Vol. 742 Thursday No. 96 17 January 2013

PARLIAMENTARY DEBATES (HANSARD) HOUSE OF LORDS OFFICIAL REPORT

ORDER OF BUSINESS

Questions Electoral Register: Young People Severn Barrage EU: Budget Food: Waste Business of the House Timing of Debates Standing Orders (Public Business) Motion to Approve Electoral Registration and Administration Bill Order of Consideration Motion Taxation: Families Motion to Take Note Local Government: Finance Settlement Motion to Take Note Unemployment Question for Short Debate

Grand Committee Defamation Bill Committee (4th Day)

Written Statements Written Answers For column numbers see back page

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are 20. So there are some real problems with keeping House of Lords young people on the register as well as getting them on it. Thursday, 17 January 2013. Lord Elton: My Lords, if the noble Lord were to 11 am accept my noble friend’s suggestion, would he make sure that the opportunity to enrol in schools takes Prayers—read by the Lord Bishop of Exeter. place after suitable instruction in the functioning of this country’s politics and constitution? While he should be on his guard against undue political influence from Electoral Register: Young People the teachers, he will be pleased to know that in my Question experience on all but very rare occasions when a teacher advises supporting one party, the class always follows the other. 11.07 am Asked by Lord Roberts of Llandudno Lord Wallace of Saltaire: My Lords, I can remember To ask Her Majesty’s Government what specific the history sixth form when I was at school. As we got measures they are taking to ensure that the maximum closer to the coming general election, the history number of young people are enrolled on the electoral teacher’s interpretation of the characters of Mr Disraeli register. and Mr Gladstone moved towards Mr Disraeli being better and better and Mr Gladstone being more wicked than he had been before. The idea of neutral school Lord Roberts of Llandudno: My Lords, on this teaching is not one that is very easy.Citizenship education historic day, when we celebrate the 150th anniversary is important. The national curriculum is currently of the birth of David Lloyd George, I beg leave to ask being reviewed and the issue of what role citizenship the Question standing in my name on the Order Paper. education plays both in the national curriculum and in sixth-form activity in schools throughout the country Lord Wallace of Saltaire: My Lords, I have to add is one that clearly we need to consider further. that my father met Lloyd George. We have a photograph somewhere of my father with him—there are about Lord Maxton: My Lords, given the advances in 3,000 people in the picture, but never mind, it is still smartcard technology in recent years, is it not time historic. that we looked again at the idea of compulsory registration Government, politicians, political parties, electoral of all children from the age of nought, to ensure that administrators and others in society all have a role to everyone is automatically on the register from the age play in encouraging people to register to vote. As we of 18 without filling in forms or anything else? have made clear throughout the ERA Bill’s consideration, the Government are committed to doing all they can Lord Wallace of Saltaire: My Lords, the Government to maximise registration, including among young people. intend to introduce the option of online registration They are looking at ways to modernise the system to as from 2014. How far we go towards what would in make it as easy and convenient as possible for everyone effect be a sort of ID card for each child born is a to register to vote. matter on which we will have to have further debate. The noble Lord will of course have seen the discussion Lord Roberts of Llandudno: I thank the Minister for in some of the press about whether parents wish to put his reply. I declare an interest as president of Bite the microchips in their children, so that they know where Ballot, the youth democracy movement. I am not only they are all the time. president, but I think great-grandfather of that movement. Is there not an opportunity for us to give young people Baroness Trumpington: My Lords, is the Minister when they reach the age of 16, possibly 17, an electoral aware that I not only knew Lloyd George but I was his registration form in their schools so they can sign up land girl? [Laughter.] Shut up, everybody. Does the then? We could even give them an electoral registration Minister share my view that it is unfair that students at form when they go to university, say in freshers’ week university, who are birds of passage, should have the when they get their pack of information. We might be right to vote in Cambridge and other university cities able to sign up a large number of people in those two in general elections, thus deciding—due to the power possible ways. of their numbers—the political future of the town where they are students but not permanent residents? Lord Wallace of Saltaire: That is an interesting consideration. I will take it back to the Cabinet Office Lord Wallace of Saltaire: My Lords, the question of and discuss it with the Department for Education. I where young people between the ages of 19 and 25 are talked to several head teachers in Westmorland on permanent residents is one of our problems. They are Friday afternoon about citizenship education and how very often transient, given the nature of what they do. we involve young people in politics. Part of the problem I am not quite sure how long my children remained we face is churn. Young people move, so even if they permanent residents at home after the age of 18; they are put on the register when they are 17, they may well were more often at their college or university than at be off it—or be in the wrong place—by the time they home. 783 Electoral Register: Young People[LORDS] Severn Barrage 784

Lord West of Spithead: My Lords, can the Minister moredetailtodemonstrate,inparticular,robustenvironmental clarify whether young Scottish men and women in the mitigation plans, evidence of the low-head turbine Armed Forces will be disfranchised in the context of impact, evidence of net regional and national job the vote for the separation of Scotland from the benefits and affordability for consumers. The Government United Kingdom? remain open to hearing about well developed proposals for harnessing energy from the Severn and elsewhere. Lord Wallace of Saltaire: My Lords, I understand that that question is under active consideration. Lord Hylton: My Lords, I thank the noble Baroness Lord Phillips of Sudbury: My Lords, is my noble for her reply. Does she agree that uncertainty is bad for friend, having twice rightly mentioned the importance everyone? If it went ahead, would a big scheme not of citizenship education, aware that it is currently part replace several new nuclear power stations? However, of the core curriculum but on present reckoning will if there is no big scheme it would give us the opportunity be taken out? Is that not lunatic in light of the declining to design smaller schemes—for example, at the English democratic adhesion of so many young people? Stones or by means of tidal canals. Will the Government at least update and amplify their earlier study so that Lord Wallace of Saltaire: My Lords, my understanding the earliest possible decision can be reached? is that we have not yet entirely decided the full spread of the core national curriculum. Of course, not everything that schools do is part of the national curriculum, as Baroness Verma: My Lords, I understand the noble the head teachers explained to me on Friday afternoon. Lord’s concerns. The consortium to which he refers There is a whole range of other activities, including submitted a business case to DECC in November visits to local courts, the local council and the whole 2011. In 2012 we asked for some supplementary business of self-government within the sixth form. information and we have had a series of meetings with That is part of a broader citizenship curriculum, which the consortium at ministerial and official level, but is the sort of thing that good secondary schools should do. none of these satisfies enough of the detailed evidence on the economic and environmental impacts of the Baroness McIntosh of Hudnall: Does the noble scheme that we require. The noble Lord will understand Lord agree that the most important thing that we have that until we get more detail about the plans it will be to establish in young people is an understanding of difficult to make a decision. how important it is that they should vote—not just that they be on the register but that they use the opportunity? Does he further agree that in a small way Lord Anderson of Swansea: My Lords, would the the ongoing work from within the Palace of Westminster noble Baroness put the Hafren Power proposal within by the Education Service and, if I may say, the Lord her category of well developed proposals? From the Speaker’s Peers in Schools programme is, in a small viewpoint of south Wales, it would be a tragedy if we way, contributing to getting that message across? did not look seriously at this—the biggest renewable energy project in Europe, which would harvest the Lord Wallace of Saltaire: My Lords, I am happy to natural powers of the Severn—and missed the opportunity. agree with that. In the recent report on electoral It would generate 50,000 jobs and improve flood registration in Northern Ireland, one of the points protection. Most importantly, it could be developed made is: without any contribution from public funds. Is the “Interest in politics is an important driver of registration and noble Baroness aware that there is considerable support declining estimates for accuracy and completeness are set against in Wales for this project, and are the Government a declining interest in politics”. giving it a fair wind? What is the Government’s preliminary We must all take that on board and work to increase response to the Hafren Power proposal? interest in and commitment to politics among the broader public, including young people. Baroness Verma: My Lords, in my Answer to the noble Lord, Lord Hylton, I laid out that we are taking Severn Barrage all proposals very seriously. However, as the noble Question Lord will be aware, it would not be right for the Government to take a decision until they are completely 11.15 am satisfied that the mitigation plans against environmental Asked by Lord Hylton impacts that need to be in place are in place. We have made it clear to all consortia that we are interested in To ask Her Majesty’s Government when they looking at how we can harness energy. We need a good expect to announce a decision on the latest plan for mixture of energy but we also need to ensure that it is a major Severn barrage. viable economically and environmentally. The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma): My Lord Crickhowell: My Lords, is my noble friend Lords, we recognise the potential benefits of the barrage aware that I have studied the latest proposals for the after looking at this carefully in a two-year cross-government scheme extremely carefully? I agree that they are at the feasibility study that was completed in October 2010. most rudimentary stage. The only positive feature that Before the current proposal can be subject to further I could find in them is that the noble Lord, Lord consideration, it will need to be developed in considerably Rowe-Beddoe, is a non-executive director. 785 Severn Barrage[17 JANUARY 2013] EU: Budget 786

Baroness Verma: I am extremely grateful for my EU: Budget noble friend’s support for my Answer. I reiterate that it Question is incumbent on all Governments to make sure that whatever projects they agree to have looked at all the 11.23 am detail. Thus far, we are not satisfied that we have had Asked by Lord McConnell of Glenscorrodale enough detail from the consortium on this. To ask Her Majesty’s Government what position Lord Wigley: My Lords, subject to the environmental they will take on the European Development Fund conditions that the Minister mentioned being met, and other European Union aid budgets in the current given that the project could generate 5% of the UK’s negotiations on future European Union funding. energy needs, and in view of the Welsh economy’s need for a kick-start of this sort, will she give an Baroness Northover: My Lords, the UK’s top priority assurance that the Government will support this project? in negotiations for the EU budget for 2014-20 is budgetary restraint. We oppose increases beyond inflation Baroness Verma: I cannot say that the Government in any area of EU expenditure, including the European will support this project until we are satisfied that all Development Fund. However, it is important at least the details that are needed to ensure that it is to maintain or increase the proportion of official environmentally and economically viable are met. Those development assistance within restrained EDF and conditions have not yet been met. overall EU budgets. Lord McConnell of Glenscorrodale: I thank the Lord German: My Lords, the proposal currently Minister for her Answer. It would be an absolute before the Government is not for a Severn barrage, it is scandal if those who lived in the poorest countries in for a Bristol Channel barrage. As such, it is a very the world were made to pay for the deficits that exist in large scheme indeed and has enormous environmental, the richest part of the world. In addition, will the physical and economic costs. Have the Government Government address this technical point? Any reductions made an assessment of the costs to energy consumers—in in the EU aid budget will simply have to be made up household energy bills—of this proposal compared to again in the national aid budgets of the member states. other forms of low-carbon energy, such as offshore wind? In the United Kingdom, where we have agreed to meet the 0.7% international target, that will mean that any Baroness Verma: My noble friend raises an important reduction in the EU aid budget is simply transferred point. Until we have a more detailed plan, we are to the DfID budget because the EU aid budget contributes unable, on the information we have at the moment, to to that 0.7% target. The only countries that will benefit make a complete assessment of the impact on consumers. from a reduction in the EU aid budget will be those We do know that alternative energy is providing us that wish to reduce their aid contributions by the back with good value at the moment, and offshore wind is door and do not replace that money in their national one of those energies. budgets. Will the Government look again at this issue and ensure that the EU aid budget is preserved so that Lord Howarth of Newport: My Lords— those countries that wish to reduce their aid contributions by the back door are not allowed to do so, and ensure Lord Cope of Berkeley: My Lords— that we make a contribution to that multilateral development assistance? Lord Howarth of Newport: Developing the important questions just asked by my noble friend Lord Anderson Baroness Northover: I thank the noble Lord for his and the noble Lord, Lord Wigley, and accepting the question. He is well aware that the United Kingdom is importance of the environmental considerations that increasing its own spending because it recognises the the Minister has rightly mentioned, will she bear in importance of supporting the poorest in the world, mind that this project is convincingly financeable at even when we are in financial difficulties. As far as the present and prospective rates of interest? That is an EDF and the EU budget are concerned, we scrutinise important reason for a quick decision. Effectively, it them very carefully for their poverty focus. We are would be a free gift of an enormous increase in encouraged by the direction they are heading in, so renewable energy in Britain. It would also be of great perhaps I can reassure the noble Lord in that regard. benefit to reviving the economy and employment in However, we will continue to keep up the pressure, as south-east Wales. it needs to be poverty-focused. I point out that we are fifth in the league, as it were, in terms of ODA in the Baroness Verma: I come back to my original point, EU, behind Sweden, Luxembourg, Denmark and the which I have stated a number of times. I understand Netherlands, all of which have gone beyond the 0.7%. where the noble Lord is coming from in his commentary. The evidence is not quite as he indicated in terms of However, given that the consortium will no doubt other countries. For example, there are increases from look for subsidies for the contract from energy bills for Germany, Italy and Sweden, so the picture here is not this particular energy as well, it is incumbent on the quite as he portrays it. Government to make sure that they deliver best value to the British public. At this time, we are working with Lord Chidgey: Is my noble friend aware that the the consortium on a much more detailed plan. We European Court of Auditors has just reported on its have not ruled it out, but we want more detail about study of 48 EDF schemes—road transport programmes what it proposes to do. At the moment we are not totalling over something like 2,500 kilometres—in the satisfied on that. Sahel? It shows that, while it is by far the European 787 EU: Budget[LORDS] Food: Waste 788

[LORD CHIDGEY] our own aid? Have the Government worked out the Commission’s financially most important sector, it has cost of churning our aid through Brussels? Are we been only partially effective in promoting policy reform really incapable of controlling it all ourselves? that would ensure the sustainability of this massive road infrastructure investment. What is the Government’s Baroness Northover: I have just given an answer response to the court’s recommendations that the saying that the EDF is very poverty-focused. What the European Commission should better focus European EU is doing is looking somewhat wider, but that is a Development Fund resources and make better use of worthwhile project as well. the conditions that it attaches to the programmes? Lord Collins of Highbury: My Lords, DfID’s own Baroness Northover: This report was published a multilateral aid review published in March last year couple of days ago, on Tuesday. DfID will produce a rated the European Development Fund and ECHO considered response, which will be scrutinised by among the top performers. It also identified clear Parliament. It is worth flagging up that, as my noble reform priorities in order to demonstrate results and friend rightly points out, this looks at aid since 1995 in deliver greater value for money from the UK aid that terms of road building and at whether the balance is channelled through the EU. Can the Minister provide between road maintenance and road building has been an update of the department’s assessment of the EU’s sustained as it should have been. In the United Kingdom progress on achieving those reforms? we know that when you are in constrained financial Baroness Northover: DfID is closely engaged in this circumstances a balance must be struck between those area and I have met Commissioner Piebalgs a number two areas. I am sure that we can learn many lessons; of times. We are sure that they are heading in the right nevertheless, it is not as though the balance between direction. those issues is not also felt in other countries.

Lord Pearson of Rannoch: My Lords— Food: Waste Question Baroness Kinnock of Holyhead: My Lords, is the 11.31 am Minister aware that if current proposals made by the President of the European Council to freeze the levels Asked by Lord Greaves of spending on EU development aid are implemented, To ask Her Majesty’s Government what is their aid will suffer a larger reduction than absolutely any response to the Institute of Mechanical Engineers other area of the EU budget and that the UK will see report Global Food: Waste Not, Want Not. a decrease in its current contribution to the European Development Fund? These are two very important The Parliamentary Under-Secretary of State, Department factors. Would it not be perverse if the effect of a for Environment, Food and Rural Affairs (Lord De commendably ring-fenced UK development budget Mauley): My Lords, we are grateful for this contribution was diminished by a huge 11% cut in the EU development to the debate on food waste and agree that too much budget? food is wasted. The waste review sets food waste as a priority, giving the Government’s commitment to tackle Baroness Northover: As I said to the noble Baroness’s it by focusing on waste prevention. The Government noble friend, the noble Lord, Lord McConnell, the are working through agreements with food retailers, EDF has clearly been a very effective measure in this manufacturers and the hospitality sector to reduce regard. DfID is extremely keen to make sure that that food waste, and we are helping households waste less is protected and that the EU’s aid contributions are and save money through the Waste and Resources poverty-focused. Within the EU budget there is clearly Action Programme’s “Love Food, Hate Waste”campaign. also a focus on near neighbours. We need only look at what has happened across the Middle East and north Lord Greaves: My Lords, this excellent report highlights Africa to see how the security, stability and economic the fact that around the world, somewhere between a progress of those near neighbours are important. The third and a half of the food that is produced is not new accession countries are also important. However, eaten. Is that not a shocking example of inefficiency we are keenly aware of the importance of the EDF within the capitalist free market system? Is it not time and its poverty focus, and we are seeking to increase its that the Government took the issue far more seriously focus on the poorest. by getting together with producers, distributors and retailers in this country so that we do not just hope Lord Collins of Highbury: My Lords— that consumers will behave better, but actually do something about it? Lord Pearson of Rannoch: My Lords— Lord De Mauley: My Lords, my noble friend would The Chancellor of the Duchy of Lancaster (Lord not necessarily expect me to agree with every word he Hill of Oareford): My Lords, I think that the House has said. Our key tool for diverting waste, particularly would like to hear from the noble Lord, Lord Pearson, food waste, from landfill is the landfill tax. On top of first. that we have the “Love Food, Hate Waste” campaign aimed at households, the Courthauld commitment, Lord Pearson of Rannoch: My Lords, I am grateful and the Hospitality and Food Service Voluntary to the noble Lord. Do the Government agree with the Agreement that is operating successfully with retailers, think tank, Open Europe, that only 46% of EU aid manufacturers and caterers. We have the AD Loan reaches really poor countries compared with 74% of Fund, and WRAP provides evidence and advice on 789 Food: Waste[17 JANUARY 2013] Electoral Registration and Admin Bill 790 food waste. Under the waste review in which we have ridiculous dominance of almost perfect-looking potatoes, committed to move food waste up the hierarchy and apples and other forms of vegetables and fruit in our away from landfill, with waste prevention a priority, shops, make the most significant contribution to the we are exploring incentive arrangements and working waste in every home in the country on an everyday with local authorities, businesses and others to make it basis, at a time when people are starving elsewhere in easier for businesses and households to manage their the world. food waste better. Lord De Mauley: I find myself in almost complete The Countess of Mar: My Lords, most food waste is agreement with the noble Lord. First, I agree with him generated by households. Does the noble Lord agree that compulsion is not the sensible way forward. On that food is too cheap in this country? If it cost the the specific issue of sell-by dates, on 15 September price of production in most cases and thus gave farmers 2011 we published date-marking guidance that will a bit more of a profit, householders—housewives, help ensure that dates are applied consistently, making perhaps—who prepare food would be more careful it easier for consumers to understand. “Use by” or about wasting it. “sell by”, labels should be used only where the safety of food cannot be guaranteed after that date. Most Lord De Mauley: My Lords, I would not wish to see other foods should have a “best before” date only to anything in the way of increases in food prices for indicate when the food is no longer at its best but is consumers. I think that that would be going too far. still safe to eat. We are seeing date-marking meet the Baroness Jenkin of Kennington: My Lords, what are guidance; for example, more labels are starting to drop the Government’s plans for phase 3 of the Courthauld the confusing “display until” dates that are only for commitment, given that Courthauld 2 expired in stock rotation. December? Will phase 3 learn from the phase 2 target of a 5% reduction in supermarket food waste, which Business of the House was exceeded after only the second year, indicating Timing of Debates that the initial target was somewhat unambitious? 11.37 am Lord De Mauley: My Lords, the waste review commits Moved by Lord Hill of Oareford us to exploring the potential for a successor to Courthauld 2. The UK Government are working with That the debate on the motion in the name of WRAP and current Courthauld signatories and trade Baroness Hollis of Heigham set down for today bodies to determine the best way forward following shall be limited to three hours and that in the name the completion of the second phase of the Courthauld of Lord Smith of Leigh to two hours. commitment and the agreed outcome will aim to build Motion agreed. on the significant progress made so far. As I say, the agreed outcome will build on progress and it is anticipated Standing Orders (Public Business) that we will launch Courthauld 3 in the spring of this Motion to Approve year. 11.37 am Lord Grantchester: My Lords, under the Waste Moved by Lord Hill of Oareford Strategy 2000, the Government have strict targets for recycling household waste. By 2020 the amount of That the standing orders relating to public business biodegradable municipal waste for landfill must be be amended as follows: reduced by 35% of the amount produced in 1995. Do Standing Order 73 (Joint Committee on Statutory the Government have plans to go further, such as a Instruments) ban on all food waste to landfill? In Standing Order 73(1), after “Human Rights Lord De Mauley: No, my Lords. We do not plan to Act 1998”, leave out “and”; and after “Regulatory ban all food waste to landfill. However, we are making Reform Act 2001” insert “, any draft order laid significant progress and we will continue to make under or by virtue of section 7 or section 19 of the significant progress—building, I may say, in a spirit of Localism Act 2011, and any draft order laid under friendliness, on progress made by the previous or by virtue of section 5E of the Fire and Rescue Government. Services Act 2004”. Motion agreed. Baroness Knight of Collingtree: My Lords, do these strictures apply to horse meat? Electoral Registration and Administration Lord De Mauley: My Lords, that is a bit wide of the Bill Question. However, on the subject of horse meat, Order of Consideration Motion consumers should have confidence that food is exactly what it says on the label. There are strict rules requiring 11.38 am products to be labelled accurately. Moved by Lord Wallace of Saltaire Lord McConnell of Glenscorrodale: Surely the most That the amendments for the Report stage be significant impact that could be made here is not marshalled and considered in the following order: through regulation or changing the capitalist system, Clause 1, Schedule 1, Clause 2, Schedule 2 Clauses 3 but by changing the behaviour of consumers. The to 5, Schedule 3, Clauses 6 to 13, Schedules 4 and 5, ridiculous overuse of “best before” dates and the Clauses 14 to 27. 791 Electoral Registration and Admin Bill[LORDS] Taxation: Families 792

Lord Wallace of Saltaire: My Lords, I beg to move economy. Shaftesbury said that he refused to accept the Motion standing in my name on the Order Paper. that the prosperity of Britain must depend on the labour and pain of its poorest children. The last Lord Forsyth of Drumlean: My Lords, I know that Government lifted more than 1 million children out of the House has agreed to consider the Report stage and poverty. With these cuts, some 300,000 to 400,000 Third Reading on the same day, but could I ask my children by 2015, and up to 1 million children by 2020, noble friend why it is assumed that no Peer will have will now slide back down the snake into absolute anything to say which requires consideration by Ministers poverty. I refuse to accept—the whole House will during the moving of these amendments? Could he refuse to accept—that poor children must be made tell us what is the urgency that has required both poorer still, so that the rest of us can, in time, become remaining stages to be carried out on the same day? more prosperous. Individual cuts seem modest, until you add them Lord Wallace of Saltaire: My Lords, the Electoral up. Can the noble Lord, Lord Freud, tell us whether Commission is anxious to have sufficient time to make the Government have published a cumulative analysis sure that the transition to the new electoral system of the cuts since 2010? In its absence, I have tried. I takes place on the set date. We are all of us, on all especially thank Sue Royston of Citizens Advice and Benches in this House and in the other place, I think, Howard Reed of Landman Economics for working concerned to make sure that the transition to individual through the statistics and the weekends, although any electoral registration results in as complete and accurate errors are of course my own. Let us remind ourselves a register as possible. For that purpose, the sooner this that the Government froze the value of tax credits and Bill passes and becomes an Act, the better. child benefit, changed the taper rate, reduced the childcare component and, for some 200,000 families, Baroness O’Cathain: My Lords, does that mean increased working tax credit hours, which may cost that the demands of time for the Electoral Commission them £40 to £50 a week on top. Next came the benefit are more important than the demands of time for us cap, which hit families, especially in London, although to make sure that what we decide on is the right way of my city of Norwich has 100 families affected by it. tackling this Bill? Housing benefit was reduced from 50% to 30% of private sector rents, so many now face serious shortfalls in local housing allowance; as do those facing the Lord Cormack: Further to that, my Lords, could bedroom tax on alleged underoccupancy. From April, the Electoral Commission be gently told that it itself perhaps a quarter to one-fifth of working-age tenants should not procrastinate as much? We were debating of the housing association that I chair face HB cuts of an issue yesterday where the Electoral Commission £12 to £15 a week, as they have nowhere else to go. has taken so much time that we were not able to consider its recommendations on the Scottish referendum Also in April come the localised council tax benefit question because those have not yet been made. What cuts. Families who had not expected to pay council tax is sauce for the goose is sauce for the gander. now face a poll tax of £5 or more a week. Benefit rises are to be capped at 1%. The bottom one-third of Lord Wallace of Saltaire: My Lords, in the process households will lose almost £5 a week as well as of considering this Bill I have met quite a large number £15 per week, effectively, by 2015. The change from of electoral registration officers. They are a subculture DLA to PIP will probably remove the lower-rate care that works incredibly hard during electoral campaigns. element, worth around £20 a week, as well as making I have real respect for what they do and how hard they changes to carers’ benefits—all this before the arrival work at the local level. We all have to recognise that of universal credit, which will cut disabled children’s getting this right, and improving the declining accuracy benefit from £58 a week to £27 a week. I could go on. and the incompleteness of the count register as we move towards a different one, is a very important goal What is the overall impact? In my city of Norwich, which we share across all political parties and Benches which has a population of 135,000, these cuts will take in this House. £35 million a year from our poorest citizens and out of our local economy. What is the impact on families? By Motion agreed. 2015, the poorest one-fifth of our people will have lost up to £2,000 a year. The more vulnerable families—those with younger children, or three or more children, in Taxation: Families poor health, in poor housing or with disabilities—will Motion to Take Note suffer even greater cuts, of £40 to £60 a week, alongside, of course, severe cuts in public services. Take a working 11.41 am husband—a security guard on minimum wage—his wife, two children of three and six, living in, and now Moved by Baroness Hollis of Heigham defined as underoccupying, a three-bedroom, £100-a-week council house. Citizens Advice calculates that whether That this House takes note of the impact on he is in full-time work with in-work benefits, or loses families of changes to tax and benefits. his job and is fully reliant on benefits, either way that family will, by 2015, be losing £30 to £35 a week, even Baroness Hollis of Heigham: My Lords, when in the taking into account the tax changes. If the younger 1830s the Tory, Lord Shaftesbury, sought to limit child child, say, is disabled, they will lose £40 a week by labour, mill owners insisted it was essential to the 2015. If, however, by 2015 that family is on universal 793 Taxation: Families[17 JANUARY 2013] Taxation: Families 794 credit, they will be losing £50 a week if in work, and As the Child Poverty Action Group has said, this nearer £65 a week—unbelievably—if he is unemployed. child is poor not because its mother is a lone parent but because she is a cleaner; this child is poor not Why are the Government doing this? The Tories because its father abuses drugs but because he is a think it necessary and perhaps desirable. The Liberal security guard. Five million people are paid less than Democrats, I think, find it necessary but perhaps the living wage. Two-thirds of those benefits cited by regrettable. Their argument goes—I will list it and try Mr Duncan Smith go to households in work to ensure to address these points—first, the welfare cost is that work pays, as we all wish to see. However, to make unsustainable; secondly, it is creating welfare dependency; the unemployed poorer, the Government will make all thirdly, welfare has to be cut if we are to cut the deficit; the working poor receiving benefit poorer as well. One fourthly, it is not right that pay be limited to 1% while despairs. benefits rise at CPI; and finally, in any case, the rise in tax allowances offsets all this. Finally, the Minister may say that raising the tax threshold significantly is the best way to support low- A fair summary, I hope, of Government views. income working people—except that it really is not. Every point is false; every one. First, the welfare bill is Very many of the working poor are below the tax not unsustainable. According to the DWP’s former threshold, and others—the full-time cleaner or the chief economist, benefits took 12.5% of GDP under security guard on the minimum wage—keep only 15% of John Major in 1994, with 8% going to working age that alleged gain because means-tested housing benefit households. As of January 2012, benefit spend fell to and council tax benefit taper away 85% of the increase 10.5% of GDP with only 5% going to working-age in tax allowance, and then the other cuts pile in. people. The driver of benefit spend is simply more pensioners getting better pensions. I welcome that, but Every justification used by the Government for poor children should not be made poorer to pay for it. these benefit cuts is untrue—every single one. If, in a final throw, the Government say that the public support Next, in the Telegraph a fortnight ago Mr Duncan them, that is because the Government, with the aid of Smith asserted that tax credits and benefits created some of the press—none of whom, I suspect, will welfare dependency, when he knows that they make it experience these benefit cuts themselves—have peddled possible for families to live on the same wage as that the view that the poor must become poorer to save the paid to a single man. A single parent, a Telegraph rest of us. reader from Amersham in Buckinghamshire, wrote Do the Government know or care what damage back on 3 January that she had brought up 3 sons they are doing as they finger the vulnerable, the fragile, while working part-time. Two are now at university the poor, the soon to be underemployed, the soon to and she is about to go into full-time work. She concluded: be unemployed, the soon to be in severe debt, the soon “I object to Iain Duncan Smith’s suggestion that tax credits to be evicted—and, yes, the soon to be hungry—and have made people lazy dependants who rely on hand-outs ... the encourage those who are themselves just a rung or two tax credit has been a life saver”. up the ladder, also struggling, to blame not those His welfare dependency; her life saver. His smear; her above them, bankers and the like, but those below experience. I know whom I believe. them for their struggle? That is ugly, cynical, and utterly indecent. Next, the Government tell us that we have to cut welfare to cut the deficit, otherwise, it will be nurses We must all refuse to use this language of welfare, and teachers—the usual rhetorical flourish. It is a with its dark shadows of handouts and dependency, matter of policy choices. It always has been and always stigma and scroungers, failure and fault. When we will be. I will offer mine, although they are not necessarily founded the NHS we also built social security—the those of the Labour party. While private pensioners roots of which go back to Lloyd George—the insurance enjoy more than £30 billion a year of tax relief, of the social contract we make each with each other; a two-thirds of which goes to the better-off, while we network of mutual social obligation. We pay in, and in cap the upper earnings limit, which saves higher rate need, we take out, as is our right. taxpayers £11 billion a year, while we refuse—as my It is social security. I calculate that two-thirds of noble friend Lord Campbell-Savours has reminded our £205 billion social security spending is likely to me—an ad hoc Lords committee, urged by my noble come back to each of us in our own lifetime: when we friend Lord Myners, on tax-avoiding personal service have children, when we are sick and, above all, when companies, and while millionaire earners see their tax we draw our state pension. It smoothes the volatility rate fall to 45p at a cost of £3 billion, I think that there of our working lives, as it should. is money from those who can afford to pay. Only a third of social security spending goes in Fourthly, we are told that as pay is limited to 1% so means-tested benefits, perhaps to relieve other people’s must benefits, which since 2007 are outpacing pay. hardship; two-thirds will come back to us, as payments Until 2007, earnings outpaced RPI benefits. Why else on our insurance paid—exactly as you would hope did pensioners demand that the state pension be linked and expect from a contributory social security system to earnings not prices? Yes, since 2007, during the based on entitlement, alongside a decent safety net for recession earnings have fallen behind inflation. Does those in hardship, which could so easily have been any that mean that we reduce benefits so that they do not of us in the past. keep pace with inflation either? In any case, it is a false Let us reframe the debate: it should not be about contrast because many families with 1% pay increases welfare and dependency, strivers and shirkers—such also rely on tax credits, housing benefit or council tax morally ugly language. It is about social security, benefit for a living income. contribution and entitlement. When I look around my 795 Taxation: Families[LORDS] Taxation: Families 796

[BARONESS HOLLIS OF HEIGHAM] over and above child benefit. Families earning over former council ward in Norwich I see children unable £50,000 a year were able to apply for a top-up in the to go on school trips, mothers missing lunch to feed form of child tax credits, yet even the most numerate their children an evening meal, women pawning their stock broker or accountant found themselves unable engagement ring to pay for school shoes. I see a to work out exactly how they were calculated. For middle-aged couple who have not eaten for two days those families, that might have meant a degree of arriving at my local food bank. I see families fearful uncertainty about whether it was worth while for a that as they cannot afford the rent of their council second earner to pursue a part-time job which in turn home from April they may become homeless—and the might have meant the tax credits were all tapered away. worst cuts are yet to arrive. But that is nothing in comparison to the abject fear in I ask this House today, how many of us here have much lower-earning families that changes to earnings suffered any cuts? As a comfortably-off pensioner I might lead to demands for massive repayments. have not suffered a penny of cuts—and so I will not Our benefits system was at breaking point under accept that it is right that poor children should be the weight of the confusing complexity of 51 different plunged deeper into poverty to spare all of us; that benefits, withdrawn at different levels. At the end of middle-aged couples should resort to food banks to many years of economic growth, prior to the recession, spare us; that families unable to pay their rent because 5.4 million people were claiming out of work benefits. of underoccupancy should face eviction to spare us. Many had done the sums and did not consider it We are not entitled to ask the poor and their children worth their while to work as they would struggle to to carry these cuts for our benefit. It is profoundly earn as much as they were entitled to on benefits. wrong and I am ashamed. DWP figures from 2010 show that despite 2.4 million households receiving working tax credit, 35% of families 11.56 am stayed in poverty when a parent entered work. Baroness Jenkin of Kennington: My Lords, rising to A significant couple penalty was also a feature, speak after the noble Baroness, Lady Hollis, who is so making it much harder for single-earner couples, who well known for her knowledge, expertise and experience might have several young children, to work their way in this area, I feel a bit like a young and very inexperienced above a somewhat arbitrary poverty line than a single First World War pilot up against the Red Baron, or parent. The level of fraud was such that lone-parent perhaps the Red Baroness in this case. However, like claimants exceeded actual numbers in the country by other noble Lords, I am of course grateful to her for an estimated 200,000. Fathers facing a general slump the opportunity to participate in this debate. in blue collar wages, a situation exacerbated by many employers understanding that the Government would Let us take a moment to look at why the Government top up the little they were willing to pay, often perceived are having to take these steps. When the coalition that the mothers of their children would be better off came into office in 2010, the country’s tax and benefit living separately from them. system urgently needed reform precisely because it was failing families, especially families headed by couples, Researchers at the University of Essex found a and let us remember that such families are still in the spike in the divorce rate of a staggering 160% among majority. families where working families tax credit made it distinctly financially advantageous for a woman to I will start by putting my remarks in context with part company with a low-earning or non-earning husband. that great reformer of the mid-20th century, the architect That is why universal credit has been designed to of the welfare state itself, William Beveridge. His ensure that people will be better off in work, to make blueprint for social reform anticipated the enormity of work pay, to simplify an eye-wateringly complex system the post-war social challenges and showed a reforming and reward responsibility, with couples raising children Government how they could rise to them even in the together and sharing the daily load, fathers and mothers hardest economic times—then, as now. It is worth willing to work extra hours to improve their families’ remembering that his appeal to conservatives and lives, not expecting the taxpayer to do that for them. other sceptics was to argue that welfare institutions Let us face it, in most cases, they were and are the would increase the competitiveness of British industry taxpayer. in the post-war period, not only by shifting labour costs like healthcare and pensions out of corporate Turning to the tax system, I strongly support my ledgers and onto the public accounts, but also by party’s pro-marriage credentials and the introduction producing healthier, wealthier and thus more motivated of the transferable tax allowance for married couples. and productive workers who would also serve as a This would be a popular first step towards rebalancing great source of demand for British goods. our tax system so that it is fairer to single-earner Yet by the end of the first decade of the 21st century families. The organisation Care found that the tax we had become a nation that was dependent on benefits burden on one earner couples with two children is a to a degree that would have astonished and possibly staggering 42% higher than the OECD average. We are horrified Beveridge, so concerned was he in his later among a small minority of countries in Europe which life that the state might have replaced the welfare do not recognise interdependence within families but society where people anticipated, gave, and received instead tax on an individual basis. mutual help. We had created a veritable tax credit The tax burden on couple families is why the respected culture that had been fostered by the party renowned Institute for Fiscal Studies found that increasing the for tax and spend. By 2011, nine out of 10 families personal tax allowance helps richer families most, were receiving some form of subsidy from government where both parents are more likely to have jobs that 797 Taxation: Families[17 JANUARY 2013] Taxation: Families 798 enable them to take full advantage of tax-free earnings, scrutiny that she brings to these issues. The noble while transferable tax particularly benefits families at Baroness has secured a full debate on a very important the poorest 20% level. Enabling a low-earning or matter for the House to consider. non-earning spouse to transfer some or all of their I am pleased to have this debate, especially as it personal allowance to their other half sends the vital ranges over the benefits and tax systems together. signal that this Government understand that it is not They are inseparable in any discussion of welfare always desirous or in the best interests of families for issues in our country. This Government’s actions in both parents to be working. It is not only Conservatives this area have been a mix of major policy changes—some who believe this. Towards the end of her time as Trade on a very large scale—coupled with the need to reduce and Industry Secretary, Patricia Hewitt admitted in an the budget. That is a difficult balancing act, but the interview to the Daily Telegraph that New Labour had Government have done well to shift the policy agenda done a disservice to families by assuming that having at the same time as having to make sharp reductions in both parents in continuous work should be the goal. public expenditure. It is worth remembering that if She said they had belatedly recognised that inadequate you take the relevant tax and benefits expenditure recognition had been given to what matters to people together, the total welfare bill of this country represents most—their families and relationships. She said: nearly £1 in every £3 of public expenditure. That is “If I look back over the last six years I do think that we have more than the total expenditure on health, education given the impression that we think all mothers should be out to work, preferably full time as soon as their children are a few and defence added together across the whole of our months old … We have got to move to a position where as a country. Therefore, it is impossible to escape the need society and as a Government we recognise and we value the for cost reduction in the welfare bill in our deficit-burdened unpaid work that people do within their families. That’s mothers country. but also fathers and people looking after elderly relatives or people with disabilities”. I wish there was greater political honesty around I do not suppose that my noble friend the Minister this matter. It was certainly not helpful when, a couple could have put it better himself. of weeks ago, the Labour Front Bench in the House of Commons outlined a new idea to divert funds from In summing up, I must reiterate that while those pension tax relief to a jobs guarantee. In an earlier who need it should of course continue to receive announcement, Labour had already allocated that support, welfare reform is vital for this country so that same money to reversing changes to tax credits. This we stay competitive and support and encourage people’s does no credit to politicians in general or to debates on aspirations to work, setting the right example to their these issues. The fiscal burden is a reality that cannot children by paying their own way and avoiding be escaped. dependency. This Government have grasped the nettle, not despite economic hardship but because our financial Nevertheless, it is pleasing to note that in the Autumn circumstances highlighted how urgent was the need Statement we were able to reduce the hit on the overall for reform. welfare bill. There was much talk of the need to make a reduction of £10 billion; indeed, it was frequently Child benefit changes have not been carried out in a talked about in debates in your Lordships’ House. The seamless and sensible way—there is no getting away eventual reduction figure announced was much less: from that charge—but again we have to face up to the £3.8 billion. Even so, it still requires tough and difficult realities. We are in an economic quagmire. Giving decisions. Any reductions in the welfare bill have to be more than £1,000 to every family, however wealthy—and fair and proportionate. When money is tight, spreading that is just for a first child—is unsupportable. However, the impact over a large number of people who lose a it is also untenable that single-earner families on incomes small amount of money is fairer than targeting specific a little over the threshold set by the Government groups for larger cuts. The average loss from the quickly lose everything when they are already being changes made in the Autumn Statement will be in the hammered through the tax system. region of £3 a week. If we really want to support families in need, we must prioritise the most vulnerable, particularly the I am pleased that the Government have reduced the disabled, as the Secretary of State and my noble friend hit on the bill and, in particular, avoided some of the the Minister have pledged to do. We should do absolutely more unpleasant proposals put forward in the lead-up everything possible to make work pay, recognising to the Autumn Statement. Those aged under 25 will that, if wages are not rising, it cannot be right to keep still be eligible for housing benefit, benefits will not be pumping in government subsidy in a way that will let frozen and families will not have their child benefit employers off the hook and make it even more difficult capped if they have more than two children. It is also to imagine life without benefits. clear that the 1% cap is a temporary measure. However, the most beneficial change, which comes in from April this year, is the increase in the personal tax allowance. 12.05 pm The amount earned before paying tax increases from Lord German: My Lords, I pay tribute to the noble £8,105 to £9,440. That is the largest real-terms increase Baroness, Lady Hollis, for securing this debate today. I in the personal allowance for 30 years. It will give the do not think anyone in your Lordships’ House does average worker an increase in their pay of nearly £600, not understand her dedication to these issues. Without and—of particular relevance to this debate—59% of wanting to trade figures with her—which is obviously the 2.2 million people taken out of tax altogether from a dangerous trade and I will not upset some of the April will be women. This is a much more effective and interpretations she places on those figures—it is, of efficient way of putting money into people’s pockets course, important that your Lordships hear the sort of than the hand-back system of tax credits. 799 Taxation: Families[LORDS] Taxation: Families 800

[LORD GERMAN] of people want to work and are working hard in order The tax credits system is so complex that it led to more to do so. More than half the people who claim jobseeker’s than £10 billion in fraud and error. From this April, allowance do so for six months or less. I am afraid that the changes will benefit 23 million workers in our both sides of the political divide have been guilty of country but not the 1.8 million of our richest people this sort of rhetoric. I hope today that your Lordships who will pay more as a result of the changes. Someone can agree that this distasteful practice must end. working full-time on the minimum wage will see their In conclusion, I give two examples of how, if the income tax bill cut in half compared to what it was universal credit system works as we all hope it will, it under the previous Government. It is getting fairer but will lead to change for families in our country. A I hope the Government’s ambition is that no one on typical one-earner couple with two children who are the minimum wage should pay income tax at all. I very renting will be £761 better off under universal credit if much hope that the Government will go further in this they come into the system this year. I wonder whether direction. that is a sign that the change we bring will support Our welfare system provides the safety net. Any families. A one-earner family with an income of £20,000 decent society must do this but I believe that it should and two children will gain £223 from the personal do more. It should help those people who are able to allowance increase. They will obviously lose tax credits improve their lives and their life chances. Giving people of £150 and child benefits of £39, but under universal a helping hand to do better is also a key role for a credit they will still make a net gain of £34. When my modern welfare system. That is why trapping people noble friend sums up on the ambitions for universal in a benefits culture is a bad idea. It offers no solutions credit, could he support these examples and show us and no way out for those who are able. The hand-back that universal credit will make sure that work will tax credit system has had the impact of increasing always pay and families will always be better off? reliance on state support instead of providing an increase in personal confidence and self-reliance. Taking 12.15 pm away tax first is the way that we should proceed, which Baroness Pitkeathley: My Lords, I feel privileged to is what this Government have been doing. People will speak in this debate introduced by my noble friend not have to hand it back; they will see their money in Lady Hollis, who, in a very fine speech, spoke with her their pocket. customary forensic skill and passion. I am very glad to The complex mix of benefits and tax credits created have the opportunity to focus on those families who by the previous Government has meant that far too have caring responsibilities. I believe that the cumulative many people are not better off in work. Changing that impact of the changes to social security, taken together aspiration and making sure that people are better off with the cuts in social care services, has not been in work is the great hope that I am sure your Lordships’ adequately assessed. House shares for universal credit. Working for just a Let us look, first, at the number of caring families. few hours a week will mean that you are better off. I The census statistics published last week show that the should be grateful if the Minister would give this number of carers has risen by 11% since the last House an update on progress towards implementation census in 2001, bringing the total in England and of universal credit so that we can see how all this will Wales to 5.8 million—a rise of nearly 600,000 carers. come into effect this year. That means that across the United Kingdom there are One of the tricky issues that universal credit brought now an estimated 6.5 million carers, and the value of forward was that of childcare under a universal credit the carers’ support has been estimated by Carers UK system. Since universal credit will give an opportunity as being £119 billion every year. I make no apology for to bring more people into a system of balancing their quoting that statistic for the second time this week in tax and benefits together, it will obviously be received this Chamber. by more people. Spreading the same amount of money Carer’s allowance, the main carer’s benefit, is already across more people could mean a reduction in the the lowest of its kind. At £58.45 a week, it leaves many amount of childcare funding that would be provided. carers in financial hardship as a result of the reduced I was very pleased that the Government managed to earning power and higher living costs associated with find an extra £300 million in order to bridge some of disability and ill-health. A survey of more than 4,000 that gap. carers in 2011 showed that 45% of carers are cutting The difficulties that we face with funding mean that back on essentials such as heating or food; four in the levers within the future system should allow for 10 are in debt as a result of caring; and the stress of more incentive to be provided within it. I know that money worries and other stresses associated with caring the Minister shares the ambition that the taper rates mean that the health of one in two carers is severely should be such that people should be able to keep affected. I quote one carer: more in years to come. I hope that he might also “We have suffered financial hardship so bad it is unreal. comment on that when he responds to this debate. Before I became a carer I worked for many years. I believe that I paid all my dues. Today a carer is made to look like a scrounger. I I very much agree with the noble Baroness, Lady feel every time you speak to one of the agencies that are supposed Hollis, about language. Care must be taken over the to help us and be understanding they somehow try to make you language that we use in all these issues. Stigmatising feel ashamed of yourself”. people by language and by the difference and distinction According to new government impact assessments, between those in work and those out of work does not while 510,000 people will receive a higher award following aid encouragement and support for improvement in the introduction of the personal independence payment, people’s quality of life. The fact is that the vast majority by 2018 an estimated 607,000 fewer disabled people 801 Taxation: Families[17 JANUARY 2013] Taxation: Families 802 will be entitled to support. Given the link between I suggest that if this cap is designed to be fair to carer’s allowance and DLA and the PIP, this risks a individuals who are working hard and playing a full knock-on impact of 23,000 fewer carers being entitled part in society, it cannot be right that it applies to to receive the carer’s allowance. DLA acts as a gateway carers—the very epitome of the big society. to carer’s allowance but this will not be replicated in The cap is also designed to apply to workless the PIP. The government impact assessment shows households, a description which carers would find that by 2018 there will be a 10% reduction in the insulting, given the level of their workload, and inaccurate, number of disabled people in the groups which act as given that carers in receipt of carer’s allowance are, as a gateway to carer’s allowance. I have said, already providing a minimum of 35 hours’ The impact assessment in May 2012 said that the care a week. Each one is saving the state an average of reforms would, more than £18,000 a year with the unpaid care they provide for loved ones. Surely it is deeply unfair to “not affect the overall size of the Carer’s Allowance population or the level of expenditure on the benefit”. apply the cap to carers, given their contribution to society. It seems to me that doing so sends out a very However, this appears to be inconsistent with such a negative message about the value that the Government substantial reduction—as I have quoted—in the number place on caring. Indeed, the cap may ultimately act to of disabled people in the carer’s allowance gateway disincentivise those who willingly and lovingly take up groups concerned with the PIP and the DLA. A third caring for their families, and it may in the future lead of people entitled to carer’s allowance are entitled to to family finances collapsing and caring becoming the benefit because they care for someone on middle financially untenable. It is a great pity that, in spite of or higher-rate DLA. the valiant efforts of many of my colleagues, the Should the carer’s allowance caseload follow the Government did not accept the amendments on this pattern of reduction in PIP spending, we would perhaps issue tabled on Report and at other stages of the expect to see a fall of 34,600 in the total caseload of Welfare Reform Bill. those entitled to carer’s allowance and a fall of 23,800 I turn to the bedroom tax, which will also have a in the number of those in receipt. It is very frustrating severe impact on certain groups of carers. They may that the lack of a full impact assessment means that be unable to cover the shortfall and be forced to we cannot reconcile the apparent inconsistency between move—for example, where one member of a couple the projected fall in the DLA and PIP caseload and has a disability and the couple cannot sleep in the the suggestion by the Minister and others that the same bedroom or where an extra room is needed for carer’s allowance will be unaffected. The latest impact equipment. Families who have spent considerable amounts assessment, I am sorry to say, simply states that the of their own money making suitable adaptations to Government are, their homes may also be forced to move. This would “continuing to analyse the impact on certain passported benefits not only be distressing for families and disruptive to and schemes, including Carer’s Allowance”. care arrangements but could risk a greater long-term This is quite unacceptable given that implementation cost as adaptations will then be needed in their new will be with us in April this year. Therefore, I must ask homes. the Minister: when will the Government publish a full As regards changes to council tax benefit, carers assessment of the impact on carers of the introduction will be affected differently depending on the scheme of the PIP, including an assessment of the impact on adopted by their local authority. I am happy to say the projected carer’s allowance claimant count compared that some councils are proposing to recognise carers with projections if DLA were to continue? This seems as a vulnerable group but others are not. Carers may to be inconsistent with government policy on the face substantial reductions in the support that is available benefit cap. The Government have said that the cap is to help meet council tax bills. This, again, is inconsistent intended to improve work incentives, yet carers in with the aims of the policy to improve work incentives. receipt of carer’s allowance are already caring for a The Government have made it clear that they do not minimum of 35 hours a week—many of them for wish to force carers to give up caring and return to 50 hours or more—so it would be impossible for many work. I have already quoted the Minister on that. to juggle work with heavy caring responsibilities. However, if carers are unable to increase their income The benefit cap is also meant to promote behaviour through work, reductions in support with council tax change and discourage long-term benefit claims. However, bills will only put them under further financial pressure. in his response to an amendment at Report stage of In summary, I very much fear that all the changes the Bill in the Lords, the Minister said that, will seriously undermine carers’ ability to care for older and disabled loved ones and will push families to “one thing we are not looking to encourage is a change in the carer’s behaviour so that they stop caring. That is absolutely not breaking point, with serious long-term consequences where we want to go”.—[Official Report, 23/1/12; col. 892.] for family life, health and social care services and, indeed, for our wider society. That makes neither I think that most of us would say amen to that. moral nor economic sense. The Secretary of State for Work and Pensions stated, when he introduced the Bill in the Commons, 12.25 pm that the benefit cap was, The Lord Bishop of Exeter: My Lords, I too thank “a matter of fairness, so that those who are working hard and paying their taxes do not feel that someone else will benefit more the noble Baroness for securing this important debate. by not playing a full part in society”.—[Official Report, Commons, There is much I could say, but in the time available I 9/3/11; col. 922.] shall look particularly at the experience of one-earner 803 Taxation: Families[LORDS] Taxation: Families 804

