credit components, or will these be calculated separately? Amendment 53 not moved. What is envisaged in respect of tapers, and will these be aligned? What will this mean for direct payments to Schedule 2 agreed. landlords? Do the Government envisage any arrangements for pensioners different from those for universal credit Clause 33 agreed. claimants? Can we hear what the proposals are for support for mortgage interest—both for those in receipt of pension credit and universal credit? We have an Clause 34 : Abolition of benefits outstanding question on that. What does this mean for the treatment of capital? We previously discussed how Amendment 53A had been retabled as Amendment 53C. these differ between housing benefit and pension credit systems. The former has the £16,000 cut-off and the Amendments 53B and 53C not moved. latter has no maximum, but income is taken into account. Will these two regimes sit side by side, or will Clause 34 agreed. they be rationalised? If they are going to be rationalised, on what basis will that happen? What arrangements will operate for uprating purposes? Will CPI be applied Schedule 3 agreed. to the housing component? What about the uprating of pension credit? I beg to move. Clause 35 : Universal credit and state pension credit 3.45 pm Amendment 54 not moved. Lord Freud: My Lords, the intention is that the housing credit will broadly follow the current rules Clause 35 agreed. that apply in housing benefit. For someone to be entitled to the housing credit element of pension credit they will need to live in Great Britain, have reached the Schedule 4 : Housing credit element of state pension pension credit qualifying age and be liable for housing credit costs that relate to the accommodation they live in. The extent to which a person is liable for the housing Amendment 55 not moved. costs, what constitutes the accommodation, how we GC 485 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 486 treat temporary absences from home and how we that. Rather than include that point in the letter, I will calculate the amount of the housing credit will also be make sure that noble Lords are informed when that included in regulations. consultation paper comes out. A person may be entitled to the housing credit whether or not they receive the guarantee credit or Lord McKenzie of Luton: I am most grateful to the saving credit element of pension credit. This schedule noble Lord for a number of detailed replies, with some also enables us to specify that rates of support may follow-up, but can he just be a little more specific differ by area. So, for example, different housing allowance around the capital rules? From his answer, it was very rates can apply in different parts of the country. unclear what is intended. We have two systems for In introducing the new housing credit we will, housing benefit: we have the cut-off at £16,000, whereas however, look for opportunities to streamline the benefit for the pension credit we do not. I am not sure whether and align rules wherever possible. This includes extending those two systems will sit side by side in the new pension credit provisions to the housing credit wherever arrangements, or whether there will be some common possible. One such area includes assessed income periods. approach to capital, and whether that will adopt the These are specified periods during which a customer is pension credit approach or the current housing benefit not required to report any changes in their requirement approach. provision—namely, their occupational pensions and Lord Freud: My Lords, it will go somewhere in capital. between. It will be a capital limit as opposed to a tariff The schedule provides us with the flexibility to income approach, but it will be a higher capital limit determine in what circumstances retirement provision than that for working-age claimants. will not be fixed in relation to the housing credit regulations, which will be subject to the appropriate Lord McKenzie of Luton: As I understand it, that level of scrutiny. The schedule also contains the will operate for pension credit as well as the housing consequential amendments to other legislation needed component. as a result of the abolition of housing benefit and the introduction of the housing credit. Lord Freud: Yes, that is correct. This probing amendment would remove flexibility and would work to the detriment of those who, through Lord McKenzie of Luton: I am grateful for that—well, no fault of their own, require assistance with their I am grateful for the answer, not necessarily the housing costs while at the same time making the information. It is the lowest common denominator system vulnerable to manipulation. again. I beg leave to withdraw the amendment. The noble Lord asked a large number of detailed Amendment 55ZA withdrawn. questions on this matter. I can deal with some of them but I will answer most by way of a letter. On direct 3.52 pm payments to landlords, it is not our intention that Sitting suspended. pensioners would be part of that regime, which is for working-age people. We are not planning to change 4.02 pm the SMI arrangements for pensioners. Uprating will be done by CPI, as it will be with working age. We Schedule 4 agreed. need capital limits in the system overall, clearly, and we need to determine what the right rates should be. Clause 36 agreed. They should be at a level where we do not see a Schedule 5 agreed. substantial change in practice. As the noble Lord pointed out, this is now done by a tariff income Clause 37 agreed. process and, as we move towards an overall position in the housing credit, we need to get the equivalence. Schedule6:Restrictions on entitlement I think that deals with the bulk of the questions. There are one or two more, which I will answer by Amendments 55A and 55B not moved. letter, but, given the assurances about how we intend to use these powers, I urge the noble Lord to withdraw Schedule 6 agreed. the amendment. Clause 38 : Capability for work or work-related Baroness Lister of Burtersett: My Lords, will the activity Minister make sure that that letter includes the answer to a question which was asked a few sessions ago but Amendment 55C to which the Committee never received an answer? It Moved by Baroness Howe of Idlicote was not specifically about pensioners but was a more general question about whether mortgage interest will 55C: Clause 38, page 17, line 32, at end insert— be paid as part of the universal credit or to the lender. “(6A) Regulations under this section must provide that, for a claimant to be treated as not having limited capability for work, the claimant must be able to— Lord Freud: We are looking very closely at the (a) reliably perform their work on a sustainable basis, for at support for mortgage interest. I can let the Committee least 26 weeks, without requiring excessive leave or know that we are planning to consult on how we do absences; GC 487 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 488

(b) work in open unsupported employment without definition of what could be meant by the ability to requiring excessive support to perform their work. carry out meaningful work. Slightly amended for the (6B) For the purposes of regulations made under this section— UK, as is proposed in my amendment, this could “work” means work— provide an important aid in determining whether a (a) that is for at least 16 hours per week on wages that are at claimant actually has limited capability for work. Broadly, or above the relevant minimum wage; and the amendment would specify that, in order to be (b) that exists in the United Kingdom; capable of work, the claimant should be able to: work “excessive support” means more than what is usually considered for at least 15 or 16 hours each week in meaningful to be reasonable adjustments or normal supervision (or both).” work that pays at least the national minimum wage; reliably perform their work on a sustainable basis without requiring excessive leave or absences—the Baroness Howe of Idlicote: I present the sincere Australian system takes this to be at least 26 weeks; apologies of my noble friend Lady Mar. She had very and, lastly, work in unsupported employment without much hoped that this amendment would come up on requiring excessive support to perform their work. Tuesday, but alas, and she has an engagement that she I beg to move. could not possibly break. So I will inadequately move it on her behalf. Lord Wigley: My Lords, I am very pleased to Under the Bill, a person will be deemed to have support this amendment. One is very aware of the limited capacity for work if the claimant’s capacity for tremendous work that the noble Countess, Lady Mar, work is limited by their physical or mental condition has undertaken in this area and of her expertise. There and if the limitation is such that it is not reasonable to is no doubt that the fluctuating condition of many require the claimant to work. The work capability people with disabilities can be a difficult factor from assessment is designed to assess whether a claimant whichever end you look at it: from the point of view of has limited capacity for work or limited capability for the disabled person, who may want to work but is work-related activity, but there is no definition of uncertain whether they can carry out the work, or work either on the face of the Bill or in regulations. A from the point of view of the state and the way in group of charities that includes the MS Society, which these regulations apply to such people. Parkinson’s UK, Arthritis Care and Forward-ME have The one element in this amendment that I am not indicated that this is a significant omission, and it is entirely certain about is the question of “unsupported one that I certainly agree with my noble friend Lady employment”. There are times when, if a disabled Mar should be rectified. person is given adequate support, they can be in Individuals must not only be capable of some very full-time meaningful work on a continuous basis. I limited work; they must be capable of obtaining realistic would not want this amendment to undermine that and sustainable employment. I am sure that the Minister dimension, which is very important. will acknowledge that capability for work is not a Turning to new subsection (6B) proposed by the clear-cut issue. Many disabled people fit neither the amendment, can the Minister comment on paragraph “completely fit for work”nor the “completely incapable (b), which refers to work, of work” categories. As the Minister knows, the main interest is in those with a fluctuating condition—an “which exists in the United Kingdom”? area where my noble friend Lady Mar has both experience This raises some interesting questions. Is it in the and, indeed, considerable knowledge. They can unpredictably Government’s mind that there might be work outside veer between both categories and, however much they the United Kingdom, the availability of which could, may want to work, this group finds it particularly if it were not taken up, lead to people being debarred difficult to obtain and retain sustainable employment. from their benefits? One thinks of people living in My noble friend and I strongly support the principle Dover: an hour’s journey puts them into the French that all those who are able to work should be supported catchment area. If one lives in Holyhead, if the fast through the work-related activity group in ESA, which boats are running one could quickly be in Dublin— is designed particularly to identify those who have a presuming that there is any work in Dublin these days. limited capacity for work. However, those who face The Government’s intention in this matter certainly significant barriers to returning to the workplace require needs to be probed. If paragraph (b) is necessary, I extra time and support to move back into the work would be interested to know what the Government’s environment. The WRAG is a very important provision explanation is. for those with fluctuating conditions, as it asks them to undertake work-related activities that are personalised Baroness Wilkins: My Lords, I strongly support and appropriate to their needs and abilities. However, this amendment in the hope that it will go someway to the group believes that the current work capability meeting the fears of the thousands of disabled people assessment sets too high a bar for the test of limited facing their work capacity assessment, especially those capability for work—the test that admits people to the who have a fluctuating condition such as multiple WRAG. The test fails to take into account the reality sclerosis or an ill understood condition such as ME. of the claimant’s abilities not just to take on work but Members of the Committee will have been inundated to retain and manage unsupported sustainable with letters from people who have been given every employment. reason to mistrust the assessment process as carried The Australian Social Security Act 1991 and the out by Atos, and I know that the Minister has been Australian assessment of work-related impairment for made very aware of the stress and anxiety this is disability support pension criteria supply a sensible causing. GC 489 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 490

Broadly, this amendment sets out that, in order to how it is carried out. We have received many letters be deemed capable of work, the claimant should be from claimants who feel that they have been abused by able to work for at least 16 hours each week in meaningful their treatment, and medical professionals have provided work that pays the national minimum wage or above further evidence. In an article in the British Medical and, most importantly, that they can reliably perform Journal this year, reference BMJ 2011 342:d599, Margaret their work on a sustainable basis of at least 26 weeks McCartney, a GP, questioned the ethics of doctors without requiring excessive leave or absences. This performing assessments without access to patients’ would do much to rectify the current situation. What medical records. She also questioned the lack of specialist happens now is that at the end of an Atos report on a knowledge among the physiotherapists and general claimant, which goes to DWP decision makers following nurses employed by Atos. She described her experience the completion of the work capability assessment, of a recruitment evening at Atos Healthcare in Glasgow, there is usually a prognosis which says “this claimant and from what is a long and critical article, I shall should be able to return to work within x months”. quote briefly: However, the WCA is not currently designed to offer “At the meeting, I asked how it was possible to know the any concrete evidence of a person’s realistic capability variation in symptoms that a patient may have during a one-off to find employment. The content of the WCA is assessment. I was told that this could be ‘difficult’ but this ‘wasn’t designed purely to assess a person’s physical and mental an occupational health service’. Instead, it was a ‘functional functionality, not their ability to find employment, assessment’… One nurse in the audience asked about training in mental health, as she had had little training in this area and would how long this may take or what support an individual not feel competent to assess it in a fitness for work setting. The may need to do so in the light of the barriers to work reply was that health professionals were ‘very thoroughly assessed’ that their condition presents. at interview for their abilities; however, general nurses were often The WCA test focuses largely on a claimant’s typical taken on and given training … One assessment, which initially day. Yet there is no such thing as a typical day for reported a woman was fit to work, reported as evidence that her mental health was reasonable that she ‘did not appear to be someone with a fluctuating condition. For example, a trembling … sweating … or make rocking movements’ ”. woman with MS in her early 30s told the MS Society I will not go on with the plethora of complaints about that on one day she may feel well enough to participate Atos, but I should like to ask the Minister three questions. in voluntary work and have a busy and active lifestyle, yet during a recent lapse she was rendered completely First, what part does medical evidence supplied by blind for a period of weeks and found that on many a claimant’s specialist doctor or GP play in the decision days she was unable to get out of bed due to disabling arrived at by the Atos Healthcare medical assessor? Is fatigue. the medical assessor bound to refer to this evidence or is it discretionary? Secondly, are there specific conditions The typical-day history taken in the WCA refers to in the Atos Healthcare/DWP contract that require a typical day out of work. However, a typical day out medical assessors to seek a specialist medical opinion, of work for someone with a long-term condition and is there any monitoring evidence that such a could be very different from a typical day if they had contractual requirement is observed? Lastly, is Atos to travel and complete a full day’s work. One person Healthcare subject to regulation by the General Medical with multiple sclerosis told the society, “Nothing done Council or the Care Quality Commission? If not, to in the interview related to my ability or my lack of which regulatory body are the decisions of its medical ability to work. I answered the questions as honestly assessors accountable? as I was able, but was not able to stress the fluctuating nature of the symptoms, i.e. yes, I can read, but not for Finally, in earlier sessions of this Committee we more than a few minutes and then I have to rest”. have talked about the appalling language used about Another person said, “They have no idea what day benefit claimants, with press headlines of “scroungers” with MS is like. They do not know how work would go and “benefit cheats”, which it seems that the Government if one day you can walk but the next you cannot, if have taken no action to modify. Indeed, there is a one day you pee yourself continually and the next you suspicion among claimants that the Government have are okay. Who would employ me? I am constantly stoked the headlines. These headlines have a particularly fatigued, yet of course the WCA found me fit for negative effect on people with fluctuating or work.” misunderstood conditions such as ME and MS. Neighbours will see them in the street being perfectly I do not doubt the Minister’s sincerity when he says active and untroubled on one day, but are totally that his whole motivation is to support and enable unaware that those people are not even able to get to people to take their place in the world of work, but the door the next day; they may be in bed for weeks. how can he hope for this to succeed when the assessment Does the Minister’s department have any action planned for determining eligibility for universal credit is based to educate the press and the public in order to counteract on such a flawed, unjust and mistrusted system? As we these damaging press reports that are bringing so have heard too many times, 40 per cent of those much misery to disabled people’s lives? In the mean wrongly found fit for work win on appeal of the time, I hope that the Minister will accept this amendment, decision, and in some areas I am told that the figure as it would go some way to allaying claimants’ fears. increases to 90 per cent if people are represented at tribunal. Baroness Grey-Thompson: My Lords, I, too, support this amendment and I, too, wish to speak about the 4.15 pm assessment process. A number of people have contacted This amendment gives us an opportunity to look at me just on this amendment alone—around 45 at the the Atos Healthcare assessment. We have heard that last count, and the figure is increasing daily. They there is considerable concern and complaint about want to express their concerns in this area and they are GC 491 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 492

[BARONESS GREY-THOMPSON] number of new customers helped by the Access to using very strong words. People are telling me every Work scheme, which has gone down to 13,240 compared single day that they are terrified by the process they with 16,520 in the previous year—a fall of nearly a are being asked to go through. I accept that it is a quarter. It would be interesting to know what is thought difficult process. We demand that through the system to be the reason behind that, because it is an important we should grade impairment, which is a necessary part way of helping people into work. of the process, and we try to put people in boxes. The really important word in this amendment is However, disability and impairment affect people in “sustainable”. Sustainable employment is defined as such different ways. The process expects yes and no 15 or 16 hours a week and on a basis, probably of answers and that is almost impossible when we are 26 weeks. This amendment is particularly important, considering a static condition, let alone fluctuating as the Government are proposing that regulations ones. Many people writing to me say that there is little about defining capability for work or work-related room to give medical evidence or provide supplementary activity are to be subject only to negative resolution data and that every step of the process feels very procedure and thus with no opportunity for debate. confrontational. It is essential that the test is appropriate for disabled people. We have had a note which states that the Government’s intention is that regulations made under subsection (3) I am also concerned about the number of people will set out the detailed circumstances and descriptors who tell me that the facilities used for the assessments used to determine limited capability for work and are simply not accessible. One example is the Croydon limited capability for work-related activity. These assessment centre; it has a lift for wheelchair users but regulations will be based on the Employment and wheelchair users are not allowed to use the lift due to Support Allowance Regulations 2008 and the subsequent health and safety reasons. To enter the centre, you amendments contained in the Employment and Support have to navigate 46 steps. If you cannot do that, the Allowance (Limited Capability for Work and Limited nearest centre is a 14-mile round trip away, which is Capability for Work-related Activity) (Amendment) very challenging for a number of people. Regulations 2011 and any other changes to the ESA I have also received a number of e-mails saying that provisions before the introduction of UC in 2013. there is a yo-yo process going on. One ex-serviceman We understand that the Government are undertaking was assessed in 2003 as being 30 per cent disabled and further work to develop a supplement to the assessment yo-yoed eight times in the next five years or so between to accurately identify individuals with enduring health being 30 per cent and 70 per cent disabled. These conditions that limit their long-term ability to fully various reassessments and appeals were carried out at provide for themselves through work. However, regulations significant expense to the public purse and distress to under Clause 41, which are also subject to the negative the individual. When he questioned the process, this resolution procedure, will define the meaning of “work”. man was told by the assessor that he was moved back Given that this is another area where we remain unclear and forth so many times because they did not really of the Government’s plan, it will be particularly important understand trauma. to have assurances about how people with fluctuating As the noble Baroness, Lady Wilkins, has said, conditions are to be protected. disabled people are constantly being labelled in the media as benefit scroungers. The rise in the amount of hate crime is a real concern. Could the Minister reassure Lord McAvoy: My Lords, as a former Member of disabled people who are feeling vulnerable and afraid, the other House with experience of constituency cases who see no light at the end of the tunnel and no and organisations, I could not sit silent during this improvement in the process? They want to work and debate. I fully support the point outlined by the noble be part of society but they feel themselves to be Baronesses, Lady Howe, Lady Wilkins and Lady Grey- victims of what is happening. Thompson. Not referring to a GP when there is a fluctuating Baroness Hayter of Kentish Town: My Lords, I illness results in Atos taking a hard line. As I have said support this amendment. As has been stated, the before, I am not one of life’s social liberals, but the line WCA is about deciding whether a claimant has limited taken by Atos on too many occasions has been unfair capability, either for work or work-related activity. As and there has often been a bit of bother in trying to the noble Baroness, Lady Howe, said, there is no sort it out. This causes fear and apprehension, not definition in the Bill, nor indeed in regulation, about only among the less able bodied but also among the what is meant by “work”. This is particularly important able bodied who are not particularly articulate when for those with fluctuating conditions, who are, at they face Atos and its people. I hope notice is taken of different times, both fit for work and incapable of the circumstances illustrated by my colleagues today work within the same month. We already know that, because it is wrong that there should be that fear. apart from any assessment, people with unpredictable I know that the media, as is their wont, take some fluctuations find it difficult to obtain employment or cases, pile into them and get stuck into government to keep it. This is partly because of their previous and organisations such as Atos to highlight obvious work records, partly if any of these fluctuations occurred unfairness, but there is enough experience in the during a probation period, and partly if they are department and among Ministers to counteract that. honest and open with a potential employer. However, there is something in the amendment. The It goes without saying that we support the principle Minister can take it away, look at it, amend it or alter of helping all those who are able to work to do so, but it, but I sincerely hope that he takes notice of it and I am concerned about the apparent drop off in the does not dismiss it. GC 493 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 494