[THE LORD BISHOP OF EXETER] just in the seventh decile, but will drop well into the couple families in the context of recent child benefit sixth decile if child benefit is removed. Meanwhile, a changes and our tax system in general. Before doing two-earner couple with two children on the same wage so, I make two crucial points about one-earner families will be well up in the eighth decile and keep its child in general. benefit. Thus, not only will the higher income child First, one-earner families are often families where a benefit charge impact one-earner families in the lower couple has made a deliberate decision to sacrifice half of the income distribution, two-earner families having a second salary so that one parent can be at right towards the top of the income distribution—in home for the children. The stay-at-home parent in the eighth decile—will keep their child benefit. If this such a family performs an important job, investing in is fair, it is a very odd definition of fairness. their children’s development which can save the state The unfortunate impact of the higher income child significant amounts of money to the extent that it benefit charge must also be seen in the context of an helps the children in question develop into adults who appreciation that even before the charge took effect are more likely to fulfil their potential and make a net our tax system already gave one-earner couples a very contribution to society. The social science evidence is rough ride and continues to do so. As the noble very clear about beneficial child development outcomes Baroness, Lady Jenkin, has pointed out, the latest by every benchmark. In the context of all the concerns available OECD figures demonstrate that the tax burden about “Broken Britain”, this is an important consideration. on one-earner married couples on an average wage in Such families should be valued and supported rather the UK and with two children is 42% greater than the than penalised. OECD average. In this context the higher income Secondly, the DWP’s own figures show that most child benefit charge is particularly unfortunate. Once one-earner families have good reason for being one-earner again, CARE has released figures that illustrate the couple families. Figures derived from the 2010-11 DWP problem. At the moment one-earner couples already family resource survey demonstrate that well over pay far more tax than two-earner couples with the half—61%—of all one-earner couple families have same income, largely because they access only one tax either a child below five, someone who is disabled or allowance rather than two. A one-earner couple with someone with caring responsibilities. So the majority two children with an income of £60,000 pays income of one-earner families are one-earners out of necessity tax of £13,950. A comparable two-earner couple, each rather than by choice. This is extremely important earning £30,000, pays £8,768. After the HICBC is because, as we have already heard, there are those who added, the one-earner couple’s tax bill rises to £15,667. give the clear impression that one-earner families should This is £6,899 more than that of the two-earner couple. not be helped because all stay-at-home parents should Put another way, a one-earner family with two children get paid employment. This is a deeply misguided view and on an income of £60,000 already pays 60% more that has no regard for the constraints that one-earner tax than a comparable two-earner couple, each earning families operate in, the sacrifices they make and their £30,000. With the introduction of the HICBC, the significant contribution to the national well-being. one-earner couple will pay 80% more tax. The charge I now turn to the recent child benefit changes that will increase the one-earner two-child family’s annual took effect last week. While no one wants to pay tax, tax bill by £1,717. Over the lifetime of the children, if we accept that it is necessary for the common good. child benefit is claimed for each child up to the age For any tax to be sustainable, it is vital that it is fair of 18, this represents a £30,000 increase in the family’s and is seen to be fair. However, that is not the effect of tax bills. the higher-income child benefit charge. Under the There is an extraordinary irony in all this. Prior to charge, a one-earner couple begins to lose its child the general election, the then Leader of the Opposition benefit at £50,000 and loses it completely at £60,000, talked at great length about his commitment to helping while the two-earner family next door has the potential one-earner married couples by giving them a transferable to earn up to £100,000, so long as neither income rises allowance. This commitment was a key part of the above £50,000, and keeps all its child benefit up to “Broken Britain”narrative that made it into the coalition nearly £120,000, so long as neither income reaches agreement, and yet, to date, the only thing the Government £60,000, before losing it completely. This is not a small have done is actually to make life much harder for unfairness. It is very significant. one-earner couples. Some might say, “Well perhaps On 6 January the Prime Minister argued on the there has been no action because there is no money”. “Andrew Marr Show” that the higher-income child But that does not make sense because the Government benefit charge was fair because it is right to ask the top have found literally billions of pounds to fund a huge 15% of the country to make a greater contribution increase in the personal allowance that the Institute during difficult financial times. That would be entirely for Fiscal Studies has demonstrated disproportionately defensible if the higher income child benefit charge benefits those in the top half of the income distribution. really were to have this impact but it does not. The The transferable allowance is far more progressive as it social policy charity CARE has released figures that has been shown disproportionately to benefit those in help to put the problem in focus. A one-earner couple the bottom half of the income distribution. with four children on £50,000 is already in the least Of course, to the extent that the introduction of well-off half of the population, with a higher net transferable allowance was made as a commitment to income than only 45% of the population. The removal recognise marriage, albeit only in a one-earner context, of child benefit will push it even further down the the Government’s failure to act has been rendered income distribution. A one-earner couple with three even more perplexing by the fact that this marriage children on £60,000 and in receipt of child benefit is commitment in the Prime Minister’s manifesto has 805 Taxation: Families[17 JANUARY 2013] Taxation: Families 806 received no attention, while proposals to redefine marriage are living in poverty. Whole communities are existing at the that were not in any party’s manifesto are proceeding margins of society, trapped in dependency and unable to progress. with undue haste. In these areas, aspiration and social mobility disappear, leaving disadvantaged children to become disadvantaged adults”. I recognise that the Government’s transferable allowance commitment still stands. Given, however, That was a clear and true statement of where this that the coalition agreement pertains only to the period Government are going. It is evidenced by one or 2010-15, time is running out. Transferable allowances two things. can be introduced only through Budget resolutions Mention has been made by my noble friend Lord and it is widely appreciated that the next Budget, on German of the macroeconomic situation. That is what 20 March, just over two months away, is the last is driving this review and rethinking. It is not possible opportunity that the Government will have to introduce for the Opposition to say with credibility that this a transferable allowance and have any chance of it measure is absolutely wrong when we know that welfare becoming operational before the next election. I firmly accounts for roughly £1 in every £3, or a third, of hope that the Chancellor will listen and make this a revenue raised. They claim that they have a credible priority on 20 March. I also hope that he will reflect on plan for reducing borrowing and yet cannot say what reforming the higher income child benefit charge so they would do to reduce that level of borrowing. The that it does indeed target only families in the top 15% noble Baroness, Lady Sherlock, is chipping in. I greatly of the country and that it does discriminate against respect her and I welcome her to her position on the one-earner families. As I said earlier, let us not forget Front Bench. I hope that when she responds she can that most one-earner families do not have the option give us an insight as to where in the Opposition’s view of becoming two-earner families, that they make an the fair way would be to apply savings to the welfare incredibly important contribution to our national budget. We would all be interested to hear that. The wellbeing and should not be penalised for doing so. veracity of the argument presented would be much On 11 February 2009, Philip Hammond, the then stronger if those points were put forward. shadow Chief Secretary to the Treasury, spoke to the It was with a great sense of irony that the current Daily Express about, work and pensions spokesman in the other place, “the continuing bias in the tax system against two parent families Liam Byrne, famously left a note on his desk in 2010, where only one adult works. No other European country penalises saying, “Sorry, I am afraid to say that there is nothing families in this way. If we want to end child poverty we must end left”. That may well be the case. If you have nothing this discrimination”. left, you have to make very tough choices about where savings have to be made. 12.34 pm There is another view that I want to challenge and Lord Bates: My Lords, it is a privilege to speak in that is that somehow these changes are being made in this debate and I congratulate the noble Baroness, a capricious and arbitrary rather than considered way. Lady Hollis, on securing it. She has an acknowledged There is no room in a society in what is one of the expertise and well deserved reputation in this area. wealthiest nations on earth for there ever to be that One of the things that has been most healthy about type of charge levelled against a civilised government; the political debate over the past 10 years is that it does not stack up. The reason is that pensions are sometimes the debate on this whole area of welfare exempt from these changes. Those pensions will be reform had been taking place on the left of British increased in line with inflation, taking the single person’s politics. However, the work of my right honourable state pension to about £110 per week, which is up from friend Iain Duncan Smith, Philippa Stroud and my about £97. We inherited that. That was a clear statement noble friend Lord Freud, has started a debate about a of intent. Mention has been made of carers and the compassionate view of how welfare reform could be importance of people who look after children, or undertaken on the right and centre-right of British elderly relatives. The announcement last week that there politics. That informed level of debate is overwhelmingly is going to be a reduction of a flat-rate state pension, healthy as we wrestle with these important issues. at about £144 per week, is tremendously good news for My first point is that the 1% benefit increase limit is those people. It is based on the principle that if people the result of a desperately difficult choice that the can work, they should work. In the past it has not Government have had to make in light of the always been the case, but it is a clear-cut choice. macroeconomic circumstances in which we find ourselves. Had we inherited the type of economic legacy that a A charity that I work with in the north-east of Government coming into office in, say, 1997, would England deals with young, hard-to-reach, unemployed have had, there would be absolutely no question about people. People make a calculation about benefit having this debate or being forced into a position of entitlement and whether employment will pay. Benefits having to consider the types of situations that I have may be well-meant but on the matter of the cap on absolutely no doubt will bring hardship to many of benefits, coming in at about £26,000 for a couple, that the most vulnerable and poorest people in our society. would require them to have an income in the region of Nor do I deny the veracity of the statement made by £45,000 to be able to exist without those benefits. If my right honourable friend the Secretary of State for that does not create dependency, I do not know what Work and Pensions in the foreword to his, State of the does. To say to somebody with no qualifications whatever Nation Report: Worklessness and Welfare Dependency that they ought to be able to seek a job at the level of in the UK. He said: deputy-head teacher is clearly nonsense. “Addressing poverty and inequality in Britain is at the heart of We must be careful about how we go about this and our agenda for government. It is unacceptable that, in one of the in saying that we do not want to create dependency. wealthiest nations in the world, millions of adults and children We must always make sure that work pays. That is 807 Taxation: Families[LORDS] Taxation: Families 808

[LORD BATES] system; they are important. Many such people prefer where universal credit comes in. That says that no to be independent and would never assume that they matter what the salary of the job that you are taking would have to turn to the state for help. It is against is, with a straight-line taper of 65p in the pound, you their natural inclinations. However, sometimes they will always be better off when you work. That is a need assistance, particularly if they have a family to basic principle and seems to me to be good. Work is support in hard times. They should be able to expect a the best route out of poverty. What is most difficult in state system that responds to their needs. I am grateful the charity is for people to get their first employment to the Low Incomes Tax Reform Group for its briefing on their CV.Once they have a job they can more easily on this subject. There have been some improvements find another one and progress out of poverty. Education to the rules for the deduction of expenses but the most is a key to that and that is why education reforms are serious objections that were raised last summer remain. key to our drive to reduce to child poverty. These The monthly assessment requirement will mean general steps can be widely welcomed. that small businesses will draw up accounts not once There is room for further work to be done. This is but 12 times a year. The absence of any carry-forward an ongoing debate. We understand the difficult choices rule will result in genuine trading losses going that have to be made, the challenges in the market and unrecognised. In addition, the minimum income floor the importance of raising tax thresholds. That is another does not allow enough time for a business to grow and important element in making work attractive, particularly develop. It gives no help when a business is experiencing at the lowest levels—not so that people stay there but a temporary dip in profits. It also prevents pension that they progress from there. Page 13, table 2A of a contributions and legitimate business expenses being helpful briefing for this debate from the Institute of fully recognised. Fiscal Studies and provided by the Library looks at average earnings growth. Reference has been made to Under generally accepted accounting principles, a the historic figures, so I will not repeat them. The true and far statement of how a business is doing institute forecasts that average earnings will increase involves accounting for business receipts and expenditure by 2% in 2012, by 3.1% in 2013, by 4.3% in 2014 and over the period to which they relate. If a business buys by 4.5% in 2015. That tells us that you need to make stock for resale, it will account for the purchase price every possible effort to ensure that people get into over the period in which the stock is expected to be work in order to benefit from those increases. sold. A tax bill, referable to a tax year, may be paid in two instalments but accounted for over the whole year. I leave two final thoughts for my noble friend to An insurance premium, paid in one instalment, will be ponder. First, I endorse what my noble friend Baroness spread over the period of the insurance cover, which is Jenkin and the right reverend Prelate have said about usually a year. Investment in essential equipment will recognising the importance of marriage in the tax be written down over the equipment’s expected life. If system through a system of transferable allowances. there is a deficit in one accounting period, it can be set Secondly, I remember having debates about the minimum against surpluses in other periods which give a true wage. I argued vigorously that it would never work. I and fair picture of the state of the business. was absolutely wrong. The minimum wage does work. It is a very important safeguard in our society that This method of accounting is also followed for people have a basic wage. The fact that we accept the working tax credit, enabling claimants to draw up one Low Pay Commission’s increase of 1.8% is also right. set of accounts that keeps administration costs down When winding up would my noble friend consider the and matches the support given by the welfare system argument that in reducing welfare dependency we to the actual state of the business. The universal credit need to move progressively from a minimum wage regulations depart completely from these generally towards a living wage? accepted principles. Under Regulations 57 to 59, businesses will account to the DWP month by month on the basis 12.45 pm of amounts received in the month, minus business expenditure paid out in the month. If that produces a Baroness Donaghy: My Lords, I thank my noble loss for the month, it may be not be carried forward to friend Lady Hollis for introducing this debate and for subsequent months. It is simply disregarded. her leadership. She keeps us all on our toes. Equally, I would like to say how pleased I am that the noble If it produces a result lower than the minimum Lord, Lord Freud, is still in his place. It is nice to know income floor, or MIF, Regulation 62 will substitute a that there is somebody there who understands what we minimum income floor equal in most cases to the are talking about, even if we do not always agree with national minimum wage for a 35-hour working week, what he says. I want to deal with the self-employed less a deemed amount of tax and national insurance and the impact on them of draft Universal Credit on that level of earnings. It is almost as though someone Regulations 57 to 59 and 62 to 64. has drafted these regulations with no experience of the Many self-employed people will not become IT fluctuations of running a business. moguls, business entrepreneurs or worldwide rock stars. Although I was not self-employed myself, I ran a Many are self-employed, because they cannot find student union for 16 years with a turnover of about secure employment. They are often self-employed on £750,000 a year. You learnt that, to get a true picture building sites, because the choice is either that or no of March and April, it was better to take the figures job at all. They are “white van man”. They are those together because Easter came at different times each who, 50 years ago, would have worked in large factories, year. You learnt that because of a large booking in utilities or local authorities, doing manual or craft July, you made more profit than during the rest of the jobs. Often, they have been failed by our education year. The following month, because it was the only 809 Taxation: Families[17 JANUARY 2013] Taxation: Families 810 chance for major refurbishment projects and major account of the tax and national insurance actually expenditure, the figures would look pretty dreadful, paid by the self-employed claimant, at the time they but I still collected my salary. Unlike a person running pay it, that will give at least some measure of relief their own business under these regulations, it did not when the business needs it. Otherwise, the self-employed have any consequences. claimant would be earning less than an employed The real objections to this method of accounting claimant, yet receive less by way of universal credit are that one month is an artificially short period over because of the distorting effect of the minimum income which to draw up a set of accounts, and that cash-in, floor. cash-out does not present a true and fair view as it On pensions, the self-employed are responsible for does not relate receipts and expenses to the period their own pension provision, but they will receive no over which they accrue. The failure to recognise losses recognition for it under the minimum income floor. further distorts the economic picture, and imposing a They will be at a disadvantage over the employed minimum income floor does not allow for events claimant, whose pension contributions will be relieved beyond the claimant’s control. in full as and when they are paid. This particularly applies to farmers. It does not I raised the issue in November 2011 about what take account of the ups and downs in a normal happens when a business suffers a downturn or undergoes trading cycle that are part and parcel of any self-employed a period of economic difficulty. I think I used the business. Legitimate business expenditure is doubly example of a farmer who was affected by foot and limited by the denial of any carry-forward relief and mouth disease in neighbouring stock and was working by substituting the minimum income floor for the net twice as hard but could not move his stock for sale. I profit figure for any month in which the net profit hoped that the minimum income floor could be suspended figure is lower. during periods when the business suffered in such a The accounting method imposed by the regulations way. Assurances were given in the debate that these presents a wholly distorted picture of how the were, business is doing and ignores the economic reality. “issues that we are looking at very closely”.—[Official Report, The minimum income floor will apply to most businesses 1/11/11; col. GC 453.] after a start-up period of 12 months. Originally, each However, no such provision has been made by the claimant was to be allowed one start-up period in regulations. There is no recognition in the regulations their lifetime. Since the consultation in the summer, that a business may experience low or no profits. that has been relaxed in that a start-up period may be The absence of any facility for carrying forward a permitted once in every five years to accommodate loss made in one month to subsequent months remains a claimant who did not succeed in their first attempt a fundamental flaw in the design of universal credit at running their own business but wants to try again. for the self-employed. In discussion, the Government This is a small improvement and should be acknowledged. have appeared to see the need for this facility but have After the start-up period, the minimum income not made any changes because the IT system has not floor will apply to every claimant who is “gainfully been designed to allow carry-forward. self-employed”unless they are subject to no work-related The burdens that the proposed regulations impose requirements, a work-focused interview requirement on the smallest businesses and the disregard for the or a work preparation requirement. A claimant is most basic principles of accountancy will seriously gainfully self-employed if the business is their main hamper claimants who wish to enter work via the employment and is, self-employed route. In many cases, they would find “organised, developed, regular and carried on in expectation of themselves better off on benefits than in work, which profit”. is plainly contrary to the Government’s intention. If the claimant is not gainfully self-employed, they are There are 4.5 million self-employed people in this not subject to the minimum income floor. Instead, country, any of whom may at some point need to they will face work-search or other requirements imposed claim universal credit due to the risk and uncertainties by jobcentre staff and sanctions for non-compliance. inherent in running one’s own business. Self-employment One change since the summer is that in calculating is a viable route out of welfare and into work. I hope the minimum income floor there will be deducted, that the Government will reconsider the regulations “an amount that the Secretary of State considers appropriate to and create a system that is as responsive to the self- take account of any income tax or national insurance contributions employed as it is to the employed and unemployed. for which the person would be liable in respect of the assessment period if they had earned income of that amount”. 12.56 pm Whether this change is good news or not will Lord Greaves: My Lords, I feel out of place on this depend on what amount the Secretary of State speakers list. I looked at it and thought that almost considers appropriate for the purpose. There is a everyone on it apart from me is an expert and they will risk that the Secretary of State will assume that a be bandying figures and statistics around that will self-employed person pays the same amount of tax send my brain numb by the time I stand up to speak. and national insurance, over the same period, as an That is true: they have sent my brain numb. The debate employed person. is full of experts, not least the noble Baroness, Lady In reality, the self-employed pay tax and national Hollis, who introduced the debate, and my noble friend insurance in two instalments, in January and July, Lord German. I have to say that I thought the noble based on their earnings in the previous period. If the Baroness was kinder to the Government than I would Secretary of State considers it appropriate to take have been had I been making her speech. 811 Taxation: Families[LORDS] Taxation: Families 812

[LORD GREAVES] It is fairly clear that somewhere between 10% and I congratulate my noble friend Lord German on 20% of the poorest people in this country are quite introducing a number of things into his speech that deliberately being made poorer by the policies of this would not have been there if it had not been for the Government. If they are not in work, their benefits are presence of the Liberal Democrats in the Government. being cut; if they are in work, they are too poor to If things are bad, they are nothing like as bad as they benefit from the cuts in income tax, because they do would have been had we just had the Conservatives. not pay it, and their benefits are also being cut. The reason why I thought that I should take part I rely a lot on the work of Professor Danny Dorling, comes from my work as a local councillor, where I an incredibly energetic geographer who seems to produce represent one of the poorest areas in east Lancashire. a book every three weeks. He is not one of those Last week, I was watching the television at home. The typical geographers who simply stroll around the BBC in the north-west was doing a week-long series countryside looking at the scenery. It is fairly clear, on food banks in the region. I thought, “Has it really from work that he and others have done, that the levels come to this?”. This country is something like the of economic inequality in this country declined year sixth richest in the world. It is richer than it has ever on year from some time shortly after the end of the been apart from a slight sag in the past five years—it Great War into the late 1970s—inequality being the spread really is slight in historical terms. Has it really come to between the richest groups of people and the poorest food banks now being part of the mainstream culture groups. In the 1980s it got worse; it got steadily worse of this country? I find it extraordinary. during the years of Conservative Government from 1979 to 1997 and it continued to get worse, year on I had made a list in preparation of all the problems year, through the Labour years until 2010. That is that we are experiencing at the moment, but the noble clearly still happening, partly because people at the Baroness, Lady Hollis, dealt with them all in far more top are getting much richer, but also because people at detail and far more expertly, so I will not read them the bottom have not been keeping up with everybody out. But I have one or two points to make. The else and are now quite clearly falling behind. We are changes can all be individually justified, particularly told that the answer lies in social mobility, which I am against the need that the Government see to cut spending, in favour of. However, you can have social mobility in but put together the position is horrific for many a more equal society and economy and in a less equal people. When that is combined with benefits in kind economy. On its own it does not alter the basic facts. provided by local services through local authorities and other bodies, it is made even worse. As a Liberal, I go back to William Beveridge and try to put things in the context of what he said back in I think that it was the noble Baroness who said that, the 1940s. As we all know, he put forward his five giant if you cut people’s benefits, there are serious effects on evils: want, disease, squalor, ignorance and idleness local economies. The fact is that benefits, as a side-effect, from lack of work, which perhaps we would now call are an efficient way in which the Government can put worklessness. His remedies are interesting to read today. money into the economy. Most of the money that Everybody now says that what they want to do—wherever people get in benefits is spent. As that money is spent, they stand on this argument—is based on what Beveridge it has a direct positive impact on local economies. On thought. the one hand we have the Government, with Mary Portas and all the rest of them, saying “Town centres Beveridge proposed that people in work pay a standard are in trouble—let’s have initiatives to help them”. On weekly payment into the social insurance fund and the other hand, they are taking money away from the suggested unemployment payments for people for as very people—certainly in small and medium-sized long as they have not got a job. He also proposed towns—who use the town centres most, because many benefits for pensioners, maternity grants, widows’pensions, of them do not have their own transport to go to the pensions for people injured at work, and so on. What out-of-town or edge-of-town supermarkets and so on. was crucial was his proposal of what he called child The poorest people spend their money and so, simply allowances, which became family allowances and which from an economic point of view, it is a good idea to have now mutated into child benefit. They were at a give more money to them. very much higher level than child benefit has now become. As part and parcel of that, he advocated the I concur with everything that has been said about creation of a National Health Service, so that when some of the quite appalling attacks on poor people you were poorly you got treated for free at the point of that have been made, such as the comparison between need. strivers and skivers, which the noble Baroness, Lady Hollis, called ugly, cynical and indecent. I congratulate The crucial part of all Beveridge’s proposals was her on finding words for that which are appropriate to that payments in all these cases should be at a standard, use in the House of Lords. I tried to think of words flat rate, depending on contributions, with no means but thought that I had better not mention them, tests, which he was opposed to. So many of the problems because any that I would use would be out of order. that we now have in what people call the welfare benefit system—the tax allowances and all the rest—have I recommend to anybody who thinks that the answer come about because people have tried to be too clever is that people who do not have jobs should just get by means-testing this, that and the other, with all the them that they go down to their local Jobcentre Plus, unfortunate side-effects that means tests have. The cleverer have a look at what jobs are on offer and how many of people get, the more they try to finesse the system; the them there are. They will very quickly come to the more detail they put into it, the more problems they view that that is not the immediate answer. create. 813 Taxation: Families[17 JANUARY 2013] Taxation: Families 814

I will give two examples. Instead of subsidising Perhaps I may give some examples that reflect the property, which is what used to happen until about concerns of groups in the voluntary sector which are 20 or 30 years ago, we now have the mantra that in the working with children and families. They include area of housing the people in the houses should be Barnardo’s, the Children’s Society, Working Families, subsidised. The effect of this is the present crazy CARE and Save the Children. Contrary to the housing benefit system, which takes up so much of the Government’s ambition, levels of childcare funding welfare benefit budget and yet is no more than old- may lead to disincentives to work. Under universal fashioned out-relief for landlords. We also have the credit, lone parents with more than one pre-school working tax credit, which is no more than a subsidy to child could face losing a significant amount of any employers who pay low wages. This is the fact of the extra money they earn. I was impressed by the speech matter and the situation that we have got into. I do not of the right reverend Prelate the Bishop of Exeter on know how we will get out of it. I am quite sure, this issue. There may well also be an impact on the however, that we will not get out of it by making the provision of free school meals, which is sometimes the poorest 10% or 20% of people in this country even only good meal that a child will have in a day. Some poorer today. 1.2 million children living in poverty in England miss out on free school meals. The Government seem to be 1.07 pm set on proposing that, under universal credit, families will be entitled to free school meals only if they earn Baroness Massey of Darwen: My Lords, I thank my less than a certain amount, which is another disincentive noble friend Lady Hollis for securing this important to earning more. I take the point made by the noble and stimulating debate and for introducing it with her Lord, Lord Greaves, about the administrative costs of usual immense knowledge and commitment. means-testing. I should like to focus today on the impact of changes to tax and benefits on children. As my noble The plan to cap the uprating of key benefits and tax friend said in her opening remarks, government policy credits for the next three years will mean that almost is likely to be detrimental to children. It is obvious to 20 million adults with children and 11.5 million children say that children are our future, but if we neglect will be affected. This will hurt millions of families who children we will surely be burdened later with possible are already finding it difficult to meet the costs of criminality, drug-taking, other risks and social unrest. food, rent and other basic necessities. For example, by All that is important, quite apart from the vital humane 2015, a lone parent of two young children working as impetus to protect children and advance their well-being a nurse and earning £530 a week will lose £424 a year. and educational opportunities, particularly children Primary and nursery schoolteachers have an average who are vulnerable or deprived. weekly income of £600. Some 150,000 of them will be I declare an interest as chair of the All-Party affected by the cap. The charity Working Families Parliamentary Group for Children. This year we are estimates that around 205 of the 3,000 calls made to conducting an inquiry into what opportunities there its helpline in 2012 were on the issue of benefits and are for children to achieve their potential and into how tax credits. Some 41% of parents in severe poverty children see their needs. We listened to a number of said that they would consider giving up work and children, and it is striking how so many of them place 25% would consider reducing their hours as a result of a huge emphasis on the importance of parents and cuts in the level of support. In times of austerity it can families in their lives, including those children who be difficult for parents to find extra hours of work as have challenging family circumstances. employers cannot afford it. This means that up to 210,000 families with 475,000 children may lose out What happens to those parents and families in on tax credits. Does the Minister not think that the times of austerity must be considered, and I am dismayed Government’s policy is producing a negative rebound? at the potential disruption and depression that may be caused by government policies. Is it not surprising that Parents with disabled children report difficulties Save the Children is, for the first time, focusing some due to the high cost of specialist or one-to-one care efforts on children in the UK, or that, as the noble because there is no extra support in the system for the Lord, Lord Greaves, said, we are seeing food banks in childcare costs for a disabled child. Paying for such unexpected places such as Guildford and, as my noble childcare is turning out to be a huge barrier to parents friend Lady Pitkeathley tells me, in Ross-on-Wye? going into paid work. There is also disappointment It is easy to portray people in unfortunate terms that the principle of universal child benefit has been using easy soundbites which appeal to popular prejudices undermined. Child benefit has been simple to administer, and which are so often inaccurate, and it is interesting has a high take-up and carries no stigmas, and by and to note that many of us think that 27% of all welfare is large ensures that the money reaches the right people. claimed fraudulently. However, the Government’s figure Some families are now going to lose out and the is 0.7%, worth around £1 billion as opposed to the system has been made more complex. It would be £70 billion lost in tax evasion. Further, most welfare interesting to know the administrative costs associated payments go to pensioners. Unemployment benefit with the new system. has fallen to 11% of average earnings compared with Maternity and paternity pay in real terms may 22% in 1979. Therefore, myths abound. The fact is that encourage parents on low incomes to cut short that since 2010 long-term unemployment has increased by important time with a new baby because they cannot 146% and I am told that there are plans to cut local afford it. This may affect early bonding, which is authority budgets by 30%, to the dismay of those working considered by experts to be very important in child to deliver services. All this will impact on families and development. The 1% uprating will impact on those children, and the poorest will be hit the hardest. claiming statutory maternity and paternity pay, which 815 Taxation: Families[LORDS] Taxation: Families 816

[BARONESS MASSEY OF DARWEN] children earning £26,000 a year losing more than £12 a is well below the national minimum wage of £135.45 a week while 8,000 millionaires will be better off by an week. The benefit cap may also apply until a parent average of £2,000 a week. It is neither fair nor just, or reaches the wages level set out in their claimant contract. equality of sacrifice or an equitable sharing of austerity, I am aware that there are some exceptions, but it may that, according to the Institute for Fiscal Studies, force parents who are currently working part time on referred to by the right reverend Prelate in his excellent low wages to seek longer hours, thus affecting family speech, some 7 million working families will be on life. The prediction is that the median income in average £165 a year poorer, while another 2.5 million households with children is set to fall and that child families with no one in work will be £215 worse off. In poverty is set to increase. this context, the new legislation is the last straw on top The tax and benefit changes are significant factors of escalating inflationary increases in the costs of in these trends. The introduction of universal credit food, travel, fuel and heating, and comes on the back may offset them in some cases—for example, it has of changes to housing benefit regulations, the Welfare advantages for those without children and for a couple Reform Act 2012 and the Local Government Finance who are both seeking paid work. I again cite CARE, Act 2012—all thrown at the poor like a series of hand which has challenged the Prime Minister’s statement grenades. that the child benefit charge will apply only to the top Two nights ago I chaired a Roscoe Lecture at 15% of the country. As the right reverend Prelate Liverpool John Moores University, and I declare my pointed out, the charity has figures to show that the interest as I hold a chair there. I had invited John Bird charge is not targeted at the top 15% and will impact MBE, the founder and editor-in-chief of the Big Issue, on many families in the middle income distribution. to deliver the lecture. At the heart of his remarks on The policy takes child benefit from those in the lower Tuesday was the proposition that the creation of a half of income distribution while not taking it from dependency culture has not helped the poor, but quite two-earner families which are considerably richer. the reverse. He said that the Government have, I return to my original concern that the inequity in “created a new class of people who are outside society: workless, tax and benefits that makes children and families broken, and lost to ambition and social improvement”. suffer is morally indefensible and may have long-term But he was not suggesting that the way to tackle this consequences that affect not only children but society. culture is to cut benefits before we have tackled the I look forward to the Minister’s response. fundamental cause. Mr Bird suggested that 450,000 families are on long-term benefits. I invite the Minister to comment upon a statistic he gave, that only half of 1.16 pm 1% of those on long-term benefits go to university or Lord Alton of Liverpool: My Lords, the noble Baroness, into higher education. If that is so, what can we do Lady Hollis, has a long-standing and well deserved about it? Certainly, the disincentive of phenomenal reputation as someone who, both in office and out of indebtedness from student loans is a major disincentive office, has championed the cause of disadvantaged for poorer families, kicking aside the ladder of educational people. I share her basic proposition that the Welfare advancement, with all the concomitant effects that has Benefits Up-rating Bill, to which she referred, is both on social mobility. poverty-producing and risks increasing both absolute Having been the first from my own family to experience and relative child poverty. I strongly believe that the higher education and having grown up in a home without Government need to become far more focused on the a bathroom, and then a council flat—and then, as a root causes of social security and tax credit demand student, being elected to represent a disadvantaged and that their priority should be to make progress on community in the heart of Liverpool, where half the full employment, living wages, affordable housing and homes had no inside sanitation or bathrooms—I have support for children. noticed some fundamental changes in the intervening They also need to be much more aware of the 40 years. One is the disappearance of fathers from the impact of their policies on the vulnerable—a point lives of children and having any involvement in their that has been alluded to by virtually everyone who has upbringing. Some 800,000 children have no contact spoken in this debate—and especially, I would argue, with their father, a point referred by the noble Baroness, on people with disabilities. The Government should Lady Massey of Darwen, in her excellent remarks a note a report that has been released today, The other few moments ago. Many drift into gangs and drug care crisis: Making social care funding work for disabled culture. The Government need to take parenting much adults in England, published jointly by Leonard Cheshire more seriously. I support entirely the recommendations Disability, Mencap, Scope, the National Autistic Society made by CARE and referred to by the right reverend and Sense. I would particularly refer them to the Prelate and by the noble Lord, Lord Bates. chapter headed “Turning back the clock on disabled The second change that I have seen concerns benefits. people’s independence”. Before the 1980s very few people were on benefits. When the Welfare Benefits Up-rating Bill was Working class families, like the one I came from, saw considered in another place, Sarah Teather MP, the them as the Beveridge safety net. The 1980s and mass former Minister for Children and Families, was courageous de-industrialisation changed all that, turning the working and right to vote against it. She was also right to say classes into workless classes and, all too often, into that it is the politics of the playground to paint a benefit-dependent classes—which is why, with 2.5 million picture of scroungers versus strivers. Rather than unemployed and 958,000 NEETs in this country, people caricatures, we need to ask how it can be right to without opportunities for education, employment or promote policies that will lead to a couple with two training, job creation is crucial. 817 Taxation: Families[17 JANUARY 2013] Taxation: Families 818

Where is the present approach taking us? Last year, people to bring their gifts to society and to contribute the implementation of the Government’s policies saw by working, volunteering or being part of their community, a 44% rise in the number of families relying on emergency and to take away their means of doing so. bed and breakfast accommodation after losing their I would also like to ask about the new regulations homes, bringing the total to almost 4,000 people, and and the failure to include the existing qualifying phrase, a staggering 79% increase in the number of people “reliably, repeatedly, safely, and in a timely manner”, visiting volunteer-run food banks—we heard this referred to earlier on—with some 230,000 expected by the end the criteria used to decide whether a person can carry of 2013. out essential activities. Without those words, these guidelines will not be worth the paper they are written This spectre should concentrate all our minds. It on when it comes to tribunals or appeals. I hope that represents not only a catastrophic human cost but also the Minister will give this urgent reconsideration. stands to create profoundly negative economic and To conclude, overall, the impact on vulnerable people social effects in the long run. Considering the numerous of many of these changes is going to be devastating. studies linking unmanageable debt to crime, family These changes are too deep, they are coming too fast breakdown, alcohol abuse and mental health difficulties, and they are already undermining the most fundamental there are clear dangers stemming from the fact that safety net through which no one should fall. It is more than one million people now rely upon payday unacceptable that through job loss, disability, illness loans to cover essential outgoings such as utility bills. or low pay, parents and children are going hungry and Similarly, the hundreds of thousands of children growing becoming homeless. But the facts speak for themselves up in overcrowded homes or going to school hungry and that is the reality for a rapidly growing number. face significantly increased risks of education and With food banks and shelters increasingly overburdened, health problems, presenting obvious challenges further it is now urgent that we repair the damage being down the line. caused to families and to our society. That is why it In this context it is unsurprising that so many was so right for the noble Baroness, Lady Hollis, to organisations working to support poor families have put this Motion before your Lordships’ House today. expressed deep concern at the virtually unprecedented We are all indebted to her for doing so. set of restrictions on the welfare system, which threatens further to weaken the safety net, which has been badly holed. The chief executive of the Cardinal Hume 1.26 pm Centre, which provides a vital lifeline to Londoners in Baroness Prosser: My Lords, I join others in thanking poverty, recently said: the noble Baroness, Lady Hollis, for tabling this debate. “Breaking the link between inflation and benefits before the I particularly thank her for her excellent opening effects of these changes”— speech. to the welfare system— I will direct my remarks towards the situation of “have even been assessed, is a potentially disastrous move that the working poor. Back in the 1980s, at the height of could cause unsustainable hardship for many people who are Margaret Thatcher’s Government’s attack on the funding already struggling to get by”. of public services, a journalist whose name I have I particularly want to ask the Minister about the forgotten coined the phrase, “private wealth and public effects on disabled people. The Welfare Benefits Up-rating squalor”. Fast-forward 30 years, and we are facing the Bill alone stands to impact upon the lives of some 1 same situation, although somehow worse. It is worse million disabled people, adding to the pressures already because over that period the gap between rich and generated by the Welfare Reform Act and associated poor has grown exponentially, so that we now have cuts. One third of disabled people are living in poverty private wealth, public squalor, and private poverty. in the UK and the new legislation simply seems to add Downward pressure on wages has come about for a to their impoverishment. I particularly want to ask variety of reasons. First, there is the reduced ability of about the new personal independence payment, especially trade unions to maintain, on behalf of their members, as it relates to mobility issues, about which I have a wage levels which give workers a fair share of the Question down for a reply during Oral Questions next financial cake, which in turn in the past has provided Thursday. An alliance of disabled people’s organisations pressure on the labour market as a whole, lifting up is extremely concerned about its effects. Can the Minister the pay of those at the bottom end of the scale. confirm the Government’s own prediction, made earlier Organised labour reduces and low-paid, unrepresented this month, that 27% fewer working-age people will be work opportunities increase: the balance shifts towards eligible for the Motability scheme once PIP is fully an inexorable decline overall. The continuing use of rolled out? Disability organisations say that the new technological solutions, and the consequent reduction proposal means that 42% fewer disabled people of in workforce numbers, within certain sectors of the working age will be eligible—an average of 200 people economy—together with the globalisation of huge in every constituency. swathes of manufacturing—have also played a major By changing the criteria for the “enhanced mobility part in keeping down the costs of labour. rate” from 50 metres to 20 metres, many will lose a To add insult to injury, along come the Government vital lifeline. Cars will simply be taken away, while with the bright idea that reducing people’s incomes those who are unable to drive, and use their mobility even further will, first, somehow help to solve the debt allowance for other means of transport, will be without crisis—I am not sure how taking away the ability of the wherewithal to fund privately owned cars or taxis. large swathes of the population to have enough money It is sheer Janus-faced double-speak to tell disabled to spend, even on essentials, will put money in the 819 Taxation: Families[LORDS] Taxation: Families 820

[BARONESS PROSSER] broken kettle or the worn-out bed linen. How are Government’s coffers, but that may be another story—and, these things dealt with when there has been no opportunity secondly, will encourage lazy scroungers to get out of to set money aside? bed in the morning, when in fact two-thirds of the The reductions in value now being proposed to people affected by these cuts are already in work. the weekly incomes of both the working poor and Those affected most by the very wide-ranging changes those who have fallen on hard times through ill and reductions to benefits are working parents with health, et cetera, will indeed cause a crisis—and all the dependent children. What kind of Government decide rhetoric will be that it is their own fault. We need a to target the poorest in society—people struggling to strategy for growth, with a well educated and trained keep their heads above water, balancing the payment workforce and high-quality employment opportunities. of the electricity bill against the cost of the supermarket That is what will deal with the country’s debt and the shop? Parents are having constantly to tell their children, deficit. “No, we can’t go to the football match” or, “No, we can’t go on holiday like your friends do”. Do Ministers 1.33 pm have any idea how soul-destroying it is never to be Lord Touhig: My Lords, I join all noble Lords in away from the fear of not having a penny piece, and thanking my noble friend Lady Hollis for securing this always having to make do and mend, although you are debate. No matter where we sit in this House or what going out to work and trying your hardest? Do the our political affiliations are—or if we have none—I Government seriously think that the children of those think we all agree that the noble Baroness, Lady families, starved as they are of the opportunity to Hollis, brings huge background knowledge and flourish and grow, are being given the start in life that commitment to trying to solve some of the problems will enable them to become tomorrow’s committed that we are talking about today. and fully rounded citizens? On Monday, I asked the Government, Noble Lords should look at the array of changes “what is their estimate of the saving to public funds as a result of taking place. Working families are being bombarded the work of unpaid carers in the United Kingdom”. with requirements to reduce their expenditure and/or In answering, the noble Earl, Lord Howe, said: to increase the number of hours worked each week. How easy is it for a mother, for example, to find an “the Government themselves have not estimated savings to public funds as a result of unpaid carers’ contribution to care and extra eight hours work each week and what does that support”; mean for childcare arrangements and costs? These households, which are at the bottom end of the income but he added that, scale, lose out particularly badly by the use of the CPI “there can be no doubt about its huge value to those who receive for uprating purposes, from cash freezes to child benefit care and to the wider community”.—[Official Report, 14/1/13; col. 470.] and working tax credit. When replying, can the Minister please not say that it is all right because of the changes Why, then, when a disabled youngster in the care of to the tax system for lower earners? Many of these his or her family becomes a disabled adult, is he or she families will have had an income below the personal considered a separate household from the caring parents allowance anyway. with whom they live, making the parents subject to the housing benefit cap? The demonisation of the recipients of welfare has The Government have said that a family with a been particularly upsetting. I firmly believe that the disabled youngster and in receipt of disability living vast majority of individuals would much prefer to be allowance would not be subject to the cap, and to able to earn sufficient so that they do not have to get me that seems right and just. But for the life of me I involved with “the social”, as it is known. Most folk cannot understand why this situation changes when want financial independence and want their children the self-same disabled child becomes a disabled adult. to have a better life than they have had. There will of On the Government’s own admission, around 5,000 course always be a small minority—the workshy and carers in the United Kingdom will see their housing the idle. That has always been an issue, but it must be benefit capped. It will mean that the average kept in perspective. They are a tiny minority. We affected caring family will see its financial support cannot have a low-wage economy and a social cut by £87 a week. The Work and Pensions system which then blames the low-paid for their own Minister, Esther McVey, said in the other place on misfortune. 10 December that families that would be exempt from Finally, I think that I am probably the only Member the cap would be, of this House who has spent a long time reliant on “those on working tax credit, all households with someone who is welfare benefits. My husband became paralysed at the in receipt of a disability-related benefit, war widows and widowers, age of 28, and I spent eight and a half years looking and those in receipt of war disablement pensions”.—[Official after him and my three young children. I can tell the Report, Commons, 10/12/12; col. 15.] House that relying on welfare is not a lifestyle choice. I praise the Government for that—I think it is fair and We were what is known as “the deserving poor” and reasonable. That is why I cannot believe that the were therefore treated with a measure of respect, and Government really intended to penalise some 5,000 probably sympathy. I also had a supportive, although families in the way that they will do with the regulations far from well-off, family. However, it should be borne that have been published. I urge the Minister to look in mind that welfare payments are calculated to leave again at this and accept the view from Carers UK, no space in the personal budget, so that the smallest which says that it is, incident becomes a crisis: the lost school coat, the “simply unfair to protect some carers and not others”. 821 Taxation: Families[17 JANUARY 2013] Taxation: Families 822

I again refer the Minister to the comments from three carers under the age of 40 said that they would Esther McVey on 10 December, when she said: like to work, but cannot do so because of their caring “I will reiterate what a household is: a household is a basic role. Many more have had to give up paid work, family unit, and for the purposes of paying out-of-work benefits reduce hours, work part-time or take lower paid jobs that will be a single adult or a couple and children”. in order to care for someone with autism. However, she added that, I think that, at this time, it is also worth remembering “once another adult is in the house, that is a separate household”.— that with local authorities raising eligibility thresholds [Official Report, Commons, 10/12/12; cols. 15-16.] for social care support, and many services such as day When that adult is the disabled child whom they have centres closing down, many carers are likely to find cared for since birth, it is plain daft to treat that person themselves missing out on the services they need. Let as a separate household—frankly, it is barmy, and it is us make sure that we do not make life even harder for an insult. As this stands, a caring family is being family carers who, in fact, are the backbone of care in penalised simply because the disabled child grows up this country. into adulthood. That cannot be right. In fact, I believe it is a tax on disabled people growing up. 1.40 pm I should declare an interest as a vice-president of the National Autistic Society. Families affected by Lord Stoneham of Droxford: My Lords, I join in the autism will be hit particularly severely because, according congratulations for the noble Baroness, Lady Hollis, to National Autistic Society research, they spend longer not only on this debate but on the leadership that she caring and therefore have less time for employment. provides the House on forensic analysis and social Across the United Kingdom, 21% of all carers spend concern. I am sad that I cannot be completely alongside more than 50 hours a week caring, but of those caring her today on the issue before us. I would like to follow for someone with autism, 83% say they spend at least by setting some sort of economic and social context, 50 hours caring. This was highlighted in Who Cares following in the footsteps of my noble friend Lord for the Carers?, a National Autistic Society document Bates. published in 2009. Caring for someone with autism is Although government is never easy, it is always therefore disproportionately intense in terms of hours. exceptionally difficult when the economy is bordering In return, if the carer spends at least 35 hours a week on recession and there is an overspending deficit to caring, they receive the princely sum of £58.45 a week clear up at the same time. We will never really know, carer’s allowance. This cap will therefore disadvantage but I suspect that without the formation of the coalition carers who spend at least as many hours caring as and a deficit-reduction strategy we could well have many people work in a week and are therefore themselves had turmoil in the markets and the IMF knocking on unlikely to find employment. That illustrates the reality our door. Interestingly, that was precisely the scenario of caring for an autistic child or adult. that our opponents in the general election said would Perhaps I may briefly touch on two case studies. happen with a coalition—but it has not happened. Ann and Laurence have four sons. Two of them—Peter, As we look at the impact of tax and benefits 31, and Stephen, 21—have Asperger’s syndrome and changes on families, we therefore need an economic ADHD and live at home with their parents. Although context for all the decisions being made—and the highly intelligent and educated to MSc level, Peter economic context has been dire. There has been a huge struggled for three years to get a job until his mother adjustment in living standards, with a fall of more helped him find one as a teaching assistant. Stephen is than 7% overall since 2009. In fact there has been no less able to succeed academically and will never be able growth in real income for the median income earners to live independently. His mother describes the challenge: for a decade. This was inevitable when economic growth “When you have your children you think you will nurture has been subzero. Households have not only had to them and teach them to become independent like my parents did bear the burden of the national debt reduction; they with me. But that’s not the case. have also had to reduce their own personal household I wouldn’t expect to be doing the things for my adult children debt, following a decade of economic growth built on that I’m doing. That’s a carer’s role ... My fear is that one of us the shaky foundations provided by unsustainable huge will get ill and we’ll have to care for that person plus the two boys, growth in personal credit and debt. and that will be difficult”. The European meltdown and rising commodity Mark and Cathy have a six year-old called Malachy, prices, particularly energy, have compounded the economic who has classic autism. He is non-verbal and impact of the UK recession. This has undoubtedly led communicates through his own invented sign language. to an adjustment of the Government’s deficit strategy— Caring for Malachy is exhausting and relentless. Mark not to plan B, but actually to one which closely follows often goes to work having had just three or four hours the strategy set out by the Labour Chancellor Alistair sleep. He and Cathy rarely have time to do the normal Darling. We will be very keen today to hear the views things that couples do, such as go out for an evening. of the noble Baroness, Lady Sherlock, telling us where Mark describes the challenge as follows: she will make the savings to replace the cuts that they “Malachy’s autism and difficulties [are] like a time bomb oppose. within your family. He completely dominates everyday life. It permeates my employment. Cathy had to give up work. It permeates Two other points need to be made about the economic the situation with the two younger children … he gets a lot of context, the first of which is on mortgages. The confidence one-to-one attention”. in the Government’s deficit reduction strategy has led Things are already difficult for carers. A National to the continuation of low interest rates. This has been Autistic Society survey last year showed that 74% of critical to those families who otherwise would have carers do not receive any support at all, and one in been embroiled in debt repayment problems, negative 823 Taxation: Families[LORDS] Taxation: Families 824

[LORD STONEHAM OF DROXFORD] This action, however, is matched by action that will equity and very severe impacts on family budgets. assist families. As we have heard today, the rise in the That was the scenario in the last recession in the early basic tax allowance by 45% in three years is unprecedented. 1990s and it could easily have happened again if Anyone on the minimum wage has seen their tax bill interest rates had moved up to 5% or 7%. Those with halved. The Labour Government gave a high priority mortgages—and they are not simply the well off—have to families through the growth of family credits. The benefitted from those low interest rates. That should coalition has prioritised pensioners, who would otherwise not be forgotten, and low interest rates must remain have been very vulnerable to energy prices going up, an important objective. and whose incomes have fallen behind income growth. The triple lock meant that, last year, pensions went up The second issue is employment. Growing by 5.2%, and will go up in April by 2.5%. It would unemployment is always the great fear associated with have been much less under the previous Labour regime. recession. We can look at the impact of benefits on family incomes but this assumes a static situation. In Action on current pensions is being matched by reality, the situation is very fluid. People move in and fundamental reforms on the single-tier pension and, in out of the labour market. Unemployment figures used due course, in seeking to resolve the social care issue to be explained to me as being like a bath: unemployment for the elderly which was left hanging by the previous figures rise like water in a bath when the flow into Government. It has been a major worry and concern unemployment continues; but the flow out of for growing numbers of families with elderly relatives unemployment is plugged because the vacancies disappear that these issues have not been resolved. The wholesale in weak economic conditions. reform of the welfare system will follow with the reform of universal credit. Who would have thought This recession has been marked by a much better that a coalition could take on this issue—which James performance on employment at a time when the working Purnell failed to persuade Gordon Brown’s Government age population has increased by 350,000 a year, more to tackle because there were thought to be too many than we could have ever anticipated. There is nothing more losers than winners in a reform needed to simplify, worse for an individual’s psyche than losing their job. target resources on the poor and reduce disincentives Self-respect and purpose go with being in work. There to work? will be arguments about the type of jobs being created. The noble Baroness, Lady Jenkin, mentioned William However, the figures show that there are 1 million Beveridge. Today is the birthday of Lloyd George. I more jobs in the private sector and the possibility of think that they would be justly proud of the scale of these jobs—whether full or part-time, permanent or the reform that the coalition Government are undertaking agency—is encouraging and vital for families up and at this very difficult time. Reform and change are down the country, north as well as south. always difficult. It is made even more difficult when This growth reflects incredibly well on our flexible money is short and there are insufficient funds to help labour markets. It has allowed adjustments to be made oil the wheels of change. However, no one can say that to keep people in jobs. It has created many new the coalition Government are not seeking to combine opportunities which otherwise would have been denied economic competence with a social concern for fairness to people on the fringes of the labour market. It also which is aimed at improving the outlook, security and undermines the arguments that say that our labour well-being of families up and down this land. market is not sufficiently flexible and that there should be more attempts to increase flexibility, thereby 1.49 pm undermining basic protection rights. Lord Graham of Edmonton: My Lords, it is a privilege This leads to another point—that recessions are and a pleasure to take part in this debate, which was so always bad things. It is why boom and bust is so well introduced for our benefit by my noble friend damaging to the poorest and most vulnerable. They Lady Hollis. I have known Patricia for many years. are the ones who suffer when the flows into and out of She is well—if not uniquely—qualified because in her the unemployment bath move adversely. The poorest city of Norwich she was the leader of the group. When and less skilled and those who are less mobile will we had a Labour Government she was a prominent always bear the heaviest burden. That is fundamentally Minister. It is the way of this House to bring together why putting the national economy on a secure path of men and women who can speak from the heart. I growth is so important, and important to them. That cannot believe there is a person on the other side of is why sustainable growth must now be the overriding the Chamber who heard the noble Baroness, Lady priority for the coalition. Hollis, who did not agree with much of what she said. However, despite the difficulties and the economic The problem is, we are where we are now and constraints that the coalition Government are facing how do we get out of it, from the point of view of they are also confounding their sceptics by a massive families? I cannot possibly enter into the finite arguments programme of social reform that will benefit vulnerable about which policies are right or wrong. I have an families. We are being, and will be, criticised for the inclination as to where I stand, as does everyone in this tough decisions that we have had to make on work-related House. Since we are talking about families, I thought I benefits. However, this criticism ignores the relative would mention that I am the eldest of five children. In rise of benefits compared to the position for those 1930 my father was made unemployed and he did not who are reliant on earnings over recent years when get another job until the war started in 1939. It was real incomes have been falling. At some stage an tough. In 1937 he had 37 shillings a week to feed the adjustment was going to be on the agenda. seven of us. 825 Taxation: Families[17 JANUARY 2013] Taxation: Families 826