4.30 pm had not thought about it in this way before—is that the WCA assessment puts somebody in a category. If Lord McKenzie of Luton: My Lords, this is an they fail, although fail is perhaps not the right term, interesting and challenging amendment and the debate they go by default into a category that assumes they has been deeply concerning. We have heard from the are fit for work. Should that judgment inevitably follow noble Baroness, Lady Grey-Thompson, that people from that process? are terrified and scared about facilities not being available; we have heard from my noble friend Lady Wilkins There is a sense of cliff edge about the system. On about the mistrust of the WCA and the profound one side of it, there are full conditionalities and harsher mistrust of Atos and some challenging questions about sanctions, and the full work-related requirements; on how they are regulated; and we have heard from my the other side, there is lesser conditionality and noble friend Lord McAvoy and the noble Baroness, requirements only in respect of work-related activity, Lady Howe, about fluctuating conditions. no prospect of higher level sanctions and higher benefit I understand that the system works at present by levels. Of course, all of this rests on the judgment seeking to establish if someone has limited capability under the WCA, subject to reconsideration and appeals for work, and that this is determined by a range of and so on. So much hinges not only on the descriptors descriptors which seek to establish how someone’s and how they are set out and whether they are appropriate physical and mental health affects their functioning. but on how they are applied. Universal credit does not Someone not reaching a sufficient points total would particularly smooth that particular cliff edge, although not be classified as having limited capability for work it deals with other cliff edges about going in and out of and would therefore—in essence by default—be deemed work. But with regard to the analysis and judgment of fit for work. The point was pressed that the assessment where people sit in the categories, it does not particularly does not look at whether someone having not been help. A lot of this is to do with the support that people deemed to have limited capability for work is therefore should have. fit for work in any practical or coherent way. Actually, Lord Wigley: I invite the noble Lord to comment on that gives food for thought. Somebody who has been the relevance of assistance in work. If people are deemed fit for work would seem to claim JSA and be available to help someone who is disabled to undertake subject to relevant conditionality and in the world of their work, it is possible for them to fulfil some of universal credit be subject to all work-related requirements. these requirements. If that person is not available, it is There have been ongoing debates about how appropriate the failure of the state to make that person available the descriptors are and, perhaps more fundamentally, that is creating the handicap for the person who is how they are applied in practice. We have certainly disabled. In applying the social definition, there could heard some of that today. This is of particular interest not be a clearer example than that. to us, because we were in government when the system was introduced; I remember all the policy staff and all Lord McKenzie of Luton: I very much agree with the work that was done to introduce the ESA and the the noble Lord, Lord Wigley. He is absolutely right WCA. Given the fact that it is not working as it about that. I imagine that the Minister will reply that should, maybe the judgment was that it is not capable this is too narrow a definition of work but I do not of working in any event, and that is of some concern. want to anticipate what he wants to say. The more I The Harrington review has published its first think about it—this is not a formal Front-Bench view—the considerations and the recommendations have been more I believe that we ought to be thinking about accepted. It is understood that the second review was smoothing the path so that we do not have that completed in July and is still under consideration. cliff-edge, as we are doing away with cliff-edges for Perhaps the Minister can give us an update. in-work and out-of-work benefits. Is there not something A key question that the amendment poses is whether that we could do to create more of a continuum, so the WCA, properly applied, would mean that the that these very difficult judgments would not have to outcome sought by Amendment 55C would inevitably be made? follow, assuming that it was the outcome that was wanted. I think probably not. On making a judgment Baroness Hollis of Heigham: Dials not dichotomies. about somebody having limited capability for work, there is a prognosis also about how long they would Lord McKenzie of Luton: Indeed. Perhaps I may remain so assessed—that is to say, a determination finish off with a question. I think that earlier in our about when they would be fit for work. The noble deliberations we touched on what would happen if Baroness, Lady Wilkins, again made this point. When someone sought to challenge the WCA determination, making that determination, to what extent would those as well as concerns about the fact that their benefit judgments reflect the criteria that this amendment would be withheld during that process. I do not know seeks to set out? Again, I suspect not—but perhaps whether the Minister has anything further to say on the Minister can help us by telling us the criteria that. I think that there was an exchange in the Commons applied when someone is making a judgment after a on which I had a note on a piece of paper, which I have while whether somebody is fit to go back to work and lost, but it seemed to give some credence to press fit for the JSA regime or the full work conditionality. reports that people were being actively discouraged Is it just the absence of failure of work-related activities from going to appeal. If that were the case, it would be requirements, or is it something more positive in trying an absolute disgrace. to see what they are actually capable of and what the I think that there is great merit in the amendment. definition is of work? I am not being very clear on this Like the noble Lord, Lord Wigley, and perhaps some issue, but my concern when I think about it—and I other noble Lords, I would not accept it quite as it GC 495 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 496

[LORD MCKENZIE OF LUTON] Lord Freud: Yes, Professor Harrington is currently says. However, when someone says that a person should looking at two areas: mental health conditions and be in the WRAG group but they should be capable of fluctuating conditions. We have received one but not coming out of it in three months or six months, there the other. We will clearly take those into account and ought to be a test of what they would be capable of at look at them closely when they come in. To that that point and whether that would amount to work extent, the debate today is slightly premature. It may under this sort of description. I should be interested in not be later in the process of the Bill. the noble Lord’s comments on that. To pick up on the point of the noble Baroness, Lady Wilkins, on the medical evidence used, all available Lord Freud: My Lords, I should start by making a evidence, including that from GPs or specialists, is point about the overall attitude of the Government to fully considered by the department’s decision-makers. people who are disabled or who have difficult medical The final decision is with the department. It gets a conditions. We are committed to unequivocal support recommendation from Atos and takes that into for those people, and that is what the support group is account with all this other information. Following about. There is extra funding for the group and we are recommendations by Professor Harrington, decision- absolutely determined to provide that support. In the makers are now phoning claimants to ensure that they midst of the concerns about particular things, and as understand the process and can submit any additional we try to make sure that the gateway works and that medical evidence that they feel is relevant. However, we can find the people who really need our support, GPs and specialists are not experts in disability assessment. that fact can be lost. However, I want noble Lords in Often, as advocates for their patients, they are not best this Committee Room to be under no illusion that we placed to make a decision that affects benefit entitlement. want to support the people who need our support. I We would not want to undermine the role of GPs as have already expressed my concern about the fear advocates for their patients. factor, which I find very disturbing. I also acknowledge As a result, the criteria provide a reliable, nuanced that the press in this country sometimes writes articles and measurable way of assessing limited capability for that none of us in this room find appropriate. I certainly work. This ensures that a full understanding is gained do not find them appropriate and my colleagues in the of an individual’s disability or health condition, the department find them deeply disturbing. We do not effects of that disability or health condition, how these control the press, regrettably, and things are written effects may vary over time and whether it would be that we do not like to see. However, I am pleased to reasonable for that person to work or not. put on the record where we stand. The amendment suggests that an additional test We debate the WCA a lot. We have debated it in this with additional criteria is added to the assessment of Committee and elsewhere, but, if noble Lords will limited capability for work. However, the criteria suggested forgive me, on this occasion I want to try to keep the are not readily measurable or nuanced. It would, for debate in the context of the Bill. instance, be impossible to measure the potential The work capability assessment uses a number of excessiveness of any workplace adjustments because specific, measurable criteria, covering all types of disability they will vary depending on the size and capacity of and health conditions, to provide an assessment of the employer concerned. whether an individual has limited capability for work. An additional test would also not provide an objective The assessment was designed to take account of chronic or more accurate assessment of an individual’s and fluctuating conditions. It is not intended to be a limitations—and in some instances could hinder it. snapshot but looks at what someone can do reliably, For instance, it would be difficult to provide strong repeatedly and safely. It takes account of the effects of evidence of whether someone currently out of work pain and fatigue. The healthcare professionals conducting could work for 26 weeks without significant time off the assessment are fully trained in understanding without knowing the type of job they would be in and fluctuating conditions. Claimants get a full opportunity their health circumstances at the time. Such judgements to explain how their condition varies over time. are difficult to make and, as a result, the criteria would The criteria were developed in conjunction with risk being inconsistently applied. disability experts, medical professionals and a significant number of disability representative groups. They focus on physical and mental function. Examples of criteria 4.45 pm include whether someone can stand or sit for periods We recognise that concerns have been raised about of time, their ability to lift and reach, how they learn the current assessment for limited capability for work. new tasks and whether they have problems engaging Indeed, many in this Room have raised concerns. socially. The criteria fully take account of the fluctuating However, as noble Lords will know, we are committed nature of many conditions. The training and guidance to improving the work capability assessment through for the assessment is clear that where an individual is a series of independent reviews led by Professor Malcolm unable to complete an activity repeatedly or reliably, Harrington. He has made clear that the work capability they will score points against the relevant criteria. assessment is not broken and that it is the right assessment. One of the great failings of our welfare state is that we Baroness Wilkins: Does the Minister accept that he have left too many people on the sidelines and written has not yet received the report of Professor Harrington’s them off without checking what their potential alternatives working party on fluctuating conditions? There may are. We are not trying to do people down but to assess well be recommendations that he has to make in that what they can do, if they have the potential to work, regard. and to help them to find a job. GC 497 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 498

However, we want to make sure that the assessment Given those assurances, I urge the noble Baroness process is right—a process that, after all, we inherited to withdraw the amendment. from the previous Government, as the noble Lord, Lord McKenzie, described. That is why we asked Lord Wigley: May I press the Minister a little Professor Harrington to review it. Indeed, we were further on the position of people who might be capable relieved when he said that the process was not broken. of work if they have assistance? To the extent that the He published the first review in November 2010, setting assistance is not available, would that be a definitive out a series of recommendations. We fully endorsed reason why they should not lose their benefits? his review and have implemented all his recommendations, including empowering decision-makers to make the right decision first time, improving communications Lord Freud: It is clear that a lot of changes are with claimants and tasking Atos to employ mental going on and I am not surprised that people do not function champions across its network. understand them all. One of the things that we have done means that claimants in the support group can I pick up the points made by the noble Baroness, volunteer to go straight on to the work programme, Lady Wilkins, on registration. All healthcare professionals where there is substantial help for them to get back are registered with a professional body such as the into work. That is one way in which we are helping General Medical Council. They must have had at least people who may find themselves in the worst possible three years’ post-qualification experience, received position to get into work. We have made a very comprehensive training—eight days for doctors, 18 straightforward mechanism. days for nurses and 21 days for physiotherapists—and be approved by DWP’s Chief Medical Adviser. The I pick up the point of the noble Lord, Lord McKenzie. thorough and stringent recruitment process means We are instigating a process whereby people, if they that only 18 per cent of healthcare professional applicants are in the WRAG with a prognosis, are asked by work are successful. Once approved, all are subject to ongoing providers whether they would like to come in at any quality checks through audit, which the department point—I think at six months. They are then encouraged validates. There have been approximately 20,000 checks to volunteer for the process early. They do not move in the past year. The contract stipulates that less than from the WRAG to JSA until there is another WCA. 5 per cent of reports must be classified as substandard, We are talking about a process here; it is a dial for and less than 1 per cent of reports returned by decision- these people, as the noble Lord said, but it has to be makers. These targets are consistently met. understood in the context of how the work programme operates as well as how the WCA operates. Professor Harrington has recently reviewed our implementation of his recommendations. He found Baroness Hollis of Heigham: My Lords, may I ask that, the Minister a couple of questions? The first is about “real progress is being made”, Atos. I was slightly taken aback by his statement that he did not want GPs’ and consultants’ evidence going and he noted a “real enthusiasm for change” from to Atos because they were the patients’ advocates and decision-makers and officials throughout the department. this was the proper role of the decision-maker. Behind He is undertaking a second review and, as part of that, this and other remarks that the noble Lord has made is looking in more detail at the criteria for the assessment. when talking about DLA, for example, is the belief I pick up the comments of the noble Baroness, that somehow there is an objective assessment that is Lady Wilkins, on the rate of successful appeals for to be much preferred to a “subjective” assessment—for claimants. I have to make the obvious point that that example, the sort of diaries that disabled people are rate is lower than under the old personal capability encouraged to keep when trying to determine what assessment, which was running at 50 per cent. Currently, level of award they would get on DLA. Does the the successful appeal rate for the WCA is 39 per cent. Minister accept the point that two people can have I should also make the obvious point that if a decision identical physical conditions but very different capacities is overturned at appeal, it does not necessarily mean for work by virtue of their education, mental health, that the original decision was inaccurate. Customers family support networks and, frankly, the savings and often produce new evidence at their appeal and that is income that they have behind them? That dowry of why there is a changed decision—there is no question resource would allow someone in an identical physical of a mistake. Clearly, we want to drive down this rate situation to someone else to go into work when the of losing appeals. We have introduced measures to other person could not. help to reduce appeal rates. These include calls to The Minister seems to believe that there is something claimants to explain the decision reached, ensuring objective about this and that it must therefore be left that all the available evidence has been submitted in with Atos because there is a sort of box-ticking going claims, and improving feedback, communication and on here that is reliable. He believes that the GP, who training between the agencies involved. We are looking has extended knowledge of the patient or applicant forward to these further improvements in the second concerned, is somehow on the patient’s side and is a review, which we hope will keep the assessment fair subjective advocate whose view should not be taken and effective. We will continue to update the work into account. I find that approach wrong. Why, given capability assessment in the light of those reviews and, that Atos is medically qualified, should it not receive indeed, the work being carried out by the noble Countess, advice from other medically qualified practitioners Lady Mar, who was the original instigator of the who know the patient’s ability in certain situations of amendment. stress? GC 499 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 500

[BARONESS HOLLIS OF HEIGHAM] I tabled the amendment at this stage, towards the My second question has nothing to do with that end of Part 1, because several of its provisions relating and is about Croydon. From the sound of it, the to disability, housing benefit and children have an Government’s Croydon centre is breaking the law of impact on matters that are partly or wholly devolved. the DDA. Could the Minister follow that up? I could well have raised this question in different parts of the Bill but I shall content myself with just raising Lord Freud: My Lords, I will follow up the Croydon the issues at this stage if that is acceptable. situation. I was not aware of it, even though I was I remind the Committee that for both Wales and brought up in south Croydon. Scotland housing, social services, education, children’s Let me try to make this absolutely clear. The whole policy and local government are totally devolved. It is point of the assessment is to judge whether someone is the responsibility of the Government of Wales to functionally able to do the job, which is exactly what provide the finance needed for those responsibilities the noble Baroness was asking for. The point is that it within Wales. On numerous occasions during the past can be done coherently and consistently by people four weeks we have heard the Minister repeatedly who are experts in that function, whereas GPs and resort to the discretionary payments and provisions specialists are trained in diagnosis and treatments that may be made by local authorities in some which are entirely different; it is not their job to see circumstances to make up for any cash or support people and make those judgments day in, day out on a losses suffered by vulnerable individuals who may lose consistent basis. But that is what we are looking for. out under the changes in this legislation. Someone has Atos Healthcare professionals are trained in disability to pay for that at the end of the day, whether it is for assessment, which is assessing the functional effects of emergency housing, social workers’ time or effort, or a person’s condition or disability. That is exactly what for the care bill needed for children or whoever. the noble Baroness is asking for. The amendment is a modest one. It calls merely for the impact of legislation on devolved services to be discussed with relevant Ministers in Cardiff and Edinburgh Baroness Howe of Idlicote: My Lords, this has before the provisions of Part 1 are implemented, which certainly been a very wide-ranging and passionate presumes that an impact assessment would have been debate on these issues, with good reason. I am certain made to enable that discussion to take place. The that my noble friend Lady Mar will read it with Minister may say that we are already having a dialogue considerable interest and will no doubt have plenty of with the devolved Administrations on these matters—I issues to raise at a later stage of the Bill, when I hope see him nodding, surprise, surprise—but I can assure she will be available. We obviously have to wait for him that Ministers in Wales have not so far received Professor Harrington’s final report, which will be extremely responses to their concerns that have put their minds helpful. The various questions that were raised makes at rest on a number of these points. For example, one realise how complicated the way through these Welsh Ministers have expressed concern that changes things will be. Above all, we will need to reassure to DLA rules will have a seriously greater effect in people with these fluctuating conditions that they will Wales than in England. There are 126,000 DLA claimants be treated fairly. On my noble friend’s behalf, I thank of working age in Wales, compared to less than 1.5 million all noble Lords who have taken part in the debate and in England. Wales has 5 per cent of the relevant beg leave to withdraw the amendment. population but 8 per cent of the claimants. Amendment 55C withdrawn. Welsh Ministers have expressed in writing, and made representations to Her Majesty’s Government Clause 38 agreed. about, their fear that these legislative changes will make disproportionate additional demands on social Clause 39 agreed. services departments in Wales and on the budgets of those service providers, and have disproportionate Amendment 55D consequences for devolved budgets. Moved by Lord Wigley 55D: After Clause 39, insert the following new Clause— 5pm “Effect on devolved administrations May I draw the Minister’s attention to the fact that Where the implementation of any sections in Part 1 of this paragraph 17 of the Government of Wales concordat Act may have an implication for other services which are with the department for Work and Pensions states that, the responsibilities of devolved administrations in Wales “where … decisions taken by DWP lead to additional costs for and Scotland, there shall not be a commencement of the Assembly Government where other arrangements”— such sections until the impact of such provisions has been discussed with the relevant ministers of the that is, the Barnett formula— devolved administrations.” “do not exist automatically to account for such extra costs, the extra costs will be met by the decision maker whose policy results Lord Wigley: My Lords, the Minister will not be in those additional costs”. entirely surprised that I raise the question of the Therefore, can the Minister assure us that additional possible knock-on effects of the Bill on the services resources will be made available to the Government of provided by the devolved Administrations. It could no Wales—likewise to Scotland—to meet those demands doubt be argued that there is an equivalent or parallel under that provision? question arising with regard to the consequences for On another aspect, we have heard on a number of local government in England, which I shall touch on a occasions that independent healthcare professionals little later. may be asked to make assessments. If those duties fall GC 501 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 502 on health departments in Wales, who picks up the Bill? Undoubtedly, some of these questions will arise in Also in Wales, there are almost 100,000 DLA claimants later parts of this Bill, so perhaps the Minister can of pensionable age, compared with 830,000 in England. give us some reassurance at this stage so that I do not Clearly, that is a much higher level—partly because a need to return to them on every part of the Bill? I beg lot of people choose to retire to Wales—and in Wales to move. both the care and mobility components of DLA are taken into account at the local authority’s discretion Lord German: My Lords, I am not able to support in the charging assessments for non-residential care. the amendment in the format in which the noble Lord Any changes in DLA will have a bearing on local has presented it. The wording states that matters should government finance to that extent. be discussed with relevant Ministers. The problem is As we have been meeting in this Committee today, that there are relevant Ministers—the noble Lord will the Low review, Independence, Choice and Control, has know some of the people I refer to—who would been published and launched beneath us. It is interesting probably say, “I am not going to discuss this with to note that it picks up the impact that there could be you”, and that would be the end of the game. The on local authorities in England. It says that: amendment, of course, is about consultation. “Local authorities were concerned that should the proposed I should like to make two additional points. Much removal of the mobility component go ahead, they would lack of what is in this Bill requires action by local authorities the resources to meet any shortfall”. which, as I have said before, cannot be undertaken by One council commented that it, this Government and this Parliament. This means that “is concerned that the removal of DLA mobility … will inevitably the actions necessary to enact many parts of the Bill lead to a shortfall in income for residential providers, and that will be requirements on others. providers will seek to remedy the position through increased There is also a two-way dialogue in this. Let us take, fees”. for example, the housing issue, which was debated in To that extent, we have a problem that is applicable in earlier clauses, and the need for appropriate housing England, although obviously it applies in a slightly stock and its reshaping to match the changes that are different way in Wales and Scotland. I dare say that about to take place in housing benefit, and the other noble Lords will have had representations from underoccupancy rules in particular. This will mean COSLA in Scotland. They state that COSLA has that the Government will not have any control over significant concerns about the scope and timeframe the level of investment in housing stock, the shaping for these changes and the impact that they will have of it or even, in a sense, the policy that will drive it for services and income streams for local authorities. forward. Welfare reform is likely to pose major financial and It is crucial that, in the one direction, if this policy service delivery risks, they say, while at the same time is to be implemented, there is a successful negotiation, increasing demand for local government services. Welsh not only with Northern Ireland—about which we Ministers have also expressed concern that the changes heard earlier—but with the other parts of the United to DLA eligibility will lead to an increase in the Kingdom. However, if you look at it the other way number of people thrown into debt and poverty, with round, you may find issues where the legislative all the additional responsibilities that that leads to competence may not exist at the moment to undertake falling on other agencies to provide the help that they all the tasks being given to the devolved Administrations. need. Has any consideration been given to the legislative Finally, I refer to the knock-on effects for devolved consequences? It may mean consent Motions being Administrations arising from the changes in housing passed in other Parliaments to give action to some of benefit. The changes in eligibility rules for housing the work that is going on. benefit will hit some 40,000 social housing tenants in We have now a very complex arrangement in the Wales, with a reduction of £11 on average for one-bedroom United Kingdom. I have already declared my hand— circumstances and £20 a week if there are two bedrooms. I think that social security is one of the pieces of glue In that context, COSLA says that increased rent arrears that holds the United Kingdom together—but to make will reduce councils’ direct income and their ability to it work we must work together, closely align ourselves borrow, and will require councils to scale back their and understand the competencies which are not with capital programmes. The Minister has also emphasised this Parliament. We need an update on where we are that the Government have a housing programme— with the current level of negotiation with both Scotland I believe it is in England only—which is relevant to the and Wales, which I suspect is different at present. rebalancing of housing stock. Have there been discussions for similar provision to be made available by the Lord McKenzie of Luton: My Lords, we should devolved Administrations, which have responsibility thank the noble Lord, Lord Wigley, for reminding us for housing in Wales and in Scotland? of the scope there is in the Bill and the profound In Committee on 20 October, the Minister consequences that it may have, not only for the universal acknowledged that there would be a financial impact credit but for all the other parts that are before us on the local authorities and devolved Administrations today and will be before us in subsequent Committees. in relation to housing, not least because of the impact I thought the noble Lord, Lord German, was on the on existing staff and the possible need for the application point of distinguishing between relevant Ministers of TUPE rules. He gave an assurance that the new and irrelevant Ministers, but he did not quite go there. burdens doctrine applies to local government additional We saw today—I am afraid I did not see it all—some impositions. Can he confirm that the new burdens of the detailed work that has gone on in preparation doctrine also applies to the devolved Administrations? for, certainly, a big part of what is in the Bill. However, GC 503 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 504