When it comes to a level of poverty, it is very problem. I am not blaming one or the other, but the difficult for someone like me to believe that people are solution that we have had from the noble Baroness, in poverty with a capital P now. Everything is relative. Lady Hollis, is well worth studying. There are people sitting on both sides of the House When I was working for the Co-op, I was paying who have been Members of Parliament and know out the dividend and there was a big queue. I looked what I mean when I talk about surgeries. When I up and there was Jackie Milburn, the hero of Tyneside. attended my surgeries in Edmonton, I would meet He said, “Can I have some money from this passbook?”. people who had big problems, mainly to do with I said, “I’m sorry, you can’t”. He said, “Why not?”. I housing but also to do with work. Twice in my time I said, “Because it is in your wife’s name. You take this left the surgery, went to my car and cried because I form, get her to fill it in, come back and I will pay could do nothing about it. you”. He came back the next day and said, “How much I very much hope that we are moving towards a can I get?”. I said, “There’s £7 and 17 shillings in the stage in this argument where calling the other side book; I can pay you £7 and 14 shillings because you names is not the solution. We are all politicians and we must leave three shillings in the book”. He said, “That’s all have a point of view but we will not solve the a week’s wages”. Playing for England and Newcastle problem if we build up resentment. I was born in in 1948-49, he was on the princely sum of £8 a week. Newcastle-upon-Tyne, not far from Jarrow, where the We all have to try to take account of comparisons. marchers came from. That was how they manifested I mentioned the Co-op because the Co-operative themselves. We all know that at the end of the day it movement deserves a lot of credit for starting self-help. did not do very much to change the Government. Most people who worked in the Co-op were members I say to this Government that, of course, most of of the Co-op. They would leave their dividend in the the time they are the masters, but not all the time. I book until they had £4 or £5 and that was their nest sense that there is resentment with a capital R building egg. I think that the Government could do more to up among more and more people, many of whom energise ordinary people to use the argument and the voted for this Government and are now suffering from instrument of mutuality, credit unions and things of the actions they are taking. I am not even arguing that kind. I hope the Minister will be able to recognise about the actions because if there was a Labour that there is a job of work to be done there. Government we may very well have carried out some In conclusion, there is no complete answer to this of the policies. problem. I can understand people who think one way When I was a boy, I came home from school and or the other, but in my view we should be past blaming said to my parents, “Look what I’ve got”. It was a pair the other side for what happened. All Governments of boots. My dad said, “How did you get those?”. I find things that need to be done. The problem for this said, “Earlier today two policemen came into the Government is that they are not doing what they said classroom. They whispered to the teacher and the they were going to do. I rest my case. teacher called us out: Tommy, Teddy, Billy, Wilfie”. On Tyneside, you did not say Wilf or Tom; it was 1.59 pm Wilfie and Tommy. So I went out and there were two Baroness Sherlock: My Lords, what a wonderful policemen with a great big wicker basket. In the wicker place to start. I would certainly not want to go back to basket were pairs of boots. The policeman threw a when my noble friend Lord Graham or the children of pair to me and said, “Try these on”. On Tyneside, in today would have no boots, but maybe a place where my station in life, your footwear was what we called Wayne Rooney got £7 a week would be a country I sandshoes—other noble Lords might call them plimsolls. would think about living in. They were sixpence a pair from Woolworths and when they wore out you put a piece of cardboard in the Like other noble Lords, I am most grateful to my bottom. When the cardboard wore out, you put another noble friend Lady Hollis for introducing this debate so piece of cardboard in, until your mam could find powerfully. If I were the Minister I would be getting sixpence. anxious already about how I would respond to that rather forensic opening statement. I congratulate her, So I brought the boots home and my dad said, too, on choosing the topic and expressing it in a way “Where have you pinched them from?”. I said, “I that has drawn so many powerful speeches from around haven’t pinched them, Dad, I was given them”. He hit the House. In a debate such as this, I am proud to be a me again and said, “Tell the truth”. Finally they Member of this House. I have learnt something from realised I was telling the truth. My dad smiled; my every speaker and having the opportunity to come mam cried. Years later, when I was in the Royal into the debate at the end is really a privilege. Marines, I came home and said to Mam, “Remember It is clear there is widespread concern about the the time I brought the boots home and you cried?”. impact of tax and benefit changes on families. Given She said, “Yes”. I said, “Why did you cry, Mam?”. She the rather forensic opening assault by my noble friend said, “Because I knew that the teacher had been asked Lady Hollis, the Minister has some rather big questions to send out of the room the children that she knew to address. I was impressed that my noble friend had were from poor families”, and that she had cried from done so much spade work in trying to dig out the shame. cumulative impact on families of successive tax and If anyone wants to ask me why I am Labour, why I benefit changes since 2010. She mentioned a whole am a socialist, it is because we lived in a society that number of cuts that have been made but there are might have done something but did not care. It is more. As well as those changes she mentioned, the about time all the parties recognised that it is a big Government have abolished the health in pregnancy 827 Taxation: Families[LORDS] Taxation: Families 828

[BARONESS SHERLOCK] What, then, of the opportunity to consider how the grant and the baby element of child tax credit; they have Government make sure that the system is, cancelled the planned toddler element of child tax “fair to the working people who pay for it”? credit; the government contribution to the child trust Tax credits, and all those payments I listed at the fund has gone; the Sure Start maternity grant is not beginning of my speech, are or were available to there for second and subsequent children; and the working parents. The Minister may argue that surely Government are introducing hefty charges for using the Welfare Benefits Up-rating Bill will rebalance things the Child Support Agency. by giving people on benefits only a 1% increase. Again, All of that makes me worry about the extent of the no. As the noble Lord, Lord Alton, noticed, although burden being borne by women and children. This was it is true that some 2.5 million workless households highlighted very well by my noble friend Lady Massey will find their entitlements reduced by an average of of Darwen. If I were a mum of young kids, out there £215 a year, 7 million households, about half of those on a modest income, I would be starting to wonder with somebody in work, will lose an average of £165 a what David Cameron thought about me and why so year. As a number of noble Lords have commented, I much of this burden seems to be borne by people like am sure we have all seen the report from the Children’s me. This is before we discuss the move to uprate Society which describes the kind of losses that occur. benefits by just 1% for the next three years. Would the A second lieutenant loses £552 a year; a nurse or a Minister like to comment on Tuesday’s admission by primary school teacher lone parent loses £424. These the Government in another place that that 1% change people are not sleeping off a life on benefits but they would increase child poverty by 200,000 more than would will really pay the price. have been the case if benefits were uprated by CPI? As we heard from my noble friend Lady Hollis, in What is the Government’s strategy on tax and the case she cited of a Daily Telegraph reader, tax benefits for families? The Chancellor of the Exchequer, credits have made a real difference, in particular to Mr Osborne, explained this very well. Introducing the enable people with children to move into low-paid Autumn Statement in another place on 5 December, work. Not only do they help those who cannot work he said: full-time, they have also helped households where only “Those with the most should contribute the most, and they one member of a couple is in work—the groups of will, but fairness is also about being fair to the person who leaves concern to the right reverend Prelate the Bishop of home every morning to go out to work and sees that their Exeter and to the noble Baroness, Lady Jenkin. The neighbour is still asleep, living a life on benefits. As well as a tax Government have taken the decision to move across to system where the richest pay their fair share, we have to have a welfare system that is fair to the working people who pay for universal credit, to replace all these benefits. I see the it”.—[Official Report, Commons, 5/12/12; col. 877.] noble Lord, Lord German, has confidence that all will Let us test the Government’s record against that be well in those days and I very much hope so, statement. First, will those who have the most contribute although I confess that I am getting worried about the the most? The Government decided to reduce the top repeated reports of delays and the constant snipping rate of income tax from 50% to 45%, a move that will away at the support within universal credit—not as give a major tax break to high earners including, as worried as the Minister, perhaps, but he can tell us the noble Lord, Lord Alton, explained very clearly, more of that later. giving 8,000 people an average tax cut of £2,000 a If the Government are confident and want to invest week. This is at the same time as introducing a Bill in universal credit because it will help people to move that would give someone on jobseeker’s allowance an between welfare and work, why are they doing so increase of just 71p a week for three years. much to undermine work incentives and cut the payments What, then, of the personal tax allowance increase to low-income families in work? How can that make that was advocated so ably by the noble Lord, Lord sense? When Ministers say, as they often do, that German? Does that help the poor? Sadly, it does not. social security spending is unsustainably high but fail The nature of tax allowances is that everybody who to be honest about the drivers for that spending, not pays tax benefits from them and the poorest do not, a only is that bad politics but it will cause them to make point clearly made by the right reverend Prelate the the wrong policy choices, which is even worse. One Bishop of Exeter and the noble Baroness, Lady Jenkin. reason spending on out-of-work benefits is higher The Child Poverty Action Group calculated that a than the Government want it to be is that unemployment working family eligible for both housing and council is higher than the Government predicted, and pursuing tax benefits will gain just 13p a week from the extended economic policies that make the recession worse or personal allowances. The much quoted Institute for longer and do not promote growth are likely to make Fiscal Studies noted that households towards the bottom that situation worse. of the income distribution, The Government have made some decisions about “benefit relatively little from the increase in the income tax their work programmes. They abolished Labour’s personal allowance, as many individuals in these households successful Future Jobs Fund and their own Work would have had a personal income below the allowance (i.e. they Programme has been shown to be worse than doing would have paid no income tax)”. nothing. I regret to say that I read in the Guardian The IFS continued, this week that the Government’s much vaunted “Households in the middle and upper-middle of the income unemployment figures include some 20% of people distribution benefit the most as a percentage of income from the who are in fact on job training schemes, most of them increase in the personal allowance”. still claiming jobseeker’s allowance. The Government So, that is not so good on those with the most paying need a strategy other than simply blaming people for the most. the fact they have lost their jobs. As a country, we need 829 Taxation: Families[17 JANUARY 2013] Taxation: Families 830 a strategy to go out there to pursue growth and create I shall set some context for the debate before I try to jobs, as was so well described by my noble friend deal with as many of the points raised as possible. The Lady Prosser. We also need measures to support arguments for our programme of tax and welfare those who are long-term unemployed. There are reform are well rehearsed. We have heard much discussion currently more than 130,000 adults over the age of in the media, in Parliament and elsewhere on the 25 who have been out of work for two years or more. I welfare and tax policies that the Government have share the view of the noble Lord, Lord Bates, that planned. However, I think that it is worth me touching people who can work should work. Labour had on the rationale for our programme of reform. said that if it was in government now, it would We have already made significant progress in tackling introduce a two-year compulsory programme; when the fiscal challenge that we faced when we came into someone had been on jobseeker’s allowance for two office. We inherited the largest deficit in more than years, they would be in a compulsory job. That would 60 years and, since then, welfare spending has risen have tackled the question of long-term youth from 11% of GDP in 2007-08 to more than 13% today, unemployment. including pensions and working-age payments. In a I have focused on working families not because I constrained fiscal climate, this puts real pressure on want to demonise or marginalise those who are not in key public services and is unsustainable. The deficit work, but to try to point out that the tendency to has now been reduced by a quarter, and we have imply that the entire social security bill is spent on a created more than 1.2 million private sector jobs. Even bunch of idle layabouts and is paid for by hard-working if we play around with the small anomaly of those people is at best disingenuous and at worst playing who are on skills training, there has been a huge politics with the lives of struggling families who are increase in private sector jobs. already finding it very hard to make ends meet. My The noble Baroness, Lady Hollis, raised a question noble friends Lady Prosser and Lady Donaghy have about cumulative impacts, and I was fascinated by her explained how tough life can be for struggling, low-income sums on this. However, I need to point out that this workers, either in employment or self-employment. Government publish impacts of benefit and tax changes The last thing these people need at the moment is for alongside each Budget and Autumn Statement. That the state to take away from them some of the bit of is something that previous Governments did not do. help they have which is just about helping them to make that transition. Baroness Hollis of Heigham: Is the Minister Statements such as that from the Chancellor fail to acknowledging that the Government have not published acknowledge that when unemployment is high there a cumulative analysis of the cuts, benefits and tax are people claiming benefits who, before they were changes since 2010? If he is so doing, which I think is made redundant, were paying tax to fund them and what he has said, it is still done slice by slice. Can we will do so again. It also fails to acknowledge the hope that he will do so—will he give a commitment to disabled people who will clearly struggle, a point made do so in future? very well by my noble friends Lord Touhig and Lady Pitkeathley and by the noble Lord, Lord Alton. I would be grateful if the Minister could confirm what Lord Freud: My Lords, it is bluntly impossible to do will happen to disabled people who, even if they a total cumulative assessment. I have looked at doing receive protected benefits, often get 70% of their income it, and you do not know what to put in and what to from benefits which will be hit by the 1% limit. leave out. No one has done it in the past; it is not I finish where this debate started. The analysis of possible. Doing it year by year, as we do, is the best we my noble friend Lady Hollis was very powerful. I urge can do—and it gives a fair view of what happens in a the Minister to tell the House today whether he accepts particular year. her figures for the impact of the Government’s changes I shall continue. While we are taking action to to tax and benefits. If he does not, will he tell us when reduce the deficit, we have continued to support families the Government will publish their own analysis of all by cutting tax for more than 24 million working they have done to families in Britain? In Britain today people, lifting 2 million of the lowest-paid workers it seems that we can afford tax breaks for millionaires out of income tax altogether. Further freezes in but a food bank is opening every three days and a council tax this year will help families with the cost million people have resorted to a payday loan just to of living by keeping the cost of council tax bills pay their rent or mortgage. I invite the minister to down. Here I pick up the point made by the noble explain those priorities to the House. Baroness, Lady Pitkeathley, about localising council tax support. That is being done because it is at the local level where the need for particular support is best 2.09 pm understood, and we have announced additional funding The Parliamentary Under-Secretary of State, Department of £100 million to support that process. More widely, for Work and Pensions (Lord Freud): My Lords, this we are investing heavily in low-income families by has been an interesting and important debate, and I supporting the most disadvantaged through every stage am grateful to all those who have contributed. The of their education. noble Baroness, Lady Sherlock, referred to the quality On the question raised by my noble friend Lady of the debate; there was something interesting in all Jenkin, the right reverend Prelate the Bishop of Exeter, the speeches, which is not always the case. I therefore and my noble friend Lord Bates, the Government thank the noble Baroness, Lady Hollis, for securing remain committed to recognising marriage in the tax the debate. and benefits system. That is as far as I can go today. 831 Taxation: Families[LORDS] Taxation: Families 832

[LORD FREUD] her that I am aiming to introduce something for that On the point raised by the right reverend Prelate on to work efficiently; that will be in time for when the child benefit, it will be completely removed only from people who need it will be using it, so I hope that I can families that include someone earning over £60,000, reassure her on that important point. and 90% of families will continue to receive child benefit. In the Autumn Statement, the Chancellor announced It is clear that decisive action is needed to control measures to tackle the rise in spending in benefits and the damaged and hugely expensive welfare system that tax credits by increasing the majority of working-age we inherited. Labour increased spending on benefits benefits by 1% for the next three years. The savings in and tax credits by £75 billion and, in real terms, that Statement amount to £2.8 billion in 2015-16. We expenditure on all working-age benefits increased from are aiming here to strike the right balance between the £59 billion in 1997-98 to almost £95 billion in 2010-11, support we provide and the need to tackle the spiralling in today’s money.These increases are simply unsustainable. cost of the welfare bill. Picking up the point made by In tax credits, spending increased by £23 billion in real the noble Lord, Lord Alton, on disabled people, we terms between the same two dates, which meant that are protecting those elements of ESA support, the nine out of 10 families with children became eligible disability elements of tax credits and the main disability for tax credits—a point made by my noble friend Lady benefits—DLA, carer’s allowance, attendance allowance Jenkin. In some cases, families could receive more and incapacity benefit. While I am discussing the than £70,000 in earnings and still be entitled. It is clear points made by the noble Lord, Lord Alton, about that, given this level of generosity, we could not protect disability—picking up his query on PIP—I suspect we child benefit and tax credits from the need to make will have a chance to talk about that more next week. welfare savings. There is not a difference: the 50 meter to 20 meter The Government have not shied away from change does not create any substantial difference in acknowledging that tough decisions are needed, and entitlement. I will be able to go into that in some more we are committed to ensuring that savings measures detail. are taken in the fairest possible way. That is why the Although the Government are committed to 10% richest households will contribute most as a supporting working families, it would be unrealistic to result of the tax and benefit changes that we are exclude that group entirely from our savings measures. making. My noble friend Lord German inquired about Although some families will be affected by the tax that. Overall, as a result of recent changes, we may credit and child benefit changes, we need to put this have reduced the marginal rate from 50% to 45%, but into context: working households will gain by an everyone in this House will be familiar with the impact average of £125 in 2013-14. Households will, on average, of the Laffer curve. What really counts is how much gain—no matter where they sit in the income distribution. total tax is taken from the richest; a quarter of all income tax is paid by the top 1% of earners, and the A lot has been made of the suggestion that 81% of top 5% pay about £50,000. In practice, our changes the £1 billion or so raised by the tax and benefit mean that, overall, the richest will pay £1,000 a year changes will come from women. However, the analysis each more in tax, not less, as has been claimed. underpinning the 81% figure misrepresents the true It is reasonable to expect the richest to pay their fair impact of welfare reforms on women. It assumes that share, and it was equally important that we took because the payment of child benefit is to women, its action to ensure that people on benefits did not receive restriction hits women; but the reality is that in many support that far outweighed the income received by cases it goes into households. The real figure, if you do many families who do not rely on benefits to get by. that analysis, moves from the 80% or so figure to the We have, for example, done away with the frighteningly 60% or so figure. The Government continue to support high rates of housing benefit in the private rented women and their families through their tax; 80% of sector, and from April this year we are applying an households with children with see their tax credits overall benefit cap so that households on out-of-work increase. The across-the-board freeze in council tax benefits no longer receive more in welfare payments bills will help families with the cost of living. than the average weekly wage for working households. Picking up the point made by the noble Baroness, The year 2013 is pivotal for welfare reform. The Lady Pitkeathley, on PIP for carers, I remind her that introduction of universal credit and the personal we are committed to linking carers to receipt of either independence payment in April will kick off the most rate of the daily living component of PIP. That is the fundamental reforms of working-age benefits for underlying reason why the impact assessment published generations. I am pleased to tell my noble friend Lord in May 2012 showed that broadly that the same number German that we aim, still on time, to start universal would be entitled to the carer’s allowance. Of course, credit on 29 April as a pilot, moving to a national continuing on her theme, where a carer lives in the basis in October. The universal credit system creates a same household as someone who is disabled, the benefit seamless system of support to make work pay. People cap will not apply anyway, because that is one of the will be able to keep more of their income as they move exclusions. into work, and it delivers a smoother and more transparent On childcare, we are spending an additional scheme that does away with the administrative difficulties £200 million in universal credit and the focus of that is created by switching between benefits and tax credits. on families who work fewer than 16 hours a week. The noble Baroness, Lady Donaghy, made a particular This investment will mean that 100,000 more families point on universal credit and the self-employed. She will be helped as they move into work. The Childcare made a point about the carry-forward, and I can tell Commission has been considering the cost of childcare 833 Taxation: Families[17 JANUARY 2013] Taxation: Families 834 in England and we expect its report to be published noble friend Lady Sherlock on her very impressive and soon, so there will be further developments on that. superb debut on the Front Bench. It was an admirable Turning to child poverty, by the relative income wind-up speech and we are indebted to her. All our measure, the previous Government may have made congratulations go to her. She absolutely rightly drew some progress in moving children from out-of-work on the speeches of my noble friends who talked about households out of poverty, but the effect on children carers, the self-employed and low earners, as well as from in-work families was considerably less. As my disabled children and their families who are worried as noble friend Lord Bates pointed out, work is the best their children become adults. My noble friends will route out of poverty. However, only 13% of the reduction allow me therefore not to repeat what she has already in child poverty between 1998 and 2010, came from said. I want to take one or two minutes—I promise not this fundamental route of families moving into work. to take any longer—to pick up on one or two points That is where universal credit is so important: our made by those sitting on Benches other than my own. estimates are that up to 300,000 more people will enter I welcome the speech of the noble Baroness, Lady work as a result of the introduction of universal credit Jenkin. Like her, I support universal credit and, like through improved financial incentives alone; 75% of her, I prioritise the support that we need to give to the gainers from universal credit are in the bottom families. I was sorry that she reiterated the point that 40% of the income distribution. tax credits had created welfare dependency. As my Universal credit will make it easier for people to noble friend Lady Sherlock said, the whole push of understand the level of benefit to which they are tax credits was to make work pay—a philosophy that entitled—compared to the current complex system of goes straight through from tax credits into universal benefits and tax credits—and significantly improve credit. I hope we do not get that argument repeated the take-up of unclaimed entitlements. That is a powerful again. tool in tackling poverty, because in 2009 it was estimated As I expected, the noble Lord, Lord German, that 400,000 of the people living in relative income emphasised the value of the tax allowance rise. Of poverty were doing so because their families were not course, I am pleased about that. However, I remind the receiving all the benefits to which they were entitled. House of the effect on someone working full time on a I need to point out the importance of our White minimum wage—the security guard I quoted. That tax Paper on pensions, published earlier this week. The allowance increase is worth £1.71 a week. That is reforms will give a boost to the people who lost out on before the £30 of other benefit cuts kick in. The noble the additional state pension in the past, such as low Lord, Lord Bates, drew on the argument that the earners and self-employed people. About 750,000 women economy is in such a state and the deficit is so high who reach state pension age in the first 10 years after that poor children must be made poorer so that the the single-tier pension is introduced will receive an rest of us can be made more prosperous. He failed to average of £9 a week more in state pension because of address the point that the big increase in benefit the single-tier valuation. In response to the noble expenditure—which, pace the noble Lord, Lord Freud, Baroness, Lady Hollis, this Government are committed I welcomed—has been driven by the increase in pensions to protecting pensioners—much thought she may resent spending, and that the amount of GDP going to those it. We have legislated to restore the link to earnings for of working age on social security benefits has fallen the basic state pension, and are committed to the since 1994 from 8% to 5%. It is simply false to say that triple lock. that expenditure is unsustainable. It is about political On the point raised by the noble Baroness, Lady and moral choices. However, he is right, and I am Sherlock, about relative beneficiaries, the people in the delighted to hear him say this, that a living wage would middle have been squeezed quite savagely in recent reduce the welfare bill. I hope that we can count on his years over all. I refer her to the interesting article in the active support for that in future. Financial Times suggesting that those brackets were I especially thank not only my noble friends but back at the levels of 2002-03, whereas the bottom 30% also the noble Lord, Lord Greaves, who made a brave, had increased their income in real terms by 3% or 4%. splendid and first-rate speech. He made points that I Our fundamental welfare reforms will transform wish I had had the wit to make myself. I also thank the the welfare system by 2017. The replacement of many noble Lord, Lord Alton, from the Cross Benches, for of the current suite of income-related benefits and tax his powerful, moral critique, which again reminded us credits with our flagship reform—universal credit—will of where our moral priorities should lie when we make provide a streamlined and transparent scheme that these policy decisions. will mean that 3 million families will be better off, on The noble Lord, Lord Freud, referred to cumulative average, by about £168 a month. In April this year, the assessment. With the help of Citizens Advice and largest ever increase to personal allowances will benefit Landman Economics, we were able to work out pretty 24 million people and lift 1.1 million people out of precisely—to within 10p or so—the total cumulative income tax altogether. Our tax measures, coupled with effect, since 2010, of the benefit cuts and tax changes. a modern benefit system, will demonstrate that supporting I did it for one family type—the security guard with a families remains an absolute priority for this Government. wife and two children. If we can do it over a weekend with wet towels and half a bottle of gin, I am quite sure that the Government can do it with the numbers 2.29 pm of staff that they have in the Treasury. The answer is Baroness Hollis of Heigham: My Lords, first, I that the Government are not choosing to do it. They thank all noble Lords who have taken part in the do not want to be shamed by us and others as to the debate. In particular, I should like to congratulate my effect of what they have done over time. There cannot 835 Taxation: Families[LORDS] Local Government: Finance Settlement 836

[BARONESS HOLLIS OF HEIGHAM] settlement was announced on 19 December but it was be any other reason why the noble Lord, of all people, no Christmas present for local authorities. It is by far who has the utmost respect from the House for his the most complex settlement ever—certainly, in my integrity on these issues, and the Government continue memory—and it not only included the new system of to duck the consequences of their action by giving us local government finance, which was agreed during the cumulative statistics today. the autumn of last year and moved funding towards The noble Lord, Lord Freud, also mentioned the the support from business rate. Of course, we do not Laffer curve. At that point, the noble Lord, Lord understand the impact of the current rating appeals. Skidelsky, muttered into my ear, as others have done, As regards moving council tax benefit support to local that the Laffer curve, which says that the lower the tax authorities, I think that in the debates on the Bill, we rate the more you collect, has been discredited by talked about a 10% reduction for local authorities. For almost every reputable economist in this country and my authority, it will be just over 15%, so we have that in the United States. I am sure that the noble Lord, to cope with. We have got changes to specific grants, Lord Freud, knows that. such as the funding for academies. A local authority As to the noble Lord’s point about pensions, it is near me, Trafford, has lost about £5.1 million from simply inappropriate of him to accuse me of not this change but its total budget was only £3.3 million. welcoming what is happening on the single state pension The new homes bonus has been cut. We have got when before the general election I was one of those new capping rules, which will allow local authorities to who wrote a pamphlet calling for it in which I was increase council tax by 2%. Unusually, this year we fortunate enough to corral the willing consent of his can add precepts, as well as levies, from transport right honourable friend Steve Webb to contributing authorities and others. Perhaps it is surprising that for it and calling for it. I am absolutely delighted. The public health money allocated to local government point I was making was not that I do not welcome the was not included in the settlement although it has improvement in pensioner benefits. Of course, I do. I come through. Those are some of the changes but we argued that it should not be paid for by making poor have not mentioned the effect of the public spending children poorer. That is the shame on this House. review and the reduction in grants to local authorities. Finally, the noble Lord, Lord Freud, sheltered behind During the passage of the Local Government Finance averages, which of course fall in the middle of the Bill, I made the point that we are transferring greater third quintile. I was trying to describe the effects on risks to local authorities with this settlement. Business the poorest quintile, particularly the poorest decile. He rates are going to go to local authorities, as will the did not rebut one of those statistics. impact of business rate losses. A major supermarket A long time ago, the Reverend Thomas Chalmers, a catching fire could lead to the closure of that supermarket Scottish Malthusian in 1819, said that character is the and, therefore, there will be no business rates. That cause, comfort is the result. He had the excuse of not cost will be on the local authority. We also debated for being able to read the early effects of an industrialising some time what the collection of council tax would be society and its profound effects on the poorest and the under the new arrangements. I do not think any of us most vulnerable, and its children. What is our excuse? expect that to be anywhere near 100%. There are one I beg to move. or two smaller local authorities which I think in future Motion agreed. are financially vulnerable. We certainly need to keep a watch on that. Local Government: Finance Settlement “Local government has borne the brunt of cuts to public spending and the settlement announced confirms that this will Motion to Take Note continue to be the case until 2015”. 2.36 pm Not my words, but words that I can agree with, in Moved by Lord Smith of Leigh which local authorities have taken some 28% reductions while Whitehall departments have only taken an This House takes note of the Local Government 8% reduction. Those words were stated by Sir Merrick Finance Settlement. Cockell, chair of the LGA, and I understand that he is leader of a local authority in London with which the Lord Smith of Leigh: My Lords, I am grateful to Minister may well be familiar. have the opportunity to raise the issues created by the local government settlement for 2013-14 and for the Despite the Government’s mantra about fairness—part wealth of talent from local government who will contribute of which I caught at the end of the previous debate—the to the debate. I look forward to that. I confess that I cuts have different impacts in different parts of the presented my first budget in 1983-84, 30 years ago. country.Over the past two years, under the Government’s Those were tough times in the era of the Thatcher new measure called Spending Power—unknown two Government but not as tough as we have today. Last years ago—the average reduction for local authorities week, in Wigan, we agreed our next year’s budget has been £91, but in Dorset the average reduction has proposals with some 18.9 millions of pounds-worth of been only £8.50. In Knowsley, it has been £229 and in cuts on top of £43 million achieved over the past two the current settlement—I apologise to my noble friend years. on the Front Bench for making this comment—Luton I declare my interests: I am leader of Wigan Council, has gained by £12.40 whereas Rochdale has lost by £57.50. chair of the Greater Manchester Combined Authority, What is fair about a distribution that is treating vice-chair of SIGOMA and one of the many vice- local authorities so differently that they are having to presidents of the LGA in this House. This year’s cope with similar problems in different ways? How is 837 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 838 local government coping with the scale of cuts that is across to the NHS. In a sense it is not a real cut in forced on them? The answer is that they are actually public spending, it is simply moving it from one area coping a lot better than many central government to another. departments, and achieving some of these savings With the additional redundancies that we are creating largely on target. As a practitioner, I am the first to we are doing damage to local economies and to local admit that there are still significant efficiency gains people in communities. I think that we are becoming which local authorities can and must pursue. To give a less civilised place. We are seeing a reduction in evidence for this, in my recent budget we were able to provision for the most disadvantaged and vulnerable take £1 million off our IT services because we had in our society; we are seeing a reduction in provision gone out for a joint procurement with a neighbouring of the arts; we are seeing a reduction in the provision authority which saved that amount. There can be of the local library service. The House has debated efficiency savings, but the scale of what is demanded on numerous occasions—so I do not want to get into of local authorities cannot be achieved. the detail of it—the forthcoming crisis in the The Secretary of State has recommended to local provision of social care, simply illustrated I think by authorities that they should use balances. At best, the so-called Barnet graph of doom. These looming this is only putting off the evil day. Towards the end pressures will and are already beginning to affect of last year, I was acquainted with one local local authorities, but I want to remind Members that authority which, because it had been a hung council, this is not a cost which will affect just social care. had dithered for two years without making any cuts. During the past few months, I have been scrutinising They had used all the balances in making the budgets the budget for Greater Manchester transport to make balance. However, come the third year balances have sure that it has kept within its budget limits. It told us gone. They now have to get back on track and are in that the prospect of more pensioners coming through the process of making savings of £100 million in one with free travel—not national but local travel—will year. As I mentioned, the risks for local authorities have a significant impact on its budgets over the next have risen because of the new funding regime and couple of years. risks need to be protected by local authorities so We cannot simply continue with these slash-and-burn inevitably will be to be a high level of reserves to cope tactics that the Government are applying to local with that. authorities. The cumulative, year on year, effect of In my own authority, I use reserves in the concept cuts will and is having serious effects on services. Most of invest to save, that is to spend money upfront now of all, and perhaps worst of all, it is not working in which will lead to savings elsewhere. We have got a what the Government want to achieve in cutting the significant capital programme to improve the basic quality public deficit. We estimate in Greater Manchester that of our road network, which is enabling us to save the impact of the Government’s policies has been to roughly £1.5 million a year on highways maintenance cut about £1 billion off direct services, but because of and the day-to-day repairs of patching up and so on. the rise in unemployment, we are paying out more in If you improve the fabric of the road, you can make welfare payments. Health costs have gone up, so public savings. That is how we are using reserves. spending has gone up in Greater Manchester, not down. We can try to make the savings by putting the cost upon our employees. For the past two years, we have There is a better way: the way of public service had a pay freeze in local government. We have now reform. Most public spending is still coping with the reached the end of that road. It is time in the forthcoming symptoms of problems rather than the cause. If we year that local authority workers, like other workers, began a proper, full collaboration of services in an have some compensation for the impacts of inflation area, as shown by the community budget pilots, we and other things. When we have done all those things, could save—according to estimates verified by Ernst we are still left with reducing the services provided & Young—up to £22 billion over five years. Not only directly by local authorities. If we are lucky, some of would we be saving public money, we would be these services may be taken up by community groups. improving the local economy, because the impact would We have been successful in transferring a small library be to get more people back into work. We would to a community group, but that is a small library in a reduce dependency and improve outcomes for individuals small location. Clearly it could not happen with a and communities. major library and that is only going to happen in one I recently visited a project for troubled families in or two cases. In most cases, we will start to cut and my borough and was moved by the outcomes of that reduce; services will disappear. Due to the scale of the project and by the extent to which those families lives cuts, no area of local authority spending can be exempt. had been turned round by the adoption of a different The impact on individuals and communities will be approach that looked to find ways to solve their problems severe. rather than just assuming that the way to deal with Those who have seen the news today may have seen them was to take the kids away. the report of the Coalition of Disabled talking about Some parts of government get sufficient support, the impact of local authority cuts on people with but clearly not all do so. The settlement also contained disabilities. It says that a £1 billion shortfall will affect a significant reduction in the early intervention grant. disabled people across the country. Some of the cuts My authority received a grant of £4 million. This was that we have decided to make in our adult services and money to help children’s development in the crucial in our local authorities will reduce the cost to us in early years and is a way of reducing dependency, but local government, but they will simply shunt costs the money disappeared. 839 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 840

[LORD SMITH OF LEIGH] this to be happening given the scale of change that has I would like the Minister, in replying to the debate, to take place in local government. Local government to say that she will tear up the 2013-14 settlement, but has to deal with the effects of previous years’ budget I do not expect that she will. However, there are three reductions, which are still working their way through things that I hope she will consider seriously when the system, although the localisation of business rates replying. First, it is a new system, so let us see whether was a very radical and welcome change, and we spent we cannot carefully monitor the impact that this complex many happy hours debating in this Chamber the changes settlement is having and show willingness, if it is in the council tax support scheme. All this is coming at necessary—I think that it probably will be—to intervene once and having to be coped with by local authorities, in-year if the consequences for individual local authorities most particularly by staff in their finance departments. demand it. Secondly, let us begin an early dialogue I hope that the Minister will pay tribute to their work with local authorities on the forthcoming settlement and to the achievement of local authorities generally, for 2014-15, which will, following the autumn spending councillors and particularly staff, and most especially review, result in more misery for local authorities. We staff in the finance departments. I am fairly confident will need to think about that. Thirdly, I hope that we that she will do so, given her background. That would can have serious conversations with willing local authorities make a very welcome change, not on the part of the on the reform of public services, which will produce Minister but as regards some comments made in the better results for everyone. other place, which, frankly, make people in local government feel even more misunderstood and unappreciated. Kind words cost nothing but sometimes 2.51 pm reap considerable benefits. Lord Tope: My Lords, I begin, as I always have to I think we all recognise that the late settlement to do in these debates, by declaring my interest as a which I have referred was beyond the control of DCLG councillor in the London Borough of Sutton. Given Ministers. Nevertheless, it was imposed and it has the subject matter under debate, I now have to add made life more difficult. However, the greatest innovation that I am a very recent member of its pension scheme occurs in difficult times. I often wish that that were not and am therefore entitled eventually to receive a tiny so. Probably the greatest time for innovation is wartime. pension. None of us would wish to experience that again, The noble Lord, Lord Smith, began with his although sometimes it feels a little like that for local confessions. If it is something to confess, then I confess authorities. I wish that we could achieve that innovation to moving my first budget as a council leader back in in a rather more measured way and with a lot less pain 1987, although for the previous 12 years I had explained than is being inflicted on us now. Nevertheless, we to the Conservative authority how it could do better; should recognise that, largely as a result of the unwelcome indeed, ever since Anthony Crosland declared, within budget reductions and the scale and speed of those months of my election, that I had missed the party. reductions, greater innovation is emerging. I thank the noble Lord, Lord Smith, for today’s We also see at this time of the year what I regard as debate and for the rather measured way in which he the annual ritual of the local government finance introduced it, although his unprovoked attack on Luton settlement. It seems to bring out not only the best in was a little unjustified. I agree with the comments he some but the worst in everyone. For as long as I can made towards the end of his speech concerning the remember, Ministers in all Governments have always need for public sector reform, and most particularly claimed that the settlement was very much better than the opportunities that must exist not only for budget it ever turned out to be. I have been watching this savings but for much better and more efficient working ritual every year over 40 years. Local government from what is now known as community budgeting. I always claims that it is the end of the world as we wish that we could move a lot faster than seems to be know it, but the world is still here and we still survive. the case thus far. That offers considerable opportunities. Councils then enter into a bitter battle. Wigan attacks While I thank the noble Lord for the debate and Luton, the north attacks the south, we argue with each well understand why the Opposition chose to highlight other as to who is worse off, and urban authorities this subject, the timing is a little unfortunate in that attack rural authorities. All this is done to get a larger the consultation has just ended. If the Government slice of a cake, the size of which is never going to already have a settled view, it is certainly not one that change. In doing that, we know that one authority’s the Minister will be in any position to give us today; gain will inevitably be others’ loss. What made this nor, therefore, do I imagine that she is likely to give us worse—this is perhaps one of the reasons why some many clues as to what will be in the final settlement northern authorities feel that they are getting a worse announcement when it is made. However, I hope that deal—was the very large share of local authority she will be able to respond to some of the points that funding that came from central government and local will be made today. authorities’ dependence on that. Too many local As the noble Lord, Lord Smith, said, this was the authorities all over the country—I suggest that this latest ever settlement announcement on record, having applied to a greater extent in the north than generally been announced just before Christmas. Indeed, some in the south, excluding some in London—were heavily necessary information was still awaited only a few dependent on central government funding. Inevitably days ago, not least the public health funding when that funding is reduced, as it has to be, they feel announcement, which was made just days ago. It is the effects rather more. I hope that that will start to hard enough in a normal year—if there ever is a change as local authorities become increasingly able normal year—but this is a particularly bad year for to raise a greater proportion of their budgets. 841 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 842

The noble Lord, Lord Smith, referred to a 3.02 pm 28% reduction. That was, indeed, the figure from the Lord Beecham: My Lords, last week the Government DCLG for the reduction in the local government published their mid-term review. It was not so much a finance settlement. However, as we know, other candid assessment of their first two and a half years as departments have also required local authorities to a Candide assessment, where everything is for the best implement their budget cuts. I have seen estimates of in the best of all possible worlds. We read in the the actual reduction in local authority budgets ranging document that the “shared instinct for decentralisation” certainly between 32% and 35%, and in some cases the on the part of Tories and Lib Dems has apparently reduction is higher than that. As we all know, as the become “an organising principle”, with, public sector funding cuts begin to bite, local authorities will inevitably have to curtail the expectations and “an historic shift of power ... to put our counties, cities and needs of their staff. citizens … in control of their own affairs”, with, I have stated that I am a London councillor and “sweeping reforms to increase local authority freedom, therefore I want to conclude with some issues of and, particular concern to London councils, although they have a wider application. The first is the results of “the ability for councils to finance themselves independently business rate revaluation appeals. According to through retaining 50 per cent of the business rate”. Valuation Office Agency data at April 2012, 24% of The latter, of course, is determined by the Government. Yet Eric all appeals are in London and they represent 28% of Pickles was the first Cabinet Minister to offer up cuts, in his case of 30%, to the Chancellor after the election—nearly four times the total rateable value of the local list in England. the scale of cuts suffered by other central government departments. This must mean that the value of appeals in London He continues to preside over a massive reduction in resources on a is likely to represent much more than 24% of the scale unprecedented even by the standards of the Thatcher years. England total. However, because the Government Characteristically the finance statement and its accompanying have used an England average to adjust the estimated documents were riddled with inaccuracies, so that the website had business rates aggregate downwards, the adjustment is to be taken down after representations from council treasurers. Equally characteristically, the Secretary of State not only not enough to reflect accurately the size of appeals underestimates the scale of next year’s cuts, he said next to that London boroughs are likely to face. In other nothing about the even bigger cuts to follow in 2014-15, which for words, London boroughs’ baselines are likely to be many authorities are likely to be in the region of 7% to 8%. artificially high, thereby leaving them more vulnerable Perhaps he had in mind consideration of the forthcoming county to funding shortfalls. council elections. The pain would to some degree therefore be deferred until the following year. London Councils has asked the Government to The Government seem determined to move inexorably monitor the adequacy of that sum and I hope that the away from a needs-based system which, for all its Minister will at least confirm that that will happen. Of unevenness at least sought to address the disparities course, London Councils is also urging the Government between more and less prosperous areas, to one based to address any such shortfall under the new burdens on crude numbers. However, there are matters of procedure. I suspect that the Minister will feel unable general application and I will return later to the issue to give that commitment today but I hope that she will of distribution. These are matters which have occasioned take it away and argue for it elsewhere. Finally on this profound concern across the local government family subject, will the Minister confirm that, if appeals are and the political divide within it. For example, the successful, local authorities will have to reimburse Local Government Association—yet again I declare businesses straight away but will only get reimbursement my interest as an honorary vice-president and as a from government over a five-year period? member of Newcastle City Council—draws attention to what is a real cash cut in services for all councils so Another concern for Londoners is the proposed that a few might be permitted to capitalise up to transfer of £150 million of undamped grant from £100 million of redundancy costs from capital receipts urban to rural areas. The impact of this change will or borrowing. No proper explanation has been given fall disproportionately on London. On London Councils’ for this cut, apparently made for “accounting reasons”. analysis, this suggests an overall funding loss of around Perhaps the Minister will give us the reason—if not £75 million in undamped grant for London. I know today, then subsequently. Perhaps he will also explain that the Minister cannot make any substantive comment where the £100 million of local government cash has on this today, but I hope she will confirm that any gone. such changes in the final settlement will be accompanied by robust factual analysis to support them. I know Similarly, as the noble Lord, Lord Tope, has pointed that London councils have made their own representations out, many councils will face problems over rating individually and collectively to Ministers and I have appeals, many going back several years. It would no further time to add to those. appear that they face the risk of having to fund 50% of the backdated costs of successful appeals, even though I echo the words of the noble Lord, Lord Smith, in the money will already have been paid into the national introducing this debate. Local government generally pool. That risk should ideally stay with DCLG. I has performed exceptionally well under exceptionally understand that the department is providing funding difficult circumstances. It is widely recognised as the to cover this for a period, but what are the Government most effective and efficient part of the public sector, doing to secure the expediting of hearing appeals by and it may be that local government should be giving the Valuation Office? I illustrate the problem by referring 50 top tips for saving money to the Secretary of State to my own authority, where there are outstanding rather than the other way round. appeals against the valuations on the 2005 basis on 843 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 844

[LORD BEECHAM] system does not reflect it and is decreasingly reflecting 100 properties, with a rateable value of £30 million—that that. It wholly invalidates the comparisons that Ministers is just for one local authority—and the DWP has are drawing. made the largest claim, which goes back over six years. Another instance is the funding for concessionary What action will be taken to deal with that? travel. We receive four times Wokingham’s funding for There are other common issues, for example a that but our costs are nine times greater. What is true further cut of 30% nationally in core services such as of Newcastle is true of much of the north-east and childcare, cuts in support for concessionary travel, and other hard-pressed regions. The north-east as a whole youth and education services, and the holdback of will lose £275 million under the new homes bonus £150 million of early intervention grant which also schemes by 2018. There are real concerns about a cut comes with a 28% reduction compared to the present in resource equalisation and the 30% cut in support year. In addition to these significant issues there are for looked-after children, where the numbers and costs huge problems around issues of distribution. It is here are increasing by 26% in the north-east compared with that the seismic shift from a needs-based approach 10% nationally—a function of the region’s economic would be most keenly felt. This is not a simple north/south plight. issue. Inner London boroughs, coastal towns such as In Northumberland, a county with the second longest Great Yarmouth and other communities—some urban, road mileage in the country, apparently with the same some rural—with significant economic and social area as Cyprus and much of it exposed to extremes of problems in different parts of the country all suffer, bad weather, government funding for highway repairs although if you look at the regional map, there are will fall by more than 40% by 2014. My city faces a marked regional differences. yawning gap of £100 million a year by 2015-16 on a Consider the new homes bonus, largely financed by current net budget of £266 million. The closure of the top-slicing money which would have come to local gap will require cuts of unprecedented magnitude. In government anyway—a fact often forgotten. The effect the ward that I represent, which is among the 10% most is to divert resources from the less prosperous areas to deprived wards in the country, we expect there to be the more prosperous, where the housing market is the closure of community buildings and a playcentre, more buoyant. Newcastle will admittedly benefit from and a reduction in standards of maintenance of open the bonus, to the extent of a little over £3 million. The space, before one takes into account the significant problem is, we lose nearly £6.5 million as our share of loss of income that many constituents will incur as a the top-slice grant, so we are nearly £3.5 million worse result of the benefits changes. Other councils in the off, despite making significant efforts under councils region face similarly appalling prospects as the relative of both political persuasions to facilitate new homes needs assessment reduces by £573 million, compared building. Note too the perverse effect of the damping with an increase in the central share of £871 million—and regime, which funnels moneys from authorities losing that is just for next year. significantly more spending power per head than some What does the Secretary of State have to offer? of those who receive it. I referred in a previous debate Fifty shades of Pickles, it seems. He provides a patronising to the £40 million that Surrey received last year, which list of possible savings, from the stultifyingly banal, went straight into its reserves. This apparently will such as not providing mineral water for council increase to £63 million next year and will be built into meetings, to the patently obvious, such as increasing the base thereafter. council tax collection—although that will not be easy Next year Wokingham, which Ministers perversely in light of the council tax benefit cuts. It will become cite as a comparator to Newcastle—although I have uneconomic to collect tiny amounts from people who not heard the noble Baroness do that yet—will receive can barely afford to pay and who did not have to pay £204 funding per dwelling in damping grant. That is in the past. I say nothing about the bill for biscuits in three times the amount for Newcastle, which has the Department for Communities and Local Government, had much larger grant cuts per dwelling in recent which apparently increased by £10,000 last year. The years. This comparison is wholly invalid. The Secretary of State ignores local government’s record Government have cited a difference in spending power— in driving through efficiencies for many years—to that is to say council tax, business rate and grant—of which the noble Lord, Lord Tope, referred—leading £700 per dwelling, but half of that is due to the higher the way for the public sector, just as he ignores the costs of adult and social care in a much poorer and damage to local services and the communities they less healthy population, one-sixth to council tax support, serve in the damage this Government are wilfully another sixth to grant for homelessness, £95 of the inflicting, especially on those areas and their people £700 for children’s social care—and we have who can least bear it. proportionately four times as many children in our My noble friend Lord Smith and the noble Lord, care as Wokingham. Lord Tope, referred to public service reform. It is right The Minister recently wrote to my noble friend that councils should do more to collaborate and make Lord McKenzie with some information about the savings, not merely among themselves but across the Social Fund allocations. It is very illuminating, because whole public sector. I recently asked a Question about it emerges that the Social Fund allocation to Newcastle, that. I look for collaboration between the Government which must surely be a critical measure of deprivation, and local government across the whole range of the is 15 times the size of that for Wokingham. Even public sector to engender savings that might, to some allowing for some adjustment for population there degree, mitigate the disaster that is about to strike our clearly is a huge disparity in need, yet the current communities. 845 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 846

3.13 pm When Eric Pickles became Secretary of State, there was a view that as a former council leader he knew the Baroness Smith of Basildon: My Lords, I am grateful value of local government. He even spoke of the to my noble friend Lord Smith of Leigh for providing “power shift”from national to local. A hugely entertaining the opportunity to have this debate about the local read, in retrospect, is his speech from the Conservative government settlement. It is clear from the speakers’ Party conference in 2011. He said that in comparison list and from what we have already heard that there is to Whitehall local government has been the most a huge amount of experience in your Lordships’ House. “efficient part” of the public sector. “My friends”, he I suspect that across the Chamber our reasons for said, taking part in this debate are similar—we value and “you can feel that power is shifting … from Whitehall to councils support local government, not as an entity in itself but … Together we will shake off the shackles of Labour and Britain for what it can achieve. I spent eight years as a county will become great again”. councillor in Essex, my degree is in public administration, I have worked in local government and was a Local I allow some leeway for conference rhetoric but Ministers Government Minister here and in Northern Ireland. perpetuated this myth as they pushed the Localism There were times as Minister when I felt that I was a Bill through Parliament. poacher turned gamekeeper, turned quarry—as I am We often hear talk of power without responsibility sure the Minister will understand. I am also a vice- but the way in which this Government are treating president of the LGA. local authorities is the reverse. This is passing on responsibility without power. Ministers repeatedly state We have heard details of level of cuts and I want to that budget decisions are the responsibility of local focus on the impact of the financial settlement. My councils and that they should decide where the axe will noble friend Lord Smith was clear; we are not against fall. But it is central government—despite warm, efficiencies or genuine savings, but this settlement goes meaningless words from Eric Pickles that local government way beyond that in its expectations. In 2011, Secretary is the most efficient part of the public sector—that of State Eric Pickles, in his inimitable style, told his hands down the budget on which councillors have to party conference that local government could, “do balance the books. more for less”. This financial settlement is certainly testing that premise. Joanna Killian, who chairs the If central government decides the funding levels it Society of Local Government Chief Executives and is holds the power and all that local government is left the chief executive of Essex County Council, expressed with is the responsibility—responsibility for trying to her concerns that the, manage cuts to have the least impact. This is passing the buck. While local councils are trying to provide “local government settlement confirms that local government will services, most of them statutory ones that the Government continue to bear the brunt of public sector cuts”. say that they must provide, the Government are removing She warned: the resources that allow them to do so. “This settlement will increase the risk of more councils being Here are some examples. Labour-controlled Thurrock financially unviable”. Council, which is a unitary council, is seeking to That view is supported by a recent report by the Audit manage cuts of £13 million this year. One of its Commission—soon to be abolished by the Government difficulties has been the relatively new government —which states that auditors consider 43% of larger concept of “spending power” that assumes councils single-tier councils and 34% of district councils to be are able to raise the same level of council tax next year at short-term or medium-term risk. There is no party- as they are this year. The new local council tax support political divide on how dangerous the situation has scheme that replaces council tax benefit means that become. That is a professional assessment from auditors, there is a significant difference. In Thurrock that will councillors and officials. The leader of Kent County be a reduction of more than £8 million. I wonder if the Council, Conservative councillor Paul Carter, warned, Government really understand the impact of their policies. “the tank is running on empty”. Conservative-controlled Southend Council, along Sir Merrick Cockrell, the Conservative chair of the with many other councils, 10 of which are Conservative, LGA, called the cuts unsustainable. The notion of has rejected the Government’s plans for a further making changes at the margins, cutting back on some freeze on council tax as being unworkable, despite services, and increasing or introducing reasonable charges having to make significant and damaging cuts. Recently, has gone. We now face a fundamental re-evaluation of Southend Council leader Nigel Holdcroft said: what local government is able to do. “We no longer have any leeway and we have to make real cuts While the Government talk of localism, every action to services … to balance our books—and that involves making they take removes not just money from local authorities some very hard choices”. but the power to tackle those very problems in society Even Conservative councils, which clearly do their that the Government are exacerbating. I accuse Ministers best to support their Government, find the Government’s of misleading local government about their intentions financial settlement unworkable. Southend is not alone. regarding what local government can and should do. A number of other Conservative councils have not When the Localism Bill received Royal Assent, Ministers taken the Government freeze this year. hailed the legislation as, Earlier this week at the council of my home town, “the biggest transfer of power in a generation, releasing councils Basildon, virtually every member of staff was handed and communities from the grip of central government”. a personal letter headed, “Transformation programme: 847 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 848