[LORD MCKENZIE OF LUTON] Our ongoing discussions with devolved Administrations the point has been made by both previous speakers are the best way to address any impact on devolved that it is not only about DWP and England; there is services and achieve the successful implementation of lots of work for others to do, particularly local authorities, these reforms. With that reassurance, I beg the noble who are about to reel under the impact of the Localism Lord to withdraw his amendment. Bill and all that Mr Pickles has sought to visit on them. Questions were raised about new burdens and how Lord Wigley: I am grateful to the Minister for his they work. It is important that that is factored in and response. I am intrigued by the way in which this that there is fairness and equity in how these matters bureaucracy is going to be such an imposition. If are rolled out. there are meaningful, ongoing discussions with the I acknowledge receipt of the Low review. Unlike Administrations in Cardiff and Edinburgh involving a the noble Lord, Lord Wigley, I have not had chance to two-way flow of discussion, after which there is either read it yet or to quote from it, but it looks to be a a meeting of minds or not, that is not an extra level of particularly valuable document. I hope I have chance bureaucracy. If that is not happening and it would be to read it before we get to DLA later in the Bill. an extra imposition, I would be very concerned because the reassurances we are getting would be insufficient. Lord Freud: My Lords, I am also looking forward to reading the Low review but I have been listening Lord Freud: My Lords, let me make myself utterly with great intensity to everything said in this Committee clear. If we had a statutory duty to discuss and if a today. Social security is a reserved matter, although it devolved Minister were, for any particular reason, will clearly have a limited, tangential impact on areas unavailable—my noble friend Lord German made my of policy where the Welsh Assembly and Scottish point here—our progress could be slowed. That Parliament have competence, the obvious examples unavailability could, potentially, be deliberate. We do being childcare and housing. It does not, however, not want another problem to negotiate when we already include DLA, which was one of the issues raised by have a formal set of agreements on how we relate to the noble Lord, Lord Wigley. devolved Administrations. We are sticking to those and we are talking regularly and informally on how I can reassure noble Lords that we have held, and best to get this through. will continue to hold, regular discussions with Ministers in the devolved Administrations and their officials. We are committed to the smooth and successful 5.15 pm implementation of universal credit. To achieve that we Lord Wigley: I note what the Minister says. He are working closely with devolved Administrations suggests that there could be some deliberate refusal to and relevant local authorities to help them identify engage in such discussions. Does he seriously have and address the impact that the introduction of universal examples of that happening that he could cite to the credit will have on any services that they deliver. We Committee, or is it something that he is imagining? are doing so in line with devolution guidance. My department is continuing to work through the detailed Lord Freud: My Lords, I could not reveal any design aspects of universal credit which will be covered confidences about the discussions that I have had with in regulations. Throughout this process they will continue Ministers in devolved Administrations. Therefore, to have discussions with the devolved Administrations, regrettably, I cannot answer that question. as appropriate, on these provisions and on others in the Bill. I can assure the noble Lord, Lord Wigley, that whatever I am saying here is relevant to the whole of Lord Wigley: I understand where the Minister is the Bill. coming from. However, the point is that there may I am concerned that this amendment would introduce well be a difference of opinion between what is perceived a new and unnecessary level of bureaucracy. My noble as good public policy in Cardiff and Edinburgh and friend Lord German hinted at some of the problems what is perceived as good public policy in his department that it would result in. In practice, that would hamper under his Government. After all, they are different progress and potentially delay the introduction of Governments of different political complexion, which universal credit, let alone other aspects of the Bill. will have different priorities. That is true of the current Government in Cardiff and the coalition Government who were there before them. The whole point is that Lord Wigley: Can the Minister clarify how that we need some understanding on this. bureaucracy comes about?

Lord Freud: The issue is that if there is an additional, Lord McAvoy: Is the noble Lord, Lord Wigley, formal process, requiring a formal level of discussion perhaps interested in asking the Minister whether at a formal time before you can clear particular things, these confidential discussions are subject to freedom that is another element of delay to negotiate when we of information requests? already have a huge number. We are on a very precise plan of implementation here. Those noble Lords who Lord Wigley: That would indeed be interesting. No were able to see the presentation of how we are introducing doubt we will hear if that is the case. However, on this and implementing universal credit will be aware of the amendment I was also pressing for assurances—it may importance of a smooth process. I am concerned to well be that the Minister was giving them in the words avoid delays due to artificial elements of bureaucracy. that he used—with regard to the application of the GC 505 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 506 concordat. I assume from his words that the concordat—I give a general perspective on why I have tabled these quoted from paragraph 17—is fully applicable and amendments and my response to individual amendments, will be in the context of these negotiations; and, I shall simply look at the rationale that runs through likewise, that the assurances of “no surprises” that the Delegated Powers and Regulatory Reform have been given to local government will also be Committee’s reasoning for these recommendations. applied. If there are any direct relationships between The first thing it says—and I think we all agree with his department and local government in Wales, which this—is that this is a detailed and complex piece of there could be in the context of housing benefit because legislation and that it needs to make provision for as there is a direct relationship, will those assurances wide a range of personal circumstances as is practicable, apply equally? I am sure that the Minister is about to but it has a perceived need for adaptability. That is nod that that is his understanding, but I should be fundamental. It comments that this is a significant grateful if that could be put in writing. revision of social security mean-tested benefits since at least 1986. It also comments on the way in which Lord Freud: I repeat my point: we are absolutely there has to be an opportunity for subsequent amendment moving in line with devolution guidance. We have no and for views on the way in which this is being intention of doing anything other than that. implemented. Clearly, as we all know, this is a skeleton Bill, and the regulations put the flesh on the bones. Lord Wigley: I have probably got as far as I will get That is why it is very important that we get the by rattling around this set of bones but this is clearly a arrangements right, particularly bearing in mind those matter of some concern. We will not know for certain key principles that I have just outlined. until the Bill becomes an Act and how this works is The Government have accepted some of the turned into reality. However, I very much hope that if, amendments, so I will not dwell on them. They have in that reality, it transpires that significant additional accepted Amendment 59. Amendment 63 proposes costs are landing on local government in England or the removal of claimants subject to no work-related the devolved Administrations in Wales and Scotland, requirements. This was an issue that came up earlier the Government will pick up the bill in the spirit of the this afternoon. This amendment removes the requirement concordat and the other devices that they have if it is from the affirmative procedure only for the first set of their actions that are causing those additional costs. regulations and later puts it back into affirmative On that basis, I beg leave to withdraw the amendment. every time it occurs. I notice that the Government have not yet responded to this amendment, and I hope that Amendment 55D withdrawn. they will deal later with the question of whether it should be affirmative throughout. It falls into the Clause 40 agreed. category where we may wish subsequent amendments to be dealt with by the affirmative process because Clause 41 : Interpretation of Part 1 they have such a substantial impact on the clients who fall under these no work-related requirements. Similarly, there is the issue of hardship, and I have Amendment 55E done the same thing there. I have taken that from Moved by Lord McKenzie of Luton being affirmative for the first occasion only, and in a 55E: Clause 41, page 18, line 35, at end insert “subject to later amendment I suggest that it should be wholly section 43(3A)” affirmative. Amendment 65 proposes that the basic conditions be subject to the affirmative procedure throughout. These basic conditions set out by Section 4 Lord McKenzie of Luton: My Lords, I shall and the regulations beyond it specify certain circumstances speak also to our other amendments in this group, in which a person has been treated as having accepted Amendments 55G, 56B and 69ZA. These amendments the claimant commitment. The basic conditions are relate to the desirability of making a greater number laid out in Section 4(1). These are the bare bones of of regulations under the Bill subject to the affirmative universal credit and should be subject to the affirmative resolution procedure to facilitate better scrutiny of procedure because they are part of the fundamental any changes that affect claimants and future claimants structure of the Bill. These basic conditions may well of the benefits system. In particular, future attempts change. There will be a requirement for some flexibility, by regulation to define the meaning of the terms knowing how the system will pan out over time. As the “disabled”, “severely disabled” and “work” should be people who are going to be affected by this will be the submitted to both Houses of Parliament for approval. more vulnerable, it seems to me that we should have an There are several other amendments in this group, affirmative resolution for those regulations throughout. which I might speak or respond to after others have spoken to them. I beg to move. On Amendment 66, the Delegated Powers Committee—whose report I read very carefully—said Lord German: My Lords, I shall speak to the that if the Government could convince it that the amendments in my name, Amendments 59, 61, 63, 64, negative procedure would satisfy it, that would be 65, 66, 67, 68, 69, 70, 77, 96, 99, 101 and 106, and to sufficient. In their response, the Government said that whether Clause 47 should stand part of the Bill. It will they would seek to reassure the committee that the not take a wizard to note that these recommendations negative procedure would be sufficient. I wait to be are based on the report to this House of the Delegated convinced, as I suppose do many other noble Lords. I Powers and Regulatory Reform Committee. Before I am grateful that the Government have changed from a GC 507 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 508

[LORD GERMAN] With the introduction of universal credit, there are negative to a first-time affirmative procedure, but the bound to be uncertainties that really should not be left amendment questions whether that is significant. I believe to the negative procedure in this matter. Some changes that the powers are significant, and the Delegated are envisaged in the regulations using the negative Powers Committee worried about the restrictions put procedure, meaning that the Secretary of State can on claimants and about whether they would be suitable restrict the conditions on a claimant so that they are for differing personal circumstances. The Bill and the searching for a job that they want or may not want or documents that we already have seem to allude to one that is near them or is paying well. The precedent using these measures in a positive way—something set by the previous legislation in this area—in fact, all that I support—suggesting that restrictions on types legislative matters in this area in the past—has required of work will allow claimants to look for work in the affirmative procedure to be used for issues of this sectors in which they are interested or for hours that kind. I wonder whether the Minister can convince us are appropriate for them. Quite clearly, it is an area that we need to move in a different direction. with significant and changeable circumstances. If it is The Government have accepted Amendments 77 the view that the negative procedure should be used and 96, while they have put down an amendment to for routine matters, then, when these policies proceed, the part of the Bill covered by Amendment 101, and there should be an affirmative process. they have also agreed to Amendment 106. Amendment 68 relates to the claimants who are With a Bill of this magnitude, which has such subject to no work-related requirements. The Government importance for a great number of people, over the said that they would make that subject to the affirmative years to come we should be absolutely clear that we procedure for the first regulations. Once again, the are going to have a fully transparent process to allow Regulatory Reform Committee asked whether the the debate to occur, not just this year or next year but Government would confirm that there would be only for the length of time that this Bill survives before minor adjustments after that first set, and I think that changes are made and whenever these matters become we might be content with that. important to the public. We need to have that public debate, and I think that Parliament deserves the affirmative With Amendment 69, it is exactly the same process. resolution in the areas that I have outlined. The Government have put in the affirmative procedure for the first time. If they can assure us that the regulations set out in the first instance are unlikely to change a Lord Kirkwood of Kirkhope: My Lords, I find to my great deal thereafter, I think that that will be satisfactory surprise that I have an amendment in the middle of as well. this group, Amendment 71, which I am sure I conceived of in a reflective moment in my bath a long time ago. Amendments 70 and 99 would remove the words The amendment proposes a new clause entitled “Universal “Scottish Ministers”. That would not only create equality credit: requirement for simplicity”. It says: between the rest of the country and Scotland but “Nothing in the regulations giving effect to this Part shall ensure that, because Scotland would be doing these introduce avoidable complexity to the claiming, calculation or regulations by affirmative procedure, the rest of the payment of universal credit.” country would be doing them that way as well. I did I do not think that anyone in the Room is in favour of not understand why it was not. avoidable complexity. However, the point that I wanted to make, as we come to the end of the universal credit Clause 47 provides that regulations under Sections part of the Bill, was that, with a bit of determination, 6 and 7 of the Jobseekers Act 1995 should require only for the first time you can achieve simplicity. Even if the negative procedure. As of now, they have the unavoidable complexity were engrained in the legacy affirmative procedure, and the regulations concern systems and the rest of it, perhaps it would be positive claimant conditionality and the requirements for claimants to have a statutory duty. There might be another to be available for and actively seeking work on which Government in due course—you never know what their jobseeker’s allowance is dependent. The predecessor might happen—and you could foresee circumstances committee that looked at the matter in 1995 for the in which there might be some back-sliding in terms of Jobseekers Bill considered the provisions concerning some of the gains that we have made with universal availability for work and actively seeking work to be of credit. If it is possible to do it—and I think that there fundamental importance to the Bill and recommended have been signal successes in this direction, and they that regulations about them should require the affirmative are demonstrated in the legislation that we have in procedure whenever made. The DWP memorandum front of us—maybe it would help to put in perpetuity on this topic says: for future Ministers a duty to avoid unnecessary “Regulations such as this are generally advantageous to JSA complexity. It is something that could always be argued claimants. The Department has increasingly found that having to if future Governments came up with other unnecessarily use the affirmative procedure makes implementing the changes complex systems. Perhaps I am talking to myself here, more onerous than it needs to be”. but the point is at least worth considering. Can the Minister say what “more onerous” means? This is, rather obviously, a probing amendment, but Does it mean that you have to have open consultation, I would like to hear the Minister’s thoughts: is it a which seems to me important? The Government rejected completely daft idea, or might there be some merit in the recommendation from the Delegated Powers trying to get Ministers—the noble Lord’s heirs and Committee, saying that moving to the negative procedure successors—always to think carefully about unavoidable was absolutely necessary. I think we would like to complexity in future iterations and reforms, particularly know a bit more about what was absolutely necessary. of the universal credit? It would be so easy to lose a lot GC 509 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 510 of the advantages if we started making it—as we allowance claimants to be actively seeking, and available always have done, for the past 30 years—piecemeal for, work. These powers are currently subject to the and patchwork, with special pleading for special cases. affirmative procedure. The clause makes them subject We end up with incoherence, which is avoidable. to the negative procedure. These powers were groundbreaking when first introduced 5.30 pm in 1995, as the noble Lord pointed out. However, the Lord McKenzie of Luton: How does the noble Lord House now has had more than 15 years experience of envisage definitions of avoidable complexity being how these powers are used. There is a wide understanding built in to the legislation—by regulation, perhaps, or a of what the phrases “actively seeking” and “available bit of guidance here and there, or perhaps even something for work” mean; in fact, it fundamentally underpins in primary legislation? our active labour market approach. We believe that this experience means that it is now far more appropriate that this power is subject to the negative procedure. Lord Kirkwood of Kirkhope: I have no idea—it was Their use is now well established and we have no a thought in my bath. I confessed that at the beginning. intention of departing from that precedent. However, it is worth reflecting on. Of course the noble Lord is absolutely right—as soon you start thinking Secondly, Clauses 33 and 89 allow for supplementary, about it, you start putting in layers of complexity. I incidental, transitional and consequential amendments think a challenge to Ministers is not a bad idea, even if to other legislation to be made through regulations. To it was just on the wall or behind the desk—I would pick up on the point that my noble friend made about settle for that. I beg to move. the Scottish Government, who have powers under Clause 33 to make consequential amendments in their Lord Freud: My Lords, in some areas I broadly area of remit, they specifically requested that these agree with the Delegated Powers and Regulatory Reform regulations be made by affirmative procedure in the Committee’s suggestions, and the Government have Scottish Parliament. This was the result of one of our brought forward amendments to make these changes. helpful non-statutory discussions, which I am sure an Where key principles are established the first time the FOI request will show in all its glory. Amendments 70 powers are used, these amendments will make the and 99 would make any regulations that amend primary regulations subject to the affirmative procedure in the legislation subject to the affirmative procedure. first instance. As to Amendment 66, Clause 6(1)(a) It is likely that a large number of minor amendments allows for regulations to set out circumstances in to other legislation will be necessary as a result of the which a claimant will not be entitled to universal importance and scale of the changes that the Bill credit even though they meet the conditions of entitlement. introduces. It is not unusual for some of these changes I am grateful for the opportunity to reassure the to be made through secondary legislation, and such Committee that the negative procedure will afford consequential powers are usually subject to the negative Parliament adequate control over the use of this power. procedure. Moving away from this precedent would As I set out during our debate on Clause 6, there take up a very significant amount of parliamentary will be a number of specific groups who will not be time and could pose a risk to the timetables for both able to access universal credit. These may include universal credit and personal independence payment. certain prisoners and children leaving full-time care We therefore feel that the negative procedure remains who remain the responsibility of the local authority appropriate. where payment of universal credit would lead to Amendments 55E to 55G and 69ZA seek to make duplication of provision. This will broadly reflect similar regulations that contain definitions of “disabled”, “severely rules in current benefits. disabled” or “work” subject to the affirmative resolution Similarly, I would like to reassure noble Lords that procedure. It inserts a new subsection into Clause 43 it is appropriate for the regulations on hardship and and consequential amendments to the terms where claimants falling into the no work-related requirements they arise in Clause 41. I can reassure the noble Lord group to be subject to the affirmative procedure only that these amendments are not necessary. Clause 43(3) in the first instance. In both cases, our intention is that already provides that a wide range of regulations will the initial set of regulations will clearly establish the be subject to the affirmative procedure the first time key principles of the new system. We have already that the power is exercised. This includes the regulations provided noble Lords with a draft of the regulations to be made under Clause 12 providing for additional to be made under Clause 19(2)(d). We have also published amounts that will include the definitions of the terms a briefing note on the conditionality threshold. We mentioned in the amendment. Noble Lords may recall have debated these matters at some length earlier in that the illustrative draft regulations on elements provided Committee. Once the system that we have set out is in to your Lordships already contain a draft definition of place, it is unlikely that the regulations will change “disabled” and “severely disabled”. significantly, and I hope that is the assurance that my Under Amendment 69ZA, the noble Lord seeks to noble friend Lord German was looking for. significantly widen the scope of regulations subject to There are three areas where I am unable to accept debate in both Houses, covering consequential the committee’s recommendations or the noble Lord’s amendments and changes to working age benefits and amendments. First, the committee and the noble Lord pension credit. It would be completely impractical for have suggested that Clause 47 should be removed from this House to debate the numerous consequential the Bill. Clause 47 relates to the parliamentary procedure amendments being made to both primary and secondary for regulations relating to the requirements on jobseeker’s legislation, and a poor use of parliamentary time. GC 511 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 512

[LORD FREUD] I have already explained why it is more appropriate Amendment 56 that Clause 33 should remain subject to negative procedures, but none of the other provisions identified Moved by Lord Kirkwood of Kirkhope by this amendment were covered by the report of the 56: After Clause 41, insert the following new Clause— Delegated Powers and Regulatory Reform Committee. “Benefit regulator We are therefore satisfied that the negative procedure Nothing in this Part shall be introduced until a claimant is appropriate. regulatory authority is established to oversee the With regard to universal credit, I should also point professional standards being observed by those government departments and other agencies delivering out that all the regulations on entitlement, awards and universal credit and other benefits.” claimant responsibilities will be in a single set of regulations. They will necessarily be affirmative in the Lord Kirkwood of Kirkhope: My Lords, I hope that first instance because if any regulations within a set in the remaining few minutes before the Committee are affirmative they all are. So, even if the Bill does not considers wrapping up for the day we can deal with my require the affirmative procedure for specific points, it two amendments in this group, which are quintessentially will apply in practice. simple ideas. Amendment 56 suggests having a benefit Amendment 71 would introduce a different form of regulator, and Amendment 113 proposes an office for scrutiny for universal credit regulations requiring the social protection. I freely confess that these ideas can Secretary of State to avoid creating any unnecessary be criticised for increasing quangocracy, but before complexity into the system. I strongly support the the noble Lord, Lord McKenzie, attacks me for creating spirit of the amendment in the name of the noble new quangos, it is certainly not my intention to do Lord, Lord Kirkwood. A key aim of universal credit is that. These are very simple quangos. to simplify the benefit system. Simplification is a I have tabled Amendment 56 because we are coming publicly stated, fundamental principle that has guided to the end of an important piece of Committee work the design of the new system. Any requirement for that will transform the way that people think about simplicity would have to be finely balanced against benefit delivery in the future. I see in other aspects of other considerations, such as affordability or easing my work that there has been a general increase in the transition to work. I acknowledge that this is a public discontent with the services that they are getting probing amendment, but perhaps a duty to consider across the public waterfront. Complaints against doctors the simplicity of any changes, as suggested by the and public servants are increasing. That may be for the noble Lord, would be a better approach than that in beneficial reason that people are more active in demanding the amendment. However, any Government would a proper service. If you look at the changes that we are clearly have to be concerned about the detailed making—and the Government argue rightly that this interpretation of simplicity, which, as the noble Lord, is a culture change if it is to be successful—perhaps we Lord McKenzie, took delight in pointing out is a should be looking at the provision of public services subjective term. delivered by professionals within the Civil Service, in Nevertheless, I will look at this idea very closely. I government departments and in the plethora of can assure the noble Lord that we will put in place a government agencies. It applies not merely to the number of non-legislative safeguards to protect universal DWP or the Child Support Agency, but to prime credit from unnecessary complexity. These include providers in the Work Programme. There is a very governance processes to ensure simplification and complicated set of hierarchies, which I am sure are consistency in policy design, and working with claimants doing their best, but they all need to be invested with a to ensure that universal credit is simple to understand culture that underpins the ethic of good service to the and administer. public. A regulator may not be the right word and an Given these explanations, I urge noble Lords to office or new organisation may not be necessary, but I withdraw or not move their amendments. feel strongly that we should be looking to the Government Lord McKenzie of Luton: My Lords, I am happy to and the department to set clearly some new paradigms do so. However, I should like to comment on the issue about how they will deliver universal credit as we go of avoidable complexity. The Minister said that he had forward. to balance that against issues of affordability and ease If I thought that previously, I was reinforced in that in transition. I accept that, but you also have to strike view by looking at the recent White Paper, Open Public a balance around issues of fairness. One of the problems Services, which contains some of the principles of of simplicity and standard systems is that they do not good complaint handling in terms of the need for necessarily take account of some of the individual public services to be accountable to users and taxpayers, circumstances that have to be addressed. You see it and to be responsive to the people whom they serve. perhaps more acutely in the tax system, but it applies That White Paper sets out the principles clearly for all equally to the benefits system. Although I clearly to see and sets the high standard that we should all support getting things as simple and straightforward aim for. I also carefully considered the work of Ann as they can be, fairness should also be one of the Abraham—the Parliamentary and Health Service balancing factors. I beg leave to withdraw the amendment. Ombudsman—of whom I am a fan. Last month, she produced a very interesting report, Responsible and Amendment 55E withdrawn. Accountable? It repays careful study for some departmental Ministers in the DWP because Work and Pensions Amendments 55F and 55G not moved. and the subsequent agencies are at the high end of Clause 41 agreed. most of the complaints. GC 513 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 514

5.45 pm asked annually by the Parliamentary Ombudsman will There are two examples in here of Jobcentre Plus be addressed going forward? I would really like to have failures of public service that were dire in their effect that assurance. on the individuals concerned. This can be used positively. Amendment 113 can wait until we get to the part of What is so good about Ann Abraham is that she the Bill dealing with the Social Mobility and Child derives the driver to improve services through the Poverty Commission. However there is a strong case complaints procedure. She is positive about how she for it. I see it as an equivalent to the Office for Budget attracts people to make their experiences known and Responsibility. You would have an independent body she tries to encourage the Government at all levels to saying to the Treasury, “We have looked at your plans react positively to those complaints as a way of driving and we think this and we think that”, and you can up standards in public service. measure that against what the Government of the day Two sentences in her report caught my eye. The are saying. Social protection is an important, equivalent Parliamentary Ombudsman Service is well developed— and equal part of the public policy domain and we you have to complain through your Member of should have an independent group of people. For me, Parliament—well known and well tested. I always the commission is not independent enough, but we thought that she had an oversight that went beyond can have arguments about that. the individual complaints that were placed on her desk We could do more to obtain a balance, particularly through that route. However, given this quote, which I in relation to CPI versus RPI, over the long term. shall share with colleagues, that is clearly not the case. Someone will need to hold the ring and look at the At page 3 of the excellent report called Responsive and long-term changes that will come into being as a result Accountable? she states: of these matters. If we cannot have an office for social protection then perhaps a body under the Social Mobility “In terms of measuring and improving performance, departmental complaint handling is not subject to any systematic external audit and Child Poverty Commission could be spun into the or similar scrutiny. As Ombudsman I consider complaints that remit in a way that would give me the assurance I am reach my Office but I do not have the legal power to undertake trying to find without the bureaucracy of setting up systemic scrutiny on my own initiative. So I do not have the an extra quango. I beg to move. mandate or the mechanisms to provide assurance on complaint handling efficiency and effectiveness across government”. The final sentence is: Baroness Lister of Burtersett: My Lords, I shall speak briefly in support of Amendment 113. I do not “Neither does anyone else”. know whether this was another amendment cooked That was news to me because I believed—wrongly—that up in the noble Lord’s bath—I forgive him for “going she was, on her own initiative, able to work with forward”—but I like the idea of an office for social departments, across departments and within departments protection. The notion of social protection is one that to try to drive up the standards of public service that we do not use enough in this country; it is very much a are currently being developed. We should be looking continental, European concept, and a very important at that. one. I am not arguing for a new quango either but the The trouble is that Ministers are far too busy to do spirit of noble Lord’s amendment is very important. I this. The textbook says that the Minister has oversight have lived through more fundamental reforms of social of everything and, therefore, he is the champion of security than I care to remember, and not one of them making sure that the complaints procedures are coherent has addressed the points made in this amendment and work. This report shows that he does not because about the adequacy and the sustainability of the different different parts of the department use different handling parts of the system. If nothing else, there should be a systems for complaints. There is a central complaints requirement on the Government that when they bring department. I know it works and I know that the forward reforms of social security they should consider people there earn their pay because they have a lot of these fundamental questions. work to do. However, I have no confidence that we are We have touched on these points in Committee taking advantage of this change of culture to determine already. One noble Lord asked questions about the the leadership that is necessary to drive up the standards principles underlying social security. I intend to come of public accountability. back to them under an amendment to Clause 51, when I am a lay member of the General Medical Council I will to talk about a contributory principle. I am and medical regulation is completely new to me. However, slightly reluctant to think about this as being part of it is fascinating to see—there are colleagues in the the responsibility of the Social Mobility and Child Room who know more about this than I do—how Poverty Commission because social security is not just good medical practice and the sharing of best evidence about poverty. The whole point about social protection goes on throughout the profession. It is probably is that it broadens it out beyond poverty—a group easier with doctors because they are a more coherent “over there”. One possibility to think about is whether group, but across civil servants a lot more could be to broaden the remit of the Social Security Advisory done, not only in establishing a coherent, transparent Committee so that periodically it reports on the adequacy and easily explainable procedure for handling complaints and sustainability of the different parts of the system. but in changing the practice and culture. That has to be driven at a ministerial level. Baroness Hayter of Kentish Town: My Lords, I If we cannot have a benefit regulator, can the declare an interest in regulatory and professional services, Minister assure me that the questions behind the need having chaired the Legal Services Consumer Panel, sat for driving up standards and the questions that are on the Board for Actuarial Standards, overseen insolvency GC 515 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 516

[BARONESS HAYTER OF KENTISH TOWN] staff often start work in benefit offices at the age of 16 practices and sat on the Bar Standards Board, the with fairly low-level qualifications. Like the police Pension Regulator and the Property Standards Board. force, this is a field where one can go up through the So I have a long involvement with non-economic ranks. The Civil Service is very good at in-service regulators who oversee the professional delivery of training and so on. However, this is nevertheless an services. These kinds of regulators have a large role to area where a great deal of responsibility is delegated, play as they are very much about what we called rightly, to staff at EO level, many of whom have come raising standards—although the words used by the up through the ranks. Certainly when meeting and noble Lord, Lord Kirkwood, when he talked about discussing policy development with them, it was “driving up” standards may be even better. This goes always clear to me within a few minutes where their beyond public services. That may be what is in front of education had effectively stopped. As a result there us now but consumers are demanding this from a was, in some cases, a real issue about driving up whole range of service providers. It has shaken some standards and trying to professionalise the service. of the barristers who do not really like the fact that Nothing that I say should be taken as criticism. It is they have to conform to new consumer-set standards. clearly obvious that in benefit offices staff may very But that is what the users of all services now want and well start at 16, 17 or 18 rather than go through that is what this kind of regulator provides. higher education, particularly given that higher I am less afraid of the idea of quangos—although I education has only recently become more widely am sure that that is not a general view—but what these available to young people. However, junior staff at the kinds of regulators do is to adopt codes of conduct; DWP, more than in any other field of Government set good practice guidelines and minimum service that I am aware of, are taking key decisions affecting standards; and then ensure that quality assurance by the well-being of hundreds of people and need way of setting minimum training or entry qualifications, professional support, training and the continual CPD requirements and the monitoring of services. driving up of standards from the department. That monitoring is not just about compliance, important though that is, but also provides a feedback loop so that lessons are learned, either for standards and the 6pm way they are defined and set, or for the way staff are Lord Freud: My Lords, I share the noble Lord’s trained, or, as was discussed this morning, to allow concern that the benefits system must be fair, efficient systems to continue to be developed in the light of the and affordable, which is indeed why this Bill is before way the service is delivered. the Committee today—to ensure that benefits are well This kind of standard-setting is particularly important targeted and fair and the system is simple to understand in view of the ending of legal aid to assist complainants and simple to administer. and users because the only other monitoring will be The first of these amendments would introduce a via this kind of organisation. This kind of regulator—for claimant regulatory body for universal credit. We are want of a better word—can identify whether particular committed to involving claimants throughout the groups are underrepresented in any category and whether development of universal credit. This involvement will all groups are being properly serviced and properly ensure that issues are known, understood and mitigated served. As the Minister has stated on a number of as universal credit is being built. As part of this, we are occasions, some decisions must be taken on a case-by-case already conducting a programme of research among a basis—in-work conditionality is a particular example. broad range of future claimants and are testing the This will involve tremendous discretion in the hands design of the claimant commitment with claimants, of thousands of decision-makers across the country, front-line staff and stakeholders. This process will so clear guidance, good and consistent training and continue over the coming months to ensure that claimants ongoing monitoring of decisions by some kind of have real and sustained input into the creation of the regulator with authority will be crucial to ensure that new benefit. the service is fit for purpose. The other amendment in this group would create a Unfortunately, the Government refused to accept wider office for social protection, looking at the benefits our earlier amendment that the Jobcentre Plus side of system as a whole. There are already a number of the claimant commitment should be laid down. It is other bodies with oversight of the benefits system and therefore even more important that this standard-setting any changes made, not least the Social Security Advisory will be open, transparent, raise standards and, most Committee. As well as scrutinising regulations, the importantly, create confidence in the new system. This committee comments on a range of operational matters, proposal has some merit. I am not sure whether or not especially in relation to claimants’ interests. While I the formula will achieve it, but we look forward to am grateful for the contributions of the noble Baroness, hearing the Minister’s response. Lady Lister, and my noble friend Lord Kirkwood, I am not convinced that another body is needed. The Baroness Hollis of Heigham: My Lords, perhaps I coalition Government are committed to reducing the may make one brief point. In common with others number and cost of quangos, and increasing accountability around the table today, I have had long and—I by transferring the responsibility for key decisions on hope—harmonious working relationships with DWP public policy back to Ministers. Ministers are held to staff, who have been almost universally helpful, account in Parliament, including by powerful committees constructive and anxious to take policy forward. such as the Public Accounts Committee and the Work However, I believe I am right in saying that in the and Pensions Select Committee, not to say the Chamber DWP, more than in any other area of government, of the House itself. GC 517 Welfare Reform Bill[3 NOVEMBER 2011] Welfare Reform Bill GC 518

I do not intend to reverse this direction of travel, (2) In subsection (1), “piloting purposes”, in relation to any and I would urge the noble Lord to withdraw his provision, means the purposes of testing— amendments. (a) the extent to which the provision is likely to make universal credit simpler to understand or to administer, Baroness Lister of Burtersett: My Lords, before the (b) the extent to which the provision is likely to promote— Minister sits down I would like to make clear that I (i) people remaining in work, or was not arguing for a separate body. I was arguing that (ii) people obtaining or being able to obtain work (or Social Security Advisory Committee could perhaps be more work or better-paid work), or asked specifically to consider, on a regular basis, the (c) the extent to which, and how, the provision is likely to issues contained in the noble Lord’s amendment—possibly affect the conduct of claimants or other people in any in its annual report—namely the adequacy of the other way. different elements of the system, the sustainability and (3) Regulations made by virtue of this section are in the the way the different elements of the system fit together. remainder of this section referred to as a “pilot scheme”. It would be very helpful to have that kind of annual (4) A pilot scheme may be limited in its application to— overview. Perhaps the Minister can take that away and (a) one or more areas; consider it. (b) one or more classes of person; (c) persons selected— Lord Freud: My Lords, I know it is not our House, (i) by reference to prescribed criteria, or but I point out that the Work and Pensions Select (ii) on a sampling basis. Committee has that remit—a very direct remit to look (5) A pilot scheme may not have effect for a period exceeding at the system overall. If you are looking at how three years, but— individual claimants are treated, we have a process of (a) the Secretary of State may by order made by statutory tribunal and independent review. There are a whole instrument provide that the pilot scheme is to continue number of different processes. to have effect after the time when it would otherwise expire for a period not exceeding twelve months (and Baroness Morgan of Drefelin: Can the noble Lord may make more than one such order); tell us who would be responsible for promoting and (b) a pilot scheme may be replaced by a further pilot scheme funding research into these questions? If there is not a making the same or similar provision. body which is taking an interest in evaluating the (6) A pilot scheme may include consequential or transitional impact of changes in social security, who will be provision in relation to its expiry.” funding, gathering and evaluating independent evidence looking at the impact of these changes or changes like Amendment 56A agreed. this? Clause 42, as amended, agreed. Lord Freud: My Lords, how we research changing universal credit is something that I am taking an active interest in getting on top of now, as I discussed on a Clause 43 : Regulations: procedure previous day. Clearly there is a lot of research. The department puts out an enormous amount of research Amendment 56B not moved. every year. Huge tomes come out monthly, and I know noble Lords enjoy reading them all. There is no lack of adequacy of independent research on DWP matters. Amendments 57 and 58 Moved by Lord Freud Lord Kirkwood of Kirkhope: My Lords, my main priority is to get back to my bath as soon as possible. 57: Clause 43, page 20, line 9, at end insert— If I do not get my 7 pm train I will not do that, so I “( ) section 4(7) (acceptance of claimant commitment);” thank the Minister for his reply, and I am happy to 58: Clause 43, page 20, line 12, leave out from “9(2)” to end of withdraw the amendment. line 13 and insert “and (3) (standard allowance)”

Amendment 56 withdrawn. Amendments 57 and 58 agreed.

Amendment 56A Amendment 59 not moved. Moved by Lord Freud 56A: Before Clause 42, insert the following new Clause— Amendment 60 “Pilot schemes Moved by Lord Freud (1) Any power to make— 60: Clause 43, page 20, line 14, leave out from “10(3)” to end (a) regulations under this Part, of line 15 and insert “and (4) (children and young persons (b) regulations under the Social Security Administration element)” Act 1992 relating to universal credit, or (c) regulations under the Social Security Act 1998 relating to universal credit, Amendment 60 agreed. may be exercised so as to make provision for piloting purposes. Amendment 61 not moved. GC 519 Welfare Reform Bill[LORDS] Welfare Reform Bill GC 520

Clause 46 : Sanctions Amendment 62 Moved by Lord Freud Amendments 71G and 71H not moved. 62: Clause 43, page 20, line 17, at end insert— “( ) section 18(3) and (5) (work availability requirement);” Clause 46 agreed. Amendment 62 agreed.

Amendments 63 to 69ZA not moved. Clauses 47 and 48 agreed.

Amendment 69A Schedule 7 agreed. Moved by Lord Freud 69A: Clause 43, page 20, line 25, leave out from beginning to “(pilot” and insert “by virtue of section (pilot schemes)” Clause 49 : Claimant responsibilities for jobseeker’s allowance Amendment 69A agreed.

Amendment 70 not moved. Amendments 71J to 71L not moved.