[BARONESS SMITH OF BASILDON] I am hugely supportive of apprenticeships but I am collective redundancy consultation”. In all my years very concerned at reports that as staff numbers are involved in local government I have never seen anything reduced apprentices are moved into their desks to like it. I quote: undertake some of their work. This of course is much “The reduction in resources and the expectation of localism cheaper. means the council needs to work together with partners and local My last comment on the settlement is to remind people to create an environment where everyone can thrive ... The ourselves that police and fire services are also affected role of the council is changing from simply doing things for by these cuts. I am appalled that Essex no longer has a people to one of working with them to do more things for themselves”. single 24-hour police station. Only yesterday, we saw the London police and fire and rescue services respond That may be worthy of “Yes Minister” but it goes on so quickly to the dreadful helicopter crash at Vauxhall to promise, Cross. London fire services are facing the loss of “a varying degree of change for all of us”. 12 fire stations, two of which attended Vauxhall, 18 fire Not quite all, as I shall come on to. The real purpose appliances and around 520 staff. of the redundancy consultation is to warn staff that, Some weeks ago I met representatives of the “there is a risk that the council will be unable to continue to Metropolitan Fire Authorities about the budgetary provide work for all its employees”. pressures that they face. They were pragmatic and In other words, not a single member of staff, other professional but clearly very concerned. Ministers will than the most senior, I understand, has job security. have to be very confident indeed that there are no Everyone who has received that letter is being made public safety implications if they go ahead with these aware that their job is at risk. Why otherwise would significant cuts to the fire service. To find a way they be sent the letter? The deputy leader of the forward, a representative of the Metropolitan Fire council has already said that he expects up to Authorities has asked the Minister whether the discretion 200 redundancies in the next few months. And there afforded to the eight fire and rescue authorities to will be more to follow. How did those staff, many long raise council tax precept by just £5 can be extended to term and not on high salaries, feel when they went all fire and rescue authorities, given that their precept home that night—numb, scared? They were certainly levels are relatively low. I hope that the Minister demoralised. As I have mentioned before in your understands their anxiety and can give a response. Lordships’ House, this is the same council which, Local government services range from the major apparently against advice from the Secretary of State, life-changing and enhancing to the mundane but include will pay a part-time executive director £100,000 a year those services that bind and connect communities and and according to reports from council documents make a difference to their way of life. I am known to paid its top 12 earners £200,000 more than in the be pragmatic and practical, so I am not exaggerating previous year, 2011. when I say that this Government are putting too much The council refuses to release information to the of that at risk. I hope that the Minister can reassure public to confirm and explain this arrangement, despite me that that is not the case. having received a letter from the Secretary of State that ordered it and every other local authority to Baroness Garden of Frognal: My Lords, I remind release details of salary and perks paid to senior noble Lords that timing is very tight. I ask noble executives. Is it a coincidence that a council that Lords to sit down as soon as the Clock hits 10 minutes. behaves in this way to its staff has seen long-term sickness almost double? In six months from April to 3.24 pm September 2012, mental health has been the main cause of long-term sickness absence and has risen Lord Greaves: My Lords, I, too, had to present from fewer than 100 days to more than 200. That council budgets a quarter of a century or so ago. The information comes from a publicly available council one that I particularly remember was in 1990, which document. was the poll tax budget. Pendle was particularly badly hit. The then director of finance and I kept reminding There is a serious implication here for administration. ourselves of what happened to Wat Tyler after he Cuts in staff have an impact on the scrutiny of the organised poll tax riots 500 or 600 years earlier. The administration. Last week, when Councillor Gavin result of it all was that the electors decided to remove Callaghan received an inadequate response to an inquiry me from the council and the director of finance became regarding unused and vacant buildings locally, he was the chief executive. He is still there and the electors told that it would do its best to provide information have recanted. Therefore, I declare my interest as a but that it was “quite short staffed”. The information member of Pendle Council, a member of the executive was required for a meeting last night. He asked for the and a vice-president of the LGA. information more than a week before. However much I want to talk about a group of councils that I think they wanted to, the staff was unable to help. Effective was alluded to by the noble Lord, Lord Smith of governance needs effective scrutiny.Opposition councillors Leigh, which I call the sorry seven. They are seven can fulfil their scrutiny role only if they have the ordinary shire district councils that are being clobbered information to do so. even harder than everybody else by this settlement. My final point on Basildon Council regards They are Hastings, Great Yarmouth, Barrow-in-Furness, apprenticeships. Yesterday the council issued a press Bolsover, Hyndburn, Burnley and Pendle. They are release congratulating itself on participating in a careers two seaside towns, with all the problems of declining convention for schools and its offer of apprenticeships. seaside towns over the decades, and five former industrial 849 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 850 areas in the north of England, if Bolosver is in the a local development company, whereby it raises two-thirds north of England. I cannot speak in detail on all of of the finance, the council raises a third, and most of them but they are all very similar and I can certainly that is put into land, buildings and so on. However, speak about Pendle, which is a district of 90,000. without any money you cannot go on doing things like The first problem with districts such as this, typified that for ever. by Pendle, is that 70% of our houses are band A for We have had a radical stripping-out of top officers. council tax, so there is no great resource that we can We are supposed to be in the top 10 most efficient rely on compared with other councils. The problem councils in the country—I do not know how people with business rates is that they have been declining in work that out, but that is what is said—and we have many parts of the borough over the years because they apparently had more awards than any other council were based on old mills, many of which have gone and this year. However, it makes no difference. We have to are still being removed. Indeed, the owners of old subject ourselves to this extraordinary procedure, whereby mills are still demolishing them in order to avoid Ministers in the DCLG will assess whether we have paying business rates. We need an expansion of our qualified for this new efficiency grant. Of course, we industrial and commercial base. Achieving that in have to assume that we will get it in order to make any areas such as ours requires public sector investment—not sort of sensible budget. If we did not assume that the completely public sector but with partnerships and all £1 million or so in efficiency grant that is being offered the rest. At the very least, it requires public sector seed will come, we would be in even worse straits—and yet, corn and assistance. If councils have no money, they how do we know that we will get it? The whole system will not be able to do this and the result will be that the that is set up for this small group of councils is business rate base will decline. absolutely crazy; nobody could dream it up. The sorry seven councils, because of the lobbying I will say a few words about the new homes bonus, that they have done and the problems that have been which other noble Lords have mentioned. According pointed out, are now eligible for something called to our chief executive, who spoke to me this morning, the efficiency grant, whereby Ministers will try to the new homes bonus is “at the heart of what will kill micromanage them in a number of different ways that Pendle and councils like it” in the next two or three they think are desirable. Why Ministers such as Brandon years, and that applies not only to the sorry seven. As Lewis or Eric Pickles should want to micromanage has been pointed out, the new homes bonus is topsliced; Hastings, Pendle or even Great Yarmouth is a mystery, it is taken out of the general fund for local authority but there we go. spending from the Government. It is then paid to The Government say that the top cuts for any councils where houses are built and occupied. In other council are 8.5%, but if you do the sums for councils words, it is a transfer of funds from areas where such as Hastings and Pendle in cash, the cut in cash housing is not being built to growing areas, where it is. grant this year is 17%. Even if you include the small On the face of it that seems quite reasonable, so why amount that these places get for the new homes bonus, not do it? the cut is still 15%. It will be even worse in 2014-16. The first reason is that whether you are able to I have some projections of the total core revenue build and occupy houses in your area is not under funding that has been available over the years to my local control. Even with social housing we have problems council and is now projected. The total funding for making the figures stack up with the rules laid down 2009-10 was £13,186,000. Some noble Lords will think by the Government and the Homes and Communities that these are tinpot little places but they are shire Agency. However, for commercial housing you have to districts. They are not bad places but we do not have have people who are prepared and want to build as much money as big councils. The projection for houses in a sensible way in sensible places in your area. 2014-15, which is five years later, is £6.9 million. When If you are not in a booming or growing area, that is my noble friend said that some councils might have a not very easy. The new homes bonuses that have been 30% cut over that period, we are talking about a 50% allocated so far have not been on the basis of recent cut, more or less. That is the scale of the disaster that decisions anyway, but on the basis of historic actions is affecting the sorry seven—this small group of small and decisions—what people put in local plans three, councils, whose problems could be solved by the four or five years ago—that bear no relation at all to Government with relatively little money but they are present policies. There is no damping mechanism on not doing so. the new homes bonus as there is on the change in business rate system, so it is simply taken away and As far as we are concerned, we have done everything handed out to other places. that they wanted us to do— or almost everything because we have not abolished our chief executive. We If I understand the figures correctly, the new homes cannot understand how you can run a council without bonus in 2013-14 for new properties—the rest make one and a half chief officers and directors, which is only a slight difference—will be: £116 million for the what it will become. We have an arm’s-length leisure south-east councils; £144 million for London; £57 million trust and we have stock transferred our council housing for the north-west; £21 million for the north-east; and at the behest of the previous Labour Government £53 million for Yorkshire and Humberside. In other because they were bribing us with vast amounts of words, London and the south-east will receive £260 million money to do that. We have outsourced many back-room and the three northern regions will altogether receive services and a front-counter service and got the private £131 million. sector partner to build new offices in the middle of I will not say that there are no places in London Nelson. We have a highly successful joint venture with and the south-east that have needs similar to those of 851 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 852

[LORD GREAVES] mistakes in it. Even the overall amounts in terms of much of the north of England. However, that allocation, spending power were quite wrong when the settlement on the face of it, seems to amount to a redistribution was first made in December. It has been incredibly of funding and resources from the north of England difficult for local authorities to work out with their to London and the south-east of England. The partners and stakeholders just what the impact is Government need to answer the question of how that going to be. My noble friend Lord Beecham also can be justified on any basis that is in any way related pointed out that this has had a real effect on the to actual needs and what people do on the ground, distribution of the settlement. and I seriously wonder if the Government will be able I am at a loss to understand why deprivation has so to do so. little impact on the decisions being made around the settlement. I wish to goodness that we did not have to 3.35 pm say in the north-east that we continue to have more Baroness Armstrong of Hill Top: My Lords, first, I people unemployed, more people on low wages and apologise for being late and I thank Members on the therefore more people on benefit than in other parts of Front Bench opposite for their indulgence. I got to the country, but we do. That is the reality. That reality Durham station in good time following a meeting in means that the needs which local government has to County Hall first thing this morning, only to find that respond to are greater. the train I was due to catch had been cancelled because On top of that, the Government have set the damping of a body on the line, and the next train was half an arrangements in stone until, I understand, something hour late, so I am afraid that I missed the beginning of like 2020, which I find inexplicable. In my era, damping my noble friend’s speech. I want to intervene only always caused us enormous problems. Nobody liked it briefly, I hope. and everybody asked why it was necessary. I used to Despite all the rhetoric, I am concerned that this spend my time explaining that, if you are losing a lot year’s settlement is far more complex than previous of money, you need a bit of time to adjust. This year, ones and that therefore it is much more difficult for however, damping is working the other way. In Durham, authorities to work out precisely what they will be although we are losing, on current projections, over getting. Indeed, certain grants have not yet been £200 million during the period to 2018, this year we announced, but here we are at the end of the formal will have to contribute over £9 million to the damping consultation period and at the point where, by law, grant, whereas—as my noble friend says—Surrey will local authorities must make their decisions. I had receive £59 million. In fact, Surrey is getting an increase hoped that the impact of localism would mean that in its settlement, whereas Durham is getting substantial the settlement would be much more simple and decreases in the basic settlement, yet it still has to straightforward, but in fact the opposite has happened. contribute to the damping, which will give Surrey even It means that localism is not yet a reality. Elements of more money to distribute to its less deprived population. the settlement are being tied in for a long period, This seems inexplicable, and I have had difficulty in which goes against the principle of fairness. Local trying to rationalise it with people, particularly councillors authorities largely now try to plan over a three-year in the locality. period but, because of the lateness of the settlement, Deprivation raises its head very quickly in all sorts they are not in a position to do that with confidence. of ways. In Durham this year, we have to make available They now rightly consult their local council tax payers services for the homeless for the first time ever. The and residents much more than they ever did, but that charity that I am involved in has just entered into a is being made more difficult when they do not have contract with Durham County Council to offer services clear figures with which to work. to rough sleepers. There have been homeless in the I come from the voluntary sector and I declare my city, but rough sleepers have never been found there interests in all the charities that I am involved with in before. That is a consequence of deprivation and of the north-east that inevitably work with local authorities. the changes that are going on at the moment, and the They do not know what their allocation for next year local authority has responsibility for it. I would be will be, so many of them are having to put workers on having a go at the authority if it did not accept that it 90-day redundancy notices in the hope that it will not has a responsibility to respond to this. However, it be necessary but, none the less, they are having to do costs money. Although it is not a massive amount in so in order to comply with the law. That causes great terms of the overall budget, it is a reflection of that unrest in those charities. deprivation, and we fear that the changes in benefits on 1 April will bring further challenges. There are The settlement this year has come inordinately late. huge challenges to local government. I have a rule in Only last Friday did authorities learn about their the charity that we do not whinge. We are not whingeing; public health settlement, while many other aspects we are asking for timely, proper announcements, and have not yet been decided. I do not think that that for recognition of deprivation and the cost that that is acceptable to authorities, so I would beg the deprivation implies. Government to improve their performance next year. As my noble friend Lord Beecham said, on top of the settlement arriving only on 19 December, which is 3.43 pm very late—in the department I used to try to insist that Lord Shipley: My Lords, I declare my interest as it was delivered during the last week of November at vice-president of the Local Government Association. the latest; that deadline subsequently slipped but I I thank the noble Lord, Lord Smith of Leigh, for think it is what central government should go back initiating this debate, which gives us an opportunity to to—it is also true to say that there were a lot of contribute to the national debate on the settlement. 853 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 854

The funding cuts for local authorities are worse £904 in Sunderland and the highest is Redcar at £1,166—a than expected. It is not clear to me why local government difference of £262. At band D, the highest in the has had to absorb such large reductions, nor do I think north-east is £1,681 in Hartlepool and the lowest is it is right that the 28% reduction in government support Sunderland at £1,343—a difference of £338. However, funding over the four years of the current spending household incomes, housing costs and the general cost period is now, in practice, nearly 33%. The pressure on of living are not that different across the north-east. services, particularly adult services, is very great and So why is there a demand that only the Government the extra 2% cut now planned for 2014-15 is a step too should solve the funding gap for a council which far—not least because cuts in government support charges lower council tax than its neighbours when it impact particularly hard on those councils more dependent could raise extra income by charging a council tax on government grant. In terms of the outcomes from closer to their level? the consultation I hope that the Minister, together with her colleagues, will bear this in mind. I will go a little closer to home. On average, a Newcastle household pays £1,039, which is £20 less In this debate I want to concentrate on council tax: than a Gateshead household, which pays £1,059. At the levels of council tax charged by local authorities in band D the difference is greater: Newcastle charges England and the consequences of a year-on-year freeze. £1,512 but Gateshead charges £1,600—£88 more. If In too much of the public discussion about the cuts we compare Newcastle to Northumberland, with which it and the fairness of them, the role played by council tax shares a boundary, we find that although Northumberland in alleviating some of those cuts has been strangely absent. charges broadly the same as Newcastle at band D, at The public debate over the settlement has been £1,504, the average household in Northumberland dominated by those trying to persuade the Government pays £1,155, which is £116 more than the average to adopt their definition of fairness. Never in the payment in Newcastle. I am puzzled by why these history of local government settlements have the words differences are not being publicly discussed. Simple “fair” and “fairness” been used as much as they have arithmetic tells us that a small rise in council tax to the in recent weeks. The Government claim that the settlement level of a neighbouring council could generate significant is fair to everyone. In the settlement announcement on sums to alleviate, for example, proposed library closures 19 December, the Secretary of State said: and cuts in cultural support over the next three years. “This is a fair settlement, fair to north and south, fair to rural and urban areas and fair to shires and metropolitan England”.— This takes me to the issue of whether council tax [Official Report, 19/12/12; col. 1604.] should be frozen. When the new Government proposed a zero council tax rise in their first year of office and Northern councils argue, correctly, that they face gave councils an equivalent grant to cover the cost, I much bigger cuts than councils in the south and say was in agreement with that freeze, having in previous that this is unfair. Some councils in London face much years supported raising council tax by the rate of bigger cuts than elsewhere in the south too. Overall, inflation and dealing with other rising costs through the reductions in the more deprived areas are twice the driving major efficiency measures. However, since the average reductions across the country. However, councils first year of the council tax freeze, despite the offer of in the south counter that the level of support per head time-limited freeze grants, councils have had options. in the north will still be much higher than in the south In the current financial year, four north-east councils, even after the latest round of reductions in government all in the Tees Valley, raised council tax by 3.5%. They support. were prudent. Rural councils complained in late December that the spending settlement hits rural areas harder than This year’s offer of a 1% freeze grant when costs are urban ones. In the summer, south-east councils published rising higher than 1%, and when councils could raise a report claiming that a fairer deal was needed for the council tax by up to 2% without calling a referendum, south-east, because south-east residents faced unfairly needs to be thought about very carefully. Councils high levels of council tax as a direct result of low which continue to freeze council tax, possibly for two central funding for south-east authorities. They pointed further years, making five in total, will end up in even out that per capita grant allocations in the south-east greater dependency on the Government for their income. outside London were half the level of London and of I think that this is a very dangerous strategy. Councils the metropolitan areas. need greater control of their own finances by generating So, perceptions of fairness vary. Equalising resources a stronger local tax base, which will in future, of through government funding is surely fair, as a principle, course, include building business rate growth in which but is it not also fair that levels of council tax charged they will share financially. should be more equal between different councils? Some The Secretary of State has said recently that councils councils charge more than others despite being in the have a “moral duty” not to increase council tax. I same part of the country. Similar properties, with would not have put it like that. Surely the moral duty householders on similar income levels and with similar of councils is to deliver services needed by their residents, household costs, can pay widely different amounts of particularly those who are less well off. Councils could, council tax. of course, help themselves more by driving greater As an example, the average council tax this current efficiencies in the way that they work. As an example, year in my home city of Newcastle upon Tyne is in his settlement announcement the Secretary of State £1,039, which is the third-lowest in the north-east and said that if councils merged their back offices like the which, incidentally, is £540 lower than Wokingham. tri-borough initiative in London, they could save £2 billion. The lowest average council tax in the north-east is If those figure proved to be true, it would mean that 855 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 856

[LORD SHIPLEY] the population at large, when the impact of these there is potential for saving more than £20 million in announcements is finally felt, will know that it is the Tyne and Wear—money that could be redirected into Government who are responsible, not local government. service provision. Historically, hand-washing in public has a very bad I understand from the press that more than 20 councils record. in England are reported to have considered their financial As has already been said, the Audit Commission position in the context of whether council tax should has found that the most deprived areas have seen be frozen, and they have rejected this option and are substantially greater reductions in government funding planning to raise council tax by up to 2%. Of these, as a share of revenue expenditure, compared with 10 are Conservative run. I think that they are right to councils in less deprived areas. That says it all. I will choose to do this if they see it as being in the long-term not repeat examples that others have given in this interests of their residents. This is localism in action. It debate. My noble friend Lady Smith referred to Joanna reduces dependency on central government and can Killian, the chair of SOLACE, the Society of Local avoid cuts to services. Crucially, it provides greater Authority Chief Executives and Senior Managers. financial stability. Ms Killian said: However, what if councils think they should raise “This settlement will increase the risk of more councils being council tax by more than 2%? The Secretary of State financially unviable and focus needs to be given to how this said in his settlement announcement that holding a market failure is managed”. referendum would be, “democracy in action: if you want to hike taxes, put it to the How chilling a statement is that? people.”—[Official Report, 19 December 2012; col. 1603.] The single most important reason why I think the Yet, apparently, none plans to do so. So, why do Government will be blamed is the localisation of council councils shy away from holding referendums? I am tax benefit. No Conservative partners in the coalition regularly told that it is not worth doing because there are participating in this debate, apart from the Minister, would be a no vote if a council went to a referendum. I of course. So I will try to inject a Conservative view. doubt that that would always be true. Are those councils The noble Lord, Lord Jenkin, said: really saying that they are so detached from their “The poll tax was introduced with the proposition that everyone voters that even a reasoned case would be rejected? should pay something … We got it wrong. The same factor will I think that councils need to show much greater apply here, that there will be large numbers of fairly poor households leadership and self-confidence rather than putting all who have hitherto been protected from council tax, who are going their efforts into trying to persuade everyone that this to be asked to pay small sums”. is only a matter for the Government to address. If they Families already facing difficult choices between heating genuinely believe they cannot drive further efficiencies, and food bills will receive a bill for council tax for the why do they not put their case to their voters? If it is first time in March-April. Figures from the Institute really true that libraries have to close, swimming pools for Fiscal Studies show that the average working family are at risk and that cultural budgets have to be abolished, will lose £165 per year, while the average non-working surely the public should be given the right to vote on family will lose £215. How many will be willing to pay the option of paying a little bit more to prevent this council tax for the first time? One journalist has described happening. this coalition government policy as a “death wish”. I agree entirely with the noble Lord, Lord Smith of Leigh, who asked for there now to be a discussion I want to deal with the issue of council reserves. about the way forward, particularly in view of 2014-15. The Secretary of State has accused some councils of, I would welcome the consultation and further discussion “stashing away billions, turning town halls into Fort Knox, whilst that he has called for. at the same time threatening to cut frontline services”. This was in response to the Audit Commission’s report 3.53 pm that English councils’ tax reserves stood at £12.9 billion Baroness Donaghy: My Lords, I thank the noble in 2012, £4.5 billion more than in 2007. The Audit Lord, Lord Smith of Leigh, for initiating this debate, Commission considers that the building up of reserves although there is an element of sadomasochism in is praiseworthy. Councils increased their reserves by having to go through this again when we went through £1.3 billion in 2011-12, despite budgeting to reduce it on 19 December. I wish I had had the time to do them, and this has been a consistent trend over recent some research into how often members of the coalition years. Front Bench have said from the Dispatch Box “That’s The Audit Commission identified two factors that a matter for local councils to decide.” Closing libraries; appear to have driven that growth. Some councils were a matter for councils. Shrinking sports facilities; a highly effective in meeting their savings targets, creating matter for councils. Closing Sure Start centres; local underspends, which could be added to reserves. For government. Cutting bus services; that is up to councils. instance, in 2011-12 the total service spend, excluding In her letter to the noble Lord, Lord McKenzie, education, fell by 7.4% against a target of 6% in single following the debate on the provisional local government tier and county councils and by 8.9% against a target finance settlement for 2013-14, the Minister wrote: of 9% in district councils. The second factor identified “It is entirely for local authorities to decide how much they are was that councils were, prepared to spend on council tax support”. We have an “entirely” now. We should state quite “putting money aside to mitigate the risks of the ongoing cuts clearly that the Government are responsible for what programme and changes to council funding from April 2013”. is happening to local authorities. I firmly believe that That is all very sensible stuff, I would have thought. 857 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 858

The biggest concern expressed by auditors about ending March 2013, councils will have had a cut in the financial problems was that councils might try to their funding equivalent to 9.3% of their 2010-11 address their 2011-12 problems through capitalisation revenue spending. This amounts to £5 billion. Looking requested under exceptional circumstances or unplanned at these two years as a whole, the deprived areas of the use of reserves. It seems that councils cannot win, north of England, the Midlands and inner London whatever they do. Does the Minister have any tips— have seen the highest cuts. For the 20 most deprived perhaps one of the 50—about what is a reasonable areas, revenue spending has fallen by 14%; in the 20% level of reserve for a council, and would that be about least deprived by 4.4%. The juxtaposition of this the same level as the then Councillor Pickles stashed debate with that led by my noble friend Lady Hollis away when he was leader of Bradford Council? reminds us that unfairness in distribution of resources We should not forget the impact on jobs in local is not limited to local government. government. Thousands have already gone and many We see this also in the latest proposals covering more people will lose their jobs in the future. Thousands 2013-14 and 2014-15. The 20 most deprived authorities of years of collective experience will be lost. will have their spending power cut by an average of Local authorities have had their improved efficiencies 8%; the least deprived by 0.7%. Once again, the thrown in their face. They are subject to needless most deprived authorities are to be hit the hardest. media attacks from the Secretary of State and at the The Prime Minister’s local authority will gain same time they are to be given the dirty job of sending 1.1%; Manchester will lose 8.2%. Total central government out council tax bills for the first time to people who funding for all local authorities in England will fall by can least afford it. I was trying to think of an appropriate 3.9% in 2013-14, but there will be a swingeing song for local authorities to illustrate how unloved 8.6% reduction in the subsequent year. We must add they must feel by the coalition Government. The only to that the cuts in the two preceding years and one I could think of was “Nobody Likes Me (Guess acknowledge that, from the Autumn Statement, we I’ll Go Eat Worms)”. That was not quite right. There know that this pattern is set to continue to 2018. An was another one, however, an old Gracie Fields song, efficiency support grant will come as limited welcome which was “I’m A Lonely Little Petunia In An Onion news to those few who receive it, Pendle included, but Patch, Oh Won’t Someone Come And Play With Me?” the settlement means that local government will continue Perhaps they are a little twee for such a serious subject; to bear the brunt of public spending cuts. It is clear other suggestions would be welcome. from what the noble Lord, Lord Greaves, said, that access to that efficiency support grant is not going to 4pm solve the problems of Pendle. The fact that it could Lord McKenzie of Luton: My Lords, I thank my have been even worse, with some of the top-slicing for noble friend Lord Smith for initiating and leading this academies and the safety net less than feared, appeals debate today and acknowledge his record as a responsible reflected in business rates aggregate, although perhaps and progressive leader of a local authority. I should not effectively enough for London, with no extra make clear the position of Luton, so that it is on the 2% cut in 2014-15, is cold comfort to those faced with record. Like lots of other authorities, we have had to having to grapple with the consequences of the settlement. face significant redundancy programmes, tens of millions What will councils do in these circumstances? Of of pounds of cuts, we now share a chief executive with course, for the Secretary of State this should all be two other authorities and we increased council tax last easy—just follow the great man’s 50 tips, and all will year. I said to the current leader of Luton Council, be well. It is as though councils had not endeavoured Councillor Hazel Simmons, that I would hate to have to pursue many of the ideas set out and, indeed, to face the problems that she has to tackle. In my day initiated some of them. Perhaps we can review the we may have agonised over a million pounds here or relevance of some of the suggestions. For example, on there, but nothing like the scale of things which councils the proposition to improve council tax collection rates, are facing today—councils such as Luton, Wigan, can the Minister give us a view on the likely impact on Newcastle, Basildon, Durham, Pendle, and many more. collection rates of the new system of council tax I express my admiration, therefore, to those such as support? Sir Merrick Cockell, chair of the LGA and Councillor Simmons and my noble friend Lord Smith referred to by other noble Lords, offered the view that who stay at the helm and do their best to cope with the most councils will have to ask people on lower incomes, challenges that this Government confront them with including the working poor, to pay more council tax and who use their democratic mandate to seek to than currently. What is the Government’s assessment protect the most vulnerable. of how many councils will not have a scheme that is Our main focus today has been on the local government either the default scheme or equivalent to it? Research finance settlement, in the words of my noble friend by the New Policy Institute suggests that of the first Lord Smith, “the most complex ever”. My noble 130 schemes that it has reviewed, only 38 councils have friend Lady Armstrong highlighted difficulties with opted to absorb the reduction in support; more than the complexity, information still to come through and 90 will pass on the cut to poorer residents. It estimates the tardiness of it and how difficult that made it to that some 670,000 working age claimants, including consult meaningfully with local communities and the 162,000 low income workers, will face an average bill voluntary sector. The settlement follows on from the of £156 a year. What is the Government’s estimate? first two years of the current spending round, and to see this in context, we should reflect on those first two The Minister was kind enough to write yesterday, years, in particular the report of the Audit Commission, following our debate on 19 December. In that letter, Tough Times 2012, which is stark. Over the two years she refers to the basis on which local council tax 859 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 860

[LORD MCKENZIE OF LUTON] There has been much discussion about the support funding is to be distributed, which is to be consequences of the settlement for local councils and OBR forecasts for 2013-14. However, there is a phrase for taxpayers—and also for the challenges facing which states: councillors. The real victims, however, are not the “An adjustment was made to mitigate very high budget pressure”. institutions or even the elected members: they are the Can the Minister explain what that adjustment is? We individuals and families who rely on the services that really are about to enter the age of poll tax mark 2. the councils provide. These are vital services which, in some cases, keep people alive, and which ensure that On council reserves, the Government’s own policies individuals can have a decent quality of life. They are are driving councils’ need for prudence by transferring services which give a meaning to community and a risk to them. Council tax collection risks are made sense of belonging. We lose all this capacity at our peril. more difficult by reduced support for the poorest, and business rate collection risks are now to be shared 4.11 pm with government. We are at the start of a new system which the Government say that, left to them, they The Parliamentary Under-Secretary of State, Department would not wish to see reset until 2020. This is made for Communities and Local Government (Baroness Hanham): worse by embedding the disproportionately high cuts My Lords, along with other noble Lords, I thank the that have been weighted against many of the poorer noble Lord, Lord Smith, for generating this debate. It and most deprived areas in the funding baseline from has not been very long since we had a previous discussion 2013-14. Matters are not helped, of course by, the about the local government finance settlement just provisional settlement figures coming later than usual—the before Christmas, and here we are again. None the less, noble Lord, Lord Tope, made that point—when they I also want to thank the noble Lord for the measured were riddled with errors that necessitated corrections way in which he introduced the debate. He has a lot of within days. common sense and experience, which comes out in the way he speaks. To date, councils have coped with the cuts by maximising efficiencies and redesigning services, shedding I was asked, by the noble Baroness, Lady Armstrong, hundreds of thousands of jobs in the process. But, as most particularly, about the delay in the provisional the LGA and others point out, this will be impossible settlement. It was later than we would have wished to do for ever. These cuts will reach, and are reaching, and we appreciate that that has caused a great deal of front-line services; there will no longer just be salami-slicing late assessment. As the noble Baroness and others will efficiencies, whole services will go. My noble friend know, the annual Autumn Statement was late this Lady Smith made that point with some force. The year, so we could not get out the provisional settlements pressures on councils will get worse, as the need for any time before that was done. However, I reassure her statutory services, particularly adult services, grows, that we are working to publish the final settlement as and resources decline. Council tax freezes are all very early as possible in February. We have made clear to well, but even Tory councils, as the noble Lord, Lord other departments that local government needs all Shipley, said, are beginning to realise that they erode funding allocations—£150 million for the early the tax base in real terms for subsequent years. intervention grant topslice, for example, and the public health grant that has now been announced—as soon Of course, we hear the mantra that salvation for as possible. In the interim, noble Lords will know that local councils lies in their own hands, because if they grow we have each year been receiving local authorities that their business rate base they will retain half the increase— have come to discuss their own settlements; no decisions notwithstanding, of course, that the Government seem have yet been made on what they have put forward, intent on applying some of the increase in the local but they are in the process of being considered. As a share to reduce revenue support grant. If they build department, we have not been sitting back just letting new homes, they will garner the new homes bonus. But things happen; nor are we unaware of the difficulties as we debated when the Local Government Finance that this has caused. Bill was under consideration, not all councils have an Sometimes, I think we look at this from different equal ability to do this. Tight urban areas may simply ends of the telescope, but I want to say that I appreciate not have the land to expand the business base, and the that local government is in a changing situation. It is general squeezing of budgets, with the inevitable focus required to make major decisions as the financial on statutory services, reduces discretionary spend on position has moved us into having to reduce its grant. councils’ economic development services. I do not want anybody to think that the department In any event, local councils are not totally masters itself is sitting in luxury. It is not: we have lost nearly of their own destiny in this regard. The Financial 30% of the grant that is given to local government, Times today carried an article about the tightening of and if we do not have that, we cannot pass it on. We capital rules for banks by the FSA, which could cause are feeling the pinch as well; the noble Baroness, Lady the scrapping of property developments outside London. Armstrong, will know that there has been a huge There is not much that councillors can do about that. reduction in the number of staff. There are, of course, some interesting messages in Councils account for a quarter of all public spending. the recent report of the noble Lord, Lord Heseltine, This year, they will spend more than £114.5 billion. No Stone Unturned in Pursuit of Growth,wherehe That is larger than the budget of the National Health espouses the benefits of unleashing the entrepreneurial Service, and twice the entire defence budget. It is also spirit of local areas; we agree. However, government more than double the debt interest, so we are not itself has to have a strategy for growth if this is to be talking about peanuts here. We are talking about a meaningful. very substantial slice of the nation’s budget. It is vital 861 Local Government: Finance Settlement[17 JANUARY 2013] Local Government: Finance Settlement 862 that local authorities continue to play their part in There is also up to £1 billion in community tackling the inherited budget deficit. They have to infrastructure levy. I was rather taken aback to hear a make sensible savings and deliver value for money for noble Lord say that councils could not do what they the taxpayer. want. The general power of competence is a very fundamental part of giving councils responsibility for I know that no noble Lord who has spoken will all their own decisions and for what they can do. There agree with the following statement but we believe that is the benefit from the £2.4 billion Regional Growth local government has been given a good deal in 2013-14. Fund and the £770 million Growing Places Fund, so It is worth noting that it was exempt from further there are other sources of money coming to local reductions in the Autumn Statement. We could have councils. lost another 1%, which did not happen. The important protection that this provides will give local authorities The noble Lord, Lord Smith, acknowledged that time, I hope, to look at where they can change services councils will have to achieve savings and I acknowledge and manage savings, bearing in mind that next year that they are doing so. The noble Lord, Lord Tope, will probably not be any better. asked me to say thank you to local government, which I have no hesitation in doing. As a former part of local This is the beginning of a new settlement. It is a government, I know and I appreciate what it does and fundamental change from the old ways of working. I know that councils have an enormous amount to do Councils will be expected to make changes, which I in supporting their local communities. That is the view appreciate is not always easy. The accusation has been across the department and of our Ministers. We appreciate made that this budget or settlement is not fair but I that that is so. If it was not so, we would not be disagree. We think that it is fair. Of course, because of passing any of the additional powers or responsibilities the way in which the formula works, there are differences that we are to local government. I hope that will in certain areas. Northern councils have not come off underline a little how the noble Lord, Lord Tope, and worse than anyone else. We understand that some we feel about local government. areas got less than they anticipated but the north-south Returning to the noble Lord, Lord Smith, and split was not part of a formula. We have retained the others, he was gracious enough to accept that local four floor dampings and the protection that they offer government was going to have to achieve savings and most councils. This year, we have gone further and everybody has known that. There has also been a huge stretched the banded damping floors so that they give amount of advice as to how those savings might come more weight to the councils that are most dependent. about and a great many local authorities are already At the same time, the Government have introduced following that. They are sharing chief executives, back- banded floors for fire and rescue services. office services and contracts for open spaces and waste We also have restored the level of the relative resource management, but not all of them are doing that. amount to that for 2010-11 to help authorities with a Those that are behind need to learn from those that low council tax base. We have introduced a safety net are doing it. The Local Government Association—to to provide additional protection where councils are give it its due—has some very powerful peer help for likely to lose resources. Noble Lords will know that, local authorities. Those that are not doing it and do between the top-up and tariffs, no one will be worse not understand it need to ask for that help, which I off than having 92.7%. There will be a safety net on know is there. the business rate to help provide that, which will help The noble Lord, Lord Smith, who made all the to ensure that service provision does not suffer as a major points, also mentioned the collaboration between result of volatility in the council’s business rates. The public bodies. Community budgets are great and the noble Lord, Lord Smith, referred to the reduction in four whole-place budgets will now be extended out. the business rate and what would happen if there was They are demonstrating very clearly that where public a big drop because, say, a business went out of business. bodies get together, they can pool their funding and The answer is that the safety net will pick that up and work together to help individuals. Troubled Families is there would be a within-year settlement. There would a good example of co-operative work where not everyone not be a big problem. is tootling off, doing the same thing for the same family, but one person has responsibility.This is beginning Next year, councils will host new financial incentives to work and beginning not only to save money—that to increase their income. If they build more homes—we is not the only purpose of this—but to set those have heard a lot about the new homes bonus—they families on a road which will, we hope, lead them to will benefit. There was a suggestion that the new jobs and their children into education, away from all homes bonus would be cut. The new homes bonus is as those things that were holding them back. it was expected to be. There was to be topslicing next year but local authorities have asked that most of that Community budgets are not as specific as the whole- new homes bonus should go into the settlement, which place budgets but they also demonstrate that you can has happened. The new homes bonus is already bring public bodies together to manage their budgets contributing to the budget. It also is worth noting that better. When I was a leader of a council, you could not the new homes bonus does the job it is meant to do. It do that. I often said it was like being in a little pays for, and helps to pay for, the development of new kingdom with a wall around you. You could not share homes. Empty homes also benefit from the new homes budgets so this is a great move forward. bonus. While it is not ring-fenced, it supports local The other thing that was brought up in particular authorities in providing infrastructure that will support was the business rate appeal. Room has been made homes. within all the settlements to allow for appeals. There is 863 Local Government: Finance Settlement[LORDS] Local Government: Finance Settlement 864

[BARONESS HANHAM] 4.28 pm headroom now—I think of about 8%—to settle these Lord Smith of Leigh: I thank all noble Lords for problems. The Local Government Association and the their contributions to this debate, particularly the two department have spent a long time agitating together who were so keen to contribute that they found the to see if this could be done on a more individual basis, stamina to participate in two debates today. but it just is not possible because the number of outstanding appeals is not known. The support has The general theme that emerged in the debate been given and is there so I hope that that will be concerned what the basis of funding for local authorities understood. should be and whether it should be based on the ability to raise revenue or on need and deprivation. We There was some concern about rural local authorities shall need to come back to that theme. Noble Lords getting more than other authorities. In fact, rural talked about the complexities and difficulties of the authorities are a bit peeved as they feel that they are new system. A number of noble Lords, including getting less than others. One needs a balanced myself, mentioned the problems associated with valuation understanding of who is getting what. The noble appeals and the impact that that might well have in Lord, Lord Greaves, suggested that the shire district some areas. The noble Lord, Lord Tope, mentioned councils were worse off and said that Pendle, Hastings that issue and I agree with his comments in that and Great Yarmouth councils could bid for an efficiency regard. The provision will cause difficulties in lots of support grant. He will know that the efficiency support areas and London may be worst affected. grant is allocated to seven councils so that their spending power is not reduced by more than 8.8%, which is the My noble friend Lord Beecham concentrated on level for all local authorities. Anybody who has studied needs. Clearly, coming from the north-east and Newcastle, the figures will know perfectly well that there is a that is something that he understands. None of us range here. Some local authorities do better than wants to be in an authority that is dependent and has others as regards spending power but the relevant high deprivation. We want to work to get rid of councils stood out as being ones that were very much deprivation but we will not do so without support. losing out. The interesting part of the contribution from my noble friend Lady Smith of Basildon was the Basildon The retention of the business rate will, of course, letter. Presumably that letter is going to local authorities have different effects in different parts of the country. across the country and is obviously making many The noble Lord, Lord Greaves, was right to point out people worry about their jobs. It is a very difficult that it will be easier to retain it in some places than in matter. I have been undertaking an exercise in my others. We will need to monitor how that works. authority where we have been talking to front-line However, local authorities have asked repeatedly to staff. It is not easy when you know that, as you explain retain the business rate. Although they clearly cannot the issues in local government, particularly funding, keep all of it, this is a good step in the right direction. some of the people you are talking to may not be there As we have made clear, we hope to raise the 50% figure come 1 April. slightly as the financial situation improves. I make no promises in that regard but I hope that that will As usual, the contribution of the noble Lord, Lord happen in due course. Greaves, was interesting. When he talked about his seven authorities, it illustrated his point about how A number of specific questions were asked, which I settlements these days seem to be skewed, as it were, will need to look at to see whether there is anything towards success. Authorities that have the ability to further that we need to take on board. I wish to finish raise business rates or get new homes or whatever will my speech by commenting on the council tax freeze. benefit, whereas areas such as his own in Pendle will That issue is very important as it has meant that local have much more difficulty and will suffer. He illustrated taxpayers have been protected from large council tax that very well. My noble friend Lady Armstrong talked increases. The noble Lord, Lord Shipley, said that it about complexity and made the point that it is not just was up to councils to decide the level of council tax local authorities that are impacted by the local authority that they needed to levy and that they should be able settlement but the voluntary sector, which relies on to impose it. However, that was the old position and it local authority funding. Obviously, if local authorities caused a great deal of angst and upset. For that reason are taking cuts, there will be cuts in the voluntary it was decided to limit council tax increases. Local sector and, if we get settlements late, they will get councils can increase their tax this year by up to 2%. If them late too. they feel strongly that they need to go above that level, There was an interesting contribution from the they have to put their case to their local residents and noble Lord, Lord Shipley. He talked about fairness ask them whether they are happy for that to be done. and raised the issue of council tax. If I understood Therefore, rather than just being faced with a rise in him correctly, the problem with council tax averages—as council tax, residents will be asked whether they think the noble Lord, Lord Greaves, said—is that it all that it is appropriate. That seems to me not an unfair depends on the banding. If an authority has a huge way to proceed. proportion of band A properties, then its average is I will draw my remarks to a close before I run out of much lower than other areas, so maybe raising bands breath and can no longer speak. I thank all noble would be quite difficult. My authority rejected the less Lords who have contributed to this interesting debate, than generous offer from the Secretary of State to in which some looked at this issue through a different freeze council tax this year. It would have cost about end of the telescope from me. However, that does not £1.5 million to do it this year and would have deferred surprise me. the cost into next year. I admired the courage of the 865 Local Government: Finance Settlement[17 JANUARY 2013] Unemployment: Young People 866 noble Lord, Lord Shipley, when he suggested a referendum unemployment, behind the economy and immigration, on increasing the council tax. I proposed in Greater to be the third most important issue facing the country, Manchester that we had a congestion charge, which and 80% consider government policy to be ineffective. went to a referendum. I still have the scars, so I am not Work builds families, affirms personal values and too keen on that. binds communities together. Being out of work for My noble friend Lady Donaghy took a very brave long periods impacts health and well-being. Youth line when she tried to take a Conservative view of unemployment cost the Exchequer more last year what might have been said, given the absence of than the entire further education budget for 16 to contributions from that side. She then spoke about 19 year-olds in England. The digital world, particularly reserves and at the end tried to come up with a song. the social media, seems to be an ideal platform to Whatever song it is, I am sure it will be the blues. reach out to these young people in their own language My noble friend from the Front Bench, Lord McKenzie and medium, motivating and informing them about of Luton, obviously defended his own authority, quite employment opportunities. Online tools are how 16 to rightly. However, I thought there was an anomaly 24 year-olds communicate and keep abreast of events. there that I had to mention. With his experience and 82% of young people use the internet to look for expertise he raised issues which we had rehearsed advice and information. 95% of 16 to 20 year-olds and during the passage of the Local Government Bill and 74% of 21 to 24 year-olds have used Facebook in the which we need to think about. He stressed—as many past four weeks. of us did—that we are talking not just about the The digital economy, with which these young people impact on institutions such as councils, which is mostly have such facility, is what many businesses, particularly ongoing, but about the impact that these cuts will have SMEs, are demanding—20% want a web designer, on individuals and communities. 12% see e-marketing as key to growth and 10% want Finally, the Minister, in her usual charming and help with customer management systems. More than informed response, replied as best she could about the three-quarters of businesses acknowledge that young issues raised. She talked about the role and size of local people have these digital skills in abundance. Some authorities. We agree that, if there needs to be a reduction 90% of the young unemployed tell us that they can use in public spending, part of it will have to come from social media to promote an idea or cause. Nearly 70% local authorities, but it should not be disproportionate. can design a web page, 20% develop an app, and many That is the issue. We will obviously disagree about are confident at coding or working with databases. Yet whether it is a good deal or not. The good news is that less than 25% of businesses will offer these young we are exempted from the Autumn Statement this year, people a first-time job or training opportunity. although we may not be in future. The Minister tried O2 estimates that the unused digital skills of the young to explain the concept of fairness by saying that she unemployed are worth some £6.7 billion to the British had been attacked by all sides. Of the three points that economy. Can it really be beyond the wit of government she raised, she probably accepted that we will have and man to bring together these skills with the digital more collaboration and that we will monitor what is needs of business? happening in the settlement, so perhaps two out of three is not bad. It is a better strike rate than most However, many young unemployed have no skills to strikers in the Premier League, other than van Persie. apply for work. Jobs Network—a site which colleagues and I have developed; again, I declare my interest—enables Motion agreed. those leaving an individual school or university to access advice and help from alumni and from local businesses providing work experience. It provides help Unemployment: Young People in preparing a CV, interview techniques, practical Question for Short Debate mentoring and career advice. Schemes such as this have real scalability and could be rolled out across 4.35 pm schools throughout the United Kingdom. Asked by Lord Chadlington The Government recognise the importance of online To ask Her Majesty’s Government what is their communications. Gov.uk is an excellent source of general assessment of the use of online tools, including information; Universal Jobmatch is the Jobcentre Plus social media, to combat youth unemployment. online service; and Plotr and FutureYou are excellent first steps. However, despite this, we are not maximising Lord Chadlington: My Lords, there will be no argument online potential. Most government-run and funded in this House that to have 945,000 16 to 24 year-olds— initiatives are patchy, ill co-ordinated and not geared roughly six times the population of Oxford—out of to what young people want, but rather geared to what work in the United Kingdom is a blight on our society. government wants to provide. Youthunemployment is 20.3%: 100,000 of these young At Million Jobs, the unemployed tell us that they people have been out of work for more than two years; want an online one-stop jobs shop that provides a 266,000 for more than 12 months; and 436,000 for complete service, including mentoring. They are looking more than six months. One new graduate in every five for a national equivalent to our Jobs Network. Plotr available for work is unemployed and 36% of recent shows some promise of providing this but does not graduates are employed in lower skilled jobs. A YouGov have mentoring and networking capabilities. Research poll commissioned by the independent Million Jobs suggests that this and other government-funded sites campaign, with which I am involved—and I declare appear to be too patronising in tone and too basic in the interest—revealed that voters considered youth content. Every government employment initiative has 867 Unemployment: Young People[LORDS] Unemployment: Young People 868

[LORD CHADLINGTON] has developed its own initiatives in this area. Finally, its own website but they are not co-ordinated, one is investing real money in getting the young into work not linked to another and they are boring and lack will save the Exchequer billions of pounds, help keep focus. The coalition Government inherited 750 public our families and local communities together, and prevent sector websites, which demonstrates the extent of waste this young generation being a lost generation. Can the and confusion when it comes to an online co-ordination Minister please take each of these points in turn and strategy. outline the Government’s attitude and policy towards Lessons can be learnt by considering successful them? initiatives in the private sector. O2’s online campaign 4.44 pm Think Big has been a success because from the first visit it is fun and engaging, and its success shows the Lord Ramsbotham: My Lords, I congratulate the benefit of sustained and integrated promotion, with noble Lord, Lord Chadlington, on obtaining this debate 4,200 Twitter followers and an ongoing editorial press and on his masterly survey of the current situation. I campaign. Similarly, Livity, a youth-engagement agency, hope that he will forgive me if, before focusing on works with young people to create innovative new combating unemployment among youth in contact campaigns. Clients such as Google, Roundhouse and with the criminal justice system, I take noble Lords on the NHS receive a unique insight into young minds, an indirect approach to my conclusion about the and in return Livity’s young people get excellent training context in which online strategies can be employed, and employment opportunities. inspired by two sentences in the UK Commissioner for Employment and Skills, Valerie Todd’s, forward to Some of the government-run sites are impossible to her report, The Youth Employment Challenge, published use. Fewer than 10% of student-loan applications are in July last year. fully transacted online because of the complexity and “Lack of experience combined with a lack of social contacts frustration involved. in a labour market which still relies heavily on informal methods The private sector also recognises that there is an of recruitment makes it increasingly difficult for young people to inherent contradiction in the way that social media get a foot on the ladder”. works. Most people use social media to communicate Secondly, and engage with and mobilise each other. It is therefore “Commissioners are committed to encouraging and incentivising very much a bottom-up way of communicating. Anything UK employers to embed a culture of developing and recruiting young people into routine business practice. It is in all our that suggests top-down control will, by its very nature, interests to rise to this challenge”. deter already disillusioned young people. In a recent I am one of those who believe that the only raw discussion about this anomaly with the Department material that every nation has in common is its people. for Work and Pensions this difficulty was confirmed. Woe betide it if it does not do everything that it can to It has piloted 10 Facebook pages that have not met identify, nurture and develop the talents of its people—all expectations. its people. If it does not do that it has only itself to There is a need for the social-media drive to be blame if it fails. co-ordinated, and to interact with young people through I declare another interest in youth development as a channels that they use and have established themselves. past member of the City and Guilds strategy board at Real attention must be paid to mentoring. Of course the time of what I regard as one of the most disastrous that is where Jobs Network succeeds, by linking school political decisions ever made. It was the refusal by the leavers and university graduates to mentors in their then Secretary of State for Education and Skills, Ruth local communities. This approach is supported by a Kelly, to accept the recommendations about raising recent report on youth unemployment. Compared the status of vocational education made by Mike with young people who sought no career advice, those Tomlinson in 2004. It has resulted in far too many who had discussed job opportunities with four or young people being forced to go down academic routes more employers were almost twice as likely to report to which they are entirely unsuited rather than having having a good idea of the knowledge and skills needed an early introduction to vocational courses and so to do a job, and they are more than twice as confident suitable placements in the labour market. about their ability to find a good job too. The lack of vocational training has had another Over the last 30 years the UK has had an average of unfortunate result. At a time when the country is some 500,000 young unemployed people. Online and crying out for growth, employers are complaining social networking provides a unique avenue by which bitterly about the skills shortage that is preventing we can reduce this horrendous waste of human talent them from being able to expand and develop their and energy. So I have two big questions for the businesses. This is coupled with attitudes to work in Government. First, how do they expect to link the general which include a refusal to consider menial jobs online skills of the young to the needs of business? because they are what some term “immigrant work” Secondly, how can the Government develop a coherent and an inability to turn up on time. online strategy that achieves at least five things? The These attitudes would have come as no surprise to first is a recognition that online communications require Glubb Pasha, whom noble Lords will remember as the a bottom-up and not a top-down structure. Secondly, commander of the Arab Legion until 1956. He wrote a the tone of online communications, if they are not to monograph about empires which, he said, lasted for be ridiculed or ineffective, cannot be patronising. Thirdly, 250 years or 10 generations. The British Empire, according with so many government initiatives being taken, they to him, lasted from 1700 to 1950. In characterising need to be co-ordinated and focused. Fourthly, there is their rise and fall, he catalogued the drive and ambition much to be learnt from the way that the private sector of their early generations, followed by the high but 869 Unemployment: Young People[17 JANUARY 2013] Unemployment: Young People 870 turning point marked by universal access to higher That leads me to hope that the Government will not education, followed by decline, encouraged by lethargy put all their youth employment-finding eggs in one and lack of ambition, marked by people thinking that digital basket. their education entitled them to a living. That is the end of my indirect approach to the That may or may not be true, but what is undoubtedly subject of this debate; I will now concentrate on my true is the confused state of our world, which is in the direct approach. The noble Lord, Lord Chadlington, midst of an information technology revolution that has already mentioned Plotr, the Government initiative nobody knows how to control, and whose impact on launched by the Prime Minister last year to help government, economies and how people live is imperfectly young people to plot their careers online. Nick Hurd, understood. This confusion includes the changing role Minister for Civil Society, said recently that Plotr had of people, as labour-saving devices take over, making the broad aim of, it difficult to determine how many people are needed “inspiring young people and connecting them to all the opportunities and in what jobs to make the world go round and what available to them to make the most of their lives”. skills they need in order to earn a living wage. That is very worthy and praiseworthy for the digital This is of course simplistic, but it provides a backdrop haves, who have access to online tools and social to the circumstances of the group of people to whose media, but not so good for the have-nots, who include needs I wish to draw attention. It includes the appalling the 8,862 between the ages of 15 and 20 held in young lack of education and job skills in young offenders, offender institutions, who face the double whammy of which is an indictment of our educational system. I also being denied access to the work experience and admit that I cringe whenever I hear political parties social contact that is deemed so essential by employers. talking competitively about their “virtual” employment The Justice Secretary, launching his rehabilitation schemes—virtual because they do not in fact offer revolution, announced his determination to reduce either real employment or the prospects of such—or reoffending, to achieve which a home, a job and a putting people back to work, when they know, and I stable relationship are said to be the three most important know, that the work that they are promising simply is contributory factors. I expect that the Minister, in her not there. There is a clear disconnect between the summing up, will commend the use of online tools number of jobs available, the skills needed to perform and the social media to combat youth unemployment, them and the skills base of the potential workforce. I with all the advantages trumpeted by Nick Hurd. fear that until and unless that fact is recognised and However, I hope that she will also encourage the appropriate remedial action taken, the situation can Justice Secretary to ensure that young offenders, for only get worse. whom everything possible must be done to deter them I once had a conversation with the head of education from a life of crime, are given access to the online and and skills at a young offender institution, who told me social media tools, if not individually because of security that her first task was to motivate young people to reasons, then at least in learning and skills departments want to learn. She also wished that she had vocational in establishments. training classrooms so that she could motivate them to want to work. She welcomed the aptitude tests introduced 4.53 pm by the previous Government under its new deal, because Lord Mitchell: My Lords, I, too, will start by thanking they gave such a clear indication of individual talent the noble Lord, Lord Chadlington, for securing this and potential, but she could not exploit that knowledge debate. Youthunemployment is an incredibly important because of the lack of facilities to enable young people issue, and it is to his great credit that he raises it today to develop their skills. and has spoken so knowledgeably and passionately on In parallel, I have also come to the conclusion that this subject. I will also pay tribute to the work he has the inability of young people to communicate verbally done in equipping school leavers for the jobs market. is the scourge of the 21st century. However able they I would like to set out my own background in this are at digital communication, they cannot communicate area because it is pertinent to what I have to say. I have either with each other or with their teachers. That is been involved in information technology for most of largely due to the absence of what used to be regarded my adult life. I started my business career in an as normal aspects of family life such as eating meals environment where data were stored on punch cards together. The chaotic and dysfunctional lifestyles they and massive mainframe computers were water-cooled. live are, almost from birth, dominated by the television Today, this iPad that I am reading from at this very screen, computer games and social media. moment has many thousand times the power and I accept that that this could be seen as helping them internal storage memory of those massive machines—and to prepare for life in today and tomorrow’s world by I can fit it into my briefcase. familiarising them with the tools of emerging society. In 2000, when I was first introduced into your However, there is what is termed a digital divide Lordships’ House, I founded a charity called the between those who have access to and can use e-Learning Foundation. Its remit was to ensure that online tools and the social media, and those who have every school child in this country had their very own not and/or cannot. That is why, when considering computing device which they could use at school as youth employment, it is important to strike a balance well as at home. We thought then that the computer between reliance on these tools, and on the social should be as ubiquitous as the pencil and we recognised contacts and informal methods of recruitment that that, in the 21st century, IT skills were critical. Most of are deemed by employers to be such an essential part all, we were concerned about the problems associated of the process of getting on the employment ladder. with the digital divide, which the noble Lord, 871 Unemployment: Young People[LORDS] Unemployment: Young People 872