Clause 43, as amended, agreed. Clause 49 agreed. Amendments 71 to 71B not moved. Clause 50 agreed. Clause 44 : Claimant commitment for jobseeker’s allowance Lord De Mauley: My Lords, this may be a convenient Amendments 71C to 71F not moved. moment for the Committee to adjourn until Tuesday at 3.30 pm. Clause 44 agreed.

Clause 45 agreed. Committee adjourned at 6.09 pm. WS 69 Written Statements[3 NOVEMBER 2011] Written Statements WS 70

supporting disabled people to lead independent lives Written Statements and exercise choice and control. Personal independence Thursday 3 November 2011 payment will focus support to those individuals experiencing the greatest barriers to living an independent life, while ensuring the benefit remains sustainable. Agriculture: Farming Parliamentary approval for resource and capital of Statement £0.65 billion for this new service has been sought in the main estimate 2011-12 for the Department for The Parliamentary Under-Secretary of State, Department Work and Pensions. Pending approval of the Welfare for Environment, Food and Rural Affairs (Lord Taylor Reform Bill, urgent expenditure estimated at £5,014,000 of Holbeach): My right honourable friend the Minister will be met by repayable cash advances from the of State has today made the following Statement. Contingencies Fund. The advance will be repaid at I am pleased to announce that the Government the earliest opportunity following Royal Assent to the published the interim response to the Farming Regulation Welfare Reform Bill. Task Force report today. I established the task force in June 2010, asking its EU: Justice and Home Affairs Council members to advise the Government on a new approach to regulation in England, from the point of view of a Statement farmer or food processor, and on how best to achieve a risk-based system of enforcement while maintaining The Minister of State, Ministry of Justice (Lord high environmental, welfare and safety standards. McNally): The Justice and Home Affairs Council was Following an extensive review, the task force published held on 27 and 28 October in Luxembourg. My its report on 17 May 2011. honourable friend the Minister of State for Immigration The task force made over 200 recommendations, (Damian Green), my right honourable friend the Secretary covering the full range of the regulatory landscape of State for Justice (Kenneth Clarke) and the Scottish that affects farming. The key messages are that Defra, Lord Advocate, Frank Mulholland, attended on behalf its agencies and delivery partners need to establish an of the United Kingdom. The following items were entirely new approach to regulation, strengthen ties discussed. with the farming and food-processing industry and The council began in mixed committee with Norway, work in partnership to achieve outcomes, and move to Iceland, Liechtenstein and Switzerland (non-EU Schengen a risked-based approach to regulation, rewarding good states). The Commission updated on the implementation practice with less frequent inspection. of the second-generation Schengen information system The report was bold and ambitious. Government (SIS II), noting that progress remained in line with the will also be bold and ambitious in finding solutions. previously agreed council conclusions. The central I am pleased to announce that the interim response is system was still expected to go live in the first quarter very positive about our progress to date. It sets out a of 2013. The second milestone test was planned for narrative of the work that is being done, and highlights the second quarter of 2012. The Commission undertook examples of how the department and its delivery to keep the council informed. agents have already started to apply the principles Next the Commission congratulated member states the task force set out. We are particularly keen to on the successful rollout of the visa information system take forward the principle of earned recognition and (VIS) to North Africa. The UK is not bound by the to make progress on simplifying and integrating VIS regulation because it does not participate in the environmental messages for farmers and we are working common visa element of the Schengen acquis. in partnership with delivery bodies and industry The presidency, supported by the Commission, stressed organisations to develop these ideas. I intend to respond the importance to local populations of the proposal to positively to as many of the recommendations as extend the local border traffic regulation to the whole possible and will give full details of this, setting out a of the Kaliningrad region and corresponding Polish clear agenda for implementation, in our final response, oblasts. Insisting it would not create a precedent, it which is due to be published early in 2012. proposed the council and Commission submit a The interim response is now available on the Defra declaration to the proposal reiterating this. The presidency website at www.defra.gov.uk. concluded that a First Reading deal could be reached with the European Parliament, whose committee had Disabled People: Personal Independence accepted the proposal without amendments. The UK Payment is not bound by this legislative proposal since it builds on that part of Schengen in which we do not participate. Statement The Commission presented its communication on smart borders, which addressed the possibility of an The Parliamentary Under-Secretary of State, Department entry-exit system (EES) and registered traveller programme for Work and Pensions (Lord Freud): My honourable (RTP) for the Schengen area. Before bringing out friend the Minister for Disabled People (Maria Miller) legislative proposals next year, they wished to secure has made the following Written Ministerial Statement. the clear support of both member states and the Personal independence payment will replace disability European Parliament on the best way forward. The living allowance for people of working age from April smart borders package would require time and investment 2013. The coalition Government are committed to and there were important data protection issues to WS 71 Written Statements[LORDS] Written Statements WS 72 address. Member states expressed broad support for asylum backlog from 46,000 to 33,000; a rise to an the communication and highlighted the potential benefits average of 12 per cent in international protection for enhancing internal security, combating organised recognition rates and ongoing recruitment of operational crime, identifying visa overstayers and reducing border staff. The European Asylum Support Office (EASO) crossing time for regular travellers. However, given the referred to its operating plan for Greece, and provided required investment, member states called for a thorough an update on deployment of asylum support teams cost-benefit analysis before proceeding. The UK is made up of experts from member states. FRONTEX excluded from these arrangements and measures since gave a brief update on the areas in which it was also they build on that part of Schengen in which we do supporting the GAP.The conditions in detention centres not participate. were very troubling, and the Commission urged the Under AOB, France raised the increasing problem Greek authorities to address the issues at the Greek- of itinerant crime and called for a debate at the next Turkish border as a priority.The Commission highlighted JHA council. that the economic situation in Greece was well understood by member states, but the EU had made significant The EMCDDA (European Monitoring Centre for funding resources available; these resources had to be Drugs and Drug Addiction) presented the findings used. Others agreed. Finally, the Commission stated from its 2011 annual report on the state of drug that co-operation with Turkey was vital, and that problems in Europe, which will be published on agreement with Turkey on readmission would not be 15 November. Heroin and opiates remained at the forthcoming without a deal on visas and mobility. heart of the problem. Commissioner Malmström Greece said that EASO and FRONTEX, as well as welcomed the report and said that there was a need for member states, had provided pivotal support but noted further EU action in this area. Commissioner Reding that this was not a long-term solution and Greece was then presented the Commission’s new communication, dedicated to strengthening its own resources. Towards a Stronger European Response to Drugs.It offered a future legislative package and practical action Discussions on the Greek action plan continued to build a strong framework for combating illicit during a closed lunchtime session on wider issues of drugs. The council also agreed the synthetic drugs illegal migration and the impact of visa liberalisation, pact. The UK welcomed the EMCDDA report and during which the UK stressed the importance of strong the Commission’s communication. The UK also endorsed external borders, supporting those who had raised the views of delegations who had called for a civil concerns about migration flows from the south-east approach to the confiscation of criminal assets and and across the Mediterranean and about trafficking. welcomed the presidency’s focus on synthetic drugs, A clear focus on upstream migration work in our and in particular on precursors used to tackle these dialogue with neighbouring regions and countries of drugs. origin was essential, while EU action, under the global approach to migration, needed to tackle the key drivers, The Commission provided an update on the namely economic instability and political insecurity. negotiations with the United States regarding an EU-US The UK also shared the concerns of others about the agreement on data protection. activities of organised criminal groups in facilitating During a discussion on passenger name records immigration crime, noting that there were strong links (PNR) Commissioner Malmström noted that the here to the abuse of free movement rights. Forged European Parliament would vote on the EU-Australia documents were used to get around the rules and gain agreement that day. She also reported that discussions access to rights they would otherwise not be entitled with the US had reached an advanced stage, and a to. It was wrong that criminals profited from free political understanding had been reached. Retention movement, while those who upheld its responsibilities periods would be 15 years for terrorism and 10 years suffered. for other serious crime, where the latter would apply to crimes punishable by three years under US law. The The presidency summarised the state of play on the “push” method would be the norm, but “pull” could asylum package: negotiations on procedures and reception be used in very limited cases. There would also be a conditions directives continued steadily at expert level; reference to the EU-US data protection negotiations. the European Parliament (EP) voted for adoption on The Commission added that on third-country transfer the qualification directive; solutions for moving forward it was considering a solution similar to the Australia with Eurodac continued to be scoped; and an early agreement. The agreement now needed to be transformed warning and preparedness system continued to develop into a legal text. It hoped to finalise this in the coming as a solution to unblocking the negotiations on Dublin. weeks. The UK supported the idea of an EU-US The latter proposal would be discussed in more detail agreement, and was pleased that a political agreement at the forthcoming Strategic Committee on Immigration, had almost been reached. The UK supported the Frontiers and Asylum (SCIFA). The Commission Commission’s view that security and data protection congratulated the presidency on the headway being could both be improved at the same time. PNR data made on the package, and encouraged the council to was an absolutely vital tool in the fight against terrorism continue to look for solutions, while remaining mindful and organised crime, and we should continue to co-operate of the views of the European Parliament. with the US for the security of all our citizens. The presidency noted political agreement had been The presidency invited Greece to update Ministers reached on the outstanding issue of correlation tables on progress with the Greek action plan (GAP) on relating to both the single permit directive and asylum and migration management, on which there qualifications directive. The UK had not opted into were some notable improvements: a reduction in the either of these instruments. WS 73 Written Statements[3 NOVEMBER 2011] Written Statements WS 74

The Commission presented its communication on on the admissibility of evidence obtained in breach of integration of migrants, highlighting the importance or derogation from the rights in the directive. There of integration and recognising that responsibility for was no discussion. integration rested at a local level. The presidency The presidency then held a discussion on the draft noted that council conclusions would be prepared on directive on establishing minimum standards on the this issue for the December JHA Council, with work rights, support and protection of victims of crime. continuing under future presidencies. Cyprus said this The UK and other member states supported the would be a priority during its 2012 presidency and presidency’s approach on clarifying the scope of victims’ informed Ministers that it would organise a conference rights in relation to the role of victims in criminal on integration. proceedings and that the vulnerability of victims should The Commission introduced its communication on be determined on a case-by-case basis. The presidency co-operation in the area of the JHA within the Eastern expressed the hope that a general approach could be Partnership (EaP). Member states noted that clear agreed at the December JHA council. actions should be in the road map which was being The presidency then provided an update on the developed, co-operation between eastern partners and draft directive on combating sexual abuse and exploitation Eurojust should be further encouraged, and the principle of children and child pornography. This directive seeks of the rule of law was vital to the Eastern Partnership. to ensure that criminal activities to sexually exploit The presidency announced that on 4 November there children, including misuse of the internet, are more would be a conference on the Prague process, which fully covered than in the existing framework decision would take forward the Eastern Partnership. (2004). It reported that on 27 October the European Parliament had adopted the text agreed by the council, Spain noted that ETA had ceased its campaign of following agreement between the council, the European violence. It thanked the EU for its support and noted Parliament and the Commission. The UK noted the that the UK had also helped. The Commission was update. keen to hear views on a possible EU terrorism finance The presidency and Commission introduced the tracking system (TFTS). The main question was whether proposal on an EU common sales law. The Commission we needed such a system. The EU counterterrorism confirmed it would be an optional instrument sitting co-ordinator and Europol supported such a system, alongside national law that did not harmonise national but it was noted that the EP was divided. Member systems. This was also discussed during the ministerial states noted the need to ensure data protection given lunch, the presidency concluded it would analyse the the current transfer of bulk data under the EU-US proposal further. agreement, but expressed concerns about whether the proposal would be cost-effective. In addition to the During any other business the presidency informed Commission’s proposals, one delegation wondered if the council on the outcomes of the EU-Western Balkans the solution was rather to improve the EU-US agreement. Ministerial Forum held in Ohrid on 3 and 4 October The UK asked for more detail about the added value and the EU-Russia Ministerial Permanent Partnership of the proposals and what the options and costs would Council held in Warsaw on 10 and 11 October. look like. The Commission agreed to undertake an The council also adopted a report on the application impact assessment and consult further with the EP of the resolution which establishes the network for before returning to the council with proposals. legislative co-operation between the ministries of justice of the European Union. The objective of the network The justice day began with the Commission introducing is to promote better understanding of the laws of its recently published proposal for a directive on minimum other member states, thus enhancing mutual trust and criminal offences and penalties for insider dealing and promoting the application of the principle of mutual market manipulation. The aim of the proposal is to recognition. secure full implementation of legislation on financial services and protection for the financial markets. This directive accompanies a wider Commission proposal Police and Crime Commissioners: Pay for a new regulation, introduced to create a stronger EU framework for tackling insider dealing and market Statement manipulation. The UK noted the presentation. The Minister of State, Home Office (Lord Henley): Next the presidency provided an update on discussions My right honourable friend the Secretary of State for in the council on the directive on the right of access to the Home Department (Theresa May) has today made a lawyer in criminal proceedings and on the right to the following Written Ministerial Statement. communicate upon arrest. This is the third measure on the road map to strengthen criminal procedural rights. I have received the Senior Salary’s Review Body The UK has not opted into this directive, at the initial report and recommendations on police and crime stage of the negotiations, because the Government are commissioners’ pay. of the view that the directive as published by the On 20 January 2011 I wrote to the chair of the Commission is not proportionate and could have an Senior Salaries Review Body requesting that he consider adverse effect on our ability to investigate and prosecute the role and functions of police and crime commissioners offences effectively.The presidency reported that progress and make an independent recommendation to me as had been made on many aspects of the instrument. to what the SSRB considers to be a suitable salary, or However, further discussions are required in the working salary range, for this new office. The report, which group in relation to the scope of the instrument and today I am placing in the House Library and is available WS 75 Written Statements[LORDS] Written Statements WS 76 to the general public through the Senior Salary Review been made available from efficiencies and savings identified Body’s website, sets out clearly the important and in BSF projects that are continuing. powerful role that PCCs will play in delivering policing I can announce today that over 100 local authorities services from November next year when they will be will receive a share of the funding. The allocations first elected. have been calculated using figures provided to the I am grateful for the work undertaken by the SSRB Department for Education by local authorities through and will reflect on its advice and recommendations. the 2011 school capacity and forecast information The SSRB has recommended a salary scale for PCCs returns. By using the most up-to-date information of £65,000 to £100,000 with each police force area available we are making sure the savings identified are within England and Wales being weighted against this being targeted to local authorities experiencing the scale. I intend to give this and the other recommendations most severe need. thorough consideration and report my final decision in due course and in good time to allow potential I understand the economic situation means difficult candidates to be clear on what they can expect their choices need to be made about how to direct funding salary to be. but I urge local authorities to target resources at managing the shortfalls in pupil places wherever they PCCs are established in the Police Reform and are most needed, and taking into account of the views Social Responsibility Act 2011 within each force area of parents. This is especially pertinent in light of the as powerful individuals, and charged with responsibility data released last week by the Office for National for the totality of policing within that area; each force Statistics (ONS) showing that previous projections for area faces a huge range of policing and social challenges population growth were underestimated and by 2020 which vary from force area to force area and each PCC there will be around 21 per cent more primary age will seek to ensure that these challenges are met in the children than in 2010. interests of our local communities. Today’s extra funding means that in 2011-12, a PCCs will need to be highly motivated, determined total of £1.3 billion will have been allocated to fund to deliver the best for the communities that they serve, additional school places. The Government already and above all be focused on making our communities announced an allocation of £800 million funding in safe. How PCCs work with and interact with chief December 2010, twice the previous annual level of constables, police and crime panels and local partners support. The nature of this funding (capital grant will be crucial to achieving success. which is not ring-fenced), the nature of the projects it The election of police and crime commissioners will fund (mainly small primary school projects), and will further strengthen the relationship between the the readiness of local authorities to get projects under public and the police, and allow us to replace bureaucratic way mean that this money will be spent efficiently. accountability to Whitehall with democratic accountability Further, I expect much of it to benefit small and to local communities. As a result the police will have medium-sized enterprises and to stimulate local economic greater freedom and discretion to fight crime as they activity across the country. see fit within a rebalanced and strengthened governance structure. I am keen to ensure that suitable and I would like to reassure those local authorities proportionate remuneration is achieved for such a whose needs were not as severe as others—and which, challenging and rewarding role. therefore, did not receive a share of this extra £500 million—that future capital allocations for basic need and maintenance pressures will be announced Schools later in the year. Statement I am also launching a 12-week consultation on the revision of school premises regulations. The consultation document sets out how the Government intend to The Parliamentary Under-Secretary of State for deregulate and end the confusion and unnecessary Schools (Lord Hill of Oareford): My right honourable bureaucracy surrounding the current requirements. A friend the Secretary of State for Education (Michael copy of the consultation document will be placed in Gove) has made the following Written Ministerial the House Libraries. Statement. I am proposing to make the requirements for I would like to update the House on my department’s independent and maintained schools identical and to work to address the shortage in pupil places being reduce the overall number of regulations. Some regulations experienced by some local authorities, and reduce the are duplicated in other pieces of legislation or are level of prescription and unnecessary guidance which simply unnecessary and I propose to remove these are a feature of the school premises regulations and regulations completely. I also think that other regulations hamper the development of new schools. can be simplified to remove unnecessary bureaucracy I would also like to inform members of my final and make requirements proportionate, without reducing decisions on the Building Schools for the Future (BSF) the quality of buildings. I would welcome views on my programme in the six authorities which mounted judicial proposals, further details of which can be found on reviews. the Department for Education’s website. In July, I announced that an extra £500 million Finally, today I am announcing my decision on the would be made available, this year, to local authorities schools that are subject to the BSF judicial review experiencing the greatest need in managing shortfalls proceedings, brought by Luton Borough Council; in providing pupil places. This additional funding has Nottingham City Council; Waltham Forest London WS 77 Written Statements[3 NOVEMBER 2011] Written Statements WS 78