[LORD MITCHELL] young people no longer get their news from print, but Lord Ramsbotham, has just mentioned, that occurs from their screens. There are downsides to this, of when the population is segmented into those who are course, but there are also benefits. Equipped with IT literate and those who are not. The devices we first digital skills, young people are in a better position to used were laptops and even desktops. They were heavy, help companies, many of which are falling behind in expensive and, in the case of the desktop, clearly not their adoption of digital technology. One programme mobile. Today we have a new world. Again, the iPad in started last November in the United States catches the front of me demonstrates how it has all changed and eye. It is called the Social Jobs Partnership, a collaboration how the technology today fulfils the criteria we were between Facebook, the US Department of Labor and seeking: powerful, small and mobile. When I read that the National Association of Colleges and Employers. over the Christmas period, iPads and other tablets It uses five of the biggest job-listing sites in the United were the hottest consumer presents, it comforts me States to gain access to 1.7 million vacancies on Facebook that the objectives we set at the e-Learning Foundation and builds upon research from the National Association are now close to being met. In a few years’ time, no of Colleges and Employers which shows that companies young person will be without a tablet, much the same want to use social media better to contact potential as very few are without their smartphones. recruits. Some 87% of those surveyed suggested that When we come to youth unemployment, it seems candidates “like” a Facebook page of companies that that there are two sides to the picture. First, as the they are interested in. noble Lord, Lord Chadlington, has already stated, it I listened with interest to what the noble Lord, is an extremely discouraging situation. But the other Lord Chadlington, said about his work on programmes side is slightly more reassuring. A whole generation to give school leavers the skills they need to go out and has grown up with the skills needed in the 21st century. find a job. One area that needs to be addressed is What we need now is to channel those skills. I contend personal presentation and interview technique. I know that with better recruiting methods, the young unemployed it seems old-fashioned, but too many young people do can be matched with dynamic companies, particularly not have a clue how to present themselves. Even in the smaller ones. digital age, this matters. Maybe peer-to-peer contact I turn, first, to the challenge. Currently, almost would help. I want to address some of this as I 1 million young people are unemployed in the UK, proceed. with 430,000 claiming jobseeker’s allowance. Of particular My mantra on job application is that you never concern is the number of young people who are finding have a second chance to make a first impression: so themselves in the very difficult position of being make a first impression. I know it seems blindingly unemployed for a long period of time. Almost a obvious, but those looking for a job need to know that quarter of a million are currently among the long-term they must turn up on time—indeed, before time—for unemployed, which is at its highest level since 1994. an interview. To be five minutes late and flustered is Given that long-term unemployment for the whole unacceptable. They should look attentive and dress population stands at 1.3 million, we need to do everything appropriately. Young people need social skills that we can to ensure that our unemployed young do not may not come easily to them: how to present themselves find themselves out of work for extended periods or and how to speak on the telephone. Most of all, they even for the rest of their lives. The demise of the need to do their homework. In a world where information Future Jobs Fund is to be regretted, especially since is so easy to come by, why is it that some interviewees the DWP impact analysis showed that for each person do not research the organisation they are hoping to it contributed £8,000 to the economy. The Work join? In my view, it is because the education system has Programme, which was designed by this Government failed them. Schools and universities need to do more to replace the Future Jobs Fund, appears to have been in instructing young people how to prepare for job-seeking rather badly named because it is not a programme and and interview technique. it does not create very much work. Of the 785,000 people who have been referred to the programme, only Young people also need to be aware of the perils of 18,000 have achieved what could be a called a job the digital world. Digital presence is very important, outcome. Essentially, in its first 12 months, the Work from the wording used in an e-mail to what they put Programme has placed only two in every 100 participants on their Facebook page. Employers look on Facebook into work. That is not very impressive. I shall put it and it is not helpful if silly videos, or worse, are on more strongly. The Government have a habit of their sites. CVs need to be better. I am associated with announcing shiny new policies, each of which grabs a a wonderful organisation called the Amos Bursary, set quick headline, but because they have been ill thought up by my noble friend Lady Amos and her sister. This through they wither on their implementation. This is charity helps young black men find their way to full-time just another example. employment. For some of these young men, university I must emphasise to your Lordships that, for my can be very daunting, and for one reason or another party, youth unemployment is very high up on the they lack personal networks. Mentors can help. agenda. My right honourable friend Ed Miliband has Social networking sites offer young people the said that the real jobs guarantee would give six months opportunity to link in with the outside world. I believe of paid work to anyone aged under 25 who has been that much more can be done. LinkedIn is a good out of work for more than a year, and that it would be example. Many of us use it and it seems to be geared paid for by a tax on bank employment. to the professional classes, but why should it be just Social media provide opportunities for us to help them? It is free, so why is it not used by more young find jobs for more young people. In today’s world, unemployed people? 873 Unemployment: Young People[17 JANUARY 2013] Unemployment: Young People 874

In my family two young people have set up companies, would be a route to success. I will leave others to judge by coincidence, in the graduate recruitment sector. I whether I have achieved success so far but I very much need to declare this interest. First, my own nephew, understand how important it is for those who do not Keren Mitchell, is a founder of the JobCrowd, and my naturally want to follow an academic route to have son, Felix Mitchell, is a founder of Instant Impact. other clear options available to them. Both are relevant to these points. Sometimes family Youthunemployment is still too high in this country, gatherings are interesting. as my noble friend Lord Chadlington made clear. The JobCrowd is the graduate recruitment equivalent However, the levels of worklessness among some young of TripAdvisor, which provides anonymous references people cannot simply be put down to the present state for hotels and restaurants. In this case, the site enables of the economy. The problem we face, as noble Lords job applicants to get inside information from their have indicated in their comments today, is much more peers who already have jobs. They answer questions entrenched than that. For the past decade and longer, such as, “What is it really like?” and, “Can I believe too many of our young people have been trapped on what I’m being told?” Instant Impact places graduates the margins, some of them growing up without positive with small and medium-sized companies—in particular, role models or in families where no one has ever held a paid interns. I want to say a little about this before I job, failed by underperforming schools or dropping finish. out of education without any qualifications, and ending Competition for jobs is very high and every applicant up in the jobcentre at 18, unready for the world of is doing his or her best to make their CVs seem as work. interesting as possible. Internships really matter and Even before the recession, youth unemployment the sad fact is that many young people believe that it is had started to rise. In 2001, just over half a million necessary to take unpaid positions just to show that young people were unemployed. By 2007, that number they have a track record. Students doing holiday jobs had already increased to just over 700,000. As all are one thing, but people having to work for nothing is noble Lords agree, we cannot afford to neglect the simply wrong. Many of the worst offenders are in the next generation. Whether it be keeping them in school NGO or charitable sector. To be honest, charities that or vocational training, or helping them into work, this I have personally been involved in have also done this, Government are committed to supporting young people, so I am not without guilt. Companies do it, particularly ensuring that they realise their potential. those in media and marketing, where young people are willing to sacrifice their pay just for the glamour. It Even in these tough economic times, we have seen also exists here, in this Westminster village. How many that it is possible to make some progress. Youth MPs and members of your Lordship’s House have unemployment is down by 72,000 in this quarter alone. unpaid young people working for them just so that If you take out those in full-time education, that fall is they can put this placing on their CVs? It is wrong; it even greater—down 90,000 to 626,000, the lowest must change, and change quickly; and we should set figure since the beginning of 2009. However, we are the example. not complacent, and I am not here to talk down the situation. There are promising signs that the steps we This digital age is presenting new opportunities in are taking to tackle youth unemployment are having so many ways, but the most successful of all has been an effect but, clearly, we need to do more. social networking. If we can use this technology to help solve the iniquity of youth unemployment, we I will come to online issues in a moment but will will have achieved a lot. first say something about investment and how we have radically changed the way we are approaching the issue of youth unemployment in this coalition 5.05 pm Government. Through the £1 billion Youth Contract, Baroness Stowell of Beeston: My Lords, I am very this Government have brought together previously grateful to my noble friend Lord Chadlington for piecemeal provision and underpinned it by greater securing this debate. I feel as strongly about youth funding, scope and ambition. With the DWP, the DfE unemployment as everyone else who has spoken today. and BIS working together, the contract offers intensive First, I associate myself with the comments made by employment support for young people, targeted at the noble Lord, Lord Mitchell, about presentation addressing the particular barriers they face. and the importance of communication. Like the noble We know that a lack of experience often proves a Lord, I believe it is essential that people get it right problem, so we are creating an extra 250,000 work because there is only one chance to make a first experience places over the next three years. Of 65,000 impression. young people who have started work experience already, I also very much share the views of the noble Lord, nearly half are off benefits 21 weeks later. We know Lord Ramsbotham, about the importance of vocational that for businesses, employing a young person comes education and of people having a clear route to success with both a cost and a risk attached, which is why we via that road if an academic route is not right for are offering 20,000 new apprenticeship grants and them. It may interest noble Lords to know that I was a 160,000 wage incentives to encourage employers to teenager in the early 1980s and did not go to university. take on young people. By easing the costs, it becomes I do not remember anybody encouraging me to go but more straightforward to give young people a chance. that may have been because I desperately wanted to go However, we are also emphasising the potential benefits to work. I was very fortunate to have two wonderful to employers, which is incredibly important—a point parents, who said to me that getting a job, being made most forcefully by my noble friend Lord dedicated to it and doing it to the best of my ability Chadlington. As he said, young people are what is 875 Unemployment: Young People[LORDS] Unemployment: Young People 876

[BARONESS STOWELL OF BEESTON] The Government have recently made data known now as “digitally native” and can offer skills available that compares university courses—this is that are valuable to businesses, certainly to small and on a website that we run called Unistats—but we medium-sized businesses that might not naturally have are also making that data widely available. The those skills already available to them in their existing consumer service Which? has taken advantage of this workforce. and has already adapted that material into its website, which is available to those who want to be able to see In the DWP, alongside these valuable interventions, and compare directly how different courses might we are harnessing online tools and channels ensuring provide the kind of training and education that they that our employment services reflect how claimants—and want. young people in particular—choose to interact. I have given a range of examples but the most recent and The National Apprenticeship Service provides significant is the Universal Jobmatch; an online service information on a nationwide basis, but we know that which has transformed the way people look for and there is more we can do to promote the schemes find work. It is simpler and quicker for jobseekers to available. We think that the idea set out by the noble use, with alerts when new jobs are posted. It provides a Lord, Lord Adonis, in his article in the Financial free service for employers, and the service also benefits Times earlier this week—that UCAS should become Jobcentre Plus advisers by modernising how they review an integrated higher education and apprenticeships claimants’ work search activity. service—is a great one. We have noticed that UCAS is enthusiastic about this as well and David Willetts is However, as the noble Lord, Lord Ramsbotham, already pursuing this. said, we must recognise that not all people have access to the internet, and that not everybody has the skills to All these national services are tweeting and using be able to use these kinds of services. I would say to social media to communicate what they are doing. I the noble Lord that even the most basic jobs these myself have retweeted things in the past to promote days do require some form of digital skill, even if it is what they are doing. But we must be careful that we do just data-entry in a warehouse. We must recognise that not try to control too much from the centre. As with if someone is not able to use some of our online the great initiative that the noble Lord, Lord Mitchell, services to find jobs, it is our responsibility to make referred to, TheJobCrowd, if something is working sure that they are trained so that they can use those and people are using it, far be it from us to seek to services, because they will need those skills once they control it. arrive at work. I was interested to hear that the initiative As my noble friend said, plotr.co.uk is a new website that the noble Lord, Lord Mitchell, said that he launched arising from a partnership of businesses in response to when he first entered the House of the Lords was his the Prime Minister’s direct challenge to find new ways e-learning foundation and the provision of devices. I to inspire young people to broaden their horizons. wish him continued success with that. That is something that we want to see continue. However, as and when new local schemes, such as the Jobs I turn now to what we are doing for those still in Network, which my noble friend mentioned, get off school and the points made by my noble friend Lord the ground and achieve results, we want to hear about Chadlington about online communication to promote them so that we can promote them to other schools for opportunities—all of which I agree with. I believe that heads to consider. Earlier I talked about today’s debate the bottom-up approach and co-ordinating our effort to my honourable friend Matthew Hancock, the Minister are not mutually exclusive—neither is his point about for Skills, who works out of both BIS and the Department tone. We need to do all these things, as well as learn for Education. He asked me to inform my noble friend from what works in the private sector and be open to that he would welcome learning more about the Jobs new initiatives that we do not run ourselves. Network. One national service that is available is the National The noble Lord, Lord Ramsbotham, pointed to the Careers Service, which was launched in April last year. risk to young offenders of long-term unemployment. It supports young people in making training and It is worth pointing out that when young offenders are career choices. I note what my noble friend said about released they are referred directly to the Work Programme some of the services available, but I am sure that a at the start of their claim. This provides intensive service that is less than a year old is seeking to improve support and providers are incentivised to support this what it offers continually, learning from the experiences group as being in need of particular support. Perhaps of those who use it. the noble Lord is aware that there was a debate earlier UCAS is independent of government and provides this week specifically about support and training for an online application service for those wanting to young offenders. If he has not had an opportunity to pursue further and higher education. Picking up one read that debate in Hansard, he might be interested in of the points that my noble friend made about ensuring the response that my noble friend Lord Ahmad gave that there is co-ordination of services, it is worth to that debate. reminding ourselves that one of the advantages of the In conclusion, we cannot underestimate the challenge digital and online world is that users like to be able of youth unemployment, especially in an uncertain access data and adapt it—to use it in ways that best economy, nor the damage we would do if we did not suit their needs. That lends itself to—and points support our young people to be ambitious for success. towards—not necessarily having a single shop that is By providing more training, work experience and nationwide and available, but making something accessible opportunities for young people via the online channels so that people can adapt it. that they use readily and often, we are giving individuals 877 Unemployment: Young People[17 JANUARY 2013] Unemployment: Young People 878 a chance to prove themselves and to secure a better doing what you do as best as you can, and I want all future, which everyone here today wants to achieve. young people to be able to experience that. From a personal point of view, we must ensure that we do not define success too narrowly. For me, success is House adjourned at 5.18 pm.

GC 307 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 308 Grand Committee Clause7:Reports etc protected by privilege

Thursday, 17 January 2013. Amendment 39 Moved by Lord Mawhinney 2pm 39: Clause 7, page 5, line 14, at end insert— “( ) After paragraph 8 insert— Defamation Bill “8A Communication between a Member of Parliament and Committee (4th Day) any constituent.”” Relevant documents: 7th Report from the Joint Lord Mawhinney: My Lords, although two days Committee on Human Rights, 8th Report from the have passed, this is the first debate following that on Delegated Powers Committee, 9th Report from the Amendment 31, which was moved by the noble Lord, Constitution Committee Lord Hunt of Chesterton. After we had adjourned, a thought occurred to me which I probably should have The Deputy Chairman of Committees (Lord Geddes): put on the record in that debate. In all truth, it did not My Lords, it is now 2 pm. I have to start the proceedings occur to me then; but it has since, so I wish to do that. as usual by saying that in the event of a Division in the In col. GC239 of Tuesday’s Hansard, in summing up House, which is extremely unlikely, the Committee his amendment, the noble Lord listed a number of will adjourn for 10 minutes. Before we come to the institutions with which he had been in communication first amendment, the noble Lord, Lord McNally, has in framing it. One of them was the Institute of Physics, a statement to make which is not debatable. which he said has 45,000 members. It was not until I was on my way home that I realised I should probably The Minister of State, Ministry of Justice (Lord have said that I am an honorary member of the McNally): My Lords, at the beginning of the Committee’s Institute of Physics. I suspect that does not even discussions on Tuesday, the noble Lord, Lord Browne remotely influence anything but, for the record, I of Ladyton, raised an issue in relation to legal advice make that clear. which had been given to Rutland County Council. It suggested that the general powers given to local authorities As regards Amendment 39, I want to point out that in Section 1 of the Localism Act 2011 had overturned it was drawn to the Joint Committee’s attention that the bar on them suing in defamation, which was when a constituent speaks to a Member of Parliament, established by the House of Lords in Derbyshire County that Member, if he then relays the information given Council v Times Newspapers. to him or her in the House, has privilege as far as My officials have explored the issue with officials at Parliament is concerned. However, there was a question the Department for Communities and Local Government, mark as to whether the communication between the which is responsible for the 2011 Act. The Government constituent and the Member of Parliament was also are in no doubt that if a case were brought, the courts covered by privilege. It seemed to the Joint Committee would still find that local authorities cannot bring that it was extremely important that it should be action in defamation. The decision in Derbyshire was covered by privilege because at the very heart of our reached on public policy grounds, which we considered democratic process is the concept and the reality that a remain compelling. The House of Lords found that it Member of Parliament acts on behalf of his or her would be contrary to the public interest for organs of constituents. That ought not to be mitigated or reduced government to be able to sue in defamation, and that it by pressures that would rule out things that the constituent would be an undesirable fetter on freedom of speech. could say to his or her Member of Parliament. It must be borne in mind that Derbyshire was decided We were also told that the Government intended to before the enactment of the Human Rights Act 1998. bring forward legislation on privilege. We all understood Consideration of Article 10 would only bolster the that and the committee took the unanimous view reasoning of the House of Lords in Derbyshire. that—how do I put this delicately?—this might be a In any event, I can reassure the Committee that long, drawn-out process, which started with ministerial even if the issue was brought before the court and statements some time ago that the Government intended found to the contrary, the situation could be remedied to legislate in this area, and various steps have been by way of a statutory instrument under Section 5(3) of taken along that path. There was no great confidence the Localism Act 2011. The power allows the Secretary that we would soon reach the end of that path. of State to prevent local authorities using Section 1 Unanimously, the committee decided to recommend powers to do anything specific in the order. In this to the House and the Government to clarify the position case, an order could be made preventing any action and to remove any doubt that what is said between a being brought in defamation. I have already indicated constituent and his or her Member of Parliament in earlier debates our view that it is preferable for the should also be covered by privilege. The argument was courts to have the flexibility to continue to develop the raised by one witness that these days you cannot Derbyshire principle, rather than to attempt to prescribe necessarily trust every Member of Parliament to behave rigid boundaries in statute. That remains our view. In appropriately in such circumstances, to be careful in the unlikely event of any difficulty arising as a result of the use of what would probably be highly contentious the provisions in the Localism Act, prompt action can information and to use it in such a way that would be be taken to address that without any need for primary in keeping with the well established standards of the legislation. House of Commons. GC 309 Defamation Bill[LORDS] Defamation Bill GC 310

[LORD MAWHINNEY] Lord McNally: When a Front-Bencher stands up, The Joint Committee took the view that an occasional that is usually a signal that it is the end of the debate. misuse of information by an individual Member of Parliament was not sufficiently important to offset the Lord Phillips of Sudbury: Am I done for? fundamental issue that we were addressing. Our thoughts are encapsulated in this amendment, which I beg to move. Lord McNally: No.

Lord Lester of Herne Hill: My Lords, I rise in Lord Phillips of Sudbury: It is only a short point. support of the amendment and what I will say briefly Will the Minister confirm that the amendment will not has some relevance to my later Amendments 43 and affect a situation where a constituent writes to a 44, dealing with parliamentary privilege. I am very Member of Parliament a brazenly vicious and malicious sympathetic to the idea explained by the noble Lord, letter designed to cast some other constituent in the Lord Mawhinney, that we should not wait for some most deplorable of lights? I think that I am right in future legislation as a result of the consideration of saying that malice would destroy the qualified privilege. parliamentary privilege generally, but that where there On that basis, it might be worth having on the record is an issue that properly falls within the scope of that we are not by this amendment upsetting the law in defamation and nothing else, we should take advantage that kind of situation, because it should not go that far. in this legislation to make the necessary amendments. I regard this as one necessary amendment for the reasons given by the Joint Committee on the draft Bill. Lord McNally: My Lords, the noble Lord, Lord Phillips, is the most frustrating of colleagues, because, The Government stated in their response that this the moment that I am tetchy with him about his was best left to the forthcoming Green Paper and draft cavalier approach to procedure, he then intervenes to parliamentary privilege Bill. The Green Paper concluded make a very helpful comment. The question that he that while some forms of correspondence between has asked, as well as the one asked by the noble constituents were already protected by common law Baroness, Lady Hayter, are ones on which I would be qualified privilege, it would be inappropriate to extend interested to hear the view of the noble Lord, Lord qualified privilege to all forms of correspondence as it Mawhinney, because my reply is going to be to preach would run the risk of potentially encouraging caution to the Committee. correspondence to MPs intended to circumvent court orders and damage the privacy or reputation of third I know that the noble Lord, Lord Mawhinney, parties. The Government expressed the view the it unusually for him, expressed a degree of cynicism would better to continue to enable the courts to determine about how long the path ahead was for us on this, but I the boundaries of privilege in individual cases. think that we should proceed with caution at this stage. It is an issue of relevance in a wider context than I understand that and it is an objection to a wider just defamation proceedings. issue than liability and defamation procedures. It is all about breach of privacy and contempt of court. However, As noble Lords will be aware—and this is partly an given that the amendment of the noble Lord, Lord answer to the suggestion of the noble Lord, Lord Mawhinney, seeks only to provide qualified privilege Mawhinney, that the Government were somehow dragging in defamation proceedings and that there seems to be their feet—the Government published a draft Bill and agreement that it is already covered by the common Green Paper on parliamentary privilege in April last law in appropriate circumstances, I see no good reason year. This sought views on a range of issues, including, in principle to oppose it. I note that the Libel Reform in the broad context which I have mentioned, those Campaign supports it. It suggested adding “Private” which form the subject of this amendment and those at the start of the amendment to distinguish between in subsequent groups. Consultation on the draft Bill letters and e-mail and social media. and Green Paper closed at the end of September, and a Joint Committee of both Houses has recently been Baroness Hayter of Kentish Town: On behalf of my established to consider the issue further. Therefore, in noble friend Lord Browne, I thank the Minister—and, these circumstances we consider that it is clearly preferable even more perhaps, his officials who did the hard for the issues relating to parliamentary privilege to be work—for bringing so promptly to us the response on left to the Joint Committee to consider and take Rutland. Perhaps I should declare an interest as someone forward rather than pre-empting its considerations by who is married to a member of the Institute of Physics. including the provision in the Bill. No doubt, the deliberations of the pre-legislative scrutiny committee I support the thrust of the amendment, but will the to which the noble Lord, Lord Mawhinney, referred Minister, or perhaps the noble Lord, Lord Mawhinney, and, indeed, these contributions will inform the clarify whether it would cover all letters from MPs to deliberations of the Joint Committee, but on that constituents? We had a case locally where an MP basis I hope the noble Lord will be prepared to withdraw attached to a letter a copy of a letter that they had the amendment and leave the matter in the hands of received from another constituent—a row was going the Joint Committee that has been established. on between two constituents, as often happens. Would attaching that letter be similarly covered by privilege if it was then given, as it was, to the press? However, we 2.15 pm undoubtedly support the intention of the amendment. Lord Mawhinney: My Lords, I think my noble friend in his careful reply hinted vaguely that I might Lord Phillips of Sudbury: My Lords— have been motivated by a touch of cynicism. I am GC 311 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 312 surprised about that given how long this has been in the hopper. A second Joint Committee has now been Amendment 39A established and part of its job will be to review the findings of the first Joint Committee. Were I to be Moved by Baroness Hayter of Kentish Town accused of cynicism, it might more usefully be applied 39A: Clause 7, page 5, line 23, after “includes” insert “local in those circumstances rather than simply on the basis government and” of time elapsed. It is probably a somewhat unusual set of circumstances Baroness Hayter of Kentish Town: My Lords, the for a Joint Committee to be established in part to amendment in my name and that of my noble friend review decisions taken by a previously properly established Lord Browne of Ladyton would extend the privilege Joint Committee, and I look forward to the potential set down in Clause 7(4) to local government. This is for an exciting debate in your Lordships’ House about probably the existing intention of the clause; we can which of the Joint Committee reports the House gives see no reason why it would not be. It is really simply most credence to were the two reports not to be for the avoidance of doubt that the suggested wording identical. would give comfort to those local journalists who play rather an important role in propagating the work of As regards the question raised by the noble Lord, local councils. Lord Phillips of Sudbury, my understanding is that malice is always outside qualified privilege. As regards It would also be useful to seek some clarification the question raised by the noble Baroness, Lady Hayter, from the Minister, to whom we gave some notice, I was careful to draft this amendment in general terms. about whether this clause covers the Welsh and Northern I did that in part because as a former Minister I know Ireland Assemblies—although the Bill does not cover well that if the spirit of the amendment is adopted, Northern Ireland, reports of that Assembly could well officials will always find an opportunity to tell the appear in our newspapers and affect people here—and Minister that the amendment is not quite correctly the Greater London Authority. I am fairly sure that it drafted and that he needs to do this, that or the other. covers all of those and is about government in its They do that extremely well, and I have been the broadest sense, but we want the wording to make that beneficiary on many occasions, so I am not being in clear. I beg to move. any sense rude or aggressive. I am simply explaining that it did not seem to me to be worthwhile to try to Lord McNally: My Lords, as an afterthought on think up every set of circumstances. If the Minister my noble friend Lord Mawhinney’s approach to accepts the principle, when the Bill emerged from amendments, I can confirm that officials do wonderful Report, it would be drafted in the way that would be work. However, his approach also reminds me of a most sensible as far as the Government were concerned. story that the noble Lord, Lord Healey, told. When he On this issue, I guess that would be most sensible in was Minister of Defence, a man came to him with a terms of the House as well. solution to the Russian submarine menace: you boil the North Sea, and when the water has evaporated you The issue is that day in, day out constituents correspond can see where the submarines are on the seabed. Denis with their Members of Parliament and there ought said to the man, “That’s fine, but how do I boil the not to be an inhibition on that. Personally, I would North Sea?”. The man said, “Look, Mr Healey, I’ve probably restrict it to the direct communication between had a good idea. Surely you and your officials should the constituent and the Member of Parliament because work out the practicalities”. That is just a passing it would be that on which the Member of Parliament thought. would stand up and address the House of Commons. Anyway, the Member of Parliament has to exercise I understand why the amendment has been tabled. I some judgment about what he or she wishes to say in hope that my reply will clarify matters; I am not sure, the Chamber. I do not think our Joint Committee—I given the presence of some very informed noble and look to the noble Baroness to correct me if I am learned friends. What I say at this Dispatch Box is of wrong—was trying to be picky to the last detail. We assistance to judges and courts when they make such were trying to persuade the Government to accept this decisions. I think so anyway, as a non-lawyer. Is it principle, which is why I worded my amendment simply called Pepper v Hart? You see, I am learning on the to get the principle in front of my noble friend. I have job here. heard what he said and have some sympathy, but do Clause 7(4) extends the provision in paragraphs 9 not feel encouraged that the Government’s timeframe and 10 of Schedule 1 to the Defamation Act 1996 on will be such as to meet the urgency that I think the qualified privilege attaching to information published Joint Committee wanted him to feel on this subject. Of by legislatures, Governments and authorities exercising course, I will be happy to withdraw the amendment government functions. The changes ensure that the but, in doing so, I ask my noble friend to give it serious provisions also cover fair and accurate summaries of thought and perhaps to bear in mind that, were this to material and that the scope of the defence is extended go into the Defamation Bill, when the Government’s to the relevant publications no matter where in the all-singing, all-dancing piece of legislation comes forward, world they occur. this clause could at that point be taken out of that Bill and put in to the new Bill so that all of defamation was Amendment 39A amends the definition of in one place. I beg leave to withdraw the amendment. governmental functions used in subsection (4) and in the 1996 Act to include a reference to local Amendment 39 withdrawn. authorities as well as to police functions. We do GC 313 Defamation Bill[LORDS] Defamation Bill GC 314

[LORD MCNALLY] Clause 7 deals with reports of proceedings at meetings not believe that this is necessary. We consider that of listed companies and stipulates that qualified privilege local authorities are already covered by the reference should attach to, to, “A fair and accurate copy of, extract from or summary of any “any authority performing governmental functions”. document circulated to members of a listed company”. The Defamation Act 1952 covered information published, There are then listed three cases in which the privilege “by or on behalf of any government department, officer of state, applies. The first is where the document is circulated local authority, or chief officer of police”. with the authority of the board of directors, and the The 1996 Act was intended to extend this coverage. second case is where the document is circulated by the We are in no doubt that the reference to, auditors of the company. So far, so good and so predictable. However, in relation to qualified “any authority performing governmental functions”, privilege, Clause 7(7)(b) seeks to amend Schedule 1 to should be read as embracing the specific bodies referred the 1996 Act by substituting sub-paragraph (3) of to in the 1952 Act. paragraph 13 as follows: There is no indication that the absence of a specific “A fair and accurate copy of, extract from or summary of any reference to local authorities has caused any difficulty document circulated to members of a listed company which in practice. However, to take the specific point, we also relates to the appointment, resignation, retirement or dismissal of believe that the devolved administrations would fall directors of the company”. within the term “legislature”, which is used in the My amendment seeks to add, “or its auditors”. amendment to the 1996 Act made by subsection (4) of Clause 7 and elsewhere in relation to qualified privilege. 2.30 pm The position of the auditors of listed companies in Lord Lester of Herne Hill: My Lords, am I in order the present age could not be more important. A great in speaking? deal of the disappointing events in the City and the financial world over the past few years has related to a want of probity, or at least of morality, as most would Lord McNally: Probably not, but I will defer to the see it. The role of the auditors in policing the financial chairman. services legislation in the past, let alone in the future, could not be more vital. I do not think that is disputable The Deputy Chairman of Committees: It is unusual in view of the fact that the documents circulated to to speak after the Minister, but there is nothing to members by the auditors of the company are expressly prevent any noble Lord speaking. dealt with earlier in this proposed clause. So, given the crucial importance of auditors and their high profile in the whole structure of a limited Lord Lester of Herne Hill: I am grateful to the company in our law, it is vital that the qualified deputy chairman. I am sorry to be unusual, but I privilege attaches where the directors are dismissing normally am. Not only do I agree with what has been the auditors of a listed company. That is a matter of said but, in my mind, extending statutory qualified the highest significance, not only to the members of privilege in the schedule is one of the most useful the company but more generally to the proper regulation things that the Bill does. We are dealing there with and probity of our largest companies. I feel, therefore, clearly prescribed situations, of which this is one, that the addition of auditors to this part of the clause where, if the press gives a fair and accurate report, it is desirable from every point of view and is, indeed, will be protected, as will the public interest. The fact essential. I beg to move. that this has been extended extremely broadly, as my Bill sought to do, whereas the 1996 Act did not do so, Lord Mawhinney: My Lords, my Amendments 41 is a matter for congratulation. and 42 have been bracketed with this amendment, and I would like to speak to them at this point. I have great Baroness Hayter of Kentish Town: I was going to sympathy with what the noble Lord, Lord Phillips, has use two words I now know I should not: they were just said about auditors, and I hope attention will be simply “thank you”. I am not allowed to say that. I paid to that. thank the Minister for his answer and beg leave to In Clause 7(9) the Bill has: withdraw the amendment. “After paragraph 14 insert … a fair and accurate … report of proceedings of a scientific or academic conference”. Amendment 39A withdrawn. The Joint Committee spent a lot of time talking about this. It felt strongly that peer-reviewed articles were certainly right to be covered—and I would like to pay Amendment 40 particular thanks to the noble Lord, Lord Bew, for his Moved by Lord Phillips of Sudbury considerable help in helping the committee understand the issues on this particular matter—but it was much 40: Clause 7, page 6, line 6, at end insert “or its auditors” more nervous about the inclusion of conferences. I should add that from 1968 to 1984 I was an assistant Lord Phillips of Sudbury: My Lords, as has already professor, a lecturer and a senior lecturer in universities been said, Clause 7 substantially amends the provisions in the United States, and in this country and in those of Section 14 of the Defamation Act 1996 and, in capacities I attended many academic conferences, as particular, Schedule 1 to that Act. Subsection (7) of has the noble Lord, Lord Bew, and other noble Lords. GC 315 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 316

“Conference” is a very widely drawn word. Having not very concerned, along the same lines, by the attended the world conference on radiation biology provisions of Clause 7(5), which would allow, and radiation physics, I would have no difficulty in “a press conference held anywhere in the world for the discussion saying that it qualified for special consideration in the of a matter of public interest”, context of the Bill. On the other hand, and I speak to have qualified privilege? It seems to me that you carefully, conferences are called by a variety of people would be in the bizarre position of having a conference for a variety of reasons, not all of which deserve the to which qualified privilege did not apply, but the sort of protection that we are envisaging in this legislation. press conference after the conference would be the The Joint Committee came fairly firmly to the view subject of qualified privilege. that there ought to be protection. The wording “scientific or academic” included medicine. There were queries as Lord Bew: The noble Lord makes a very good to why medicine was not specifically mentioned but we point, one that I was actually aware of. While I fully thought “scientific or academic” was sufficient to cover understand the ambiguity to which he referred, the all of the academic disciplines. reason why I am more open to the provision as it We were very strongly of the view that there ought stands for press conferences is that in recent time we to be protection. We were equally strongly of the view have had, to my knowledge, at least one celebrated that conferences ought not to be included unless my case where a particular government department gave a noble friend intends on Report to define, delineate and press conference and people subsequently wrote perfectly describe what the Government mean by an academic legitimate articles on the basis of what was said by conference, or unless he wishes to add regulations that department but none the less, the case went to about the reviewing of contents of conferences to court and substantial payments were made. bring them into line with peer-reviewed papers. I cannot bring myself to say that it is reasonable Amendment 42 adds to peer-reviewed papers coverage that if a department of government holds a press for material in archives that is of academic importance conference and people actively report or elucidate on and subject to the ground rules specified in the particular what is said there, there should subsequently be libel amendment. The effect of the two amendments together actions, which there have been in recent times. That is is strongly to endorse peer-reviewed scientific and the reason why at the moment I am living with the academic papers, to remove the Government’s intention press conference issue. to include conferences and to add authentic archive I am open to persuasion on this question of material. conferences, but those of us on the Select Committee want to know that the Government have thought Lord Bew: My Lords, I rise to support the amendment enough about the fact that some academic conferences moved by the noble Lord, Lord Mawhinney, and to are not very well run and are somewhat chaotic, and say that he has accurately recalled the discussion and that they have some way of thinking that responds to the feeling of the Joint Committee. My sense is that we that. A fundamental thinking of our committee was actually did get differing evidence. For example, I that the deepest problem is that academics, in the seem to recall that the Master of the Rolls was sceptical sciences or in the humanities, can be driven by their about extending privilege to academic conferences for research to certain conclusions, and at this point there the reasons that the noble Lord, Lord Mawhinney, has is a chill point that means they would discover it was given us. On the other hand, we had a former Lord difficult to find an academic outlet because a journal Chancellor, for example, who took the view that it was might say, “Our budget is so small that if there is a right to extend privilege. So there was a genuine difference libel action here, even though your research looks very of evidence from significant people. We were certainly interesting to us, we can’t possibly publish it”. We much keener to protect peer-reviewed journals than know that this is currently going on, and that seems to we were to offer a new measure of protection for be the greatest single evil in this field that needs to be conferences for the simple reason that all of us who addressed. I feel less concerned in principle about are academics have attended conferences that we are defending the rights of someone who may be spouting not sure would deserve this privilege. The Government off a little at a conference. may well have things to say to expand their thinking to produce a more enthusiastic response—on my part, at Lord Lester of Herne Hill: My Lords, I had not any rate. However, it is worth saying that were somewhat expected to need to reply about press conferences but, cagey on this matter. in the light of my noble friend Lord Phillips’s intervention, Perhaps I may say very briefly, referring to the I better had. This question was dealt with by the privilege matters discussed and to what is about to House of Lords in a case that I was involved in called come, as the one person who was a member of the McCartan Turkington Breen v Times Newspapers, Joint Committee on Parliamentary Privilege and of 2001 2 Appeal Cases, 277; the noble Lord, Lord Bew, the Joint Committee on the Defamation Bill, that I am may remember it. finding the discussion so far extremely helpful, I expect to find further discussions even more helpful, and I Lord Bew: I do indeed. am learning a lot. Lord Lester of Herne Hill: What happened was that Lord Phillips of Sudbury: Given the noble Lord’s a soldier was found guilty of murder for, I think, deep involvement in this issue, I understand what he is killing a woman at a roadblock in Northern Ireland saying about the amendment proposed. However, is he and sentenced to imprisonment. He was represented GC 317 Defamation Bill[LORDS] Defamation Bill GC 318

[LORD LESTER OF HERNE HILL] Baroness Hayter of Kentish Town: There is no answer by a firm of solicitors in Northern Ireland. A group of to that. On the first point, on the face of it, it appears senior military men had a meeting in a castle in, I to be not a bad idea. I think that some of us feel that think, Yorkshire in order to accuse the solicitors of half the problem is that auditors are not sacked often negligence in the way that they had gone about defending enough. On the Financial Services Bill, we went through the soldier. The meeting in the castle was open to the many of the things that they somehow failed to notice. public, but very few members of the public were in I cannot resist saying that the people who would be fact able to get in. The law firm sued for libel and the most likely to sue are, of course, auditors. Auditors are defence was that it was a public meeting and therefore firms. If we were to get our way about resisting non-natural covered by statutory qualified privilege. The argument persons having the same rights as natural persons, was that it was not really a public meeting but a press perhaps we could get around it that way. That is partly conference; they gave out a press statement and it was because I cannot resist reminding the Minister of that. in a castle. On conferences, my fellow members of the Joint Lord Bingham gave the lead judgment, making it Committee said that we felt that the peer-reviewed clear on free-speech grounds that the press are the eyes nature of the documentation or the speech is important. and ears of the public, and that where the public However, in many of the cases of scientific conferences cannot get in easily on an occasion like that and the where action has been taken, it has been taken by a press can, the press must be free to make a fair and corporation. That is not wholly so, but very frequently, accurate report—it must be fair and accurate—of so there may be more than one way to skin this cat. We what is alleged at the press conference, which is to be would support the rightful emphasis on peer-review. treated as a public meeting. On Article 10 grounds, the House of Lords clarified Lord McNally: In relation to Amendment 40, the the meaning of “public meeting” to include press Defamation Act 1996 gives a defence of qualified conferences. In fact my memory, although I may be privilege to fair and accurate reports of proceedings at wrong, is that the Faulks committee in 1975 had a general meeting of a UK public company and to recommended that press conferences should be included. copies of and extracts from various documents circulated So I have no difficulty at all with the express words in to members of such a company. the Bill making clear that it covers press conferences Clause 7(7) extends this protection more widely to anywhere in the world, for the reasons given by the cover reports in relation to companies listed on recognised House of Lords, per Lord Bingham, in that case. My stock exchanges worldwide and to summaries of such difficulty is with what is to be done with the amendment material. This includes material circulated to members tabled by the noble Lord, Lord Mawhinney. I was of a listed company which relates to the appointment, looking at the Joint Committee report about it. resignation, retirement or dismissal of directors of the Paragraph 48 states: company. The debate has reflected this. In drawing up “The draft Bill goes some way towards tackling this problem this Bill, we have constantly challenged about where by extending qualified privilege to include fair and accurate we are drawing the line and whether it is the right reports of what is said at a ‘scientific or academic conference’. We place to draw the line. welcome this development, provided the conference is reputable”. Amendment 40 would in addition extend qualified The report goes on to deal with peer-reviewed articles privilege to material relating to the appointment, and recommends extending it to peer-reviewed articles resignation, retirement or dismissal of the company’s in scientific or academic journals. Then, as the noble auditors. We do not consider that this would be Lords, Lord Bew, and Lord Mawhinney, have done, it appropriate. Extending privilege in this way would explains the definitional problems, and towards the give protection to reports on contractual material end it recommends, between companies and their auditors such as issues “that the Government prepares guidance on the scope of this new of appointment and dismissal. We consider that this type of statutory qualified privilege in consultation with the would be an inappropriate intrusion into how companies judiciary and other interested parties”. conduct their business affairs which could impact on As I read this, the Joint Committee are saying that it is business efficiency, and that it is preferable for the a good idea, but there are definitional problems, so focus of Schedule 1 to continue to be on protecting include it, but with proper guidance. fair and accurate reports of material which is publicly available. Amendments 41 and 42 would alter the way in 2.45 pm which the Bill extends qualified privilege— On the subject of proper guidance, I need to say something to the Minister and his well developed Lord Browne of Ladyton: I am grateful to the Minister sense of humour. He mentioned the case of Pepper v for giving away and apologise to Members of the Hart. I am not sure whether I have said this in Committee Committee since I did not take part in the debate on before, but when I was arguing Pepper v Hart, my this amendment. It occurred to me as he was speaking, opponent, the Attorney, said, “Don’t rely on anything and I draw his attention to the provisions of his own Ministers say, especially in the middle of the night, Bill, that the place where he seeks to draw the line and because often they say it without much knowledge of the restriction that he seeks to maintain may well what they’re doing”. Lord Ackner said to the Attorney, already be overtaken by the provisions of new sub- “Mr Attorney, is the maxim, ‘Think before you speak’ paragraph (2)(a) which subsection (7) seeks to add to incompatible with good government?”. the schedule. I cannot think of any circumstances GC 319 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 320 where the kind of document that the Minister is perhaps I may respectfully suggest, lawyers—and talking about in such a meeting would not be circulated companies, where there is a barn door left open. I to the members of the company with the authority of understand, as indicated by the noble Lord, Lord the board of directors of the company. That information Browne, that the intention of the proposal is to give will already be privileged as far as I can see. I may be protection. I am willing to reflect on whether where we wrong, but it seems to me that the Minister’s concern have drawn the line is exactly right, and I will listen to about revealing private commercial business of this expert opinion in this Committee. As a layman, I also nature is already overtaken by the provisions which he feel a slight tingle between the shoulder blades about seeks to put in the Bill. where we are going in terms of the relationship of professions such as auditors and lawyers with their clients. I, too, would like advice on these matters. Lord McNally: I doubt that. We are moving the extra line to where a company has made a decision to change its auditors, which will be reported to the Lord Lester of Herne Hill: We are not supporting members of the company. There may be a number of the amendment. We are urging the Government to reasons for that, but the report will be suitable for the accept that the amendment is not necessary because annual general meeting, and other issues, personal or the matter is well within its scope. related to performance, may be covered by it. As I have said, in a number of these areas, we are drawing lines. Where there is a relationship between a company Lord Phillips of Sudbury: Before this mini debate and its auditors, I just wonder whether it would be concludes, I would just say that I agree with my noble entirely conducive to good working relations between friend Lord Lester about the particularity of the post them if a reason for dismissal which was extremely of auditor. It is not like the lawyers of the company. damaging to the auditors was privileged in this way. They are not officials of the company; they have a unique role, and I simply put it to the Committee that Lord Lester of Herne Hill: My Lords, I am sorry to they should be on the same footing vis-à-vis defamation say that I cannot understand that. We are dealing with as the directors. They are not as it stands because of a publicly listed company; we are dealing with the the point to which the noble Lord, Lord Browne, resignation or removal of directors, which is a very referred. Clause 7 refers only to privilege extending to serious step; we are dealing with qualified privilege, documents circulated by the auditors of the company, quite rightly, to give a fair and accurate report of that. but proposed new sub-paragraph (3), where the The auditors are officers of the company performing a amendment would bite, refers to documents circulated vital role. If they are mixed up with some wrongdoing by the company to the members of the company. At that needs to be reported, we are dealing not with the moment, it gives qualified privilege to those documents some private, contractual, sensitive matter, but with vis-à-vis appointments, and so on, of directors but not what is in the report to the shareholders about the of auditors. I am saying that it should be there, but it public listed company. That is already there. I cannot can be reflected on. therefore see any good reason for not including the auditors in that. It is nothing to do with an ordinary, 3pm private commercial relationship, so I agree with the noble Lord, Lord Browne. Lord McNally: You can see, Lord Chairman, that this is a very interesting Committee. Amendments 41 Lord McNally: I am Daniel in the lion’s den here. I and 42 would alter the way in which the Bill extends will certainly look at— qualified privilege to certain types of material. Again, I was interested in the interventions and understand Lord Browne of Ladyton: In the interests of clarity, some of the concerns expressed. We thought about I am not very pleased with how I put the argument whether we should try to define “conference”, and earlier. I can put it much more simply. With respect to perhaps we will have another think about that. If the noble Lord, Lord Phillips of Sudbury, I think that anyone has a suggestion, they know my address. his amendment is unnecessary. The circumstances that As the Committee will know, we had a lot of he envisages in this sort of environment are already discussions with editors of a number of scientific and covered by the provisions of the government amendment academic journals. They were keen to stress that qualified that we all support. I cannot imagine that what he privilege for peer-reviewed articles was seen as the seeks to allow to be reported and to attract privilege most important priority by them. I very much agree would be circulated other than with the authority of with the point that the noble Baroness, Lady Hayter, the directors to the members of the company. I think made in her intervention. We should hold close to the that it is unnecessary but it may be an issue that needs protection of a proper peer-review process in the to be thought about. I am concerned that perhaps in changes that we are making to the law. telling the Committee the line that has been adopted As the noble Lord, Lord Bew, indicated in his and to hold the line at a particular point, the Minister recollection to the Committee, these editors and others may already have crossed that line in any event by were not opposed to the extension of qualified privilege these provisions. to fair and accurate reports of proceedings of scientific and academic conferences, or fair and accurate copies Lord McNally: I will reflect on that but I am also of, extracts from or summaries of matters published at very concerned and do not want to enter a field regarding such conferences. Our impression was that the scientific the professional relationship between auditors—or, community has welcomed this extension. GC 321 Defamation Bill[LORDS] Defamation Bill GC 322

[LORD MCNALLY] wide range of material. There would also be considerable We do not agree with this amendment. The protections difficulties in defining what types of archive should or set out in subsection (9), along with the protection in should not be covered. We believe that this would risk Clause 6 and a number of other measures in the Bill not providing adequate protection for claimants, and are an important step forward and reflect our aim of therefore we do not consider this amendment to be ensuring that scientific and academic debate is able to appropriate. There is no generally agreed definition of flourish. what constitutes an archive, and this amendment would potentially cover a very wide range of material. Lord Mawhinney: We are all agreed on the importance I am have to say again—and I am not opening any of peer review. As my noble friend is going to think gates for reconsideration on this—that I was, until a further about conferences—he has just said that he few weeks ago, the Minister for the National Archives. will—will he do so in the context of peer review? That I am extremely proud to have held that position because is the principle that we are all hanging on to. The Joint it is one of the jewels of our crown in terms of a Committee could not find to offer to him a satisfactory national asset. As I said to the noble Lord, we are way which enshrined peer review in the context of again worrying about where to draw the line. On this conferences, partly because peer-review papers are occasion, we draw the line, as far as he is concerned, peer reviewed ahead of publication. Peer review in on the wrong side of his amendment, but I hope he conference would be subsequent to whatever was being will agree to withdraw it. said. Will my noble friend at least assure the Committee that when he reflects further on conferences, he will do Lord Phillips of Sudbury: I am grateful for what the so specifically in the context of peer review? Minister said and for the contributions to the debate on this amendment which have prized out a matter not Lord McNally: Most certainly. That was the point hitherto appreciated. However, rather than prolong that the noble Baroness, Lady Hayter, made, with this debate, I suggest that there be a conversation with which I heartily concur. It is interesting that when the the Minister hereafter and perhaps a return on Report. Bill was debated in the other place, the move in the direction of conferences and other gatherings was Lord McNally: It might be an indication of how warmly welcomed. I will reflect, but these proceedings confused the Minister gets that it was subsequently will of course also be read by the scientific community. clarified to me that the noble Lords, Lord Lester and Perhaps it will help me. I have made this point time Lord Browne, were both supporting me—something and again: I want to be able to look at the scientific that I was not aware of when I heard their speeches. and academic community in the eye and say, “Look, this is the best that we can do in giving scientists and academics the maximum of freedom to indulge in Lord Phillips of Sudbury: That does not change my proper debate and criticism in their areas of expertise”. reply. I beg leave to withdraw the amendment. I certainly accept that suggestion by my noble friend Lord Mawhinney. There has been a general welcome Amendment 40 withdrawn. for our attempt to extend this more widely than the very narrow context of peer-reviewed articles in magazines Amendments 41 and 42 not moved. of repute. Amendment 42 would extend qualified privilege, Clause 7 agreed. subject to explanation or correction, under Schedule 1 to the Defamation Act 1996 to peer-reviewed articles Amendment 43 and fair and accurate copies and reports of material in an archive where the limitation period for an action Moved by Lord Lester of Herne Hill against the original publisher of the material has 43: After Clause 7, insert the following new Clause— expired. In speaking to the amendment to Clause 6 “Reports etc of certain Parliamentary matters protected by tabled by the noble Lord, Lord Hunt of Chesterton, I absolute privilege expressed concern about extending the protection for (1) The following are absolutely privileged— peer-reviewed material more widely than in respect of (a) a fair and accurate report of proceedings in Parliament; articles in scientific and academic journals. This (b) a fair and accurate report of anything published by or amendment would extend that protection even more on the authority of Parliament; and widely to any peer-reviewed material, wherever it appears, (c) a fair and accurate copy of, extract from or summary of and, as a result, would serve only to increase the risk anything published by or on the authority of of the defence applying in instances where the peer-review Parliament. process had not been applied in a sufficiently robust (2) The court must stay any proceedings where the defendant way. shows that— In respect of extending qualified privilege to archives, (a) the proceedings relate to the publication of anything that this is something that I know the Joint Committee on falls within paragraph (a), (b) or (c) of subsection (1); or the draft Bill, chaired by the noble Lord, was in favour (b) the proceedings seek to prevent or postpone the making of. We indicated in the government response to the of any such publication. committee that we would consider this proposal. However, (3) This section also has effect in relation to the Welsh Assembly after considering the position further, we came to the and the Northern Ireland Assembly (and any reference to Parliament conclusion that extending qualified privilege to archives is to be read as a reference to the Assembly in question). would potentially make the defence available to a very (4) The Parliamentary Papers Act 1840 is repealed.” GC 323 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 324