Borough Council; Newham London Borough Council; The contract represents a better deal for the taxpayer Kent County Council; and Sandwell Metropolitan than that negotiated in 2008, a saving of more than Borough Council. 20 per cent in real terms, taking into account inflation I announced what I was minded to do in July and and the value of the pound. have received further representations from each of the claimant authorities. I considered these carefully but I am not persuaded that I should depart from the Terrorism Act 2000 and Part 1 of the decision which I announced I was minded to take. My Terrorism Act 2006: Independent Review final decision is, therefore, not to fund the schools in Statement the claim but, instead, to fund, in capital grant, the value of the claimant authorities’ proven contractual liabilities. The Minister of State, Home Office (Lord Henley): My right honourable friend the Secretary of State for Further information on all aspects of today’s the Home Department (Theresa May) has today made announcements, including a complete list of local the following Written Ministerial Statement. authorities receiving extra funding for shortfalls in pupil places, can be found on the Department for I am pleased to announce the publication today of Education’s website at www.education.gov.uk. the Government’s response to the report of Mr David Anderson QC on the operation in 2010 of the Terrorism Act 2000 and Part 1 of the Terrorism Act 2006, which will be laid before the House today. St Helena: Airport I am grateful to David Anderson QC for his detailed Statement report and I have considered his recommendations fully. Following consultation within my department and with other relevant departments and agencies, I am pleased to lay my response to David Anderson’s Baroness Northover: My right honourable friend recommendations before the House today. Copies will the Secretary of State for International Development be available in the Vote Office. has made the following Statement. In my Statement of 22 July 2010 I confirmed the Government’s willingness to finance an airport for Thames Tunnel St Helena on condition that: Statement an acceptable contract price is achieved; the risk of cost and time overruns after the award The Parliamentary Under-Secretary of State, Department of the contract is addressed; for Environment, Food and Rural Affairs (Lord Taylor the airport design using engineered material arresting of Holbeach): My honourable friend the Parliamentary system (EMAS) is approved by Air Safety Support Under-Secretary for Natural Environment and Fisheries International: and (Richard Benyon) has today made the following Statement. the St Helena Government undertake to implement On 7 September 2010, I outlined in a Written the reforms needed to open the island’s economy to Statement (col. 9WS) the Government’s support for inward investment and increased tourism. Thames Water’s plans for a tunnel to reduce the amount I am pleased to announce that these conditions of untreated waste water being discharged into the have now been met. A design build and operate (DBO) River Thames. I presented an estimate of the costs and contract for the St Helena airport will be signed with impact on customers’ bills, which I said we would Basil Read (Pty) Ltd today. continue to scrutinise with Ofwat to ensure value for The airport will end five centuries of isolation for money. I said Defra would update the 2007 impact this UK overseas territory, which to date has been assessment and that I was minded to consider development accessible only by sea. It will provide its British population consent for the tunnel under the regime for nationally with the means to build a future which, in the long significant infrastructure projects established by the term, is expected to lead to financial self-sustainability Planning Act 2008. and an end to UK budgetary aid. This vision of a My Statement today reaffirms the Government’s more vibrant, self-sufficient territory would not be support for Thames Water’s plans and reports on possible if we were to provide a replacement ship. progress we have made since my last update. In particular, Continued sea access as the only way to get to and it provides an updated estimate for the overall cost and from St Helena would consign the island to a bleak the likely completion date for a project of this size and future of further emigration and economic decline. complexity. The contract will be in the amount of £201.5 million The need to upgrade the sewerage system in London for the design and construction of the airport, with an which in places is running out of capacity even in dry additional amount of up to £10 million in shared risk weather, and for a solution to the resulting environmental contingency, and £35.1 million for 10 years of operation. challenges in the Thames tideway remains persuasive. We are confident that both the negotiated price and I will today place in the Libraries of the House a the allocation of risk represent value for money for the paper, Creating a River Thames Fit for our Future, British taxpayer. In the long run, and including the summarising the strategic and economic case for the investment cost, the decision to proceed with the airport Thames tunnel. This builds on the impact assessment is expected to save money for the UK taxpayer. produced in 2007. It explains why we continue to WS 79 Written Statements[LORDS] Written Statements WS 80 believe that a tunnel represents the preferred solution On planning, we have completed a 12-week public for dealing with the untreated sewage that is polluting consultation on proposed secondary legislation (Section 14 the River Thames. order) which would classify proposed major sewer projects such as the Thames tunnel as nationally significant Last year I reported the project costs for the Thames infrastructure projects (NSIPs). We are currently analysing tunnel as £3.6 billion at 2008 prices. This was the cost responses. It will then undergo parliamentary scrutiny of the project reported at what is known as the P80 and an affirmative approval process. Following such level—ie, there is an 80 per cent probability the project approval, I would anticipate that a Section 14 order costs will be less than this figure based on probability could come into effect in the spring of 2012. modelling of cost risks. This figure excluded financing We have revised the draft waste water national costs. Since then development of the construction policy statement in light of responses to the public plans has continued, more allowance has been made consultation and recommendations from the EFRA for a later completion date and in response to the first Committee. The NPS is to be used by the Infrastructure phase of public consultation by Thames Water, greater Planning Commission, or its successor, to guide its use of brownfield sites and river transport has been examination of development consent applications for allowed for. The cost base has also been updated to waste water projects of national significance. We anticipate 2011 prices and on this basis the estimates for the that the NPS will be laid before Parliament for approval project costs are now £4.1 billion. They include £0.9 billion later this year. of risk allowance and optimism bias. These estimates have been examined by independent advisers on I am very conscious of the impact construction of behalf of Ofwat and confirmed to reflect best practice the tunnel will have on local communities. Thames in the industry. At this stage some uncertainties remain Water completed its first phase of consultation on the and the estimates will continue to be refined going preferred route earlier this year and has amended forward. some of their proposals in response. Tomorrow it launches the phase 2 consultation, which will be further Last year I also reported that the estimated average opportunity for people to let their views be known. peak impact on annual customer bills was likely to be This consultation is with a view to submitting a planning £60 to £65 in 2008 prices. This figure was based on the application to the Infrastructure Planning Commission then estimate of project costs plus modelling of likely (or its successor body) in autumn 2012 and construction financing costs. Since then, in addition to the revised starting by 2016. project cost outlined above, Thames Water has with The initial timeline for completion of the tunnel Ofwat and my department made progress in developing was 2020. However, as the parties have worked through the delivery route, risk management processes, and the issues relating to planning, financing, procurement likely financing costs. They have also developed the and regulation of the project it has become clear while modelling of the likely impacts on customer bills. This construction time remains at six years, the 2020 date is gives a central range for an average maximum annual unrealistic. On the basis of what is now known, and customer bill impact of £70 to £80 at 2011 prices. The depending on the choices made as we go forward, considerable uncertainty in this range reflects the impact completion of the construction of the tunnel is now that financing costs will have on bills and the difficulty expected to be between 2022 and 2023. We continue in estimating these for a project of this nature and with Thames Water to explore how we can minimise duration. Relatively small changes in the cost of capital the overall timescale. for the project could have a significant impact on bills. I propose to provide a further update when we have agreed a delivery route with Thames Water and before I understand the concern that Thames Water customers it applies for development consent in the second half may have over this increase in their bills. Defra, with of 2012. Ofwat, IUK, the EA and the Treasury, has been working closely with Thames Water to ensure that the engineering costs are minimised through value engineering, and Transport: MoT Scheme that the project is delivered efficiently with a structure Statement and financing mechanism that delivers value for money for customers. We will continue to do this and to Earl Attlee: My honourable friend the Parliamentary ensure that there are no better-value solutions that Under-Secretary of State for Transport (Mike Penning) meet the need. has made the following Ministerial Statement. The Department for Transport has today published Financing a tunnel of this size at a cost that is value a consultation on a proposal to exempt vehicles of historic for money for customers is a challenge. The Government interest (vehicles manufactured prior to 1 January 1960) believe that the private sector can and should finance in Great Britain (GB) from the statutory MoT test, as this project but accept that there are some risks that allowed under Article 4(2) of the EU Directive 2009/ are not likely to be borne by the private sector at an 40/EC. acceptable cost. It is willing in principle to provide contingent financial support for exceptional project The EU directive of the European Parliament and risks where this offers best value for money for customers of the Council, Chapter II, Exceptions, Article 4 states: and taxpayers. However, I will want to be assured that, “Member states may, after consulting the Commission, exclude when offering this contingent support, taxpayers’ interests from the scope of this directive, or subject to special provisions, certain vehicles operated or used in exceptional conditions and remain a top priority and that the taxpayer is appropriately vehicles which are never, or hardly ever, used on public highways, protected by measures that minimise the likelihood including vehicles of historic interest which were manufactured and impact of these exceptional risks. before 1 January 1960 or which are temporarily withdrawn from WS 81 Written Statements[3 NOVEMBER 2011] Written Statements WS 82 circulation. Member states may, after consulting the Commission, UK Forestry Standard set their own testing standards for vehicles considered to be of historic interest”. Statement Sections 45 to 48 of the Road Traffic Act 1988 provide the legislative basis for MoT testing. The The Parliamentary Under-Secretary of State, Department purpose of the MoT test is to ensure that cars, other for Environment, Food and Rural Affairs (Lord Taylor light vehicles (including some light goods vehicles), of Holbeach): My right honourable friend the Minister private buses and motorcycles over a prescribed age for Agriculture and food (Jim Paice) has today made are checked at least once a year to see that they comply the following Statement. with key roadworthiness and environmental requirements in the Road Vehicle Construction and Use Regulations I informed the House in February (col. 791W) that 1986 and the Road Vehicle Lighting Regulations 1989 I expected the revised edition of the UK Forestry (both as amended). Standard to be published later this year. I am delighted to say that we have published the While it is important to ensure that vehicles are safe new standard and its suite of supporting guidelines to use on the highway, it is also important to ensure today. Copies are available on the Forestry Commission’s that regulations imposed are not excessive. Currently, website: www.forestry.gov.uk/ukfs. both the age and the categories of vehicles requiring the MoT test in GB go further than the EU directive The documents, prepared by the Forestry Commission on roadworthiness test 2009/40/EC, which only subjects and Northern Ireland Forest Service, set out how we post-1960 registered vehicles to a compulsory must manage our forests in a truly sustainable way. roadworthiness test and does not require motorcycles They form the practice code for forest management of any age to do a statutory roadworthiness test. and detail the conditions that must be met when felling trees, carrying out woodland operations and The Government believe that the proposed exemption receiving grants. They apply to all woodland, irrespective will reduce regulatory burden on owners of historic of who owns or manages it. vehicles, meet its reducing regulation agenda and the desire to remove unnecessary burdens. It will also The standard ensures that international agreements bring the age of vehicles requiring the statutory MoT and conventions on areas such as sustainable forest test in line with the Goods Vehicles (Plating and management, climate change, biodiversity and the Testing) Regulations 1988, which already exempt unladen protection of water resources are robustly applied here pre-1960 manufactured heavy goods vehicles from the in the UK. roadworthiness test. For forest managers, the new standard encapsulates all the various requirements of sustainable forest Two-thirds of pre-1960 licensed vehicles (vehicles management and spells out what they mean in practice. manufactured prior to 1 January 1960) are driven less For the first time it includes principles of forest than 500 miles each year. This is significantly less than management for carbon benefits, which is a UK the 9,000 miles driven on average by all licensed vehicles. government carbon plan commitment. The UKFS While the pre-1960 licensed vehicles made up about also provides the basis for the new Woodland Carbon 0.6 per cent of the approximately 35.2 million licensed Code that gives assurance that woodland projects for vehicles in GB in 2010, they were involved in just carbon capture provide the benefits claimed for them. 0.03 per cent of road casualties and accidents. The For many years the UK has been at the forefront of pre-1960 licensed vehicles are largely well maintained international moves to protect the world’s forests. The by their owners. The initial MoT test failure rate for new standard provides an excellent and up-to-date these vehicles in 2009 was less than 10 per cent, while example of our approach. It is most appropriate that the initial MoT test failure rate for post-1960 licensed we are doing this in the International Year of Forests. vehicles was over 30 per cent. The standard will help us strike that vital balance The purpose of the consultation is to invite views between the economic, social and environmental benefits on proposals to exempt vehicles of historic interest of forestry. To that end, I am pleased to note the from the statutory MoT test in GB. In addition to no Forestry Regulation Task Force’s support of the standard change, the consultation offers three options based on as the cornerstone of long-term sustainable forest vehicle manufactured date—ie it seeks respondents’ management. views on whether the Government should exempt I want to thank all the forestry and environmental from the statutory MoT test, pre-1960, pre-1945 or organisations who have worked with us to bring the pre-1920 manufactured vehicles. standard together. The consultation also seeks respondents’ views (in all three options) on whether all vehicle categories and vehicles used for commercial purposes should be included Universal Credit in the exemption review. Statement The consultation will run until 26 January 2012. Copies of the consultation document have been placed on the Library of the House. Further copies are The Parliamentary Under-Secretary of State, Department available on the DfT website at www.dft.gov.uk/ for Work and Pensions (Lord Freud): My right honourable consultations/dft-2011-27. Depending on comments friend the Secretary of State for Work and Pensions received and the department’s response, amendments (Duncan Smith) has made the following Written Ministerial may be made to regulations. Statement. WS 83 Written Statements[LORDS] Written Statements WS 84

The Department for Work and Pensions has obtained the diamond mines in the Marange region of Zimbabwe. approval for an advance from the Contingencies Fund A copy of the agreement has been placed in the of £46 million to allow for the continued development Library of the House. of IT for universal credit before Royal Assent. This is Following almost a year of intensive discussions a second advance; an earlier advance of £18 million among KP participants, a robust but fair agreement was approved for the same purpose in April. has been reached which only allows exports from Parliamentary approval for resource and capital of mining sites in the Marange region deemed to be £80 million for this new service has been sought in the compliant with KP standards. Exports from other main estimate 2011-12 for the Department of Work mining sites can only take place once those sites are and Pensions. Pending approval of the Welfare Reform judged to be KP-compliant by independent experts. Bill, urgent expenditure estimated at £46 million will This agreement establishes a credible independent be met by repayable cash advances from the Contingencies monitoring mechanism, including a role for civil society Fund. and independent experts, to ensure ongoing compliance The universal credit programme has successfully with KP standards and to prevent non-compliant completed the second stage of IT delivery on time. Marange diamonds from being traded under the KP. This is a major achievement given the demanding The agreement also commits Zimbabwe to take action timetable and relatively new agile way of working. The to bring all mining in Marange into compliance with second advance will allow the programme to continue the KP. to work to its current design and development timetable Allowing rough diamond exports only from and enable continuity of third-party supplier engagement. KP-compliant mines in Marange ensures that the This will support an earlier move to the new simplified credibility of the KP is maintained and guards against benefit than could be achieved without it and achieve the risk of non-compliant mines exporting to international better value for money by enabling a more rapid markets because of the lack of any agreement. In take-up of online claims with lower operational delivery addition it means that there is some transparency of costs. revenue flows. This will help the Zimbabwean Finance The amount covered by the advance is part of the Ministry to collect tax and royalties owed to it, and proposed £2 billion investment in universal credit agreed thereby ensure the financial benefits of the diamond at the time of the spending review. The advance will be sales can reach the Zimbabwean people. repaid at the earliest opportunity following Royal We will continue to monitor the situation closely Assent. and respond appropriately to any future developments. As the agreement makes clear, the KP will constantly review progress towards KP compliance in the Marange region. We urge Zimbabwe to make every effort to Zimbabwe overcome the outstanding shortcomings so that next year the KP plenary will be in a position to declare Statement Marange fully compliant with KP minimum standards. If this is not the case, the KP plenary will have to discuss whether to renew the present agreement or The Minister of State, Foreign and Commonwealth alternatively what other measures are appropriate to Office (Lord Howell of Guildford): My honourable address any remaining obstacles. friend the Parliamentary Under-Secretary of State for The Kimberley Process remains an important conflict Foreign and Commonwealth Affairs (Henry Bellingham) prevention mechanism. This agreement upholds the has made the following Written Ministerial Statement. credibility of the KP and signals the determination of On 1 November the Kimberley Process (KP) plenary all Kimberley Process participants, including Zimbabwe, meeting in Kinshasa reached an agreement to ensure to work together to uphold Kimberley Process principles credible and effective safeguards and monitoring of and standards in the future. WA 277 Written Answers[3 NOVEMBER 2011] Written Answers WA 278

scheme claimants are required to identify the risk of Written Answers soil degradation on their holding and select appropriate management options to mitigate these risks. Thursday 3 November 2011 Asked by Baroness Miller of Chilthorne Domer Abdul Baset Al Megrahi To ask Her Majesty’s Government, in the light Question of the Environment Agency advice that “selenium is an essential element (micronutrient) for animals Asked by Lord Laird and humans”, what assessment they have made of changes in uptake by plants of selenium; and whether To ask Her Majesty’s Government whether they this is likely to be as a result of changes in soil pH, will instruct the British Ambassador to Libya to or, if not, for what other reasons. [HL12613] visit Abdul Baset Al Megrahi in Tripoli and ascertain his state of health. [HL12723] Lord Taylor of Holbeach: The Environment Agency The Minister of State, Foreign and Commonwealth has reviewed selenium toxicity and environmental Office (Lord Howell of Guildford): The Scottish authorities behaviour as part of its contaminated land exposure are responsible for monitoring Mr Al Megrahi’s health assessment (CLEA) programme. Although changes in as a condition of his compassionate release licence. It soil pH over the past 40 years could result in an is for the Scottish authorities to assess his state of increase in selenium uptake by plants, the Environment health. As such, the Foreign and Commonwealth Office Agency has no data to confirm this and consideration will not be instructing H.M. Ambassador in Libya to of selenium concentrations in soils in England and visit Abdul Baset al Megrahi. Wales suggests that any increase would be very small and probably insignificant. Abortion Question Arab Partnership Asked by Lord Alton of Liverpool Question To ask Her Majesty’s Government why they are Asked by Lord Luce pressing the Republic of Ireland, through the United Nations, to legalise abortion; and how this pressure To ask Her Majesty’s Government, in the light of is compatible with their commitment to respect the the Arab Spring, what range of co-operation, advice rights of sovereign democratic nations. [HL12547] and assistance they offer to countries in the Middle East through the Arab Partnership. [HL12838] The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): We are not pressing The Minister of State, Foreign and Commonwealth the Republic of Ireland to legalise abortion. At the Office (Lord Howell of Guildford): Through the Arab recent UN Human Right’s Council’s Universal Periodic Partnership, the UK has committed £110 million over Review (UPR) of Ireland the UK recommended that four years to support both political and economic Ireland introduce legislation to implement the European reform across the Middle East and North Africa region. Court of Human Rights (ECtHR) judgment in the A, This includes up to £40 million for political reform, to BandCvIreland case. It stated that Ireland had support not just free and fair elections, but stronger violated the convention by failing to provide an accessible parliaments, media and judiciaries; and up to £70 million and effective procedure by which a woman can have to support inclusive economic growth. There are a established whether she qualifies for a legal abortion number of areas where the UK has specific expertise under current Irish law. In its response to the UPR the and can make a distinct contribution to effective reform Government of Ireland have committed to ensuring in the region. Arab Partnership projects are working that this judgment is implemented expeditiously. with countries on issues such as tackling corruption, reinforcing the rule of law, enabling political participation, Agriculture: Soil Management enhancing the public voice, creating jobs, accelerating Questions economic growth, supporting economic and social inclusion and improving public sector accountability. Asked by Baroness Miller of Chilthorne Domer To ask Her Majesty’s Government how they assess which areas of the country to prioritise for Armed Forces: Aircraft increased soil management regimes. [HL12609] Question Asked by Lord West of Spithead The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs To ask Her Majesty’s Government how many (Lord Taylor of Holbeach): The Government do not Royal Air Force Nimrod aircrew were made redundant systematically prioritise different areas of the country in the last round of redundancies; and how many for increased soil management regimes. However, through are forecast to be made redundant in the next two the cross-compliance requirements, all single payment rounds of redundancies. [HL12847] WA 279 Written Answers[LORDS] Written Answers WA 280