Lord Lester of Herne Hill: In speaking to The same protection should therefore be conferred on Amendment 43, it may be convenient for me to speak also fair and accurate reports of parliamentary proceedings to Amendment 44 as they both deal with privilege. If as applies to court proceedings. that is not convenient, I shall speak to Amendment 43 In 1999, the Joint Committee on Parliamentary only, but they are grouped together. Privilege of the noble and learned Lord, Lord Nicholls There is one defect in Amendment 43, which is that of Birkenhead, described the 1840 Act as being, subsection (4) should not repeal the Parliamentary “drafted in a somewhat impenetrable early Victorian style”. Papers Act 1840 for reasons that I shall explain. It recommended that the, I know that the Minister will say in his reply, “Leave “protection given to the media by the 1840 Act and the common it all to the Committee on Parliamentary Privilege”, law itself should be retained. but I hope that these amendments will eventually We consider, further, that the statutory protection would be more persuade the Government that that is not a convenient transparent and accessible if it were included in a modern statute, and sensible course. That will be particularly true whose language and style would be easier to understand than the when we come to the Neil Hamilton affair and Clause 13, 1840 Act. We recommend that the 1840 Act, as amended, should which was being dealt with 13 years ago by the Joint be replaced with a modern statute”. Committee on Parliamentary Privilege of the noble The 1840 Act was considered more recently by the and learned Lord, Lord Nicholls of Birkenhead. There House of Commons Culture, Media and Sport Committee has never been a more authoritative committee, crowded in its report Press Standards, Privacy and Libel,at as it was with jurists, former law officers of the Crown paragraphs 94 to 102. Referring to the 2009 case and evidence given by every conceivable expert on between Trafigura and the Guardian newspaper, that parliamentary privilege. The idea that we should now committee concluded that Parliamentary Questions revisit what that committee said about Clause 13 of tabled regarding the case were clearly covered by these the Defamation Act is not sensible. provisions and would not therefore be covered by the However, before I come to that, I need to deal with then existing super-injunction which prevented publication Amendment 43. The amendment would have the effect of any reference to the case. That interpretation was of reinstating Clause 7 of the Bill that I produced to challenged by the firm of Carter-Ruck, acting for provide absolute privilege in defamation proceedings Trafigura. I do not think that I need to go through for fair and accurate reports of proceedings in Parliament. that, but the committee concluded: Section 1 of the Parliamentary Papers Act 1840 prevents “The free and fair reporting of proceedings in Parliament is a any civil or criminal proceedings in respect of a report, cornerstone of a democracy. In the UK, publication of fair paper, votes or proceedings published by order of extracts of reports of proceedings in Parliament made without either House. Section 2 confers similar protection on malice are protected by the Parliamentary Papers Act 1840 … copies of such publications. Section 3 confers a lesser They cannot be fettered by a court order. However, the confusion over this issue has caused us the very gravest concern that this degree of protection on any extract from or abstract of freedom is being undermined. We therefore repeat previous such publications, which must be published in good recommendations from the Committee on Parliamentary Privilege faith and without malice. that the Ministry of Justice replace the Parliamentary Papers Act Newspaper reports which are not taken from Hansard 1840 with a clear and comprehensible modern statute”. are also protected at common law. The case of Wason Neither committee specifically addressed the question and Walter, 1868-69, 4 Queen’s Bench, 73, established of whether publication of reports of parliamentary that by analogy with reports of court proceedings, a proceedings should be absolute or remain qualified. publisher of a report of a parliamentary debate is The approach taken in my Bill was endorsed by the protected at common law from actions for defamation. Joint Committee on the Draft Defamation Bill on the If the whole debate is published, the protection is basis that it is of fundamental importance that proceedings absolute. If less than the whole is published, the protection in Parliament can be reported upon freely by the press is qualified by the requirement that it is published to ensure that people can discover what is being said without malice, as stated in the Joint Committee on and done by elected representatives on their behalf. In Parliamentary Privilege report 1999, paragraph 356. paragraph 51 of its report, my noble friend Lord Court proceedings now enjoy absolute privilege Mawhinney’s committee said: under Section 14 of the Defamation Act 1996. Section “We recommend adding a provision to the Bill which provides 15 confers qualified privilege on reports of the proceedings the press with a clear and unfettered right to report on what is in public of a legislature anywhere in the world, as well said in Parliament and with the protection of absolute privilege for any such report which is fair and accurate”. as material published by or on the authority of a Government or legislature anywhere in the world, The Government’s response left the issue to the which we have just discussed. The report must be fair Parliamentary Privilege Green Paper. I will not take and accurate and published without malice and in the further the time of the Committee by reading any of public interest. that, but some of the issues which they raise have nothing to do with defamation, but with privacy and Wason and Walter was decided by analogy with the contempt of court. I accept that the issues raised in privilege afforded to court proceedings. Chief Justice their Green Paper on contempt and privacy may be Cockburn said that given the, best dealt with in more detail by the Joint Committee “paramount public and national importance that proceedings on Parliamentary Privilege or the Law Commission in of the Houses of Parliament shall be communicated to the public its review, now pending, on the law of contempt of … to us it seems clear that the principles on which the publication of reports of proceedings of Courts of Justice have been held to court. However, none of that is any good reason for be privileged apply to the reports of Parliamentary proceedings. not giving effect to what the committee of the noble The analogy between the two cases is in every respect complete”. Lord, Lord Nicholls, recommended 13 years ago, what GC 325 Defamation Bill[LORDS] Defamation Bill GC 326

[LORD LESTER OF HERNE HILL] political will to get rid of a really disgraceful provision the Commons committee has recommended and what that is Section 13, which was put in to appease Neil the Joint Committee on this Bill has recommended. Hamilton at the time. It was attacked by everybody in That is three committees over more than 13 years the House of Lords during the debates and by great concentrating only on defamation, not on privacy or jurists, such as Lord Simon of Glaisdale. It was put in contempt. and carried on a Whip. Every expert in the field ever since has said that it was completely unconscionable. Given the pressure on the parliamentary timetable, it 3.15 pm seems to me that as this is only about defamation Amendment 44 would repeal Section 13 of the and nothing else, we should now do as past Defamation Act 1996, effectively reinstating Clause 16 committees have said and get rid of it. It should be left of my Bill. Clause 13(1) provides that: to both Houses to work out the proper machinery “Where the conduct of a person in or in relation to proceedings afterwards. in Parliament is in issue in defamation proceedings, he may waive I forgot, in my overlong remarks, to explain why my for the purposes of those proceedings”. proposed new subsection (4) is wrong in proposing the Accordingly, if a Member of Parliament is accused of repeal of the whole of the 1840 Act. The new provision accepting money to ask parliamentary questions, as should apply only to defamation. If one left out the happening in the Neil Hamilton affair, the MP may whole of the Act, there would be a gap in relation to waive the privilege given by Article 9 of the Bill of other matters. For that reason, that bit is wrong. I beg Rights 1688 and, in that event, evidence may be given to move. and questions asked about the MP’s conduct without infringing parliamentary privilege. It is not possible to counterclaim for damages for slander spoken in Lord McNally: My Lords, just to give some sense of Parliament, even against the claimant MP, who has momentum on this, I can tell your Lordships that the himself waived privilege for the purpose of the Joint Committee that has been established on proceedings. parliamentary privilege is asked to report by 25 April 2013. Section 13 was strongly criticised by the 1999 report of the Joint Committee on parliamentary privilege, I listened carefully to what my noble friend said. As chaired by the noble and learned Lord, Lord Nicholls always, he made an extremely well informed and well of Birkenhead, in some detail. It was attacked as researched contribution, but can I just put to the undermining the basis of privilege and creating Committee a political reality? We are dealing with indefensible anomalies, and states: probably one of the most sensitive areas of the functioning of our parliamentary democracy; that is, parliamentary “A fundamental flaw is that it undermines the basis of privilege: freedom of speech is the privilege of the House as a whole and privilege. There is not a snowball’s chance in hell of not of the individual member in his own right, although an the Houses of Parliament in an area, which is so individual member can assert and rely on it. Application of the sensitive and so important, allowing this Committee new provision could also be impracticable in complicated cases; and this Bill to make decisions which go ahead of for example where two members ... are closely involved in the what the Joint Committee is going to do. same action and one waives privilege and the other does not. Section 13 is also anomalous: it is available only in defamation As the Government’s Green Paper pointed out, the proceedings. ... The Committee considers these criticisms are point of parliamentary privilege is not defamation or unanswerable”. what is published in the newspapers; it is the right of The Joint Committee recommended that Section 13 Members of Parliament to conduct their business in should be repealed and replaced by a new provision Parliament. That is why parliamentarians are so careful under which either House on the advice of a committee and so jealous about how we should handle this. would make a general waiver of Article 9 in an appropriate Therefore, I am sorry to say that I can give my case. It states: noble friend no other response than the one that I gave “We recommend that the mischief sought to be remedied by to the noble Lord, Lord Mawhinney: that the Joint section 13 ... should be cured by a different means. Section 13 Committee is now in being. Certainly, my noble friend’s should be replaced by a short statutory provision empowering contribution today will be well worth reading by that each House to waive Article 9 for the purpose of any court committee, but it is a matter for that committee and I proceedings, whether relating to defamation or any other matter, urge my noble friend to withdraw his amendment. where the words spoken or the acts done in proceedings in Parliament would not expose the speaker of the words or the doer of the acts to any legal liability. Each House will need to consider Lord Lester of Herne Hill: I am grateful. I learnt appropriate machinery once the section has been repealed”. this appalling word from Europe, comitology, which is The parliamentary privilege Green Paper noted the study of committees, and I have gone too much these criticisms and Clause 16 of my Bill, and invited into the past committees. Although I am not surprised views on whether Section 13 should be, by the Minister’s reply, I am deeply disappointed by it, “repealed without replacement, amended, or left as it is, given because what my amendments seek to do is extraordinarily that the existing power of waiver has never been used”. important but modest. The first would clarify the 1840 Given the huge authority of the committee of the Act on a completely non-controversial issue so far as noble and learned Lord, Lord Nicholls of Birkenhead, that Act, which is all about reporting proceedings in 13 years ago, and the evidence of law officers past and Parliament, is concerned. The second amendment would present, anyone could not but realise that it is remarkable remove what everyone has always agreed was a gross that this Government, when dealing with parliamentary anomaly. We apparently will have to wait for yet privilege generally, should not have the guts, or the another committee to look at this, but I am liable to GC 327 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 328 return to it on Report, because I am not satisfied by In the Commons, the Government stated that they the stonewalling. On that basis, I beg leave to withdraw did not think that, the amendment. “extending the single publication rule in such a way would provide adequate protection for claimants”.—[Official Report, Amendment 43 withdrawn. Commons, Defamation Bill Committee, 26/6/12; col. 143.] and that they thought that Clause 8 struck the right Amendment 44 not moved. balance. In the context of the rest of this Bill and the objectives that it seeks to achieve, I cannot for the life of me understand why there is a sub-balance of a Clause 8 : Single publication rule balance. If one publication triggers the right to sue and repeated publication by the same person does not regenerate that right, I do not understand why repeated Amendment 44A publications by others would. This whole clause seems to depend on a level of implied knowledge on the part Moved by Lord Browne of Ladyton of the claimant that should be of relevance, no matter 44A: Clause 8, page 7, line 3, leave out from “if” to end of line who republishes. 6 and insert— Amendments 47A and 47B are here for the same “(a) a statement is published to the public (“the first purpose. The effect of Amendment 47A would be to publication”); and allow a court, in considering whether a subsequent (b) there is subsequently published (whether or not to the publication of the same, or substantially the same, public) that statement or a statement which is substantially the same.” material was made in a materially different manner from the original publication to have specific regard to the, Lord Browne of Ladyton: My Lords, the amendment, which is in my name and that of my noble friend Lady “quality and credibility of the source”, Hayter, would apply the single publication rule to the of the re-publication compared with that of the first subsequent publication of the same material by any publication. I realise that there may be arguments—I publisher rather than by the same publisher. As it give the Minister fair notice that he does not need to appears to be convenient to the Committee, I shall rehearse them all—about the elegance of some of our speak also to Amendments 47A and 47B which stand phraseology. If we agree about the purpose of this, I in our joint names, too, and may make some passing am perfectly happy that it be phrased in some other reference to the amendments tabled by the noble Lord, way. However, let me just explain the purpose. Lord Phillips of Sudbury. I intend to speak to the Both these amendments, but specifically Amendment amendments comparatively briefly, because this issue 47A, are designed to allow the Committee to explore was rehearsed in Committee in the House of Commons, whether there has been a material change if the first but I am seeking further information, if possible, from publication is in a less credible source than a subsequent the Government. publication. It is designed to elicit further clarification Under the current law as I understand it, each as to what “materially different” means. It is for the publication of defamatory material gives rise to a purpose only of allowing those who will seek to have separate cause of action which is subject to its own access to the law in this area, after it is amended, to limitation period. That as I understand it, although I have some sense of what it was intended and designed have no experience of it, is known as the multiple to achieve. For example, the readership of two blogs publication rule. Clause 8, which I support, very sensibly may be the same but they may have a very different introduces a single publication rule to prevent an impact, depending on whether an authority on the action being brought in relation to publication of the subject or a lay member of the public runs them. same material by the same publisher after a one-year Whether there is a materially different effect depends limitation period which will apply from the date of on whose blog it is. first publication. I have no intention of going through To complete this discussion, when this matter was the effect of the six subsections of this clause. They are considered and debated in Committee in the House of there for Members of the Committee to read for Commons, the Government did not consider that the themselves. amendment was appropriate. They argued that they would find it “difficult to see” when the amendment 3.30 pm would apply, and said: Amendment 44A is intended to probe why the “If a statement is published for a second time by the same protection of the single publication rule is restricted to publisher, the comparative quality and credibility of the source the re-publication by the person who published the will … always be the same, even though the place where the first statement. I argue that it should not be relevant subsequent publication appears may be different”.—[Official Report, who subsequently published a statement as long as the Commons, Defamation Bill Committee, 26/6/12; col. 144.] manner of publication is not “materially different”, as I beg to differ with that. I can see why publication in set out specifically in this clause. I am supported in one set of circumstances can be materially different this argument because it reflects a recommendation of and that because the list in subsection (5) is nonexhaustive, the Joint Committee; again, I do not intend to go the court could take these relevant considerations into into its reasoning, which is there in its very valuable account. My noble friend and I seek by this amendment report. to give the Government, through the Minister, an GC 329 Defamation Bill[LORDS] Defamation Bill GC 330

[LORD BROWNE OF LADYTON] Before sitting down, I turn to Amendments 45, 46 opportunity to explain further what, in the circumstances and 47, which are in the name of the noble Lord, Lord of modern publication that we are considering, “materially Phillips, but which are grouped with the two amendments different” may mean. in my name. My understanding of these amendments Amendment 47B seeks to extend the protection of is that they are designed to produce a more elegant Clause 8 to other categories of republication by providing phraseology. If that is right and if it is considered to be greater detail as to what constitutes a materially different more elegant, I support them. If there is something publication. I am wary of lists for the reasons that more significant to them, I wait respectfully for the have been apparent in other parts of this Bill, but I noble Lord to explain it to me and I will respond to it. think that they are helpful at least for the purpose of I beg to move. exploring what is in the Government’s mind. This amendment is designed to cover two specific instances Lord Phillips of Sudbury: My Lords, I do not know in which a subsequent publication should not be deemed whether my few words in Amendments 45 to 47 could to be materially different. be described as eloquent. The first situation is where a statement is part of a scientific or academic journal that was originally accessible Noble Lords: Elegant. only on payment of a fee, which then becomes accessible free of charge—perhaps on the internet after a period Lord Phillips of Sudbury: Oh, elegant. Well, they of time. Publishers often find that a few weeks after are certainly not elegant and certainly not eloquent. the first publication the number of reads of the paper Nevertheless, they are designed to make life a little copy of the article tails off dramatically, at which easier for whoever hereafter will read this Act of point it is logical to make the article more widely Parliament. They are very modest drafting amendments, available. Policywise, it also enables scientists in developing putting the definition right up where it first appears in countries to have access to scholarly resources to two places, dispensing with the need for subsection (2) which they otherwise would not have access because and saving words—which is never a bad thing in they have to go through a paywall of some description. legislation. It is as simple as that. The second situation is the creation of archives on the internet or on microfilm, which are in a different As to the much more substantial amendment moved form from the original publication and should not lose by the noble Lord, Lord Browne of Ladyton, and the protection of the clause. This particular amendment supported by the noble Baroness, Lady Hayter of is supported by the Libel Reform Campaign. In their Kentish Town, I await what the Minister has to say response in the Commons, the Government stated with more than usual intensity. I can quite see that that their consultation recognised that subsection (4) there are many issues of some subtlety around this of the Bill as presently drafted, that need, as always, to be weighed. I am inclined to support them but I am waiting to hear from him. “might mean that the single publication rule does not apply to an article that is made available on a free-access basis after it was initially published in a subscription-based scientific journal”. Lord Marks of Henley-on-Thames: My Lords, I support the principle of Amendment 44A moved by They added: the noble Lord, Lord Browne of Ladyton. The single “There may, however, be circumstances when making a previously publication rule in this Bill is an important reform for subscription-based journal article freely available could significantly avoiding multiplicity of actions and is thoroughly increase the extent of the publication”, welcome, but its impact is markedly diminished by and therefore cause harm—serious or more extensive restricting its application to republication by the same harm, I suppose—to the claimant. Again using the publisher. I can see no justification in principle for striking of the balance argument, the Government restricting a claimant suing on a second publication by said that it would not, the original publisher but permitting him to sue on a publication at a later date by a second publisher. “strike the correct balance to say that a claimant could never bring an action in such a case”, Lord Ahmad of Wimbledon: In terms of audibility and, for all noble Lords, please could noble Lords make “that it would be unduly inflexible to set out in statute specific sure that their mobile phones are kept well away from instances when the test of whether a publication has been made in the microphone because they cause issues with listening a materially different manner may, or may not, be satisfied”.—[Official and difficulties for all concerned. Report, Defamation Bill Committee, 26/6/12; cols. 144-45.] I fully anticipate that the Minister will rehearse Lord Marks of Henley-on-Thames: I rather hope it some of these arguments. I hope that I have not stolen was not mine, but it might have been. At any rate, it all of his thunder and may have saved the Committee has been moved now. some time. By re-raising these issues in this truncated form against the background of the debate, I hope The proviso of republication in a different manner that it gives the Minister and his advisers, who have as the application of the rule in my view provides had more time to think about this issue, an opportunity sufficient protection. That was the unanimous and to give us more and better specification about the strongly held view of the Joint Committee, and it is words that the Government have chosen to put in this one which I urge the Government to reconsider. I legislation, which broadly are supported. would add one caveat which is that, while I support GC 331 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 332 the principle of this amendment, I can see the need for 3.45 pm its qualification to ensure that this situation is addressed. Lord Ahmad of Wimbledon: My Lords, we have It is possible to envisage a first publication by an heard much about balance. In order to provide balance insolvent publisher and then a second publication by a from the Dispatch Box, at least in terms of the coalition, publisher who is worth suing. It would be perfectly it is only right and appropriate, after my noble friend reasonable for a claimant to take the view that he did has spoken, that I now address the Committee and not propose to sue the first publisher, but that he did deal with some of the issues that have been raised. I wish to sue a publisher at a later date when the original listened with great interest to the noble Lord, Lord limitation period might have expired because that Browne, proposing the amendments and noted with publisher was worth suing and was likely to be good great care what he said. At times I felt that some of my for the costs and the damages. It does not seem to me responses had winged their way over to him. to be beyond the wit of draftsmen to cater for that position and to allow suing a second publisher in I shall respond to the amendments in front of us those circumstances. Subject to that caveat I support and share some thoughts as well. I assure noble Lords the amendment. that when looking at the tabling of an amendment and its implications, both I and my noble friend Lord McNally look at these wordings in rigorous terms to Lord Brown of Eaton-under-Heywood: I was not test their application, ultimately from a layman’s proposing to speak to this amendment at all but it perspective, to try to understand and get behind the seems to me that there is an enormous distinction to true meanings of the different clauses. be made between person A and person B as to which publication one is being denied by the Limitation Act Amendment 44A would amend Clause 8(1) to provide the opportunity of proceeding in respect of. It is, with that the single publication rule would apply to the respect, not only whether the second publisher may be publication of the same material by any publisher financially worth suing as opposed to the first publisher rather than by the same publisher. As noble Lords which must be catered to in this provision, but surely have acknowledged, this would significantly extend also the standing and reputation of the publisher. One the scope of the single publication rule, and there are can very well imagine a situation in which one simply implications for the protection for claimants. I shall would not be bothered to be defamed by person A talk through some technicalities. First, it would mean because that person’s standing and reputation was that if the claimant were to bring an action in relation itself so low and yet a republication by somebody of to the original publication and that action took more real repute and standing would trigger one’s intent to than a year to resolve, he would then have to rely on sue. So if this Amendment 44A is to be accepted, that the court to exercise its discretion under the Limitation sort of thing should be catered to, whether under the Act and permit him to bring a further action against provisions of subsection 4, with a specific provision another person who might have republished the material. about material difference lying on occasion in the Although the claimant may have obtained a court character and position, financially and otherwise, of injunction against, say, a local newspaper in this regard the publisher, or in some other way, I leave to others to to prevent further publication of the material, another consider. newspaper under different ownership in a neighbouring As to the other amendments, I agree with the view town would still be free to republish it. that Amendments 45, 46 and 47 are a simpler and The scenario painted by my noble friend Lord more elegant fashion of expressing those provisions. Phillips is certainly not something that I have looked As to Amendment 47B and the proposed insertion of at, and I will have to refer to our officials in that new Section 5A, I am neutral as to how desirable it is regard. Sorry, it was my noble friend Lord Marks who to spell out these considerations which shall not be painted the scenario on solvency, which was an interesting regarded as materially different. I would respectfully proposition to dwell on. suggest that the expression should be not, I talked about understanding what this would mean “shall not be deemed to be”— from a layman’s perspective. In our discussions, one of it is not a question of deeming—but the things that have been conveyed to me is that the “shall not be regarded as”, purpose behind the amendment, or at least its effect, would be, in short, that one newspaper could simply but that is a very minor point indeed. report what another one had reported without paying any due regard to whether it was defamatory. Of Lord Lester of Herne Hill: On my noble friend Lord course, in these circumstances a court has a discretion Phillips’s Amendments 45, 46 and 47, I hardly ever and in some cases would be likely to exercise its argue with parliamentary counsel as being defective in discretion in favour of the claimant. However, the the way that they approach their work. With respect to concern remains for the Government that this process my noble friend and to the noble and learned Lord, would involve additional delay and expense. We do Lord Brown, I do not think that it is an improvement not believe—I am going to use the words again—that to save two words by twice repeating, it would strike the right balance. “or a section of the public”, Amendment 47A relates to the provision in when it is clear beyond argument in Clause 8(2) that subsection (5) that the single publication rule does not protection to the public includes publication to a apply where the manner of the subsequent publication section of the public. I therefore oppose what Lord is materially different from the manner of the first Wilberforce once described as “the austerity of tabulated publication. As the noble Lord, Lord Browne, legalism”. acknowledged, unless considered in conjunction with GC 333 Defamation Bill[LORDS] Defamation Bill GC 334

[LORD AHMAD OF WIMBLEDON] Lord Browne of Ladyton: My Lords, I am grateful Amendment 44A, it is difficult to see how this amendment to noble Lords for participating in this short debate on would apply. When a statement is published for a the amendments, and I am grateful to the Minister for second time by the same publisher, as Clause 8 provides, his response, even if it was substantially predictable. I the comparative quality and credibility of the source am particularly grateful for what I might call the will, in most cases, always be the same, even though neutral support of the noble Lord, Lord Phillips, but the place where the subsequent publication appears why should I expect anything more since that is what I may be different. give his amendments? I am grateful to the noble Lord, In any event, the Government do not consider that Lord Marks of Henley-on-Thames, for his overt support the amendment is necessary. Subsection (5) identifies of Amendment 44A, and grateful, too, to the noble certain matters to which the court may have regard in and learned Lord, Lord Brown, for the benefit of his considering whether publication is made in a materially wisdom. I have to say that I see the strength of his different manner. It is difficult to see what relevance argument to a degree and I am sure that it was the fact that a subsequent publication has been made reflected in the words of the Minister. I venture to in a more credible place has to the question of whether suggest, however, that if that is the nature of his a claimant should bring a claim. thinking on this issue, if we come back to it in the future, he might apply that logic to Amendment 47A The noble Lord, Lord Browne, raised the question: and find that he should be supporting it even if it what does “materially different” mean? The noble and could be better and more elegantly drafted. learned Lord, Lord Browne, acknowledged that to I will look very carefully at what the noble Lord has define “materially different”may be a little fact sensitive. had to say. I am interested in a threat of consistency We believe that the question of whether the publication running through the way in which we legislate. I am is materially different should be decided by the courts tempted to say that the answer to the example that he rather than that we should attempt to provide a definition gave of republication in a different town as a justification in the Bill. In the unlikely event that the court considered for restricting this single publication rule to the same issues such as those contained in Amendment 47A to person lies in Clause 8(4). That could be said to be be relevant, there is nothing to prevent the court “materially different”. I say with respect to the Minister taking them into account. that it is not a complete answer. From the point of Amendment 47B provides that subsequent publication arguing against myself, I prefer the argument of the shall not be deemed to be materially different in two noble and learned Lord, Lord Brown, but that may specific instances: first, where the statement is part of already be accommodated in the potential of an academic or scientific journal and goes from being subsection (4). accessible only on payment of a fee to being accessible In trying to tease from the Government further free of charge; and, secondly, where the subsequent specification on “materially different”, it is no answer publication is as a result of an archive accessible on to say that it will be left entirely to the courts, when the internet. We recognise that concerns have been subsection (5) seeks to do that in part. There are two expressed about the importance of archives and material examples of what would be relevant to the court in in scientific and academic journals. We have taken determining whether the manner of the subsequent action elsewhere in the Bill to protect material which publication is materially different. I appreciate that it has been properly peer-reviewed. is not intended to be an exhaustive list; we could go round in circles debating it, but it is no answer to However, there may be circumstances in which making suggest that it is a matter entirely for the court when previously subscription-based journal articles freely the Government themselves seek to specify it in the available could significantly increase the extent of the clause. We should either put in some or none—we will publication and could cause serious harm to the claimant. go back to our earlier debates. I am seeking consistency. This is also the case where the material was previously I am concerned that I may stir the noble Lord, Lord available only in an off-line publication and is placed Lester, and may add time to this. I am trying to do this on an archive accessible on the internet as this may quickly and will go away and reflect on it. I beg leave bring it to the attention of a much wider audience. We to withdraw the amendment. do not consider that it would be right to say that a claimant should never be able to bring an action in Amendment 44A withdrawn. these cases, which would be the effect of the amendment. In any event, the court would need to be satisfied Amendments 45 to 47B not moved. that the publication has been made in a materially different manner, and how that test is applied is, again, Clause 8 agreed. best left to the court to determine in each individual circumstance. In the event that the court decides to 4pm allow a claim to proceed, the serious harm test would have to be satisfied for the claim to succeed. We, again, Clause 9 : Action against a person not domiciled in the believe that this strikes the right balance. UK or a Member State etc On Amendments 45, 46 and 47, I cannot add much more to the words of my noble friend Lord Lester in Amendment 48 describing the Government’s position. We believe that there is clarity in the Bill as drafted. On that basis, I Moved by Lord Mawhinney hope the noble Lord will withdraw his amendment. 48: Clause 9, page 7, line 29, at end insert— GC 335 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 336

“( ) A person domiciled in England or Wales may bring an to do because constituents would stop coming to them action for defamation in respect of publication by a person to and saying, “I won a law case but the person doesn’t whom subsection (1) below applies provided that they can demonstrate have the wherewithal to meet the bill”. Indeed, I have that such publication has caused them serious and substantial harm.” been in that situation myself. I am not entirely clear how you would prove to the court’s satisfaction that not only did you have the Lord Mawhinney: My Lords, politics is frequently money but it would still be there when the judgment described as the art of the possible, but it is also was made. Having the money before you start and still described as dealing with truth and people’s perception having it when you finish are, conceivably, two entirely of the truth, and the latter is frequently harder than different issues, so I have some hesitation about the the former for politicians to handle. amendment of the noble Lord, Lord Singh of Wimbledon. I was reminded of this particular issue because Again, I would also be interested to hear what the there have been a number of very high profile legal Government have to say. I beg to move. cases called, mainly in the tabloid press, libel tourism. Because they have been high profile and involved lots Lord Phillips of Sudbury: My Lords, I speak to of money, a perception has been created that this is a Amendment 49 in my name. I believe that Clause 9(2) major problem. In fact, though, the evidence given to goes too far in requiring a court to be not merely Joint Committee was that it was not a major problem, satisfied that England and Wales is the most appropriate in the sense that it happened not frequently but place to bring an action but clearly satisfied. It is not occasionally. However, the perception of it being a clear to me quite what that would mean in any event. major problem probably meant that it needed to be Is it applying a criminal law test of “beyond reasonable addressed, and the Government, in my view and that doubt”? I think it loads the dice against a person who of the Joint Committee, have sought to address libel is not domiciled in the UK. tourism in Clause 9. My amendment would clarify that if you are resident in this country you could take out legal proceedings wherever the libel was alleged to Lord Mawhinney: What the clause actually says is, have taken place. This country has a reputation of “satisfied that … England and Wales is clearly the most appropriate being a friendly place in which to bring major libel place”, cases, but in many of the few they have precious little not, to do with England and Wales—and “precious little” “clearly satisfied that … England and Wales is the most appropriate is probably a euphemism for practically nothing. place”. We as a Committee were keen to ensure that, in Would that make any difference to his argument? defining what you could not do, we did not raise any question about what a bone fide residence in this Lord Phillips of Sudbury: I am obliged to my noble country could do, irrespective of where the libel took friend for picking up my slackness. No, I do not think place, so long as the UK resident could show that he it would. The wording, as the noble Lord, Lord or she had been seriously and substantially harmed. If Mawhinney, just said, is: something defamatory was said in a far-flung part of “England and Wales is clearly the most appropriate place”. the world and no one in this country ever heard about I think it is quite enough to leave it to the judge to it, that would not pass this test. On the other hand, it decide whether it is the most appropriate place. That is would pass the test if there was perceived to be serious a strong test in itself and, as I say, I do not think it is harm done in the perception of people in this country. right to load the dice in this regard. In my view, what is The amendment is not complicated, nor does it seek to provided for in Clause 9 goes far enough to stop the persuade the Government to go into new territory that most undesirable cases of libel tourism. they do not want to go into. It is with the grain of the Government’s thinking but would clarify that trying On Amendment 50A in the name of the noble to address libel tourism does not diminish the right of Lord, Lord Singh of Wimbledon, I am afraid I agree residents of this country, subject only to the harm test. with my noble friend Lord Mawhinney. It would make the position of the poor litigant wanting to protect his Two other amendments are linked with this one. On or her name and reputation even more unequal than it Amendment 49, it is quite clear from the Government’s already is. We know that legal aid does not apply to Bill that the court has to make a decision about what is defamation proceedings and to have a provision that “appropriate”. What is “clearly appropriate”will therefore requires him or her to satisfy a court that they have fall into the same category. My sense is that “clearly” resources to meet costs arising from an unsuccessful is a higher level than “appropriate”. A court is perfectly action means that at least half the population will capable of deciding “appropriate” and “clearly never be able to protect their reputation, and that appropriate”, and at this stage I am ambivalent until I cannot be right. hear from the Minister why he thinks this is a good or bad idea, because I can see arguments in both directions. Lord Singh of Wimbledon: On that point, it is the Initially, I had a sympathetic reaction to it to litigant from abroad that I am concerned about, not Amendment 50A. However, I started to think a little the defendant in this country—a litigant with substantial more about what the words say. In our law we do not funds. often require people to demonstrate that they have funds available before they begin proceedings; indeed, if that were indeed a general tenet of the law this Lord Phillips of Sudbury: With respect, it says: country, Members of Parliament would have a lot less “Action against an individual domiciled in the UK”. GC 337 Defamation Bill[LORDS] Defamation Bill GC 338

[LORD PHILLIPS OF SUDBURY] Bill”—the team behind the Minister will know its It does not say anything about where the plaintiff is correct name. I was concerned that people in countries domiciled. It talks about where the defendant is domiciled. such as Singapore or Malaysia, which have draconian If I were suing the noble Lord, he is domiciled in the libel laws and use them to suppress dissent and unpopular UK but so am I. This clause does not affect my views without, I am afraid, any proper respect for the domicile, only his. right to free speech, would be able to bring those laws into this country and enforce them here in libel proceedings. Lord Singh of Wimbledon: My Lords, this whole amendment is concerned with protection against those I was concerned about that because the EU was in domiciled abroad using their wealth and remoteness the process of harmonising tort law, including libel to chill freedom of expression in the UK. It could be law, and seeking to abolish what is known as the that the wording is clumsy. I will come back to that. It double actionability rule of common law, which provides is intended to be applicable equally to wealthy businesses that if a wrong is committed in another country—a and religious cults. My concern is with the latter. road accident in Gibraltar, for example—the victim could bring a claim for negligence in this country Many in this House will be aware of the power and based on what had been done in Gibraltar, but only if influence of powerful cult leaders who claim deep it was actionable under the law of this country as well religious insights denied to the rest of us. They often as Gibraltar’s. In other words, domestic British legal attract and get large donations from rich businessmen standards had to apply and be satisfied. Under the EU and media celebrities, which they use to acquire property harmonisation programme, the danger was that if you and business interests, and often to fund expensive abolished the double actionability rule it would mean lifestyles. More worryingly, they also prey on the that someone in one of these other countries could superstitious and vulnerable, promising to use their bring in their bad, repressive libel law and rely upon it influence with God to help people meet life’s challenges in this country. or to cure incurable diseases. In one case, a cult leader got a woman to sign over her property in return for a Of course, President Obama did precisely the same promised cure for cancer. Sadly, the woman died soon thing that I am about to say that we did to the after. I believe that it is in the public interest that such Malaysia and Singapore. In that Act, we kept the activities are exposed. double-action ability rule in place but only for libel proceedings. The effect is that the Defamation Bill, There are many more such cases in which superstitious when it becomes law, will provide the British standard; and vulnerable people are deprived, sometimes of anybody coming from another country and seeking to virtually all that they have. The power and attraction use the defamation law coercively will have, under the of such organisations is totally dependent on uncritical double-action ability rule, to satisfy the standard anyway acceptance of their claims to special powers; they use of the Defamation Act, including the Defamation Act their might and muscle to silence those who, in the being read with the constitutional and conventional public interest, dare to challenge them. Many such right to free speech. So there will already be very organisations are domiciled in the subcontinent of strong reasons in public policy why such a person will India, or in the United States and Canada, and use not get very far if they seek abusively to bring libel their wealth and power to stifle any public-interest proceedings in those circumstances. questioning of their activities. They also use their remoteness from the UK to avoid paying the costs of any finding against them. 4.15 pm There are many examples. I will give one of a young I mention President Obama because, before we had journalist, who questioned the practices of an Indian this Bill, when the common law was notoriously chilling sect and found himself in a ruinous lawsuit. After on free speech, the noble Lord, Lord Singh, may three nightmare years facing financial ruin, he eventually remember that the Congress of the United States did won his case but has no prospect of recovering some something pretty rude to us and provided that English £50,000 spent in doing so, as this would involve further libel judgments were unenforceable in the United States protracted litigation in Indian courts. The attitude of on similar grounds. That is my way of trying to such foreign-based litigants is very much, “Heads I explain that we already have defensive mechanisms in win, tails you lose”. It might be that the amendment’s our system that would be enforceable to deal with the wording is clumsy but its intention is very clear. I kind of abuse with which the noble Lord, Lord Singh, believe it will significantly deter those who use power is rightly concerned. and remoteness to intimidate those in the UK who are genuinely concerned about their activities. I beg to move. Lord Marks of Henley-on-Thames: My Lords, I rise briefly to support the amendment proposed by the noble Lord, Lord Mawhinney. Again, this was a Lord Lester of Herne Hill: My Lords, I shall speak recommendation of the Joint Committee. We took the briefly only to Amendment 50A, tabled by the noble view, I suggest rightly, that it is entirely correct that Lord, Lord Singh of Wimbledon, to bring him good cases against those who are not domiciled here or in a news as to why it is not needed because we have convention country should be restricted if they are something else in place. When the noble and learned brought by claimants who are themselves domiciled Lord, Lord Mackay of Clashfern, was Lord Chancellor outside the jurisdiction. But I do not think it right for we dealt with a Bill whose Title was something like the a local potential claimant within the jurisdiction to be “private international law miscellaneous provisions debarred from suing a foreign defendant for a libel GC 339 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 340 that has caused the local claimant serious harm here, Although I am sure the hearts of my colleagues even if there may be other countries that are at least as behind me will sink, I have listened to the debate and I appropriate. For example, an Italian newspaper could will study again the remarks made and the example publish a libel in Italy and England that would cause a given by the noble Lord, Lord Marks. local English claimant damage in both jurisdictions. There may be reasons for the defendant to argue that Lord Marks of Henley-on-Thames: Perhaps I may Italy would clearly be the most appropriate forum for correct something that I have said. My example, which the resolution of the dispute but, as it stands, this was off the cuff, of Italy was wrong: it ought to be the section would debar the English claimant from suing United States or somewhere outside the Brussels and in England. Lugano conventions. The clause is intended to restrict libel tourism so far as is consistent with the Brussels and Lugano conventions. Lord McNally: I was just thinking that myself, but I It does that, but it should not also restrict local claimants did not want to raise it. from suing foreign defendants here when there reputations have been damaged here, even if there may be other Broadly, at the moment we consider it is right that jurisdictions in which they might equally well or better these cases should be caught by the test and therefore sue. not automatically take place in our courts. Where a claimant in a case where the defendant is domiciled The amendment achieves what should be the aim of outside the UK, EU or Lugano convention states is the clause. I am not sure that the proviso relating to unable to satisfy a court that, of all the places in which harm is necessary, because I would be content to rely the statement complained of has been published, England on Clause 1 for the serious harm test. But subject and Wales is clearly the most appropriate place to to tidying it up, I suggest that the amendment bring the action in respect of the statement, then he or proposed by the noble Lord, Lord Mawhinney, is she should be refused access to our courts and should entirely justified. be required to seek redress abroad. Such cases are not likely to arise with any frequency but, when they do, Lord Phillips of Sudbury: My Lords, I briefly comment they give rise to legitimate concerns about libel tourism on what the noble Lord, Lord Singh of Wimbledon, which uses up the time and resources of our courts. said. I have to stick to my earlier analysis, but after We do not believe that the requirement to show that hearing what he said, if his amendment had incorporated England and Wales is clearly the most appropriate the purport of that I would have been very sympathetic place to bring the claim will cause undue inconvenience to it—notwithstanding what my noble friend Lord to claimants domiciled here who legitimately wish to Lester said, because his clause would address a different bring an action in this jurisdiction to protect their issue. The only question I have is whether the security reputation. It is likely that in most cases where a for costs arrangements that can be invoked here might claimant is domiciled in England and Wales the Clause 9 not come to the aid of the person to whom he refers. test will be satisfied as the main harm to reputation will have been caused here and, in those circumstances, a claimant will readily be able to show that this is the Lord McNally: My Lords, this has been an extremely most appropriate place to bring the claim. However, useful debate. From the beginning there has been a claimants should not be able to use our courts to question of whether libel tourism exists, and there are pursue libel actions which are more appropriately varying views on this. Indeed, without breaking too heard elsewhere, even if they are domiciled here. many confidences, when I explained to a very senior member of the Government that we were trying to Amendment 49 seeks to make a small amendment curb this so-called libel tourism, he said, “Are you to Clause 9 but it would have an undesirable impact on sure? Should it not be the more the merrier?”. He had the effectiveness of the clause. Clause 9 provides that a the idea that if foreigners wanted to come and use our court does not have jurisdiction to hear and determine excellent legal and judicial services they should be an action to which the clause applies unless it is welcomed. In another respect, of course, we make a satisfied that, of all the places in which the statement great play of the excellent facilities at the Rolls building complained of has been published, England and Wales for doing just that. However, there was a problem not is clearly the most appropriate place in which to bring only with the numbers but in the use of threats to stifle an action in respect of the statement. publication or opinion—the so-called chilling effect—and Amendment 49 would make a small amendment to it is right that we have had this debate. Clause 9, but would have an undesirable impact on its Amendment 48 would mean that the effect of the effectiveness. Clause 9 provides that a court does not provisions on libel tourism reflected in Clause 9 would have jurisdiction to hear and determine an action to be narrowed as cases where the claimant is domiciled which the clause applies unless it is satisfied that, of all in England or Wales would no longer be caught even if the places in which the statement complained of has the main impact of the alleged libel was outside England been published, England and Wales is clearly the most and Wales. The Government do not consider that appropriate place in which to bring an action in respect narrowing the scope of Clause 9 is appropriate. It of the statement. would mean, for example, that a Russian oligarch Amendment 49 would remove “clearly”. We do not domiciled in England and Wales could sue a person believe that this would be appropriate. Great concern outside the UK/EU in the English courts in circumstances has been expressed in Parliament and elsewhere about where the alleged main harm to his reputation has libel tourism. The amendment would reduce the strength occurred in, say, Uzbekistan. of the test to be applied by the courts and could have GC 341 Defamation Bill[LORDS] Defamation Bill GC 342

[LORD MCNALLY] date on Report voting at 11.20 pm on whether “clearly” the effect of leading to their allowing more claims to should stay in the Bill, with the noble Lord, Lord proceed in this jurisdiction in instances where the Browne, seeing an opportune moment to defeat the question of whether this is the most appropriate place Government. Until that moment, I ask noble Lords to bring the claim is more marginal. We believe that not to press their amendments. most people who have commented on these issues would agree with us that it is important to give a signal 4.30 pm to the courts that Clause 9 should be applied robustly, and that claims should be allowed to proceed only Lord Lester of Herne Hill: Before the Minister sits where this is clearly the most appropriate jurisdiction. down, I shall explain in case I was not clear. I was trying to say that all the defences—the requirement of Turning to Amendment 50, I understand the point serious harm, the public interest defence, qualified made by the noble Lord, Lord Singh, about drafting. privilege—will be able to be used as a shield against an Perhaps I may say in passing that as soon as he starts unscrupulous claimant, and the double actionability speaking my mind comes to mornings when I feel rule would require that too. tetchy, down-at-heart and at war with the world, and his mellifluous voice comes on “Thought for the Day”, and, at the end of it, I always feel a little bit better Lord McNally: Noted. about the world. The amendment would require an organisation or individual bringing an action against Lord Mawhinney: My Lords, I listened carefully to a person domiciled in the United Kingdom to provide what my noble friend said, and he generated in me a evidence that it or he has funds in the UK to meet any little surprise; I was under the impression that he and I costs that might arise were the action to be unsuccessful. were singing from the same page of the hymn sheet on As the amendment is drafted, this would apply where this one. I shall suggest to him why he and I may both parties are domiciled in the UK as well as where appear to be thinking differently and invite him to only the defendant is domiciled here. This would put reconsider one thing that he said. potential claimants with limited resources at a serious I incorporated into the amendment the view of the disadvantage, as has been said by a number of those Joint Committee about “serious and substantial harm”. who have spoken in this debate. For example, it would We have already debated that and the Government mean that if an individual wished to bring an action have a view. If their view turns out to be as we suspect against a national newspaper based in the UK, he or it to be from this debate, I am not chasing on “serious she would have to show that he or she had sufficient and substantial”; I used it merely because the Joint means to pay the newspaper’s costs, which could be Committee did, but I am not sure that anyone is going substantial, in the event that the action was unsuccessful. to get too precious about that aspect of the amendment. This would considerably restrict access to justice. As I said at the beginning, the amendment was However, the point that the noble Lord, Lord Singh, designed to protect those who live in this country so raised and the specific examples that he gave should that they would not get excluded. My noble friend give us pause for thought. As with the other points chose to interpret that—perfectly correctly; I have no made about the way in which our laws are being used, complaint—by citing a Russian oligarch who lived the ability of those from abroad with resources to here and who had been libelled in Uzbekistan, I think intimidate those making legitimate criticism of their he said, and the damage was in that country. behaviour should give us pause. The noble Lord, Lord This is the point that I would like my noble friend Lester, gave assurances on that matter. As always with to think about: if you take this amendment as a advice from the noble Lord, I wish to take it away and freestanding amendment, it allows itself to be interpreted consider it, and ask my advisers whether the assurances in the way in which my noble friend interpreted it. that he gave are sufficient to protect against the abuses. However, if the amendment became part of the Bill How we protect against the kind of threat and intimidation then it would sit just a few lines above Clause 2, where that comes short of reaching court, I do not know, but the court has to make a decision as to whether this is perhaps one of the defences is that, when the Bill the most appropriate location for a legal case to be becomes an Act, people will be more aware of the heard. Given the example that my noble friend used, protections in our law against such intimidation. an English court would be asked to decide whether or We recognise the concerns that exist about the costs not this was the most appropriate place for a Russian of defamation proceedings for both claimants and oligarch living in Kensington to take action against defendants, and are firmly committed to reducing someone who slandered or libelled him in Uzbekistan. them. As I have mentioned in debating earlier I yield to no one in my admiration for British justice amendments, the provisions on costs protection which and I am guessing that, if you put together the amendment we have asked the Civil Justice Council to consider, and Clause 2, judges would say, “No; the fact that you together with changes to the Civil Procedure Rules to are here allows you to come and ask us, but it doesn’t support early resolution of key issues, will help claimants mean that this is the most appropriate place for you to and defendants of limited means to bring and defend do this”. When my noble friend says that he will reflect claims. further on this debate, I invite him to look at his I have given noble Lords an assurance that I will example against the pairing of the amendment and look at this debate and see whether we have got the Clause 2, which would both be an integral part of this balance right. I am not sure that I can give any idea overall clause, and invite him to accept that Clause 2 that we are going to give up “clearly”; I am going to has a mitigating effect on the amendment. If he buys defend that to the very last. I can see us at some future the general argument that I am encouraging him to GC 343 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 344 think about, and if he says that in order to clarify this Clause 10 : Action against a person who was not the we need to tweak the new amendment to make crystal author, editor etc clear what we are trying to say, then I am free and easy with that; in fact, I would be delighted were he to do so. Amendment 50B Given that caveat, because I think that we are not Moved by Lord Browne of Ladyton very far apart and that a drafting tweak might clear 50B: Clause 10, page 8, line 24, at end insert “damages for” that up, I thank my noble friend for his response. I note that he is nodding in thoughtfulness—I attribute nothing else to him other than thoughtfulness—and in Lord Browne of Ladyton: The amendment, standing that spirit, I beg leave to withdraw the amendment. in my name and that of my noble friend Lady Hayter, would confine Clause 10 to actions for damages only. I Amendment 48 withdrawn. say at the outset that I support Clause 10. It is a significant improvement in the law, and that position is supported by those who practice commercial activities. Amendment 49 The Booksellers Association, to which I will refer later, is a strong supporter of Clause 10, but it does Tabled by Lord Phillips of Sudbury not think that it goes far enough for reasons I am 49: Clause 9, page 7, line 38, leave out “clearly” about to give in support of the amendment. Amendment 50B would restrict Clause 10 to action Lord Phillips of Sudbury: Perhaps I may make a for damages only. It would provide that a court does comment, but not to pick up the point so clearly made not have jurisdiction to hear and determine an action by the noble Lord. It occurs to me, especially in the for damages, light of the amendment tabled by the noble Lord, “for defamation brought against a person who was not the Lord Singh of Wimbledon, that it is odd that if this is author, editor or publisher of the statement complained of unless dealing with libel tourism, it is about actions by plaintiffs the court is satisfied that it is not reasonably practicable for an not domiciled in the UK rather than dealing with action to be brought against the author, editor or publisher”. defendants not domiciled. It seems to me that it is the The intention is that when the primary publisher wrong way round, but that could be the subject of cannot be found, the claimant would still be able to discussion. sue the secondary publisher for an injunction of some description, a take-down order or for a book to be removed, even if they were not able to pursue an Amendment 49 not moved. action for damages. I am in the fortunate position of being familiar Clause 9 agreed. with the Government’s position on this amendment because it was moved in the House of Commons. The Amendment 50 had been withdrawn from the Marshalled Government thought that it could lead to a situation List. that even when it is reasonably practicable for an action to be brought, the secondary publisher would end up having to defend the claim, although they Amendment 50A, in substitution for Amendment 50 would not be liable for damages if the claimant were successful. Nevertheless, the Government said that Tabled by Lord Singh of Wimbledon they would give further consideration to this issue. 50A: After Clause 9, insert the following new Clause— The response from that further consideration may well “Action against an individual domiciled in the UK be Clause 13, which was not there at the time of that (1) This section applies to an action for defamation against a debate. I cannot anticipate fully what the Minister will person who is domiciled in the United Kingdom. say, but I have an expectation that he may refer to (2) The organisation or individual bringing the action, in Clause 13. addition to satisfying the court of serious harm, must also provide evidence of funds in the UK to meet any costs arising from an Clause 13 merely provides in the context of a judgment unsuccessful action.” that the court may order a statement to be taken down. It would be more appropriate to make it clear that claimants retain the right to bring an action when Lord Singh of Wimbledon: On rereading the wording, the remedy sought is not damages. Again, this could I feel that it does say what I intended it to say but that perhaps be better drafted to achieve that, and I am is drafting. I am grateful to the noble Lord, Lord content to discuss that. If the Committee can be Lester, for his comments and assurances, and I am persuaded to support the principle of this argument, I particularly grateful to the Minister, Lord McNally, urge the Government to take the argument seriously. who gave the impression that he would look at this a For ease of dealing with these three amendments little further. In those circumstances, I shall not move that I have grouped together, Amendment 50D is a the amendment. consequential amendment on Amendment 50B and provides that nothing in Clause 10, Amendment 50A, in substitution for Amendment 50, “prevents a court from granting any injunction or order requiring not moved. a person to cease publishing a defamatory statement”. GC 345 Defamation Bill[LORDS] Defamation Bill GC 346