The Parliamentary Under-Secretary of State, Ministry The air transport sector’s turnover in 2009 was of Defence (Lord Astor of Hever): The number of around £26 billion; the sector directly generated around Royal Air Force Nimrod aircrew that were selected for £9 billion of economic output and directly provided redundancy in tranche 1 of the RAF redundancy 120,000 jobs in the UK, supporting many more indirectly. programme is 64. No qualified pilots were selected for Aviation plays a crucial role in facilitating business redundancy. A forecast of the number to be selected and trade, for example, in 2010 goods worth £113 billion for redundancy in future tranches is not available as were shipped by air freight between the UK and the redundancy fields have not yet been confirmed. non-EU countries representing 38 per cent of total trade with those countries. Armed Forces: Litigation Costs Asked by Baroness Gibson of Market Rasen Question To ask Her Majesty’s Government whether, given Asked by Lord Laird the Department for Transport’s assertion in the UK Aviation Forecast’s report (August 2011) that To ask Her Majesty’s Government whether they “The recent financial crisis and associated recession will take steps to recover the costs of the trial from caused the biggest fall in activity at United Kingdom the compensation paid to Aidan McKeever following airports since 1950”, they have plans to introduce his High Court case against the Ministry of measures to assist this sector pending the publication Defence. [HL12722] of the Sustainable Framework for UK Aviation in March 2013. [HL12891] The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever): There is no legal Earl Attlee: The Government want to see a successful basis on which to do so. The Government are studying aviation sector which facilitates economic growth and the terms of the judgment with a view to deciding addresses its environmental impacts. We will issue a whether to appeal. sustainable framework for UK Aviation for public consultation in spring 2012. In the mean time, we are Armed Forces: Staff pursuing a number of measures to support the sector, Question including taking forward the recommendations of the South East Airports Taskforce, and reforming the Asked by Lord Oakeshott of Seagrove Bay economic regulation of airports to put passengers at the heart of the regulatory regime and to support To ask Her Majesty’s Government what level of investment in our airports. security clearance is held by Mr Luke Coffey, Special Adviser to the Secretary of State for Defence; and what measures are in place to ensure that he does Banking not face any conflict of loyalties arising from his Question past service as an officer in the United States Army. [HL12488] Asked by Lord Myners To ask Her Majesty’s Government what assessment The Parliamentary Under-Secretary of State, Ministry they have made of whether the increased use by of Defence (Lord Astor of Hever): Mr Coffey, who has banks of liquidity swaps represents a risk to financial now left the Ministry of Defence, had the appropriate stability. [HL12641] level of security clearance when working in the department from May 2010 to October 2011 to permit him to have unescorted access to the building to undertake his The Commercial Secretary to the Treasury (Lord duties as special adviser to the Defence Secretary, and Sassoon): On 21 July, the Financial Services Authority to have access to information that his role required. (FSA) issued proposed guidance on liquidity swaps, Nationality is not a bar to holding a security clearance which refers to transactions that effect liquidity but may restrict access to certain types of sensitive transformation, typically between an insurer and a information. bank. The bank can access liquidity embedded within asset portfolios held by an insurer and thereby improve Aviation its liquidity position. It does this by exchanging certain Questions of its less liquid assets with high-quality, more liquid Asked by Baroness Gibson of Market Rasen assets held by an insurer. The FSA’s proposed guidance highlights evidence To ask Her Majesty’s Government what is their of significant demand for liquidity swaps, which creates assessment of the contribution of airports to the the potential for a significant increase in the volume of United Kingdom’s infrastructure and to economic trades. This would enhance the interconnectedness of growth. [HL12889] the banking and insurance sectors, and therefore pose a greater risk to financial stability. It is therefore Earl Attlee: Aviation makes a significant contribution, important that the potential risk of a significant increase both directly and indirectly, to the UK economy. We in the volume of these trades could pose is carefully want to maximise this contribution in the future and managed. Further details of the FSA’s proposed guidance explore how aviation growth can occur, while ensuring can be found at: http://www.fsa.gov.uk/pages/Library/ that it is genuinely sustainable. Policy/guidance_consultations/2011/11_18.shtml. WA 281 Written Answers[3 NOVEMBER 2011] Written Answers WA 282

Banks: Lending To ask Her Majesty’s Government what they Questions estimate will be the total value of social security payments to residents of Scotland in 2015, 2020, Asked by Lord Myners 2025 and 2030. [HL12871] To ask Her Majesty’s Government what assessment The Parliamentary Under-Secretary of State, they have made of the Eurostat statistical report on Department for Work and Pensions (Lord Freud): The unsuccessful loan applications by small and medium- total amount paid in state pension to residents of sized businesses to United Kingdom banks over the Scotland for the 2010-11 financial year is an estimated last four years, published on 3 October; and £6.0 billion. what assessment they have made of the possibility The information requested is not available. The of this leading to further strengthening of Project department does not forecast below Great Britain Merlin. [HL12683] level for social security payments. Forecasts for Great To ask Her Majesty’s Government whether data Britain for 2015 can be found on the DWP’s website reported in the most recent Bank of England report at: http://research.dwp.gov.uk/asd/asd4/index.php?paqe Trends in Lending have contributed to their assessment =expenditure. of Project Merlin’s performance. [HL12781] In the 2010-11 financial year the Department for Work and Pensions spent an estimated £13.2 billion on its main benefits1 in Scotland. The Commercial Secretary to the Treasury (Lord The information requested is not available. The Sassoon): On 9 February, the Chancellor announced a department does not forecast below Great Britain new commitment by the UK’s biggest high street level for social security payments. Forecasts for Great banks on lending expectations and capacity. As part Britain for 2015 can be found on the DWP’s website at of this commitment, the banks intend to make available the address above. appropriate capital and resources to support £190 billion 1 DWP figures include expenditure for attendance allowance, of new credit to businesses in 2011, up from £179 billion bereavement benefit/widows benefit, carer’s allowance, disability in 2010. If demand exceeds this, the banks will lend living allowance, incapacity benefit/severe disablement allowance, more. £76 billion of this lending will be to small and income support, jobseekers allowance, pension credit, state pension, medium-sized enterprises (SMEs). This is a 15 per winter fuel payments, employment and support allowance and housing and council tax benefits. cent increase on 2010 lending of £66 billion. Source: At the half-year point, the Bank of England has DWP statistical and accounting data, as published at: http:// reported that the banks have loaned over £100 billion research.dwg.gov.uk/asd/asd4/all_tables_budget_2011_2.xls and to UK businesses. Over £37 billion of this was to at http://research.dwg.gov.uk/asd/asd4/PC_expenditure.xls SMEs. The Government will use all of the tools available Notes: to it to ensure that the banks live up to their promises. Figures are rounded to the nearest £100 million. Children: Care Question Benefits Asked by Lord Roberts of Llandudno Questions To ask Her Majesty’s Government, further to Asked by Baroness Liddell of Coatdyke the Written Answer by Lord Hill of Oareford on 18 October (WA 46), what is the breakdown of the To ask Her Majesty’s Government how much £2,881 average cost per week of caring for a child in was paid in state pension payments to residents of a local authority children’s home. [HL12644] Scotland in the 2010-11 tax year. [HL12868] To ask Her Majesty’s Government what they The Parliamentary Under-Secretary of State for estimate will be the total value of state pension Schools (Lord Hill of Oareford): The breakdown of payments to residents of Scotland in 2015, 2020, the average cost per week of caring for a child in a local authority children’s home is provided in the table 2025 and 2030. [HL12869] below. This expands on information provided in a To ask Her Majesty’s Government what was the previous Written Answer and is derived from Table 6.2 total amount paid to residents of Scotland in social in the University of Kent’s publication Unit costs of security payments in the 2010-11 tax year.[HL12870] health and social care 2010.

Costs and unit estimation 2009-10 value Notes

Capital costs (A, B & C)

A. Buildings £98 per resident week Based on the new build and land requirements for local authority children’s homes. These allow for 59.95 square metres per person.2 Capital costs are discounted at 3.5 per cent over 60 years.

B. Land £13 per resident week Based on statistics provided by the Department for Communities and Local Government. Land costs have been annuitised at 3.5 per cent over 60 years. WA 283 Written Answers[LORDS] Written Answers WA 284

Costs and unit estimation 2009-10 value Notes

C. Equipment No information available. Revenue costs D. Salary and other revenue costs £2,578 per resident week Mean costs for children looked after in own provision children’s homes are based on P55 EX1 returns for 2007/2008 uprated using the P55 Pay & Prices Index.4 Data have been adjusted to include respite and short-term placements. Capital charges based on the above estimate (£98) have been deducted. The mean cost in the “Leadership and Resources in Children’s Homes” study staff costs accounted for 65 per cent of the total cost of homes on average. E. Agency overheads Agency overheads are excluded from this schema. However the “Leadership and Resources in Children’s Homes” study imputed these costs at 10.6 per cent of total annual revenue costs. F. Other costs Service use data taken from the “Leadership and Resources in Children’s Homes” study and likely to be an underestimate as information on key services only was requested. External services Health services 5 Costs of hospital services were taken from Trust Financial returns (CIPFA, 2001) and uprated to 2009/2010 prices using the HCHS Pay & Prices Index.5 Social services £15 Support provided by field social workers, leaving care workers and family support workers. Unit costs were taken from Netten et al, (2001) and uprated to 2009/2010 prices using the P55 Pay & Prices Index7 Youth justice sector £2 Costs for police contacts and youth custody were estimated using information contained in Finn et al. (2000) and uprated to 2009/2010 prices using the P55 Pay & Prices Index.7 Costs estimated according to the location of the home using information contained in CIPFA (2001).5 Education sector (excluding in-house education) 170 Home tuition costs were estimated using methodology reported by Berridge et al. (2002).8 The mid-point of the pay scale for qualified teachers was used, including employers’ National insurance and Superannuation contributions. A percentage (6S per cent) was added to cover ’other institutional’ expenditure and LEA overheads. Use of facility by client 52.18 weeks per annum Occupancy 84% Taken from the “Leadership and Resources in Children’s Homes” study. Based on the occupancy rate for all Community Children’s Homes. London multiplier 1.06 x A: 2.52 x B: 1.01 x (D) Relative London costs are drawn from the same source as the base data for each cost element. Unit costs available 2009-10 £2,689 establishment costs per resident week (includes A to E); £2,881 care package costs per resident week (includes A to D and F).

More information on the above table and other worth almost £1.7 million. Of this, £842,000 will be costs is available at: http://www.pssru.ac.uk/pdf/uc/ spent on supporting enhanced political participation, uc2010/uc2010.pdf). including a £500,000 package of support linked to the forthcoming elections. This additional package includes £50,000 to support the increased participation of women Egypt in parliamentary elections through a pilot training Question academy led by a local non-governmental organisation. The academy is preparing women candidates and their Asked by Baroness Kinnock of Holyhead campaigners with the skills they need to run effective campaigns. In our work supporting inclusive political To ask Her Majesty’s Government to what extent dialogue we have ensured women are prominently the Arab Partnership Fund is being used to support represented and the UK is supporting the UN’s focus women’s rights and political participation in the on women and other marginalised groups in their forthcoming elections in Egypt; what percentage of voter education programme. the applications received by the fund to date were from women’s organisations working in Egypt; and what proportion of grants awarded to date will support women’s rights in Egypt. [HL12810] Overall, around 5 per cent of the total bids to the The Minister of State, Foreign and Commonwealth Arab Partnership in 2011-12 were from women’s Office (Lord Howell of Guildford): The Arab Partnership organisations. Bids were received for projects in Egypt, programme in Egypt is the largest country programme, Lebanon, Iraq and regional programmes. WA 285 Written Answers[3 NOVEMBER 2011] Written Answers WA 286

Employment for Business, Innovation and Skills; where each Question meeting was held; on what dates; whether they will place in the Library of the House (a) the agenda, Asked by Lord Wills and (b) the minutes, of each such meeting; and whether they will publish the speaking notes of the To ask Her Majesty’s Government what assessment United Kingdom representative at each such they have made of the impact on jobs in each meeting. [HL12883] region of the United Kingdom of the United Kingdom leaving the European Union. [HL12740] The Parliamentary Under-Secretary of State, The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Department for Business, Innovation and Skills (Baroness Wilcox): The United Kingdom is represented at Wassenaar Wilcox): There is no available estimate of the impact Arrangement meetings held in Vienna by officials on jobs for the United Kingdom as a whole and in from those government departments with an interest each of the regions of the United Kingdom of the in accordance with their policy responsibilities. This United Kingdom leaving the EU. These estimates would include an official from the Export Control would be difficult and would therefore represent an Organisation. The agenda and minutes of these meetings important cost as the consequences on a wide range of are not made publicly available in order to enable issues would have to be considered. This would include frank discussions of the issues by the participants. among other things the impact on trade in goods and services, foreign investments of European Union and non-European Union origins, financial and banking Family Income relations, inward and outward flows of migrants, etc. Question The consequences would also depend on the type of Asked by Lord Patten relation the UK and the rest of the EU would be able to negotiate or not as an alternative to EU membership. To ask Her Majesty’s Government (a) what was The time length and the economic uncertainty created the median family income in 2008-09, 2009-10, and by that negotiation would influence the business 2010-11; and (b) what was the percentage increase environment in the UK. Many other details of such a or decrease in income between each of those scenario are unknown and would be extremely difficult years. [HL12795] to guess. The Parliamentary Under-Secretary of State, European Union Department for Work and Pensions (Lord Freud): Question Households below average income data can be used to Asked by Baroness Kinnock of Holyhead provide estimates of median family incomes. Data are only available for 2008-09 and 2009-10. The 2010-11 To ask Her Majesty’s Government, further to the Households Below Average Income publication will statement by the Prime Minister on 24 October be published in May June 2012. (Official Report, col. 26-7), what are the European The table below shows the median unequivalised Union powers and competencies which they gross and net family income for families for 2008-09 intend to “bring back from Brussels”; and what and 2009-10 and the percentage change between the procedure they will use for accomplishing this two periods. repatriation. [HL12811] Table 1: Median unequivalised gross and net family income, 2008-09 and 2009-10 The Minister of State, Foreign and Commonwealth Median unequivalised gross and net family Office (Lord Howell of Guildford): The Government’s income (£ per week, 2009-10 prices) stated intention is to examine the balance of the EU’s Gross family income Net family income existing competences. We have made no commitment to a particular outcome from that review. Bringing 2008-09 389 318 back powers and competences can be done in a number 2009-10 392 324 of ways. For example, by repealing EU legislation or Percentage change +1 +2 between 2008-09 provisions in EU legislation, by getting agreement to and 2009-10 (per no longer use a TEU Treaty provision in a particular cent) way, or by changing the competences conferred upon Source: the EU under the treaties. Households Below Average Income (HBAI) 2008-09 and 2009-10. Export Control Notes Question 1. These statistics are based on households below average income (HBAI) data sourced from the Family Resources Survey (FRS). Asked by Lord Alton of Liverpool 2. For this analysis, unequivalised gross and net family income is To ask Her Majesty’s Government what were the used. Conventionally, HBAI analysis is based on equivalised disposable household income that is adjusted for household size meetings of the Wassenaar Arrangement on Export and composition. This enables the total equivalised income of Controls for Conventional Arms and Dual-Use the household to be used as a proxy for the standard of living of Goods and Technologies in each month since May each household member, but because incomes have not been 2010; who attended each meeting from the Department equivalised, this is no longer true. WA 287 Written Answers[LORDS] Written Answers WA 288

3. Gross and net family incomes have been used to answer the Our High Commissioner in Delhi has not raised the question. This includes earnings from employment and self- issue of sex-selective abortion and female infanticide employment, state support, income from occupational and private with the Indian Government in 2011. However, the pensions, investment income and other sources. Income tax, payments, national insurance contributions, council tax I domestic UK Equalities Minister, my honourable friend Lynne rates and some other payments are deducted from incomes to Featherstone, discussed the problem of sex-selective produce net incomes. abortion and female infanticide, as well as other issues 4. All estimates are based on survey data and are therefore subject affecting women in India, during meetings with the to a degree of uncertainty. Small differences should be treated Indian Ministry for Women and Child Development with caution as these will be affected by sampling error and and the Indian Parliamentary Committee for Women’s variability in non-response. Empowerment, when she visited India in June of this 5. The reference period for HBAI figures is the financial year. year. 6. Weekly incomes are presented in 2009-10 prices and have been Additionally, through the Government of India’s rounded to the nearest pound. Percentage changes have been Reproductive and Child Health Programme the rounded to the nearest percentage point. Department for International Development supports 7. Families are defined as a single adult or couple living as the Indian Government’s efforts to implement its Pre- married and any dependent children, including same sex couples (civil partnerships and cohabitees) from January 2006. A household Conception and Pre-natal Diagnostic Techniques is made up of one of more families and is defined as a single Regulation Act which outlaws the practice of sex-selective person or group of people living at the same address as their only abortion. or main residence, who either share one meal a day together or Our ambassador in Beijing has not raised the issue share the living accommodation (ie a living room). In line with the wording of the question, analysis has been carried out at the of female infanticide with the Chinese Government in family level. 2011. However my noble friend Baroness Warsi raised China’s one child policy earlier this year in a meeting with Madame Uyunqimg, vice-chair of the Standing Committee of the National People’s Congress. Gendercide We believe that it is important that family planning Questions and its implementation meet international human rights Asked by Lord Patten standards. In his 2011 Work Report to the Nation, Premier To ask Her Majesty’s Government whether the Wen announced that China would progressively improve United Kingdom representative to the United Nations the basic state policy on family planning and promote has raised the issue of gendercide in 2011 to balanced population growth. We welcome this date. [HL12730] announcement and would encourage the Chinese Government to ensure that the relevant domestic laws are properly enforced at local level. The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): The Government remain firmly committed to combating all forms of Government Departments: Official discrimination and violence against women and girls. Receptions We raise this issue both through bilateral dialogue and via mulitilateral fora. UK representatives have spoken Question out against such discrimination and violence on many Asked by Lord Laird occasions at the United Nations both in Geneva and New York, including in discussions at the Human To ask Her Majesty’s Government who represented Rights Council, the Commission on the Status of the Foreign and Commonwealth Office at the recent Women and the General Assembly. Hillsborough reception which included the President The UK Permanent Representative to the UN in New of the Republic of Ireland. [HL12670] York has also raised the question of violence against women in a number of Security Council discussions, The Minister of State, Foreign and Commonwealth including on Libya, Somalia and Sudan. The Office (Lord Howell of Guildford): His Excellency Government’s concern was reiterated by Parliamentary Julian King, the British Ambassador to Ireland attended Under-Secretary of State Henry Bellingham during the reception and dinner at Hillsborough Castle at the the UN summit on Preventing and Responding to invitation of the Secretary of State for Northern Ireland Sexual Violence in Conflict in September. the right honourable Owen Paterson. Both events were attended by President McAleese as the guest of Asked by Lord Patten honour. To ask Her Majesty’s Government whether in 2011 to date the British High Commissioner in Government Departments: Staff India and the British Ambassador in China have raised the issue of gendercide affecting female babies Question in those countries. [HL12796] Asked by Lord Ashcroft To ask Her Majesty’s Government how many Lord Howell of Guildford: The Government remain staff have been employed by the Department for firmly committed to combating all forms of discrimination International Development in each year since and violence against women and girls. 1997. [HL12357] WA 289 Written Answers[3 NOVEMBER 2011] Written Answers WA 290