[LORD BROWNE OF LADYTON] defence of innocent dissemination a defence would It may be unnecessary, but it is coupled with it. Again, have existed if the bookseller had a reasonable belief I have the benefit that the Minister who dealt with this that the alleged defamatory material was not libellous, debate in the House of Commons indicated that further having in most circumstances received assurances from consideration would be given to this issue, too, but it lawyers that one of the defences applied. may be that the further consideration has resulted in Clause 13, at least in part. 4.45 pm Amendment 50C is an inelegant amendment. It Finally, they contend that the effective repeal—the seeks to do something that I do not think that I have elimination of the innocent dissemination defence—has ever seen before in legislation, and it can be criticised had, and this is a phrase I thought I would never use in for that reason. However, because of the nature of these debates, a chilling effect on booksellers whereby these proceedings—we are encouraged by the noble a claimant’s lawyers often now send threatening letters Lord, Lord McNally, to treat them as some form of to booksellers warning that unless a publication containing seminar discussion—I have retabled this amendment. the alleged libel is immediately withdrawn from sale, It mixes up the substance of the issue with the issue of proceedings will be started against the bookseller and jurisdiction. I understand that, and I am happy to take the books removed from the shelves. Paragraph (c) of on the chin that criticism of it. However, if we move our amendment is therefore intended to reinstate the towards each other in relation to this, or if the Minister defence of innocent dissemination for booksellers. I can give a better explanation than there has been have a sheaf of letters, which I will not share with the otherwise about a specific aspect of this argument, Committee, from some of the most significant firms of and we go beyond this in agreement, I am sure that lawyers in the country to small booksellers across the this amendment can be redrafted in another way. country threatening in very strident terms just this At the heart of this amendment is a belief on the sort of action. I fully understand why small independent part of the Booksellers Association and those who booksellers, who may have 20 copies of this book on advise it—indeed, there may be people in your Lordships’ the shelf, take them down and do not sell them in Committee who have advised it at one time or other; those circumstances. That may represent for booksellers, happily, I have not—that the innocent dissemination who have a lot of competition, their whole profit for defence, which existed previous to the 1996 Act, as a that week or month, and I suspect, although I have matter of fact and practice is now repealed effectively, not explored this, that those who wholesale the books although perhaps that was not the Government’s intention. to them are not prepared to take them back. That The debate in the other place was interesting because clearly is not where we intend to be. the then Minister who dealt with it conceded in the I have already covered the issue of the mixing-up of debate that there were different views on the effect of the substance of the case with jurisdiction, and I Section 1 of the Defamation Act 1996 as to whether concede that that is not the right thing to do, but it the defence that it provided was weaker than or as allows us to have this debate in a concentrated form. If good as the innocent dissemination defence. With this we come to a point where we feel that we need to do short debate that I hope we will have, I seek to elicit something about this, then we can work together to try from the Government a clarification of their position to do it in a better way. I see some of the logic in the as to whether there is a difference between Section 1 of arguments rehearsed by the Government in previous the 1996 Act and the effect of the Bill, taken together, debates in respect of this particular amendment, but on the one hand and the pre-1996 defence of innocent there is an expectation on the part of secondary publishers dissemination on the other, and why the Government and, in particular, booksellers, which are in a particular believe that this combination that we are now presenting situation, that they should understand clearly what to secondary publishers is better than what they had the Government are presenting to them and what before 1996. circumstances they will be living in in the future. If we The amendment requires that a prima facie case can improve their position by moving back towards should exist. Although Section 1 of the Defamation the innocent dissemination defence, in my view they Act 1996 is available to booksellers as a defence, the are a group of people whom we should try to assist. Booksellers Association contends that it is weaker I beg to move. than a common law defence of innocent dissemination, which that section replaced. As I have said before in Lord Lester of Herne Hill: I am very grateful to the Committee, the Minister who then dealt with it noble Lord, Lord Browne, for the way in which he has substantially conceded that point but only went as far just presented the amendment. I do not have the as to say that there were differing views on the section Booksellers Association as my client, although I did as to whether one was weaker than the other and did some time ago meet it in order to discuss the problem not express what the Government’s position was. I which has been eloquently described. I have, however, think that there is at least a reasonable expectation on acted for Amazon US and Amazon UK and I would the part of secondary publishers that the Government like briefly, because it harps back in a way to Clause 5 should nail their colours to the mast and say what they and the internet, to link that with what we are now are creating here by this process. discussing because it is quite important. If I walk into The Booksellers Association also contends that Daunt Books in London to buy a book, I am reasonably under Section 1, booksellers and other secondary clear that if the bookseller has no reason to believe publishers lose the protection if they know or have that the book is defamatory, the bookseller would reason to believe that a publication contains any have a defence under the defence of innocent dissemination defamatory statement, whereas under the previous as it was before 1996 and probably under Section 1 of GC 347 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 348 the 1996 Act as well. I agree that there is some lack of As the noble Lord, Lord Browne, indicated, the clarity about the effect of Section 1 on the common-law amendments were originally tabled in Committee in defence in that situation. the other place by the honourable Member for Newcastle- The problem becomes much more acute for the under-Lyme. His concern was that circumstances could international bookseller who is selling via the internet. arise where a claimant who had successfully brought The case that I was once in—thank goodness it never an action against the author of defamatory material led to an argument because it was settled—is a very on a website was left in the position of being unable to good example. A book published in the United States secure removal of the given material. This situation completely wrongly and in a defamatory way attributes might arise as a result of the fact that an author may to police officers in Northern Ireland the killing of not always be in a position to remove material which Catholics. It is completely disgraceful and defamatory. has been found to be defamatory from a website, and So the police officers go against the author who is the new defence in Clause 5—together with the more made bankrupt. They go against the publisher who is general protection provided to secondary publishers made bankrupt, so they have no recourse at all. So in Clause 10—might prevent the website operator they go against the international bookseller on the from being required to do so. As the noble Lord basis that it has sold a defamatory book on the internet. acknowledged, it was precisely for this reason that the When we buy that on our computers online, whether Government introduced Clause 13 into the Bill on from Amazon US or Amazon UK, that is an act of Report in the other place. publication. There is therefore publication by the In an offline context where a successful action is bookseller of something that is defamatory and therefore brought against an author, editor or publisher and a Amazon is liable. Amazon, shipping the book from its secondary publisher is made aware of the successful warehouse in California, has absolute immunity under action, we believe that in the great majority of cases US law. Amazon does not have immunity under UK the secondary publisher would act responsibly and law, nor should it, and the same applies to Amazon remove the defamatory material from sale. UK. The practical problem is: what is the position of the However, there are issues that still appear pending international bookseller? It can try to rely on Section 1 and this point has been reiterated by my noble friend of the 1996 Act. The problem with that is that it is Lord McNally and made by me as well. We are listening quite narrow and very unclear as to how it applies. It in great detail to the debates and discussions in Committee. can try to rely on the e-commerce directive and to give As has been illustrated from the Government’s perspective new meaning to Section 1 of the 1996 Act. It can try to in the other place, appropriate clauses and amendments rely on Article 10 of the European Convention on are being introduced to refine this particular Bill if Human Rights to give clarity as well. But all I can say and when they are needed. is that some years ago I had a merry time—well paid—in trying to work out the answer to the puzzle Amendment 50C is identical to the one tabled on that I just described. Report in the other place. It was said then that it was in part an attempt to codify the defence of innocent If something like Amendment 50C were included, dissemination. As the Government explained then, and the noble Lord, Lord Browne, is quite right in Clause 10 is about jurisdiction. To require the court, saying how difficult it is to clarify some of this, it as part of an assessment on jurisdiction, to assess the would have benefit not only for the home-grown London merits of the case before it in the manner proposed bookseller but for the international bookseller in trying would be highly unusual and potentially confusing. to resolve what would otherwise be extremely complicated Furthermore, it would involve additional evidence problems that I have probably failed properly to explain. and expense, which would be wasted in the event that it was held that it was reasonably practicable for the Lord Mawhinney: If peer-review is one of the principles claimant to pursue the primary publisher. Such arguments that we want to hang on to, combating chilling effect are properly pursued once it is established that the should be another that we want to hang on to. I have court indeed has jurisdiction. Subsection (1)(c) would no idea, and I am not competent to judge, whether the also put the onus on the claimant to show what was in wording of the amendment tabled by the noble Lord, the knowledge of the secondary publisher, which, as Lord Browne, is right and precise, but combating well as being practically very difficult, would be a chilling effect ought to be deemed to be so. significant shift in the current law. The noble Lord, Lord Browne, drew to the Committee’s Lord Ahmad of Wimbledon: My Lords, I will take attention the fact that there is a debate over the terms all three amendments together as they have been grouped. of Section 1 of the 1996 Act—the noble Lord, Lord In doing so, I will refer first to Amendments 50B and Lester, referred to this as well—and how that compares 50D. They seek to provide that Clause 10 should to the common-law defence. A question was raised prevent an action for damages for defamation being about the Government’s position. The Government brought against a person who was not the author, believe that it is preferable to adopt the approach in editor or publisher of the statement complained of Clause 10 of directing claimants towards those who unless the court is satisfied that it is not reasonably are actually responsible for defamatory material. This practicable for an action to be brought against the reflects the approach that we have taken elsewhere in author, editor or publisher, but should not prevent a the Bill. In the unlikely event that it is not reasonably court from granting any injunction or order requiring practicable to sue the author, editor or publisher, a person to cease publishing a defamatory statement. Clause 10 allows a claimant to bring an action against GC 349 Defamation Bill[LORDS] Defamation Bill GC 350

[LORD AHMAD OF WIMBLEDON] I will go away and think about this again. We may a secondary publisher, such as a bookseller. However, have room for some progress in extending the scope of nothing in the clause would then prevent that bookseller Clause 13. I am not sure that I will ever persuade the from deploying any defences available to him them. Government to move beyond, with all due respect, a We believe that this approach strikes a fair balance slightly timid position on innocent dissemination, but that provides substantial protection for secondary we may have to return to this issue on Report. In the publishers while not denying claimants a means of mean time, I beg leave to withdraw the amendment. redress where this is deemed appropriate. I hope that on that basis of these explanations, the noble Lord Amendment 50B withdrawn. will agree to withdraw his amendment. Amendments 50C and 50D not moved. Lord Browne of Ladyton: My Lords, I am grateful Clause 10 agreed. to the noble Lord, Lord Lester of Herne Hill, for his intervention and for indicating the value of at least 5pm one of my amendments in a broader, international sense. I think that that will help to concentrate our Clause 11 : Trial to be without a jury unless the court minds on the value of looking with some care at the orders otherwise provisions of Clause 10. I am grateful to the noble Lord, Lord Mawhinney, for his reminder that we should be seeking a direction of travel away from what Amendment 51 may inadvertently have been created by the effect of Moved by Lord Mawhinney Section 1 of the 1996 Act on the common-law defence 51: Clause 11, page 8, line 38, at end insert— that existed. “( ) A court may only order a trial with jury in a case involving I am grateful, too, to the Minister, although I have a senior figure in public life and when that person’s credibility is at to say that I am disappointed in his articulation of the stake.” Government’s position. There is a lack of courage on their part if, even in these circumstances where we are Lord Mawhinney: My Lords, there is no need to all agreed on the direction of travel, they are not take any time to establish that all of the members of willing to say that the law in relation to secondary the Joint Committee believe in the importance of trial publishers is moving in the direction of undermining by jury. That was not the issue. The issue was whether the chilling effect of the behaviour of lawyers, who jury trial was appropriate in defamation cases. Most often act for very wealthy clients, intimidating small of us went into the committee being unsighted, and people from pursuing business because to some degree the evidence was very quick and almost unanimous: it involves an expression of free speech. judges had in effect already decided that jury trials The appropriate response to this short debate is to were probably not the way to go in defamation cases. indicate to the Minister that I will go away and think A number of witnesses told us that there had not been about this again. With regard to the first of our a jury trial for defamation or libel in the past 18 months amendments, Amendment 50B, after this debate I am to two years; the practice had largely ceased. We were minded to consider whether Section 13 should be moving to a position of saying that we endorsed the broader in scope. That may be the answer to the present situation. problem and a more appropriate way of dealing with Then we got evidence from the editor of the Guardian. it—not to restrict it only to secondary publishers and In his evidence, he said something which caused us all the web but to seek that it be broader in scope. That to perk up. He referred back to the case of the Guardian might be a simpler way of addressing at least part of against Jonathan Aitken. He said that he and his the problem. newspaper had wished that that trial had been conducted On the pre-1996 common-law position being better in front of a jury. He made the case that occasionally, and less chilling than the present situation, even when perhaps even exceptionally, people in public life needed improved by Clause 10, I am not sure that I will to be tried in front of their peers simply because of the abandon my attempt to persuade the Government public perception and ramifications of someone in that something must be done. I now have the difficult high office being in that position. He specifically mentioned job of solving how one can do that without challenging judges, Members of Parliament and, if my memory is the court to deal with jurisdiction and the substance of right, very senior people in the Armed Forces, where the case at the same time. My limited experience of the credibility of the public and the individual were practising before the courts—limited by being elected such that they needed to be tried in those circumstances. to the House of Commons, although it was 20 years’ However, other than that, he said that what the judges experience—suggested that once one started to make had already established was the way to go. All I have arguments about preliminary issues, one often got far sought to do in this amendment is accurately to reflect into the substance of the case to do. In making arguments our evidence. I hope that I have done so faithfully. before the court, it was quite difficult to do the sort of I beg to move. thing that we suggest is possible here, by keeping these two issues separate. Apart from anything else, you Lord Brown of Eaton-under-Heywood: My Lords, often do not understand the arguments until you there can be few occasions, particularly at five past understand the facts and where the credible argument five on a Thursday afternoon, when one feels entitled likely lies in a set of circumstances well enough. Anyway, to tell, so to speak, a story from one’s own experience. never mind that. However, I believe this to be just such an occasion. GC 351 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 352

Over a quarter of a century ago, I tried, with a jury, the amendment raises the very concerns that the the case of the late Robert Maxwell suing Private Eye. Government in their response to the Joint Committee It was a defamation case. The burden of the central report refer to in paragraph 62. It was there said that: complaint that Maxwell was making was that Private “Concerns were expressed that including guidelines in the Bill Eye had published a piece which insinuated that he could be too prescriptive and could generate disputes”. had tried, by means of free holidays and the like, to I have already alluded to that as one of the problems. bribe the then leader of the Labour Party—Neil It goes on to say that: Kinnock—to recommend him for a peerage: plus ça “There would also be a risk that detailed provisions setting out change. The case was opened—as all these cases invariably when jury trial may be appropriate could inadvertently have the are—at great length and the witnesses started to go effect of leading to more cases being deemed suitable for a jury into the witness box. I came back from lunch on the than at present”, fourth day to find a note from the jury which read, which would work against the committee’s view, one “Please, sir, can you tell us what a peerage is?”. On the that the Government share, that jury trials should be fourth day of a case all about peerages they did not exceptional. If this clause is amended as proposed, know what that meant, which did not increase my there is a risk that if somebody who claims to be a faith in, and admiration for, juries. senior figure in public life whose credibility is at stake A later case over which I presided in the Court of wants a jury or, indeed, the defendants to a claim by Appeal was that of Grobbelaar, who secured a very someone who is arguably within that description wants large award from the jury—I cannot remember the a jury, then initially you have a dispute and a debate as exact amount but I think that it was about £100,000—on to whether it is a case where it is permissible to have a the basis that he had been libelled by a newspaper jury and, if so, the suggestion would be that Parliament which had accused him of match fixing. Noble Lords would have implicitly sanctioned the thought that that will remember that he was a Zimbabwean who I think is indeed a case where it is appropriate, whereas I played for Liverpool at the time. We eventually held—we would suggest through my earlier illustrations that not were upheld in this by the Appellate Committee of the even in that case would it generally be appropriate for House of Lords—that that was a perverse award. a jury trial. I would respectfully oppose the amendment. Again, that was not greatly to the credit of juries. Therefore, I confess that I am very strongly opposed to Lord Lester of Herne Hill: My Lords, I am so glad juries in defamation cases, not least when important that the noble and learned Lord, Lord Brown, has just people—celebrities—are involved. Juries tend to be made that very important contribution. I agree with mesmerised by celebrity.Indeed, that is true of defamation all of it and therefore I can be extremely brief. I could cases and there are many other instances—it is perhaps add recollections from my own casebook of cases invidious to mention them—where that can be seen to where juries were wholly inappropriate. The particular be so in the libel context and perhaps more widely. one I have in mind is the Convery case in Northern Under Clause 11 as drafted, defamation cases will Ireland, but I will not go into that now. be tried without a jury unless a court orders otherwise. I want to make only a couple of points. The first is The matter is left to the general discretion of the that in the 19th century, Albert Venn Dicey said in his court. Obviously, only very exceptionally would it be Introduction to the Study of the Law of the Constitution thought a good idea to have a jury trial with all the that the best safeguard of free speech is the English disadvantages of such a trial in terms of length, expense, jury, which is far better than all those charters of unreasoned judgment and all the rest of it. If I may rights, whether continental or American. That was the respectfully say so, the problem as I see it in this view at the end of the Victorian era, and Fox’s Libel proposed amendment is that it is, first, too prescriptive Act did of course place great emphasis on the role of and, secondly, may well encourage the use of jury the jury. It was that Act, as Sir Brian Neill reminded trial. In the original report of the Joint Committee, it me, that led judges to be very concerned about not was recognised in paragraph 25 that it would be giving rulings on meanings too early because they did undesirable to restrict this discretion—that is, the court’s not want to interfere with the jury. I was surprised to general discretion—although it is fair to say that it discover, when acting for newspapers, that they no went on to state that it should be possible to outline longer believed that trial by jury was a good safeguard general principles. The general principle later referred of free speech. They preferred the reasoned judgment to was that the circumstances in which the discretion of a single judge which could be appealed, because it should be exercised, was a reasoned judgment, to the unreasoned and “should generally be limited to cases involving senior figures in incapable of being appealed judgment of a jury. In my public life and ordinarily only where their public credibility is at Private Member’s Bill, with Sir Brian Neill as my stake”. guide, I took the step of saying that, not always but normally, trials should be by judge alone and not by The first problem with the proposed amendment is jury. that it limits the discretion of the court because it states that: Much to my surprise, the free speech NGOs and others, with the one exception being Liberty for reasons “A court may only order a trial with jury”, I understand, all supported it, as did the entire press. I in this class of case, and there may be others. For that note, of course, what Alan Rusbridger has said, but I reason, it also raises in acute form the definition do not agree at all with making a special case for problem of deciding who is properly to be regarded as celebrity public figures. As the Minister will remember, a senior figure in public life and when that person’s recently in another context the House agreed to abolish credibility is at stake. Perhaps more fundamentally, the old common law offence of scandalising the judiciary. GC 353 Defamation Bill[LORDS] Defamation Bill GC 354

[LORD LESTER OF HERNE HILL] whole Bill. I thought that we ought to get that on the The Law Commission agreed with that, as did the record. While juries are very rarely used, the fact that senior judges. It could not be seen why senior judges they can be used at all is what has added to cost with should be made a special case to be protected from regard to the extension of time in this. They drag out gross offence, rudeness and attack when nobody else action, mostly because they deny the ability of the could be. Were we to approve this amendment, we judge to take early views on issues that, quite properly, would be saying that there was a special privileged they feel must wait in case there is a jury trial, so they class, called the great celebrity or public figure, who have not been able to take an early view until the doors were to be given special point under the legal system. of the court swing open. It was our view on the Joint That would create completely the wrong impression. Committee not only that this was important for the One of the most important reforms is abolishing a reduction of costs but that we hoped that judges presumption of trial by jury. The reason is that that would seize the opportunity for some really good case then enables the Government, in their procedural changes, management, and tried to pull this stuff back as much with the judges’ co-operation, to make all kinds of as possible to get the time and therefore the money changes that would not be possible if the normal reduced. I do not think that we will ever go quite as far mode was trial by jury. This is an extremely significant as the American system of case management, but I clause and I very much hope that the Government hew think that we were mentioning an urge to be as early to it without amendment. and robust as possible. The Joint Committee did not go as far as saying 5.15 pm that there should be no jury trials, although some Lord Lloyd of Berwick: Could the noble Lord just people suggested that. As the noble Lord, Lord inform me, although I am sure I ought to know this: is Mawhinney, has said, it seemed that there were cases, Fox’s Libel Act still on the statute book? such as a judge, where, for reasons of public confidence, a jury would need to be there to ensure that it was not Lord Lester of Herne Hill: I think so but I am not one judging their own, if you like. Again, as much for absolutely certain. public confidence as for anything else, that could also mean people who were involved in appointing judges, or people who were very senior in Government. In Lord Lloyd of Berwick: Well, if you are not certain, such cases an independent jury is there as much to give who is? the public confidence in the hearing as for any great insight that the jury may bring. Lord Lester of Herne Hill: I am not certain. The feeling of the Joint Committee, which I support, is that such cases should be few and far between. Most Lord Phillips of Sudbury: My Lords, I, too, am importantly, the Bill, and I think that this is the extremely unhappy with the amendment. To take a purpose of the amendment, should signify that we are literal point, why only a senior figure in public life? talking about a very few cases in exceptional circumstances. Why not a senior figure in the private sector, for This does not really relate to a TV star or a celebrity, example, where the consequences of the substance of in the word of the noble and learned Lord, Lord a libel trial may be at least as important as for a senior Brown of Eaton-under-Heywood, or an athletes or figure in public life? the head of a business. We were looking more at those Above all, this provision—although I perfectly people who are involved in the broadest sense in the understand that my noble friend Lord Mawhinney did judicial and legislative process who, to the outside not advance it in any spirit adverse to the principles of world, perhaps seem a bit cosy. Those are the sorts of our legal system—as my noble friend Lord Lester just cases that would be the exception. said, would create a privileged class of person. It is not compliant with equality before the law. What is more, We were looking for some indication to be given, it trenches on the discretion of the judge, which I because otherwise the fact that there could be a jury believe is the only reasonable way of limiting the right will have exactly the effect that has been suggested— of privilege of trial by jury, given that that judge will possibly more cases, and people arguing that they be able to take into account all factors that seem to should have a jury. We therefore want to try to shut him or her relevant in that particular case. I am also that off as early as possible. A final decision still has to bound to say that I cannot think of another provision be made by a judge. Whether it is easier or harder for in English law that discriminates in this way. I hope the judge to do that, it is important that they are given very much, although this was persuasively argued by some guidance. Those in our Lordships’ House who my noble friend, that it will not be given credence by have been judges know better than I whether it is the Government. easier or harder to do that without guidance. In a sense, guidance needs to be given to those who might be either claimants or defendants about whether they Baroness Hayter of Kentish Town: My Lords, when have a small or a large chance of getting a jury trial. coming back to this it is helpful to have been a They need to know that the circumstances are very member of the Joint Committee and heard the evidence. limited. Before I address the amendment, given that it is the only one on the clause, it is worth saying how important We were partly searching for some indication to be the clause is; the removal of the presumption in favour given that we are talking about a very small number of of a jury is one of the most important parts of the cases. Cases where public confidence would almost GC 355 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 356 demand that they were heard not simply by a jury Clause 11 agreed. should be few and far between. We look forward to the Minister’s response on this. Clause 12 agreed.

Lord McNally: My Lords, perhaps I should say at Clause 13 : Order for removal of defamatory the outset that both my party and the coalition statement from website Government are more attached to jury trial than perhaps some of the comments about the quality of juries in this debate. Part of the coalition agreement is about Amendment 51A our support for jury trial. However, we as a Government also accept the strong arguments made by the Joint Moved by Baroness Hayter of Kentish Town Committee. The contributions from my noble friend 51A: Clause 13, page 9, line 14, at end insert— Lord Mawhinney and the noble Baroness, Lady Hayter, “( ) Regulations may make provisions as to the procedure to put this amendment in context, but for me the extremely be followed on the making of an application for an order under helpful intervention by the noble and learned Lord, subsection (1).” Lord Brown, removes any reason for lengthening this debate. He explained clearly the dangers of going Baroness Hayter of Kentish Town: My Lords, I rise along the lines of the amendment. We believe that to move this amendment which is tabled in my name under the terms of Clause 11 as drafted, the courts and that of my noble friend Lord Browne of Ladyton. will have a wide discretion in deciding whether jury He mentioned Clause 13 in an earlier debate about trial is appropriate. whether it is possible that we will need to broaden this I take the point made by the noble Baroness, Lady for the reasons that were discussed in relation to Hayter, in her closing remarks. Part of what we are booksellers. hoping is not to open the gates to more jury trials or to In general, we are very pleased to see Clause 13 in create any special class of person who should be put the Bill. It was brought back by the Government on into jury trials. Much of what we are hoping for, as a Report in the other place in response to an issue that result of this legislation and other actions taken, is our Labour friends raised in Committee there. They much more robust case management by judges to were rightly concerned that circumstances could arise make cases more easily and cheaply dealt with. However, in which a claimant had successfully brought an action I have to tell my noble friend that, although I understand against the author of defamatory material online but his loyalty to the committee of which he is chair, the would be unable to secure the removal of that material. Government would not find his amendment acceptable. We welcome the new clause and the fact that the Government—as they have promised to do all the way through the Bill, so I should not be too surprised—have Lord Mawhinney: My Lords, I do not need to take listened. too much time. I thought it was interesting that all three distinguished lawyers who took part in the debate However, Amendment 51A adds what our amendment with very impressive political sleight of hand got us in the Commons also included, which is a call for into celebrities extremely quickly. The Joint Committee regulations settings out the procedure for making a did not discuss celebrities; I did not mention celebrities; removal order. Again, it is part of the clarity which we the Bill does not mention celebrities; and the amendment believe is important for people to know how to apply does not mention celebrities. But celebrities are easier to a court to make such an order. I know that all the to attack than generals, admirals, members of the lawyers are very familiar with these things, but ordinary Cabinet or senior judges, so I am not surprised that claimants and defendants are less so. they went for celebrities, but we might at least have the This part of our original amendment was not addressed record straight. by the Minister in the Commons, although he said he would go away and think about the amendment generally, Normal behaviour now does not do juries. It has so we hope that the Minister will be able to enlighten not for the past 18 to 24 months. There has not been us on his colleague’s reflections on this. one, we were told. I carefully said in my opening remarks, “exceptionally” and “occasionally”, and that Amendment 51B is a belt-and-brace or clarification was the view. It remains my view precisely because—and measure. It is designed to ensure that the removal of I think the noble Baroness, Lady Hayter, said it better defamatory material from a website should not prevent than I did—wrapped up in all this is an element of the claimant being able to bring an action in defamation. public confidence. It is easy to squander public confidence. I think it is clear, but clarification is of help. I beg to If you have ever been a Member of Parliament, you move. know it is extremely hard to get it back once you have squandered it, so I wish my noble friend well. He has 5.30 pm the lawyers on his side, there is no question. I look Lord Ahmad of Wimbledon: My Lords, I thank the forward to listening to him defending to the rest of the noble Baroness for introducing the amendments. I country how doing away with jury trials in defamation want to revert to the broadening of the scope which cases enhances the coalition’s commitment to jury was talked about in Clause 13. Again, in the spirit of trials. I beg leave to withdraw the amendment. what has been said before by my noble friend Lord McNally, if that is required and desired, the Government Amendment 51 withdrawn. are happy to contemplate it. GC 357 Defamation Bill[LORDS] Defamation Bill GC 358

[LORD AHMAD OF WIMBLEDON] In light of the assurances I have given and coming Amendment 51A envisages introducing a regulation- back to the issue of the scope, which the noble Lord, making power to set out the specific procedure to be Lord Browne of Ladyton, addressed earlier, I hope the followed in relation to the making of an application noble Baroness will agree to withdraw the amendments. for an order under Clause 13(1). We do not believe that this amendment is necessary. Clause 13, as the noble Baroness Hayter of Kentish Town: I thank the Minister Baroness acknowledged, was introduced in the other for that. He is right about Amendment 51B; that was place to address the concern that the claimant who had the intention. His assurance that although defamatory successfully brought an action against the author of material has been taken down there can still be an defamatory material online may be left in the position action for damages meets the point that we were trying of being unable to secure removal of the material. This to raise. On regulations and his reference to Civil situation might arise as a result of the fact that an Procedure Rules, the problem is the same. To expect an author may not always be in a position to remove the ordinary citizen to know that there are even such material and the new Clause 5 defence might prevent things as Civil Procedure Rules, let alone where to find the website operator being required to do so. The them or what they say, is difficult. When the Government clause, therefore, applies only where the claimant has come to look at the guidance and other regulations brought proceedings against the author and is completely attached to this, I urge them to look at whether the separate from the process under Clause 5. As drafted, Civil Procedure Rules may be incorporated, even if it enables an order for removal of the material to be they are word-for-word the same. Asking ordinary made during or shortly after the conclusion of those folk to go through lots of rules or even to know that proceedings, or on a separate application under Part 23 they exist is a tall order. I will leave that thought with of the Civil Procedure Rules. Part 23 governs applications the Minister. I beg to withdraw the amendment. for court orders and sets out in detail how the process should work, including rules in respect of how an Amendment 51A withdrawn. application is to be made, where it should be filed, what information should be included and how it should Amendment 51B not moved. comply with any relevant time limits, among other matters. To the extent that any supplementary provision Clause 13 agreed. might be required, it is the Government’s view that the existing power to make rules of court is entirely sufficient to enable such a provision to be made. A regulation-making Amendment 51C power is therefore unnecessary and could perhaps add Moved by Lord Browne of Ladyton confusion about the relationship with Part 23 and possibly cast doubt on the scope and applicability of 51C: After Clause 13, insert the following new Clause— the existing power in the Civil Procedure Rules. “Disapplication of the Legal Aid, Sentencing and Punishment of Offenders Act 2012 Amendment 51B provides that the removal of allegedly Sections 44 and 46 of the Legal Aid, Sentencing and defamatory material from a website and the publication Punishment of Offenders Act 2012 shall not apply in of an apology or correction should not prevent an relation to civil actions for defamation, malicious action for damages being brought. It is not clear how falsehood, breach of confidence, privacy or publication proceedings.” this amendment fits specifically with Clause 13. As I have said, this clause is to address situations where a claimant brings a successful action against the author Lord Browne of Ladyton: My Lords, Amendment of defamatory material online but where the author 51C would disapply the LASPO Act in relation to may not be in a position to remove material which has defamation proceedings and Amendment 51D would been found to be defamatory from a website. Where apply one-way costs shifting to defamation proceedings. the content is removed by website operators in other Both the amendments are probing amendments. I circumstances—for example, after following the Clause 5 have some sympathy with the Minister in being prodded process where the poster chooses not to engage or on this issue again. He may have thought that he had agrees to removal—there is nothing in either Clause 5 seen it off with his letter of 10 December and the or Clause 13 which would prevent a claimant bringing assurances that he has repeatedly given us, but I am a defamation action seeking damages against the poster. afraid that I shall invite him to discuss again costs in Clearly, there may be cases where the damage caused relation to defamation. by a defamatory statement is so serious that simply As noble Lords will be aware, and as I think the having it removed from the website will not provide Minister is acutely aware, this issue was addressed the claimant with sufficient remedy. In these cases, it is during the passage of the LASPO Bill, when calls were right that the claimant should be able to pursue an made to disapply it in relation to defamation and action against the poster, and if that is the intention privacy proceedings. Assurances were given by the behind this amendment, then we agree entirely with Minister that this would be addressed in the Defamation the principle and the sentiment. However, we do not Bill. I do not seek to keep him specifically to that believe this amendment works in conjunction with assurance, because I suppose that, on one view, a existing provisions in Clause 13 and, for the reasons I substantial amount of water has passed under the have given, such a provision is deemed unnecessary. bridge since that debate and many other things are Where a statement is removed by a website and the going on. Whatever intention other noble Lords may claimant still wishes to pursue an action against the have in the debate that will ensue on this, I have no author, there is nothing to prevent them doing so. intention of transgressing into the debate about the GC 359 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 360

Leveson recommendations and their consideration in finds an extraordinarily public-spirited solicitor who tri-party talks; I have managed until now not to mention will in effect act for nothing if his client’s case collapses. “Leveson” anywhere in your Lordships’ House, and I Even then, there would be costs possibilities for the had intended to keep it that way. poor litigant, whether as defendant or plaintiff, in that Throughout the passage of this Bill, we have had he or she may end up having to pay the other side’s further assurances that something will be done to costs. All I am doing is sympathising with my noble address the cost of defamation proceedings, and the friend Lord McNally in having to answer these two Government recently gave a commitment that LASPO issues. At the moment, there is no ready answer, although would not apply to defamation until they had resolved the idea of changing the recently passed LASPO legislation the situation in relation to costs. That stay of execution, for defamation has its own problems if one believes, as as it were, is very welcome. Our amendments are, I do, that the methods of paying lawyers under the however, designed to elicit further information from conditional or contingency fee system have led to the Government as to the timing of these proposals great problems of public interest. That is a rather and what they will consist of, to the extent that the ineffectual contribution to the debate on these two Minister is in a position to share that information with amendments. me. I want to make one very specific point to the Lord McNally: My Lords, I will not, at this hour, Minister which I hope he will address when he responds. reopen the debate on LASPO except to say that what I have before me his letter of 10 December 2012, which we were addressing, following the advice of Mr Justice was very welcome and very helpful in covering a Jackson, was the inflationary effect of the no win, no number of issues before the Committee convened to fee regime that we have replaced. How it will work out consider this Bill in detail. Under the heading “Cost in terms where any success fees will be paid from Protection in Defamation and Privacy cases” it sets damages we will have to see. But let us not be in any out that, doubt that there was a problem that was generally “the Government is keen to provide some form of cost protection agreed had an extremely inflationary effect on the cost so as not unduly to damage the interests of impecunious parties. of justice in this country. The Government has asked the Civil Justice Council (an independent advisory body, chaired by the Master of the Rolls) to advise on 5.45 pm this by the end of March 2013”. On the matter of getting involved—my noble friend So I realise that we will have to be patient until the end Lord Phillips touched on this problem with a welcome of March 2013 to see what the council under the candour— much as we like to believe that access to chairmanship of the Master of the Rolls advises. In justice is readily available, deciding to go to law is an order to instruct those deliberations, we have the benefit extremely risky and potentially very expensive business of annexe A to the letter, which sets out the terms of for any individual. reference of the Civil Justice Council’s remit. I say to the noble Lord, Lord Browne, what I have I am limited in my understanding of all of this, said from Second Reading: I recognise the problem of never having practised in this jurisdiction, but I understand costs. However, as Minister, I had to take advice on that cost protection is designed to protect a party from how this was best dealt with. The best advice I got, as the liability to pay the other side’s costs if their case he has pointed out, was to ask the Civil Justice Council fails. If my case fails, cost protection is designed to and the Master of the Rolls to take on this task and to protect me from the liability to pay costs, or to reduce report back by March. We will then have to examine my liability. That addresses half of the problem. The how it will affect the civil procedure rules and bring serious part of the problem is how does one deal with forward proposals in the hope that they will be in the impecunious client who does not have the ability place by October. to institute proceedings in the first place if LASPO and the Jackson reforms are applied to defamation? Like the noble Lord, Lord Browne, I have tried to How does one encourage lawyers to take on cases on resist references to Lord Justice Leveson, but when I some form of contingency basis, in the light of the read his recommendations on costs in defamation my application of LASPO and the Jackson reforms? The heart leapt. It is amazing how great minds think alike. Government may believe that that is dealt with through I know this is a probing amendment. I have said the cost protection order process, but I am not satisfied that we have deferred the implementation of LASPO that it is. Will the Minister address that issue? I beg to until we can look at it all of a piece. I do not think move. anyone can seriously doubt my intentions to deal with this matter. We will have to take it in time, when we get Lord Phillips of Sudbury: My Lords, I cannot clearly the advice and can see the whole of the piece, but deal say whether I do or do not support these two amendments with the matter we will. as they have all sorts of ramifications and implications. What is common ground between the noble Lord, Lord Browne of Ladyton: My Lords, the Minister Lord Browne, and the noble Baroness, Lady Hayter, is shares with me the view that this is a fiendishly complicated that the position of not only the impecunious would-be challenge. I welcome his reluctance to embroil us in a litigant, but that of the not-well-off would-be litigant debate on the recommendations of Lord Justice Leveson’s in relation to defamation, whether as plaintiff or report but I hope that before Parliament’s deliberations defendant, is astonishingly unsatisfactory. It makes on the Defamation Bill are concluded, we will know this branch of law, more than any other, one in which the recommendations of the Civil Justice Council and equality before the law is frankly mythical, unless one have some clarity on the way forward in relation to GC 361 Defamation Bill[LORDS] Defamation Bill GC 362

[LORD BROWNE OF LADYTON] Lord Browne of Ladyton: My Lords, this amendment Lord Justice Leveson’s report and, in particular, his is designed to probe the Government on the possibility recommendations about costs in defamation actions. of creating a defamation county court. The idea of We will then be at least in a position of knowing that having such a court has already been discussed in a when the seal is put on the Defamation Act—which previous session of your Lordships’ Committee. It was broadly we all support and consider as progress in the a recommendation of the Joint Committee, at least in development of the law—we will not have to revisit a pilot sense. At this time of day, I shall spare your the issue quickly thereafter. That would be nonsensical. Lordships the pain of having to listen to me read the I know that sometimes it is not possible get all stars whole of the paragraph that refers to this from the aligned but surely it must be possible with draft legislation Joint Committee’s report. of this nature, where there is such substantial agreement, However, for the purposes of the record it is for parties to timetable the proceedings of Parliament paragraph 87, which I will read in short. It starts with in such a way that we maximise the possibility of a sentence that I think we would all agree with: coherence and consistency rather than minimise it. I “Some witnesses argued that costs would be reduced if libel hope that we do not get caught up in the demands of cases were generally dealt with by county courts rather than the people who are timetabling other business, the usual High Court”. channels and so on, and are railroaded into a timescale It goes on to make a good argument, concluding: on this Bill which makes our deliberations look foolish “The Ministry of Justice should implement a pilot scheme to shortly after we have concluded them. determine how this proposal might work in practice”. I am grateful to the Minister for his response. We This amendment is our attempt to set a statutory will certainly return to this issue on Report; there is no framework for such a pilot scheme. The idea behind it question about that. The application of the LASPO is to significantly reduce the costs of defamation Act to these proceedings sits in the context of a very proceedings; an issue that we have agreed is a shared clear undertaking, which we intend that the Minister concern. and the Government will live up to. We will come back The drafting of this amendment will prove not to to that and I hope that we will have more specification be perfect but it is intended to be a probe. However, it of some description, or at least that the tripartite talks is based on the Patents County Court. By way of may have concluded in relation to Lord Justice Leveson’s background, the Patents Court is not a county court recommendations. Pending that day, I will keep the in the usual sense but a specialist court for the resolution rest of my powder dry and, for the moment, seek the of intellectual property disputes. It was originally set leave of the Committee to withdraw the amendment. up in 1990 but was set up under its most recent guise in late 2010, with the aim of providing efficient intellectual property case trials as an alternative to costly and Amendment 51C withdrawn. time-consuming High Court trials. The key provisions of the Patents County Court are that costs are on a fixed scale, capped at £50,000, while Amendment 51D not moved. the damages that the court can award are limited to £500,000 and each trial is aimed to be concluded—wait Amendment 51E for it—within two days. The court has recently started giving non-binding opinion, generally during the case Moved by Lord Browne of Ladyton management conference stage of proceedings and before 51E: After Clause 13, insert the following new Clause— trial, as to the likely outcome of the case. I suspect that “Defamation county courts: special jurisdiction all noble Lords in this Committee would welcome that environment for the early and swift deliberation of (1) The Lord Chancellor may, with the concurrence of the Lord Chief Justice, by order made by statutory instrument designate cases that got to trial, never mind the issue of some any county court as a defamation county court and confer on it pre-trial provision or alternative dispute resolution, jurisdiction (its “special jurisdiction”) to hear and determine such which noble Lords have previously discussed. descriptions of proceedings— When this idea was discussed during our previous (a) relating to defamation, or session, the Minister said that he would go away and (b) ancillary to, or arising out of the same subject matter as, think about the idea. With this amendment I am proceedings relating to defamation, providing an opportunity for the Minister to tell us as may be specified in the order. where his thinking presently is. For the purposes of (2) The special jurisdiction of a defamation county court is the record, the exchange that I am referring to was exercisable throughout England and Wales, but rules of court with the noble Lord, Lord Faulks during the first day may provide for a matter pending in one such court to be heard in Committee at col. GC 458. I beg to move. and determined in another or partly in that and partly in another. (3) An order under this section providing for the discontinuance Lord Marks of Henley-on-Thames: My Lords, I of any of the special jurisdiction of a defamation county court strongly support allowing county courts to hear all may make provision as to proceedings pending in the court when the order comes into operation. but the most serious defamation cases. As the noble Lord has said, it was a recommendation of the Joint (4) Nothing in this section shall be construed as affecting the ordinary jurisdiction of a county court. Committee; indeed, it was the noble Baroness, Lady Hayter, and I who advocated it very strongly on that (5) The Lord Chief Justice of England and Wales may nominate a judicial office holder (as defined in section 109(4) of the committee. Quite apart from the complexity of the law Constitutional Reform Act 2005) to exercise his functions under and the arcane procedures that we have developed, this section.” one of the main reasons why costs have become so GC 363 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 364 high in these cases has been the development of a 6pm highly specialist Bar and specialist solicitors, all conducting Lord McNally: My Lords, it has taken me till the cases very expensively exclusively in the High Court. fourth day of this Committee to rumble the noble The simplification of the defences in this Bill, coupled Lord, Lord Browne. Beneath his metropolitan, urbane with the simplification of procedure and more extensive and sophisticated exterior, there is a canny Scot. My and earlier case management, should make it possible absolute copper-bottomed assurances on dealing with to reduce the complexity of defamation cases substantially. costs are met with a clear assurance that that will not In those circumstances, the development of county be delivered without him battering us on to deliver. court expertise with designated judges to manage and Now he notices a bandwagon on county courts that hear these cases would make justice, importantly, more was rightfully set rolling by the Committee and he local, quicker, cheaper, simpler, and in all ways more immediately claims it as his own. I can see him now, accessible. Of course there will always be cases that are ticking off in his memoirs the influences that he has complex, difficult and paper-heavy. They will require had on the Bill. I hope that when he gets home tonight High Court expertise and the attention of specialist he will read to his wife the passage about “metropolitan, High Court judges. However, I hope that for the urbane and sophisticated”. generality of cases county courts will become the Let me be clear that defamation cases can be started norm and that therefore the cases will become simpler in a county court at the moment, although both to sue, to defend and to resolve. We recommended parties must agree to this in writing. That is the trialling county courts for defamation cases; I ask that position under Practice Direction 7A to the Civil that happens soon. Procedure Rules, but I freely acknowledge that it may be that we should revisit those procedure rules. We will Lord Mawhinney: My Lords, just as I paid tribute give the issues involved very careful attention, and I earlier to the noble Lord, Lord Bew, for his contribution, sincerely welcome this very useful debate and the so I pay tribute also to the noble Baroness, Lady suggestions that have been made. The Lord Chancellor Hayter, and the noble Lord, Lord Marks. Without already has broad powers to allocate business between them I am not sure that the Committee would have the High Court and the county courts. When the noble come to this conclusion. The noble Lord, Lord Marks, Lord, Lord Faulks, raised the matter earlier in our has just eloquently explained our thinking and our proceedings, I think I mentioned that the Lord Chancellor reasoning. Indeed, my noble friend Lord McNally has expressed his interest in this idea. The Lord may remember that the noble Baroness, Lady Hayter, Chancellor’s broad powers are under Section 1 of the had one or two questions for him on this subject when Courts and Legal Services Act 1990. The provisions in he came to give evidence. the Crime and Courts Bill to establish a single county The noble Lord, Lord Browne, said that we proposed court, which the House has approved, will preserve a pilot, and the noble Lord, Lord Marks, has confirmed this power. that. I would add that we proposed a pilot in part I therefore assure noble Lords that we are very because we thought that this was such a radical idea interested in this idea, but it does not need primary that the Minister would need some help in dealing legislation to carry it forward. If we consider the use with the legal profession. We could hear the legal of county courts to be appropriate, the necessary profession lining up against this idea and we wanted procedural changes to enable that to happen can be to side with the Minister, so we suggested a pilot. put in place. I hope that that is a firm enough indication However, he should not be unaware of the fact that he of direction of travel. I tore up my notes and changed will have one or two sessions of arm-wrestling with them to that very positive response because of the people who were not overly persuasive to the Committee persuasive case that the noble Lord, Lord Browne, before, hopefully, he gives effect to this particular made in opening this debate. In the mean time, I hope amendment. that he will withdraw his amendment.

Lord Phillips of Sudbury: My Lords, I add my strong support for this amendment. You could almost Lord Browne of Ladyton: My Lords, I am grateful say that we have been mourning the failure to provide for the support of the noble Lords, Lord Marks of justice in the defamation field for more years than I Henley-on-Thames and Lord Mawhinney, but I am can remember. The Society of Labour Lawyers published not surprised by it because the amendment draws a document, Justice for All, back in the 1960s. The support already from the report of the Joint Committee. Society of Liberal Democratic Lawyers published their I am grateful also for the overt support of the noble blueprint 20 years ago. Every legal body that I am Lord, Lord Phillips of Sudbury. aware of has bemoaned the intractable problems related I have to thank the Minister for his flattering if particularly to defamation. However, I see here the somewhat inaccurate and probably libellous description seeds of a breakthrough. It is very difficult for us of me. It is unworthy of him to suggest that I am a lawyers to accept that sometimes the best is the enemy bandwagon-jumper in any sense. I will privately produce of the good, and I would far rather have some rough evidence to him that this is an issue which I have been and ready justice within a sensible, practical framework discussing with members of the legal profession in such as might be provided under this amendment than England in various guises for some months now, because I would see justice spurned. I hope that we can be it is not entirely what he and the noble Lord, Lord open-minded and a bit imaginative and, before this Faulks, described and discussed. This very specific Bill is done, provide something that will remedy what provision is presented in this fashion, taking advantage is at present a shame for us all. of the specialist Patents Court, to make another criticism GC 365 Defamation Bill[LORDS] Defamation Bill GC 366

[LORD BROWNE OF LADYTON] provisions of the Crime and Courts Bill for establishing that I think the Minister will have to face should he a single county court. It is superfluous because powers seek our shared ambition of moving these cases to the already exist to allocate jurisdiction as between county county court—that is, there are already specialist judges courts or, in future, in the single county court and the who do these cases, but they are in the High Court. High Court under Section 1 of the Courts and Legal There will be, I predict, resistance on the part of the Services Act 1990. judiciary, among others, who will say that this difficult, This also gives me the opportunity to withdraw my complicated work, which requires High Court judges, scandalous assertion; I was just getting a bit demob has to be kept there. happy in asserting that the noble Lord jumps on The reason why I presented the amendment in this bandwagons. I stick by “metropolitan, urbane and fashion, having thought about it for some time—since sophisticated”, though, because I know how much long before the exchange between the noble Lord, trouble that will give him back home in Scotland. Lord Faulks, and the Minister took place—is that I cannot think of a more complicated area of law and Lord Browne of Ladyton: I beg leave to withdraw fact than patent law. If a specialist court at county the amendment. court level, with specialist judges, works for that area of the law, then I believe it can work for defamation. Amendment 51E withdrawn. I am also told that it is in the nature of the legal profession that our very senior judges tend to have Clause 14 agreed. been in the profession for a period of time and retire. I am not entirely sure what further lifespan on the Bench—that is the wrong phrase—what further time Amendment 52 on the Bench the judges in the High Court who are Moved by Lord Mawhinney specialists on defamation have. Although I do not know this, the suggestion was made to me that there is 52: After Clause 14, insert the following new Clause— a probability that they will retire, or at least that a “Civil Procedure Rule Committee Guidance significant number of them may, within a comparatively The Secretary of State shall publish guidance for the Civil short time. I am not sure whether that is right but they Procedure Rule Committees proposing procedural will have to be replaced sometime, and it should not be reforms in the case of defamation proceedings.” beyond the ability of the legal profession to produce judges at county court level who have this specialism. Lord Mawhinney: My Lords, at the end of his last I am not entirely sure whether the Minister is right contribution to the noble Lord, Lord Browne of Ladyton, that the creation of a specialist court or courts, such as the Minister talked about the importance of procedural the patent courts, does not require primary legislation. change. This amendment is about procedural change. If it does not then I am interested to know why the The committee got frustrated at times because to us patent courts were created by primary legislation if we the single most important thing was cost and bringing can create specialist county courts without it, but this legislation to literally millions of people who are maybe the law has been changed since they were at present prevented from getting coverage by the law. created. I will not take the time of the Committee at this late hour to read into the record the evidence that the Lord Phillips of Sudbury: Might the noble Lord Minister gave when he came, but we were encouraged encourage the Government to look at the possibility that he was of a similar mind to us. The Government of empowering registrars of county courts to do much have the power to interact with the senior levels of the more of the preliminary work? They could have a legal profession and the judiciary to require them to much bigger role, but again that might require primary do things. We were hugely impressed by the cost legislation. attached to the management structures of the judiciary at this time. They could be streamlined, enhanced and quickened, and all of that pulls down the cost and Lord Browne of Ladyton: I am grateful for that therefore makes legislation available to millions who at intervention from the noble Lord, Lord Phillips. The the moment are priced out of the market. best that I can say is that I am sure the Minister has heard that suggestion, and when he is deliberating I know my noble friend is going to tell me about the further on this potential development I am sure that Master of the Rolls. I understand all of that. I have he will take into account. noted very carefully that he hopes to be in a position to press a button of some description by October of I am reassured that this is sufficiently high among this year and I am sure we are all going to hold him to the Government’s priorities to be a possibility—that is that. But I cannot let this opportunity pass. This looks the best that we can expect at this stage. We will on the face of it a fairly obscure, perhaps mildly continue to keep an eye on this issue while the Bill is boring, not very important amendment but it may be before the House. just about the most important amendment that the committee made and it comes with a lot of feeling, a Lord McNally: The noble Lord asked a specific lot of passion and a lot of importance. If Parliament question on the powers to create a court in this area. does not legislate to make remedy available for the The amendment is clearly based on the provision for millions, it is legitimate to question what Parliament is the Patents Court in the Copyright, Designs and Patents all about. If my noble friend will accept this amendment Act 1988, which is being repealed as part of the and then put his shoulder to the wheel and push aside GC 367 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 368 those who will line up to thwart him in every direction, That said, we do not consider the amendment he will have the thanks not only of our committee, not necessary. The rule committee does not operate in a only of this Committee, not only of the House and vacuum and civil procedure rules are made by a Parliament; he will have the thanks of millions and process that requires the approval of the Lord millions of people who will look at our deliberations Chancellor for rules made by the committee. I take it tonight and think, “It is all very well for them but we on board; I have been in this job long enough to do not have any say in this procedure at the moment”. realise that you have to be careful in the separation of I strongly commend this amendment to the Committee. powers that we have in our system between the responsibilities of the judiciary, the Government and Lord Browne of Ladyton: My Lords, on behalf of Parliament. But that does not mean that Parliament the Opposition, I wish strongly to associate myself or the Government cannot send the clearest messages with the amendment tabled by the noble Lord, Lord to the judiciary. That is why I agreed with the noble Mawhinney. It must be possible for Parliament through Baroness, Lady Hayter, earlier that case management this Bill to find a conduit to the appropriate Rolls is a major responsibility now for judges, and in this committee to express the unanimous view of Parliament case in particular. that access to justice in this area must be improved and The Government can and do put before the it can only be improved if we reform the way in which committee proposals for amendments to rules of these cases are conducted to reduce the cost and delay court. The Lord Chancellor is also able by virtue of of them. I am not entirely sure whether this is the Section 3A of the Civil Procedure Act 1997 to notify appropriate way to do it and I do not think it matters the committee that he thinks it expedient that rules to the noble Lord, Lord Mawhinney, whether it is. should achieve a specified purpose, and in such a case There must be a way of doing that without transgressing the committee must make rules as it considers on the appropriate separation of powers. There must necessary to achieve the specified purpose. Ministry be some way of getting that message across. It is of Justice officials have discussed the contents of the undoubtedly the case for those of us who have practised Bill and related procedural issues with members of before the courts, whether in this jurisdiction or in the senior judiciary on a number of occasions during other jurisdictions, that whether there is a specialist the period in which the Bill has developed. Most Bar, whether there is a complicated area of the law, recently, a meeting has taken place to discuss these whether there are litigants with deep pockets, the one issues with the Master of the Rolls, Lord Dyson, who thing that is most important to the efficient conduct of heads the Civil Procedure Rule Committee. The business is the maximum appropriate judicial intervention Government will put proposals for procedural to concentrate the minds of parties on the real issue changes to support the new Act before the Civil and to get them to resolve those issues in the minimum Procedure Rule Committee shortly. Our intention is of judicial time. If we can find some way of doing to ensure that these are in place when the Act comes that, while at the same time ensuring that those who into force. I hope on that basis that the noble Lord do not have deep pockets have a right to redress, we will be prepared to withdraw this amendment. will have done our work. Raising the bar, simplifying and explaining the defences and preparing the best suite of defences the world has ever seen will mean Lord Mawhinney: My Lords, I offer warm thanks to nothing if all we have done is recreate the issues of my noble friend for what he has said. He pointed out dispute for the same tediously long processes and that arrangements already exist for the interrelationship complicated debates that eat up vast amounts of people’s between government and the judiciary. That was the time and resources. They also destroy lives—much point that I sought to make in moving the amendment. more quite often than the remarks that were made No one on the committee, and no one I know, is trying about them in the first place. to challenge the separation at the very heart of our democracy; that was not the issue. However, having 6.15 pm been told that there are ways in which those who are elected can relate to those who sit in judgment, we Lord McNally: My Lords, I was getting a little took the view that the more that people understood frivolous earlier because we have had a long day, but I that those ways existed, the more they would be used, associate myself absolutely with the comments of the the more the Government’s arm would be strengthened noble Lords, Lord Browne and Lord Mawhinney. Just and the more people would benefit in their advocacy as at the beginning of this exercise, the question of and involvement. costs and cost protection has been one of the keys to this problem of defamation. I share exactly the views I reassure my noble friend that he and I are approaching expressed. It is a little sad that our distinguished this in exactly the same way. He will notice that I did judicial Members are no longer with us, and perhaps not table any amendments on arbitration and mediation, we will return to this. The noble Lord, Lord which were very much parts of the committee’s report. Mawhinney, will remember when I and the previous I did not do so because they are all wrapped up in this Lord Chancellor, the right honourable Kenneth question of cost; I mention them now so that he will Clarke, gave evidence to the committee. I know that not forget them when he reflects further on how best Ken Clarke was absolutely convinced that this was to reduce costs. Very much in the spirit that he has one of the keys to the whole thing. I have not outlined the issue, in which I wish to share, I beg leave discussed this in any detail with the present Lord to withdraw the amendment. Chancellor but I cannot imagine that he is any more or less convinced on this. Amendment 52 withdrawn. GC 369 Defamation Bill[LORDS] Defamation Bill GC 370

should know their rights and their duties in regard to Amendment 53 defamation and we hope that the Government can Moved by Lord Mawhinney respond positively to the amendment. 53: After Clause 14, insert the following new Clause— In the mean time, as we close this part of our “Reporting to Parliament scrutiny of the Bill, I thank the Lords Deputy Chairmen The Secretary of State shall report to Parliament annually who have guided us through procedures; the Bill team, on the codification of this Act; and in particular on its who have assisted us throughout, both here and in impact on accessibility and clarity of the law.” other meetings, for their patience; the Ministers for their mostly good humour and occasional cheekiness; Lord Mawhinney: My Lords, I feel, on a personal and our colleague, Sophie Davis, for keeping my noble level, the need to start, not exactly by making an friend Lord Browne and myself as close to the straight apology, but by recognising that I have been playing and narrow as was in her ability to do. far more of a role in this Committee than my record over 30 years in Parliament would have caused anyone Lord Phillips of Sudbury: I associate myself and to anticipate, or than I would find comfortable. I have these Benches with the most recent remarks of the interpreted my responsibility as chairman of the Joint noble Baroness, Lady Hayter. Committee in carrying through the work of the Joint Committee to this Committee so that when the government Bill did not cover what we recommended Lord McNally: A few weeks ago in the House I I could at least draw the issues to the attention of this tried to make a Churchillian quote and got it completely Committee. In that sense and spirit I move my last messed up. I shall have another go. amendment; I am probably as pleased to be at the end “This is not the end. It is not even the beginning of the end. of the process as much as the rest of your Lordships But it is, perhaps, the end of the beginning”. are. I have got it right this time. We were conscious that we were doing two things. The only doubt I have had is about how vigorously Defamation seems to be one of those areas of law the Committee have taken up my invitation for discussion. where the common law has prevailed. What has been I will not make that mistake again. Next time, I will be codified has been minimal, and judges have been left utterly Stalinist in ramming the Bill through. to move the thing forward. The argument for that has been the great flexibility of common law. We got Our considerations of the Bill have been extremely evidence that not many people understood the common useful. The constructive way in which the Opposition law and that there was benefit for the citizenry to have have approached the Bill and brought their experience more codification in this area than has traditionally to it, and the fact that the noble Lord, Lord Mawhinney, been the case. Hence this final amendment, to set out has seen his duty as chairman of his committee not some help: to ask the Government to help people to ending with the delivery of the report but has helped understand the codification, what is left of the common and guided us on the thinking behind so many of the law, and what more might be usefully codified and recommendations, have been extremely helpful. My then to undertake to report to Parliament annually, so colleagues on these Benches have been extremely helpful that all of us can see that as what is agreed in Parliament and it has been great to have the help of some distinguished is implemented, so the public benefit. I thank my judges. colleagues for their patience and, for the last time, We now move on to Report and it is rather sad that invite them to allow me to move the amendment. I cannot accept the final amendment tabled by the noble Lord, Lord Mawhinney, as it stands. He was an experienced Minister and will know that the two things Baroness Hayter of Kentish Town: My Lords, the that I have been told to avoid, even in my brief Committee has heard from me before, as has the ministerial career, are annual reports to Parliament House at Second Reading, on my admiration for and sunset clauses, which are usually the stuff of the concentration of the noble Lord, Lord Opposition amendments. I cannot accept an annual Mawhinney, both on the ordinary citizen—particularly report because, as the noble Lord will know, arrangements in Peterborough—who might get caught up in a libel already exist for post-legislative scrutiny. The Ministry case, whether as claimant or defendant, and also on of Justice is committed to fulfilling the requirements the need of anyone involved to be able to read and of post-legislative scrutiny in relation to this legislation. understand the Bill after enactment without the need of lawyerly guidance, as he has just outlined. This is However, taking up the point which was partly his final throw and we should support him. implicit in what the noble Lord, Lord Mawhinney, said and in the final remarks of the noble Baroness, We do not want the courts to so run away with Lady Hayter, I cannot make commitments on spending interpretation and reinterpretation of the Act that a money in the Ministry of Justice because we have not simple reading of it would give very little guide to the got any. The noble Baroness is absolutely right that current law on defamation, so nuanced will it have once this legislation is passed, a simple guide for become in learned judgments. I imagine that the noble laymen and laywomen on what we have done, how we Lord, Lord Mawhinney, would want Parliament to have done it and how it will be applied, both on our come back to this at that stage and say, “Look, the Act website and in printed form, would be extremely useful. no longer represents the law; we should amend it”. We In that spirit I will take away the amendment and hope concur completely with his desire that untutored people that the noble Lord will withdraw it. GC 371 Defamation Bill[17 JANUARY 2013] Defamation Bill GC 372

Lord Phillips of Sudbury: Would it not be possible served by the Ministers. They have undertaken to to think of what was done in the Charities Act 2006? reflect on what has been said, and I have the confidence This is landmark legislation in defamation. Could to believe that a little of what was said that initially did there not be a review within four or five years, which not please them may turn out eventually to be slightly would not impose, obviously, the obligation of an more persuasive than originally they may have thought. annual review but would ensure that this did not go by I look forward to Report and I make a promise to the board because there was another Government colleagues that I shall not be as visible then as I have with other priorities? sought to be here. I seek leave to withdraw the amendment.