Baroness Northover: The numbers of staff employed Date Official photographs of the Foreign Secretary by the Department for International Development in each year since 1997 are shown in the table below. 10-May-11 Foreign Secretary with Maltese Prime The figures show our Home Civil Servant (HCS) Minister staff and our Staff Appointed in Country (SAIC). 12-May-11 Foreign Secretary with Chairman of the Libyan Transnational National Council SAIC are employed locally overseas on local terms 16-May-11 Foreign Secretary with Romanian Foreign and conditions, in support of our in-country development Minister activity. 23-May-11 Foreign Secretary with US Secretary of State 06-Jun-11 Foreign Secretary with Sudanese Foreign No. of HCS No. of SAIC Minister Karti Year employees employees Total 07-Jun-11 Foreign Secretary with Secretary General 1997 1,714 330 2,044 Council of Europe 1998 1,690 356 2,046 08-Jun-11 Foreign Secretary with Ethiopian Foreign Minister 1999 1,822 457 2,279 08-Jun-11 Foreign Secretary with Georgian Speaker 2000 1,896 404 2,300 2001 1,884 424 2,298 27-Jun-11 Foreign Secretary meeting on British Indian Ocean Territory 2002 1,956 739 2,695 27-Jun-11 Foreign Secretary with Premier of Québec 2003 1,933 874 2,807 29-Jun-11 Foreign Secretary Twitter picture 2004 1,949 918 2,867 30-Jun-11 Foreign Secretary with Indian Foreign 2005 1,928 989 2,917 Minister 2006 1,847 932 2,779 30-Jun-11 Foreign Secretary with Mexican Foreign 2007 1,765 874 2,639 Minister 2008 1,658 843 2,501 30-Jun-11 Foreign Secretary with President of Pakistan 2009 1,647 763 2,410 13-Jul-11 Foreign Secretary with Colombian Foreign 2010 1,619 766 2,385 Minister 2011 1,609 760 2,369 14-Jul-11 Foreign Secretary with Malaysian Prime Minister 19-Jul-11 Foreign Secretary with Kazakh Foreign Government: Official Photographs Minister Question 19-Jul-11 Foreign Secretary with President of the Bharatiya Janata Party of India Asked by Lord Kennedy of Southwark 21-Jul-11 Foreign Secretary with Kuwaiti Minister of Foreign Affairs To ask Her Majesty’s Government at what events 25-Jul-11 Foreign Secretary with French Foreign in the past six months they have taken official Minister photographs of the Foreign Secretary. [HL12802] 26-Jul-11 Foreign Secretary in Milton Keynes 27-Jul-11 Foreign Secretary Libya Statement The Minister of State, Foreign and Commonwealth 27-Jul-11 Foreign Secretary with Polish Foreign Office (Lord Howell of Guildford): The Foreign Secretary Minister is regularly photographed. Photographs are an element 27-Jul-11 Foreign Secretary with Yemen Foreign Minister of his official duties, but they are also used as part of 08-Aug-11 Foreign Secretary with German Foreign the FCO’s strategy of explaining more clearly its work Minister to the public. 24-Aug-11 Foreign Secretary Libya Statement In the past six months, the following official 06-Sep-11 Foreign Secretary with President Elect UN photographs have been taken of the Foreign Secretary: General Assembly 07-Sep-11 Foreign Secretary with Nigerian Foreign Date Official photographs of the Foreign Secretary Minister 30-Mar- Foreign Secretary with Turkish Foreign 07-Sep-11 Foreign Secretary with Minister for Foreign Minister Affairs & European Integration for Moldova 04-Apr-11 Foreign Secretary with Chair of the African 08-Sep-11 Foreign Secretary speech at the FCO Union Commission 08-Sep-11 Foreign Secretary speech 11-Apr-11 Foreign Secretary with Commander NATO 29-Sep-11 Foreign Secretary & Minister Burt with Training Mission Afghanistan Syrian Human Rights activists 11-Apr-11 Foreign Secretary with former Libya UN 06-Oct-11 Foreign Secretary with Commonwealth Permanent Representative Secretary-General 11-Apr-11 Foreign Secretary with Italian Foreign 06-Oct-11 Foreign Secretary with Israeli leader of the Minister opposition 11-Apr- 11 Foreign Secretary with Italian Foreign Minister press conference 12-Oct-11 Foreign Secretary with Iraqi Speaker 27-Apr-11 Foreign Secretary with Australian Foreign 12-Oct-11 Foreign Secretary with Malawi Foreign Minister Minister 28-Apr-11 Foreign Secretary with US Senator John 12-Oct-11 Foreign Secretary with Portuguese Foreign McCain Minister 03-May-11 Foreign Secretary with Japanese Foreign 20-Oct-11 Foreign Secretary with Macedonia Prime Minister Minister WA 291 Written Answers[LORDS] Written Answers WA 292

House of Lords: Catering The Parliamentary Under-Secretary of State, Question Department for Communities and Local Government (Baroness Hanham): People who have worked hard Asked by Lord Palmer and paid their taxes all their lives should not be taxed To ask the Chairman of Committees what is the or bullied out of their homes. Many people will rightly outstanding debt to the House of Lords Catering want to stay in their homes for as long as possible. and Retail Services beyond the 30-day limit; and Homes can provide a secure asset for the future, they how much of that is owed by (a) members of the provide bedrooms for visiting family and friends, and House of Lords, and (b) members of staff employed homes have an important emotional value and attachment. by the House of Lords. [HL12787] State interventions in private property should be limited, and the right to own property is a fundamental human right that should be respected. The Chairman of Committees (Lord Brabazon of Tara): As at the end of 25 October 2011 the total In this context, we disagree with many of the outstanding debt to the House of Lords Catering and suggestions in the independent report, such as its calls Retail Services owed for more than 30 days was £38,916.63, to abolish the single person council tax discount and made up of the following amounts: to increase taxes on family homes. £31,578.90 owed for banqueting functions and Instead, it is the approach of this Government to other events, sponsored by Members of the House work with local communities to build more homes and of Lords; increase choice. For example, we have provided £13 million for councils to make it easier for tenants who actively £2,067.38 owed by Members of the House of want to move from larger family homes to smaller, Lords for food and drink in House outlets; and more manageable homes. We have abolished arbitrary £5,270.35 owed by a member of staff employed by Whitehall density targets to encourage the building of the House of Lords. new family homes. Our FirstBuy scheme is helping Accounts are always reviewed at the end of every first time buyers get on the housing ladder, and our month and, as at the end of 31 October, £2,705.00 of National Home Swap initiative will allow social tenants these banqueting debts, £745.04 of these Members’ to move home without losing their security of tenure. debts, and the full amount owed by staff had been paid. Libya Questions House of Lords: Oral Statements Asked by Lord Empey Question To ask Her Majesty’s Government whether they Asked by Lord Stoddart of Swindon will lead negotiations with the National Transitional To ask the Leader of the House, further to the Council in Libya to secure compensation for the Statement he repeated on 24 October concerning victims of IRA violence. [HL12732] Libya and the European Council meeting (Official Report, cols. 550–3), whether in the future when The Minister of State, Foreign and Commonwealth two important and separate subjects are contained Office (Lord Howell of Guildford): We are looking at in one Statement they will arrange that forty minutes all possible options to secure the resolution of legacy are available for back-bench questions. [HL12951] issues including those relating to Qadhafi’s support of IRA violence. When the National Transitional Council The Chancellor of the Duchy of Lancaster (Lord appoints the new Transitional Government, this will Strathclyde): Ministerial Oral Statements are made “for be one of HM Government’s priorities. As my right the information of the House” and “should not be honourable friend the Prime Minister has said in made the occasion for immediate debate” (Companion another place, this will be an important bilateral issue 6.07). Twenty minutes is appropriate for backbench between Britain and the new Libyan authorities. interventions on Statements, given the Companion Asked by Lord Empey guidance and the necessary balance between interest in a Statement and inconvenience to those Members To ask Her Majesty’s Government whether who have come prepared for the day’s expected business. negotiations with the National Transitional Council In exceptional circumstances, however, the Usual Channels in Libya to secure compensation for victims of IRA can agree to extend the time allocated to back-bench violence will be left to private individuals or their interventions on Statements, and have done ,so on legal representatives to initiate. [HL12733] several occasions this session. Lord Howell of Guildford: We are looking at all possible options to secure the resolution of legacy Housing issues including those relating to Qadhafi’s support of Question IRA violence. When the National Transitional Council Asked by Lord Alton of Liverpool appoints the new Transitional Government, this will be one of the Government’s priorities. As my right To ask Her Majesty’s Government what assessment honourable friend the Prime Minister has said in they have made of the Intergenerational Foundation’s another place, this will be an important bilateral issue report Hoarding of Housing. [HL12637] between Britain and the new Libyan authorities. WA 293 Written Answers[3 NOVEMBER 2011] Written Answers WA 294

Local Authorities: Expenditure Pension scheme funding strategies are designed to Question deliver members’ benefits over the long-term, during which time there will inevitably be fluctuations in the Asked by Lord Kennedy of Southwark economic cycle. I understand that the Regulator will continue to apply the system pragmatically, looking To ask Her Majesty’s Government what estimate for outcomes in the best interests of the scheme and they have made of changes in per capita spending sponsor. in local authorities following the 2011-12 local government settlement. [HL12693] Protests The Parliamentary Under-Secretary of State, Question Department for Communities and Local Government Asked by Lord Patten (Baroness Hanham): Local authority revenue expenditure in England in 2010-11 is estimated at £1,998 per To ask Her Majesty’s Government whether they capita. Budgeted revenue expenditure for 2011-12 is are (a) considering availability for work surveys £1,951 per capita. This is a change of just 2.4 per cent, amongst those presently camping in support of the before adjusting for differences in responsibilities between Occupy the Stock Exchange protests by St Paul’s years. Cathedral and Finsbury Square, City of London, and (b) making special arrangements for the payment Northern Ireland Office: Bonuses of social benefits to those persons. [HL12731] Question The Parliamentary Under-Secretary of State, Asked by Lord Laird Department for Work and Pensions (Lord Freud): The benefit entitlement rules encourage claimants to meet To ask Her Majesty’s Government what plans their responsibilities. Those people claiming jobseeker’s they have to award bonus payments to staff of the allowance are expected to attend their Jobcentre Plus Northern Ireland Office; and how much such payments Office fortnightly, where they are asked to confirm would be. [HL12697] that they are available for and actively seeking work. Failure to attend, or to comply with these requirements Earl Attlee: The Northern Ireland Office has adopted could result in their benefit being sanctioned, or Ministry of Justice terms and conditions for its staff who terminated. As those claiming jobseeker’s allowance are Home Civil Servants. The Ministry of Justice have their continued entitlement assessed frequently, operates a reward and recognition scheme, which the there are no plans to carry out a more general “availability NIO has adopted, for staff below the senior civil for work” survey. service. This provides for non-cash awards (gift vouchers) No special arrangements have been made for the of up to £50 and special cash bonuses up to £500 for payment of benefits to claimants camping at the Occupy staff who have made a particularly outstanding the Stock Exchange protests. contribution. Pay arrangements for 2011-12 are yet to be determined but will, as in 2010-11, reflect the current two-year pay freeze. Shipping: Towing Vessels Question Pensions Asked by Lord MacKenzie of Culkein Question To ask Her Majesty’s Government what discussions Asked by Lord Myners have taken place with the Government of France in relation to the withdrawal of the coastguard’s To ask Her Majesty’s Government whether the emergency towing vessels from their stations in Pension Regulator will be instructed to take into Dover and Falmouth; and whether the Government account the impact of quantitative easing when of France has made any representations on this directing that action should be taken to accelerate matter. [HL12666] the reduction of scheme deficits. [HL12805] Earl Attlee: The cost and operation of the Dover The Parliamentary Under-Secretary of State, emergency towing vessel (ETV) was shared with the Department for Work and Pensions (Lord Freud): The French Government. The Falmouth ETV was funded Pensions Act 2004 introduced a scheme-specific approach solely from UK Government funds and was operated to regulating pension scheme funding. The Pensions by the Maritime and Coastguard Agency (MCA). Regulator, which is operationally independent of Ministers, Following the comprehensive spending review has made it clear that funding objectives must be set announcement concerning the withdrawal of UK ETVs, prudently, to uphold stability during various economic MCA officials wrote to the French Directorate of climates. The scheme funding regime is sufficiently Maritime Affairs formally to advise them of the flexible to support pension schemes through fluctuations withdrawal of the Dover ETV.MCA officials also met in the economic cycle, and allows trustees the flexibility with their opposite numbers at the French embassy. to develop prudent funding strategies which take account The French Government have since announced their of the particular circumstances of their particular intention to reposition one of their ETVs from the scheme. Bay of Biscay area to the area off Calais. WA 295 Written Answers[LORDS] Written Answers WA 296

South Sudan Unemployment: Under 25s Question Question Asked by Lord Alton of Liverpool Asked by Lord Roberts of Llandudno Toask Her Majesty’s Government what support they To ask Her Majesty’s Government what financial are giving to the Government of South Sudan in support they make available to unemployed persons expediting their application to join the Commonwealth; between (a) 16 and 18 years old, and (b) 18 and and what timetable has been established for completing 25 years old. [HL12860] the admission process. [HL12633]

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): Financial The Minister of State, Foreign and Commonwealth support for all unemployed people depends upon their Office (Lord Howell of Guildford): We fully support particular circumstances. Benefits that may be available South Sudan’s application to join the Commonwealth. are jobseeker’s allowance (JSA), income support (IS), If possible, we would like to see South Sudan join by employment and support allowance (ESA) and housing 2013 as long as it meets the relevant criteria, especially benefit. those relating to the core values of democracy, human For jobseekers who have paid sufficient national rights and the rule of law. Ultimately it will be for all insurance contributions in the relevant income tax member states to agree on whether to admit South years, contribution-based JSA is available. Eligibility Sudan to the Commonwealth. for income-based JSA for under 18s is restricted to prescribed circumstances or where the Secretary of State makes a severe hardship direction. Prescribed circumstances include care leavers, those who are forced Transport: Funding to live away from their parents or another person Question acting in place of their parents and those released from custody. People aged 18 or over may receive JSA Asked by Lord Kennedy of Southwark if they meet the standard eligibility criteria. Income support is available to people aged 16 or To ask Her Majesty’s Government what capital over who fall into a prescribed category. Those in and revenue funding for local transport schemes prescribed categories usually have obstacles to employment has been provided to each of the London Boroughs that means they are not expected to be available for and the City of London in each year since work. Examples include young people who are estranged 1996. [HL12545] from their parents and in non-advanced education, lone parents and carers. People aged 16 or over may be able to receive ESA Earl Attlee: Since 2001-02 funding for local transport if they have an illness or disability that limits their schemes has been provided to the London boroughs ability to work. and the City of London by Transport for London, Any award of a DWP benefit for a person aged 16 with the exception of specific grant payments made to 25 is subject to their meeting the normal conditions direct from the Department for Transport. of entitlement, such as the income, capital and earnings These payments by the department include exceptional rules. Where the conditions are met and an income-related funding to cover damage to local road networks caused benefit is awarded, or the young person is on a low by the severe winter weather. They also include funding income, housing benefit may also be available. Council for street lighting projects delivered through the private tax benefit may also be available to those aged over 18. finance initiative to boroughs including Croydon and The rates of benefits payable to 16 to 25 year-olds Lewisham, Brent, Ealing, Enfield, Lambeth and Islington. in 2011-12 are available in the annual uprating statement Transport for London (TfL) receives funding in the in the (Official Report, 9 December 2010, col. WS 38). form of a block grant from the department to deliver transport services. Under devolution it is for the Mayor of London and TfL to decide transport priorities in London and to allocate their budget accordingly.However, Universal Credit as part of the spending review settlement, a list of Questions major investment and upgrade schemes was agreed Asked by Lord Touhig with the department to ensure delivery of key projects. Before 2001-02 funding was provided directly to London To ask Her Majesty’s Government what is the boroughs and the City of London by Government. estimated cost of the computer system that will be Information on the overall sums that were paid to established to run the universal credit. [HL12656] local authorities nationally under different schemes is available in the departmental reports for those years; copies of these reports are in the House Library. The Parliamentary Under-Secretary of State, However, details of specific amounts paid to each Department for Work and Pensions (Lord Freud): The borough during the period in question cannot be Treasury has allocated £2 billion investment funding provided without incurring disproportionate cost. to the Department of Work and Pensions for universal WA 297 Written Answers[3 NOVEMBER 2011] Written Answers WA 298 credit over the current spending review period. Plans Lord Freud: The department has been working with on the allocation of funding are currently under review NAO, to help support it with the methodology of as part of work to produce an outline business case for assessing and auditing an agile programme. next-stage approval. This funding will cover all aspects As part of the Integrated Approvals and Assurance of implementation. Group that has oversight of assurance activity relating to universal credit, the NAO has put proposals to that Asked by Lord Touhig group detailing a series of reviews to examine how universal credit will deliver anticipated outcomes and objectives. To ask Her Majesty’s Government whether the Planning for the review of the technical assurance National Audit Office has been consulted about the of proposed IT system is expected to start in November development and planning of the computer system with field work planned to take place in the new year, that will be established to run the universal leading to the anticipated publication of a value for credit. [HL12658] money report in 2012.

Thursday 3 November 2011

ALPHABETICAL INDEX TO WRITTEN STATEMENTS

Col. No. Col. No. Agriculture: Farming...... 69 Terrorism Act 2000 and Part 1 of the Terrorism Act 2006: Independent Review ...... 78 Disabled People: Personal Independence Payment ...... 69 Thames Tunnel ...... 78 EU: Justice and Home Affairs Council...... 70 Transport: MoT Scheme...... 80

Police and Crime Commissioners: Pay...... 74 UK Forestry Standard...... 82

Schools ...... 75 Universal Credit ...... 82

St Helena: Airport ...... 77 Zimbabwe...... 83

Thursday 3 November 2011

ALPHABETICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. Abdul Baset Al Megrahi ...... 277 Gendercide...... 287

Abortion...... 277 Government Departments: Official Receptions...... 288

Agriculture: Soil Management...... 277 Government Departments: Staff...... 288

Arab Partnership ...... 278 Government: Official Photographs ...... 289

Armed Forces: Aircraft...... 278 House of Lords: Catering ...... 291

Armed Forces: Litigation Costs ...... 279 House of Lords: Oral Statements ...... 291

Armed Forces: Staff...... 279 Housing ...... 291

Aviation ...... 279 Libya ...... 292

Banking ...... 280 Local Authorities: Expenditure...... 293

Banks: Lending...... 281 Northern Ireland Office: Bonuses ...... 293

Benefits...... 281 Pensions...... 293

Children: Care ...... 282 Protests ...... 294

Egypt ...... 283 Shipping: Towing Vessels ...... 294

Employment ...... 285 South Sudan ...... 295

European Union ...... 285 Transport: Funding...... 295

Export Control ...... 285 Unemployment: Under 25s...... 296

Family Income...... 286 Universal Credit...... 296 NUMERICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. [HL12357]...... 288 [HL12547]...... 277

[HL12488]...... 279 [HL12609]...... 277

[HL12545]...... 295 [HL12613]...... 278 Col. No. Col. No. [HL12633]...... 295 [HL12781]...... 281

[HL12637]...... 291 [HL12787]...... 291

[HL12641]...... 280 [HL12795]...... 286

[HL12644]...... 282 [HL12796]...... 287

[HL12656]...... 296 [HL12802]...... 289

[HL12658]...... 297 [HL12805]...... 293

[HL12666]...... 294 [HL12810]...... 283 [HL12811]...... 285 [HL12670]...... 288 [HL12838]...... 278 [HL12683]...... 281 [HL12847]...... 278 [HL12693]...... 293 [HL12860]...... 296 [HL12697]...... 293 [HL12868]...... 281 [HL12722]...... 279 [HL12869]...... 281 [HL12723]...... 277 [HL12870]...... 281 [HL12730]...... 287 [HL12871]...... 282 [HL12731]...... 294 [HL12883]...... 286

[HL12732]...... 292 [HL12889]...... 279

[HL12733]...... 292 [HL12891]...... 280

[HL12740]...... 285 [HL12951]...... 291 Volume 731 Thursday No. 217 3 November 2011

CONTENTS

Thursday 3 November 2011 Royal Assent Questions UK: Union...... 1339 Loan Companies: Interest Rates...... 1342 Shipping: Towing Vessels...... 1344 Protests: Tent Pitching...... 1347 Legal Aid, Sentencing and Punishment of Offenders Bill First Reading ...... 1349 Business of the House Timing of Debates...... 1349 Creative Industries Debate ...... 1349 EU: Financial Stability and Economic Growth Debate ...... 1397 Television Advertising: Communications Committee Report Motion to Take Note ...... 1426 Grand Committee Welfare Reform Bill Committee (10th Day) ...... GC 457 Written Statements...... WS 69 Written Answers...... WA 277