Lord McNally: But, my Lords, that is exactly what Amendment 53 withdrawn. will happen. There will be post-legislative scrutiny within three to five years of this Act passing. Clauses 15 to 17 agreed.

Lord Mawhinney: My Lords, I salute my noble Bill reported with amendments. friend the Minister. I thank him and the noble Lord, Lord Ahmad. We as a Committee have been well Committee adjourned at 6.31 pm.

WS 51 Written Statements[17 JANUARY 2013] Written Statements WS 52

advice, including guidance on good practice for employers Written Statements to approach settlement within the broader context of management. Thursday 17 January 2013 The Government intend to introduce the statutory code and guidance by the summer, in line with the Committee on Standards in Public Life legislative change coming into force. Statement In relation to the unfair dismissal compensatory award cap, the Government intend to introduce a Lord Wallace of Saltaire: My right honourable friend 12 months’ pay cap on the compensatory award for the Minister for the Cabinet Office (Francis Maude) unfair dismissal, subject to parliamentary process. The has made the following Written Ministerial Statement. introduction of a pay-based cap will run alongside a specified overall cap, with the limit the lower of the The fourteenth report of the Committee on Standards two figures. in Public Life (Cm 8519) has been published by the committee today. Copies are available in the Libraries With regards to the overall level of the cap, no of both Houses. consensus emerged in consultation either in terms of whether it should be changed, or, if so, how it should be changed. We are therefore not pursuing a change to Employment Law the overall cap on the compensatory award for unfair Statement dismissal at this time. The Government will introduce the necessary The Parliamentary Under-Secretary of State, Department secondary legislation to implement the change to the for Business, Innovation and Skills (Viscount Younger cap after the Enterprise and Regulatory Reform Bill of Leckie): My honourable friend the Minister of State receives Royal Assent. for Employment Relations and Consumers Affairs (Jo We are also launching today a further consultation Swinson) has today made the following Statement. on early conciliation. We announced, in the government The Government believe that the UK economy response to the Resolving Workplace Disputes consultation, should be supported by a framework of laws that our intention to introduce an early conciliation (EC) ensures we have a strong and efficient labour market process that would make it a requirement for most which is flexible, effective and fair. We are looking at prospective claimants to send the details of their claim the laws that affect all aspects of the relationship to ACAS before they are able to lodge the claim with between employers and employees, and at each stage the employment tribunal. This proposal, which has of the relationship, through the Employment Law received broad support from all stakeholders, will Review. Priorities for reform have been informed by enable ACAS to offer the parties the opportunity to the Red Tape Challenge process, and the results of the resolve their dispute without the need for tribunal 2011 Resolving Workplace Disputes consultation. involvement. Today the Government are publishing their response We are taking the necessary primary powers to to the consultation on Ending the Employment introduce EC in the Enterprise and Regulatory Reform Relationship, and launching three further consultations Bill. However, the implementation of EC requires relating to the employment relationship, covering: secondary legislation and the development of the necessary how early conciliation should operate in practice; administrative process. This consultation sets out how a range of proposals to improve the TUPE regulations; we intend that EC should operate. and, Our consultation on proposed changes to the Transfer reforming the regulatory framework for employment of Undertakings (Protection of Employment) Regulations agencies and employment businesses. 2006 (TUPE) also launches today. TUPE legislation Our response to the Ending the Employment protects employee rights when the business or undertaking Relationship consultation details how we will support for which they work transfers to a new employer. the legislative changes in the Enterprise and Regulatory The call for evidence identified concerns that the benefits Reform Bill regarding the inadmissibility of offers of intended from service provision changes to TUPE settlement in unfair dismissal claims at employment made in 2006 had not been achieved and that the tribunal, and a power to increase or decrease the limit provisions on employee liability information were not on the compensation awarded in cases of unfair dismissal. required. Settlement agreements offer a dignified, consensual The Government consider that there is scope to and mutually beneficial way of ending the employment improve the regulations by removing unnecessary relationship without risking a long, costly and distressing gold plating and generally eliminating bureaucracy. employment tribunal claim. In support of the legislative Accordingly, we are consulting on a range of proposals change, we have consulted on the principles to underpin designed to ease the transfer process, including the the system, and the best way for Government to repeal of the service provision changes and the specific enable employers and employees to approach settlement requirements regarding the notification of employee agreements confidently in a fair and appropriate way. liability information. We will ask ACAS to publish a statutory code of In addition, we are consulting on a number of practice, which will include template letters for beginning proposals to change the wording of particular provisions the settlement discussion, and an explanation of the in TUPE more closely to reflect the acquired rights term improper behaviour. Accompanying guidance directive and the case law of the Court of Justice of will supplement the code with more substantive practical the European Union. WS 53 Written Statements[LORDS] Written Statements WS 54

One example of this is the provisions restricting reviewers that existing resources would be better used changes to contracts. Other proposals will allow smaller to support employers to manage sickness absence firms, in some situations, to inform and consult employees more effectively. about transfers directly and we will also improve guidance We will also support employers by retaining existing on a range of issues. tax relief on employee assistance programmes and Additionally, we are launching today a consultation abolishing statutory record-keeping requirements for on reforming the regulatory framework for employment statutory sick pay. We will consider the introduction agencies and employment businesses. The recruitment of a tax relief on interventions recommended by the sector plays an important role in the UK’s labour new service, and make a decision at the 2013 Budget. market by improving the efficiency of matching demand The response sets out how we will use the opportunity for jobs to demand for workers. However, the legislation provided by wider reform of the welfare system to which regulates the sector is complicated and difficult address the problems the reviewers identified with the for businesses and individuals to understand. way the current benefit system treats people with We want to reform how the recruitment sector is health or sickness issues. Under universal credit we regulated, ensuring that protections are in place for will ensure that people receive appropriate support to people looking for work, but removing costly and assist their return to work from the start of their claim complex regulations. rather than waiting until they have undergone a work capability assessment. And we will use the universal We want to establish when it is appropriate for the jobmatch system to help people who are unable to Government to impose rules on the recruitment sector return to their old job due to health issues to find and when it is more appropriate for the sector and more suitable employment. marketplace to decide the rules for themselves. The consultation will also seek views on different enforcement The response also announces measures to strengthen options and whether individual enforcement would be sickness absence management within the public sector, more effective than the current government enforcement following the progress made by the Civil Service in regime. reducing absence and reviewing the terms of occupational sick pay policies. We will continue to work with public Copies of the Ending the Employment Relationship sector employers to bring transparency and accountability government response, and of each of the consultation to the management of sickness absence. documents being launched today, have been placed in The response has been informed by close working the Libraries of the House. across government and the devolved Administrations and input from employers, employee organisations and Employment: Sickness Absence healthcare professionals across the country, who have Statement all made an important contribution to the development of these proposals. The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): Today the Government EU: Foreign Affairs Council will publish a Command Paper giving their response to the independent review of sickness absence in Great Statement Britain carried out by Dame Carol Black and David Frost. We are setting out a new strategy which will help The Senior Minister of State, Department for Communities people to stay in work, support employers to manage and Local Government & Foreign and Commonwealth attendance more effectively, and reduce the number of Office (Baroness Warsi): My right honourable friend people falling needlessly onto sickness benefits. the Minister for Europe has made the following Written The review identified structural failings in the current Ministerial Statement. system, which typically offers little support to either The High Representative of the European Union employees or employers in the early stages of sickness for Foreign Affairs and Security Policy, Baroness Ashton absence and brings significant state resources to bear of Upholland, has called an extraordinary Foreign only once the individual has become detached from Affairs Council for Thursday 17 January in Brussels to the labour market and significant damage has been discuss the situation in Mali, and take stock of possible done to their future employability. EU action in support of the Malian Government and Our response sets out new measures to support people. I will attend. employers, employees and healthcare professionals to Baroness Ashton’s statement calling the extraordinary minimise avoidable absences and keep more people Foreign Affairs Council can be found at http://www. attached to the labour market. We expect this to yield consilium.europa.eu/uedocs/cms_data/docs/ significant benefits for individuals, employers and the pressdata/EN/foraff/134662.pdf. state. As set out in Baroness Ashton’s statement, the At the centre of our approach is a new state-funded Foreign Affairs Council will discuss the proposed EU service which will carry out an independent assessment training mission, financial and logistical assistance for of employees after four weeks of sickness absence and the deployment of African-led International Support provide advice to the employee, employer and GP. Mission to Mali (AFISMA), and will consider other This service will be funded by the abolition of the direct support to the Malian Government. percentage threshold scheme, which currently reimburses I will report to Parliament the outcome of the some elements of statutory sick pay but does nothing extraordinary Foreign Affairs Council, and will continue to encourage employers to reduce it. We agree with the to update Parliament on future Foreign Affairs Councils. WS 55 Written Statements[17 JANUARY 2013] Written Statements WS 56

Finance Bill 2013 Plasma Resources UK Limited Statement Statement

The Parliamentary Under-Secretary of State, Department TheCommercialSecretarytotheTreasury(LordDeighton): of Health (Earl Howe): My honourable friend the My honourable friend the Exchequer Secretary to the Parliamentary Under-Secretary of State, Department Treasury (David Gauke) has today made the following of Health, (Dr Daniel Poulter) has made the following Written Ministerial Statement. Written Ministerial Statement. The Government are today publishing draft legislation Further to the Written Ministerial Statement made for inclusion in Finance Bill 2013, in addition to that on 13 July 2012 (Official Report, col. 84-85ws) I am published on 11 December. This will be open for announcing today that the Government have decided technical consultation until Wednesday 6 February 2013. to seek private sector investment in the government-owned Details of the clauses, tax information and impacts limited company, Plasma Resources UK Ltd (PRUK) notes, and explanatory notes published today are available through the sale of the majority or all of the shares in on both the HM Treasury and HM Revenue and the company. We are taking this action to support the Customs website. company and its employees in the next phase of the The draft legislation includes clauses on the following company’s development. policies announced at Budget 2012: We have carefully examined the strategic options the removal of a tax charge under the remittance that will best allow the company (which includes the basis of non-domicile taxation which can arise UK based fractionation facility Bio Products Laboratory inadvertently in certain circumstances; and Limited (BPL) and the US based plasma supply company, DCI Biologicals Inc) to grow and be successful in an the definition of trusts with vulnerable beneficiaries. established and highly competitive global industry. It This is a revision of legislation published on should fulfil its potential as part of the strategically 11 December 2012 and contains detailed provisions important bioscience sector of the UK economy. Our originally planned to be introduced by secondary conclusion is that this route will best meet those legislation but which will now be introduced via requirements. Finance Bill 2013. Patients will also benefit, as investment will not only allow continued improvements to the existing The draft legislation also includes two other clauses: products but also the potential development of new as announced at Autumn Statement 2012, the treatments to create a better product portfolio. Resources Government are publishing draft legislation to raise will also be used to ensure that the facilities keep pace the annual drawdown pension limit from 100% to with the latest technology so the company can achieve 120% of the value of an equivalent annuity; and its full potential. Overall, the investment will play a legislation which amends the Corporation Tax Act 2010 key part in ensuring the continued supply of high to ensure that, as with police authorities before quality products to patients. them, chief constables and the Commissioner of Potential investors will need to show not just the Police of the Metropolis are exempt from any liability level of resources they are willing to make available to pay corporation tax on any profits from chargeable but also set out a credible plan as to how the operations activities. This is a new announcement and the will be grown and how products will be developed. legislation will take effect from the dates the new legal entities came into existence. For the Commissioner of Police of the Metropolis, the legislation will take Regional Growth Fund effect from 16 January 2012, and for chief constables, Statement it will take effect from 22 November 2012. The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger Machinery of Government Change: of Leckie): My right honourable friend the Minister of State for Business and Enterprise (Michael Fallon) has URENCO today made the following Statement. Statement Today my right honourable friend the Deputy Prime Minister will announce the opening of a fourth competitive round of the regional growth fund. A total of £350 million The Chancellor of the Duchy of Lancaster (Lord Hill is available for applicants. Building on the success of of Oareford): My right honourable friend the Prime the regional growth fund over the past two years, this Minister has made the following Written Ministerial money will continue to support businesses to expand Statement. and create jobs. I am today confirming a machinery of government The additional funding was announced in the 2012 change concerning the management of the Government’s Autumn Statement as part of a range of measures to stake in the uranium enrichment company URENCO. target help for businesses and rebalance the economy Responsibility for this is moving from the Department to drive growth. This brings the overall total of RGF of Energy and Climate Change to the Department for to £2.6 billion—helping create and safeguard thousands Business, Innovation and Skills. of jobs and attract private sector investment. WS 57 Written Statements[LORDS] Written Statements WS 58

RGF is delivering jobs and growth through good programmes have agreed final terms. This means that value for money projects and programmes—so round 4 over £1 billion has been released generating £5.8 billion will be a further competitive bidding process, with the of private sector investment. A small number of contracts same objectives as previous rounds. We still need to are either at an advanced stage of due diligence or build growth in key parts of the country which are have specific strategic value so have been given a little overly dependent on the public sector and the RGF is more time. However, in order to retain the sense of a key part of this because of its success in generating urgency, these have been moved onto the round 3 private sector investment. timetable which means that a final offer will have to be Round 4 of the regional growth fund is open now agreed by 19 April. and will close to applicants on 20 March at noon. Bids Selected bidders from round 3 are currently agreeing will be appraised as quickly as possible. The accelerated terms and conditions for their final offers from the accelerated timetable that I introduced for round 3 will be used timetable which was announced in October 2012. The which means the contracting process will be complete deadline for agreeing a provisional offer is 19 January within six months of a bid being selected. Potential and I will be issuing a further Statement following this applicants should look out for expressions of interest deadline to update both Houses on progress in round 3. events in their local area for support and further help Exceptional RGF with the application process. The first of these will be Ministers have agreed Government reserve the option in Manchester on 31 January followed by meetings in to use RGF funding flexibly in order to respond Birmingham on 6 February, Leeds on the 19 February quickly to economic shocks and opportunities or to and Nottingham on 25 February. Other meeting dates, ensure that viable growth-promoting projects are not including one in London, will be announced shortly. terminated because of minor funding shortfalls which These meetings are open to any organisation interested need to be met quickly. This will be in exceptional in bidding. circumstances only and will take place outside the Further information for bidders is available at https:// normal bidding process, although detailed due diligence www.gov.uk/understanding-the-regional-growth- requirements will still need to be met. fund. Exceptional RGF will be funded through money Progress to date recycled back into the fund because selected projects The contracting process for rounds 1 and 2 is now or programmes have either reduced in scope or withdrawn. complete and 89% of all round 1 and 2 projects and I will include updates on exceptional RGF in my programmes have started. In total, 180 projects and regular Statements to Parliament on RGF. WA 143 Written Answers[17 JANUARY 2013] Written Answers WA 144 Written Answers BBC Media Action Question Thursday 17 January 2013 Asked by Lord Laird To ask Her Majesty’s Government, further to the Written Answer by Baroness Northover on Asylum Seekers 29 October 2012 (WA 85), why the report of the first Question annual review of the global grant of £90 million to BBC Media Action was not available on the Department Asked by Lord Hylton forInternationalDevelopment’swebsitefrom30November To ask Her Majesty’s Government, further to 2012; whether the review’s evaluation suggests any the Written Answer by Lord Taylor of Holbeach on of the project’s impacts or outcomes were unlikely 8 January (WA 7–8), whether they will ensure that to be achieved; and what efficiency savings have (a) women caseholders and female interpreters are been made to date. [HL4424] provided for women seeking asylum, and (b) country Baroness Northover: The annual review of the information on the treatment of women is accurate Department for International Development’s (DfID) and regularly updated. [HL4457] global grant to BBC Media Action concluded that the project’s performance moderately exceeded expectations The Parliamentary Under-Secretary of State, Home during its first year of implementation and was rated Office (Lord Taylor of Holbeach): The UK Border A+. The review was focused primarily on assessing Agency’s policy provides that, if the applicant requests project outputs and did not identify any outcomes or a gender specific interviewer and interpreter, this should impacts that were unlikely to be achieved. The cost-savings as far as possible be accommodated, especially if this incurred by DfID of managing a single global grant has been requested in advance of the interview. In rather than 13 individual grants were estimated to be practice the agency makes every effort to ensure that £188,159 over the course of the first year. women can be interviewed by another woman if they The review was concluded and authorised on wish to be. 29 November 2012. However, due to an error, it was not uploaded onto the website. It is now available on The Agency’s Country of Origin Information Service the publications section of the DfID website. (COIS) publishes country information reports on the 20 countries generating the most asylum claims in the United Kingdom. These reports contain information Benefits on a range of human rights issues, including the Question treatment of women, and are regularly updated with Asked by Lord Taylor of Warwick information provided from a wide range of recognised and respected sources. COIS also provides an information To ask Her Majesty’s Government what steps request service which produces responses to specific they will take to help the poorest households in country-based enquiries, including women’s rights. All Britain in the light of the Government’s proposals decision-makers have access to this service and the to limit the increase in working-age benefits to 1%. up-to-date country reports, which focus on the main [HL4459] asylum and human rights issues of a particular country. The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): The Government have protected pensioners who are on fixed incomes Badgers and the additional needs benefits of disabled people Question whose added costs are linked to price inflation—through the triple lock on the basic state pension, through an Asked by Baroness Corston equivalent cash increase on the pension credit standard To ask Her Majesty’s Government, further to minimum guarantee, and through price up-rating of the comments by Lord De Mauley on 11 December disability living allowance, personal independence payment, (Official Report, col. 973), what are their “assumptions carer’s allowance, attendance allowance, incapacity benefit about the effectiveness, humaneness and safety of and the support group element of employment and support allowance. controlled shooting” of badgers. [HL4183] For those in the labour market, work is the best route out of poverty. Universal credit will seek to The Parliamentary Under-Secretary of State, Department ensure that any work pays, and in particular low-hours for Environment, Food and Rural Affairs (Lord De work. Reducing the complexity of the system, and Mauley): Our assumptions are that controlled shooting removing the distinction between in-work and out-of-work is an effective, humane and safe method of culling support, makes clear the potential gains to work and badgers. It is a method that is already widely used in reduces the risks associated with moves into employment. other wildlife species. However, in response to concerns Nonetheless, the Government recognise the need to on lack of evidence of its use in culling badgers, we are balance fairness to the taxpayer with the increased taking a precautionary approach through a pilot of living costs of those in receipt of state support, and controlled shooting in two areas to test our assumptions have decided to make cash increases to working-age about its safety, effectiveness and humaneness. benefits despite the tough economic conditions. WA 145 Written Answers[LORDS] Written Answers WA 146

British Antarctic Territory Majesty’s Courts and Tribunals Service (HMCTS) is Question responsible for the administration of courts and tribunals within England and Wales and tribunals of Scotland. Asked by Lord Berkeley HMCTS undertakes regular security assessments To ask Her Majesty’s Government whether the of all courts. This is to assess and to ensure that the all ownership of the British Antarctic Territory and security arrangements are proportionate to the level of the part of it recently renamed Queen Elizabeth risk identified. Family and district courts are subject Land is recognised internationally. [HL4430] to the same process and, as such, are under continual review to ensure the security arrangements address the risks identified. The Senior Minister of State, Department for Communities Any significant risks must be mitigated against and, and Local Government & Foreign and Commonwealth as a result, any increased levels of security required Office (Baroness Warsi): The British Antarctic Territory will be addressed as and when it is identified. is the oldest declaration of sovereignty in Antarctica, dating back to 1908. The Antarctic Treaty, 1959, puts all Antarctic sovereignty claims in abeyance and protects Debt each party’s position in respect of the recognition or Question non-recognition of such claims. Queen Elizabeth Land covers the previously unnamed part of the British Asked by Baroness Smith of Basildon Antarctic Territory.It will be for other Antarctic Treaty To ask Her Majesty’s Government what proportion parties to determine whether they will use this name of household debt is represented by mortgage debt or not. in (1) South Basildon and East Thurrock parliamentary constituency, (2) Basildon, and (3) England. Civil Servants: Political Activity [HL4567] Questions The Commercial Secretary to the Treasury (Lord Asked by Lord Laird Deighton): The Bank of England produces monthly estimates1 of total lending to individuals (excluding To ask Her Majesty’s Government what estimate student loans), including lending secured on dwellings, they have made of the number of civil servants such as mortgages. employed by the Department for Environment, Food and Rural Affairs engaged in political activity, for Estimates are available only at a national level. The latest release for November 2012 indicated that 89% of each month since May 2010. [HL4296] household debt in the UK was secured on dwellings. To ask Her Majesty’s Government what estimate 1 http://www.bankofengland.co.uk/statistics/Pages/default.aspx they have made of the number of civil servants employed by the Department for Environment, Food and Rural Affairs who were prevented from taking Democratic Republic of Congo part in political activity, for each month since May Question 2010. [HL4297] Asked by Lord Avebury The Parliamentary Under-Secretary of State, Department To ask Her Majesty’s Government what assessment for Environment, Food and Rural Affairs (Lord De they have made of the evidence given by Steve Hege, Mauley): Since May 2010, one member of staff in core the former member of the United Nations Group of Defra has sought formal permission to participate in Experts on the Democratic Republic of the Congo, political activities and this was granted. to the United States House of Representatives Committee on Foreign Affairs on 11 December 2012 on the No estimates are made of the number of staff rebellion by the M23 group, and in particular of his engaged in political activity for which no permission is suggestion that the motive for Rwanda’s support for required. the rebellion is that it will lead to the establishment Since May 2010, no requests from staff wishing to of an autonomous state which Rwanda would dominate participate in political activities have been prevented in the eastern Democratic Republic of the Congo. by core Defra. [HL4376]

Courts: Security The Senior Minister of State, Department for Communities Question and Local Government & Foreign and Commonwealth Office (Baroness Warsi): The evidence that Steve Hege Asked by Lord Beecham gave to the United States House of Representatives Committee on Foreign Affairs reflects much of the To ask Her Majesty’s Government what steps information contained in the 2012 interim and final they are taking to increase security in family division Group of Experts’ reports. The UK welcomed the and district courts. [HL4368] reports and found the evidence of Rwandan support to be credible and compelling. The British Government The Minister of State, Ministry of Justice (Lord have made it very clear to the Rwandan Government McNally): My department takes the security and safety that they must respect the sovereignty and territorial of all courts and court users extremely seriously. Her integrity of the Democratic Republic of the Congo. WA 147 Written Answers[17 JANUARY 2013] Written Answers WA 148

Economy The Senior Minister of State, Department for Communities Question and Local Government & Foreign and Commonwealth Office (Baroness Warsi): The overwhelming weight of Asked by Lord Myners international precedent suggests that, in the event of Scottish independence, the remainder of the UK would To ask Her Majesty’s Government what assessment continue to exercise the existing UK’s international they have made of the impact of a potential loss of rights and obligations, including its membership of the the United Kingdom’s AAA credit rating on the EU, and that an independent Scotland would be a new United Kingdom economy. [HL4576] state. The British Government judge that this situation would be recognised by the wider international community. The Commercial Secretary to the Treasury (Lord It follows that an independent Scotland would be Deighton): The Government have taken action to reduce likely to have to apply for membership of whichever the deficit and rebuild the economy. The Government’s international organisations it wished to join, and treaties overriding priority is to return the UK to sustainable, to which it wished to accede. In the context of EU balanced economic growth. The Government’s actions membership, this would involve detailed negotiation have secured stability and positioned the UK as a with the UK and other existing member states on the relative safe haven, with interest rates near historic terms of Scotland’s membership. Under the EU treaties, lows, benefiting families, businesses and the tax payer. decisions about EU membership and the terms of membership have to be agreed by consensus. Energy: Renewable Energy Question Government: Correspondence Asked by Lord Pearson of Rannoch Question Asked by Lord Berkeley To ask Her Majesty’s Government whether they support renewable energy projects on areas of high To ask Her Majesty’s Government, further to quality agricultural land. [HL4497] the Written Answer by Lord Wallace of Tankerness on 30 October 2012 (WA 118–19), to what extent The Parliamentary Under-Secretary of State, Department their decision to prevent the publication of the of Energy and Climate Change (Baroness Verma): All correspondence between the Prince of Wales and renewable energy developments are considered within Ministers, described by the Attorney-General as formal planning procedures. These assess all potential reflecting the Prince’s “most deeply held personal impacts of a project, including on the environment. views and beliefs”and being “in many cases particularly frank”, on the basis that they are seen as “preparations for kingship”, took account of the principle that EU: Birth Rates the monarchy is politically neutral. [HL4379] Question Asked by Lord Laird The Advocate-General for Scotland (Lord Wallace of Tankerness): A detailed explanation of the basis on To ask Her Majesty’s Government what discussions which the Attorney-General arrived at his decision is they have had in the European Union about birth-rates set out in his statement of reasons. The importance in the European Union. [HL3958] and relevance of political neutrality is specifically explained and relied on at paragraphs 6, 10, 12(3) and The Senior Minister of State, Department for Communities 21. As stated at paragraph 10: and Local Government & Foreign and Commonwealth “The Prince of Wales is party-political neutral. Moreover, it is Office (Baroness Warsi): During the Hungarian presidency highly important that he is not considered by the public to favour of the EU in 2011, the Government participated in a one political party or another. This risk will arise if, through these letters, the Prince of Wales was viewed by others as disagreeing discussion on family policy issues at a meeting of with government policy. Any such perception would be seriously Ministers responsible for demography and family policy. damaging to his role as future Monarch, because if he forfeits his The UK was represented by the deputy head of mission position of political neutrality as heir to the Throne, he cannot from our embassy in Budapest. easily recover it when he is King”. The Government have participated in no further formal discussions of EU birth rates since May 2010. Government: Official Visits Question EU: Membership Asked by Lord Myners Question To ask Her Majesty’s Government which Ministers Asked by Lord Mawhinney have visited Mexico representing the United Kingdom To ask Her Majesty’s Government whether, in since May 2010. [HL4372] the event of Scotland voting in favour of independence, the United Kingdom, as reconstituted, would be The Senior Minister of State, Department for Communities required, in the light of current European Union and Local Government & Foreign and Commonwealth membership rules, to make a fresh application to Office (Baroness Warsi): The following Ministers have join the European Union. [HL4449] visited Mexico representing the UK since May 2010. WA 149 Written Answers[LORDS] Written Answers WA 150

Prime Minister, Right Honourable David Cameron reproductive and child health programme. We will MP—June 2012; continue to raise the issue with government counterparts Deputy Prime Minister, Right Honourable Nick at national and at state levels. Clegg MP—March 2011; Chancellor of the Exchequer, Right Honourable Legal Aid George Osborne MP—February 2012, June 2012, Question November 2012; Asked by Lord Avebury Former Minister of State for Foreign and Commonwealth To ask Her Majesty’s Government what assessment Affairs, Jeremy Browne MP—November 2010, March they have made of the Runnymede Trust report 2011, October 2011, February 2012; Justice at Risk; what is their response to the Minister for Trade and Investment, Right Honourable recommendation that fixed payments per case for the Lord Green of Hurstpierpoint—June 2012; immigration work should be replaced by hourly Minister of State for Universities and Science, Right rates for cases of specified kinds based on the Early Honourable David Willetts MP—March 2011; Legal Advice Project evaluated by the Legal Services Former Secretary of State for Energy and Climate Commission and the UK Border Agency; and what Change,RightHonourableChrisHuhneMP—December estimate they have made of the reduction in appeals 2010; from initial decisions which could be achieved thereby. [HL4377] Former Minister of State for Energy and Climate Change, Right Honourable Greg Barker MP— The Minister of State, Ministry of Justice (Lord December 2010; and McNally): We are grateful to the Runnymede Trust for Parliamentary Under-Secretary of State for Employment its report and will give it careful consideration alongside Relations, Consumer and Postal Affairs, Norman the final evaluation of the early legal advice project. Lamb MP—April 2012; We expect this early in the summer. At that point we In addition, over the same period the following will consider whether any changes should be made to individuals, although not government Ministers, have how legal aid payments operate in asylum cases. visited Mexico representing the UK. the Right Honourable the Lord Lamont of Lerwick. Migration To represent the Government at the inauguration of Question Mexican President Pena Nieto—December 2012; Asked by Lord Laird the Right Honourable the Lord Brittan of Spennithorne, former trade adviser to the Government. To promote To ask Her Majesty’s Government why they bilateral trade and investment—February 2011; and propose to disaggregate the totals for net migration to indicate the student element when the international the Right Honourable Sir John Major. To represent standard is to include migrating students; whether the UK Government during Mexico’s bicentenary they will distinguish between students at universities celebrations—September 2010. and those at private colleges; and how they intend Further visits to Mexico by UK Ministers and to improve the quality of data on students leaving other representatives of the Government will take the country. [HL4423] place during 2013 and subsequent years. Lord Wallace of Saltaire: The information requested falls within the responsibility of the UK Statistics India Authority. I have asked the authority to reply. Question Letter from Glen Watson, Director General for ONS, to Lord Laird, dated January 2012. Asked by Lord Alton of Liverpool As Director General for the Office for National To ask Her Majesty’s Government whether the Statistics (ONS), I have been asked to respond to your Department for International Development has in Parliamentary Question Toask Her Majesty’s Government its library a copy of the Report of the National why they propose to disaggregate the totals for net Family Health Survey of India; if so, what assessment migration to indicate the student element when the they have made of the reasons for its finding that international standard is to include migrating students; there are up to 35% more male births in some whether they will distinguish between students at universities provinces than there are female births; and whether and those at private colleges: and how they intend to they will raise such disparities with the Indian improve the quality of data on students leaving the authorities in the context of discussions on future country [HL4423]. aid to, and co-operation with, that country.[HL4470] ONS does not intend to remove students from official net migration estimates and will continue to Baroness Northover: The National Family Health use the UN definition of a long-term international Survey (2005-6) was partly funded by DfID. It found migrant. that 18 states of 29 in India had sex ratios at birth ONS uses data from the International Passenger below normal. India has strong legislation prohibiting Survey (IPS) to estimate long-term international migration the misuse of pre-natal diagnostic techniques for sex- (LTIM) with adjustments made for asylum seekers, selective abortions. The UK has supported the people whose intentions change with regards to their implementation of the legislation, through India’s length of stay, and migration to and from Northern WA 151 Written Answers[17 JANUARY 2013] Written Answers WA 152

Ireland. Net LTIM estimates will continue to adhere Baroness Warsi: The Government recognise that to the UN definition of a long-term international both religious and non-religious groups have valid migrant, which states that a long-term migrant is a perspectives to contribute to the formulation and person who changes his or her country of usual residence implementation of policy, and departments are committed for a period of at least a year. This definition applies to proper engagement processes. The specific role of to all migrants, regardless of their reason for migration. the Minister for Faith and Communities is to ensure Since 2009, student migration forms the largest that the voice of people of faith is heard, which has single category of long-term migration to the UK. not always been the case. Until January 2012, the IPS only collected information on a person’s main reason for migrating. This means that a person may have arrived to study, but left several years later for a different reason, such as work. Trees Therefore it was not possible to identify how many Questions migrants who originally arrived to study have since Asked by Lord Framlingham left the UK. In January 2012, new questions were added to the To ask Her Majesty’s Government how many IPS to ask those leaving the UK what their main organisations in the United Kingdom received public reason for migrating was when they originally arrived funds to fund tree planting in the past 10 years for in the UK. A further new question asks all emigrants which figures are available; which were those if they have studied while in the UK. These changes organisations; and how much they each received. will provide better information on emigrants who [HL3840] originally arrived in the UK to study or who arrived To ask Her Majesty’s Government when they for another reason but studied while they were in the will answer question HL3840, tabled on 29 November UK. These new data, relating to the year ending and due for answer on 13 December, concerning the December 2012, will be available in August 2013. funding of tree planting organisations in the United ONS is unable to distinguish between students at Kingdom. [HL4324] universities and those at private colleges as that information is not collected on the IPS. The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley): The primary source of funding for tree planting Religious Faith over the past 10 years has been the English Woodland Questions Grant Scheme and its predecessor, the WoodlandGrant Asked by Lord Warner Scheme, both administered by the Forestry Commission. The payment records do not readily distinguish between To ask Her Majesty’s Government, further to individuals, organisations and managing agents so the the Written Answer by Baroness Warsi on 8 November separation of all payments to organisations could be 2012 (WA232), what guidance they give the Minister provided only at disproportionate cost. of Faith and Communities in applying faith The Big Tree Plant is a Defra and Forestry considerations to the formulation and implementation Commission-led tree planting campaign that began in of public policy in the light of (1) the 2011 Census December 2010. Projects that have received funding finding that those declared as having “no religion” from the £4 million Big Tree Plant Scheme for planting outnumbered those of a declared non-Christian season 2011-12 (the first season of operation of the faith by more than 2 to 1, and (2) the long-term scheme) are listed below: trend in the number of citizens with no religious belief or identity. [HL4438] Name £ Grant Northfield Ecocentre 7,000.00 The Senior Minister of State, Department for Communities Million Trees Derbyshire 7,161.00 and Local Government & Foreign and Commonwealth PITSTOP 2000 3,955.90 Office (Baroness Warsi): The Government believe that Hereford Orchard Topic Project 3,178.60 religious belief is an important motivation for service Plymouth Tree Partnership 12,563.09 to community. However, it is obvious that the needs Woodsetton Charitable Trust 800.00 and perspectives of all interested groups, whether religious Pepys Community Forum 1,791.89 or non-religious, should be taken into consideration Sheffield Vulcan Rotary Club 745.00 when policy is formulated and implemented. Boston Woods Trust 1,846.00 Blisworth Canal Partnership 2,498.84 Asked by Lord Warner Horndean Community Centre 512.00 To ask Her Majesty’s Government, further to Cricklade Bloomers 3,418.78 the Written Answer by Baroness Warsi on 8 November St Stephen’s Bradford 439.20 2012 (WA232), what criteria are used by the Minister TCV Kent 5,000.00 for Faith and Communities to balance the conflicting Aspire Housing 5,644.00 needs and perspectives of different religious and Canterbury Society 536.40 non-religious groups in the formulation and London Orchard Project 16,000.00 implementation of public policy. [HL4439] WA 153 Written Answers[LORDS] Written Answers WA 154

Name £ Grant 2008-09 Financial Year Grant Claims Swanley Town Council 3,517.11 Organisation Amount awarded (£) Wellingore Parish Council 730.00 Lancashire Wildlife Trust 8,999.55 Bexley Council 9,900.00 Trees for Cities- outside London 115,184.00 Trees for Cities 2,000.00 Groundwork Luton and Beds 6,812.00 London Wildlife Trust 5,000.00 Trees for Cities- pan London 75,000.00 PADI 1,500.00 TCV Community Copse 1,732.68 Better Bankside 3,725.00 Gateshead Countryside Volunteer Rangers 1,187.15 LB of Havering 1,600.00 Street Trees Barnet 4,000.00 Groundwork East London 1,230.00 Friends of Fallowfield Loop 658.84 Hillingdon Natural History 880.00 Tinsley Tree Project 14,831.41 Society Skegby Neighbourhood Residents Group 2,596.00 British Airways PLC 5,250.00 Treesponsibility: Transition Hebden Bridge 1,545.50 LB Kingston Upon Thames 2,500.00 Sussex Orchard for Communities and Schools 2,396.00 The Friends of Finsbury Park 5,000.00 Selby Community Trust 10,500.00 Friends of Kneller Gardens 883.00 Ryde South West Action Group 500.00 LB Hillingdon 4,200.00 Northbrook Park Community Group 5,290.00 Hackney Marshes User Group 5,000.00 Heeley City Farm 1,678.70 Padi 900.00 Groundwork NE Middlesbrough 4,813.47 Trees for Cities 2,000.00 Garforth and District Lions Club 750.00 Noel Park Primary School 500.00 TCV South East 3,296.16 Groundwork London 3,236.00 TCV Norfolk 3,033.66 Royal Parks 4,650.00 RSPB Rainham Marshes 1,570.00 Ruislip Woods Trust 1,000.00 Community Forests North West RRF 134,551.00 LB Barking and Dagenham 3,300.00 Stroud Valleys Project 10,977.00 Sheringdale School 1,000.00 Groundwork Oldham and Rochdale 25,000.00 St Bernadette RC School 1,000.00 Staffs Wildlife Trust 4,195.41 Trees for Cities 2,000.00 Shrewsbury Town Council 5,560.00 Witton Park Community Association 600.00 Trees for Cities 2,000.00 Birmingham Trees for Life 24,842.00 The Salvation Army Playgroup 630.00 London Wildlife Trust 3,036.00 Southwark Council 5,000.00 Groundwork Thames Valley 7,500.00 University of Westminster 2,711.00 Creative Support 650.00 Newington Green Action 5,000.00 Group Bee Guardian Foundation 2,964.70 Alnwick Community Development Trust/Now 1,317.76 Friends of King Henry 5,000.00 Groundwork NE Northumbria Woodlands Friends of Wallsend Parks 2,200.00 St Marks School 245.50 Great Western Community Forest 18,019.00 LB of Bromley 5,000.00 Groundwork Leicester and Leicestershire 9,948.22 Total 93,840.50 Leading Link 1,000.00 Peterborough Environmental City Trust 21,923.00 2009-10 Financial Year Grant Claims Warley Woods 950.00 Organisation Amount awarded (£) Ideal for All 2,258.18 Royal Parks 4,935.00 London Wildlife Trust 5,000.00 Pensford Field Environmental 1,560.00 Trust Ltd The following projects were funded as part of the London Borough of Enfield 1,457.94 Big Tree Plant in 2010-11 before the £4 million funding The Bromley by Bow Centre/ 5,000.00 scheme was established. T/A Green Dreams Trees for Cities 3,620.00 Campaign for Greener Healthcare 40,000.00 Hackney Marshes Users Group 4,700.00 Tree Council 60,000.00 Canons Park Residents 4,900.00 Keep Britain Tidy (in partnership with The 200,000.00 Association Conservation Volunteers) London Borough of Bexley 6,000.00 Growing Concerns Garden 2,418.00 Centre Trees for Cities 2,445.00 The London Tree and Woodland Community Grant Trees for Cities 5,000.00 Scheme was funded by the Forestry Commission from PADI 2,000.00 2008 until 2011-12 to support the delivery of the PADI 1,000.00 London Tree and Woodland Framework in partnership with the Greater London Authority and Mayor’s Office. Better Bankside 4,740.00 In 2012-13 and beyond, funding is provided by the Friends of Queens Wood 3,500.00 Greater London Authority and Mayor’s office. Croydon Council 3,660.00 WA 155 Written Answers[17 JANUARY 2013] Written Answers WA 156

2009-10 Financial Year Grant Claims 2010-11 Financial Year Grant Organisation Amount awarded (£) Claims Organisation Amount paid (£) Parks and Greenspaces - 5,000.00 Bromley council PADI 1,000.00 Friends of King George’s 1,651.00 Royal Parks 1,125.00 Playing Fields Royal Parks 812.50 Westminster Tree Trust 5,000.00 Transition Brockley 1,500.00 the London Orchard Project 3,604.00 Trees for Cities 5,000.00 North Mitcham Parks Friends 2,568.00 Trees for Cities 3,100.00 Group Trees for Cities 5,000.00 Trees for Cities 2,600.00 Trees for Cities 3,000.00 Trees for Cities 1,900.00 Trees for Cities 2,600.00 London Borough of Hackney 4,300.00 Trees for Cities 5,000.00 Trees for Cities 3,791.00 Trees for Cities 4,200.00 Trees for Cities 4,250.00 Trees for Cities 3,100.00 Trees for Cities 3,500.00 Trees for Cities 2,000.00 Trees for Cities 5,000.00 Trees for Cities 1,500.00 London Borough of Tower 3,000.00 Hamlets Trinity School 1,642.67 London Borough of Barking 2,967.00 Total 119,665.62 and Dagenham London Borough of Lewisham 5,000.00 2011-12 Financial Year Grant Claims Lea Valley Regional Park 6,400.00 Organisation Amount claimed (£) Trees for Cities 2,975.95 Abney Park Trust 5,000.00 University of Westminster 1,213.00 Butterfield Green Users Group 2,411.00 London Borough of Ealing 5,000.00 Friends of Foxley 5,000.00 St Michael’s School 2,000.00 Friends of Tower Hamlets 5,000.00 Total 133,655.89 Cemetery Park Groundwork London (Homes 3,291.001 2010-11 Financial Year Grant for Islington) Claims Organisation Amount paid (£) Groundwork London (Friends 750.002 of St John Vianney RC Primary Back2Earth 3,000.00 School) Day Therapies Dept, St Anns 3,600.00 Groundwork London (Friends 1,750.00 Hospital of Stationers Park) Downlands Project 1,000.00 Deferred project 2010-11: 5,000.00 Eastlea Community School 500.00 Groundwork London Forest Recycling Project 500.00 Hackney Marshes User Group 4,993.64 Friends of Blondin Park 3,000.00 Hummingbird Tenants’ & 650.00 Friends of Foxley Wood 5,000.00 Residents’ Association Friends of Selsdon Wood 500.00 Isledon village Community 3,000.00 Friends of Tower Hamlets 5,000.00 Project Cemetery Park Kew Gardens 5,000.00 Garden Classroom 1,000.00 London Borough of Barking 2,750.00 Groundwork London 4,000.00 and Dagenham Groundwork London 1,000.00 London Borough of Bromley 3,177.31 Groundwork London 500.00 London Borough of Haringey 5,000.00 Lee Valley Park 3,000.00 London Borough of Havering 500.00 London Borough of Barking & 1,801.44 London Borough of Newham 5,000.00 Dagenham London Borough of Sutton 4,000.00 London Borough of Barking & 5,000.00 London Orchard Project 4,900.00 Dagenham London Wildlife Trust 7,600.00 London Borough of Bromley 3,486.00 North West Kent Countryside 3,321.00 London Borough of Hackney 4,471.00 Partnership London Borough of Havering 3,490.00 Oasis Children’s Venture 5,000.00 London Borough of Islington 2,649.00 Organiclea 3,875.00 London Borough of Richmond 2,295.00 Padi 500.00 upon Thames St Michael’s School 1,000.00 London Orchard Project 4,695.00 The Conservation Foundation 4,488.00 London Orchard Project 2,000.00 The Friends of Beckenham 1,482.74 London Wildlife Trust 5,000.00 Place Park Oasis Children’s Venture 4,498.01 The Garden Classroom 4,895.00 Organiclea 3,600.00 Trees for Cities 5,000.00 PADI 1,500.00 Trees for Cities 5,000.00 PADI 3,000.00 Trees for Cities 5,000.00 WA 157 Written Answers[LORDS] Written Answers WA 158

2011-12 Financial Year Grant Claims is an important part of the job our heads of missions Organisation Amount claimed (£) overseas. Foreign and Commonwealth Office and UK Trade and Investment senior officials in the UK are Trees for Cities 5,000.00 also assessed against their performance in securing Trees for Cities 5,000.00 economic and commercial objectives. Trees for Cities 5,000.00 The Prime Minister, my right honourable friend the Trees for Cities 5,000.00 Member for Witney (Mr Cameron) has also made it Trees for Cities 2,500.00 clear that every permanent secretary of a government Trees for Cities 3,000.00 department should have growth as a key objective, Trees for Cities 4,250.00 which in many cases will include promoting UK business Vision Redbridge Culture & 1,770.00 overseas. Leisure Total 145,854.69 Notes: 1 £1,709 carried forward into 2012-13 Water Management: Urban Waste Water 2 £750 carried forward into 2012-13 Question There is no specific funding for tree planting through Asked by Lord Berkeley Natural England’s core grant in aid budget. However, Natural England administers funds under the Rural To ask Her Majesty’s Government what Development Programme for England (for which Defra representations they have made to the European is the managing authority and accounts for the payments). Commission about decision C-301/10 of the European Under the programme and its predecessor (the England Court of Justice finding them guilty of failure to Rural Development Programme) a number of agri- fulfil their obligations under the Urban Waster environment schemes provide funding for direct tree Water Directive 91/271/EEC. [HL4288] planting and certain aspects of management. Details could be provided only at disproportionate cost. The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De UK Business Overseas Mauley): We are currently in contact with the European Question Commission regarding the judgment of the Court in Asked by Lord Hunt of Chesterton Case C-301/10, relating to breaches of the urban waste water treatment directive 91/271/EEC in London and To ask Her Majesty’s Government whether they Whitburn. have plans to include in the job descriptions of In relation to London, the court accepted that the senior officials in United Kingdom departments Thames Tideway Tunnel represents a solution to the and agencies clauses regarding the promotion of problem of the collecting system in London. We have United Kingdom business, in the light of the comments therefore drawn the Commission’s attention to the made by the Foreign Secretary regarding promoting current and future works planned in the Tideway area, United Kingdom business overseas. [HL4543] including the construction of the Lee Tunnel and the Thames Tideway Tunnel and upgrades to sewage The Senior Minister of State, Department for Communities treatment works. For Whitburn, we are exploring with and Local Government & Foreign and Commonwealth the Commission what is necessary to comply with the Office (Baroness Warsi): Promoting UK business overseas terms of the judgment. Thursday 17 January 2013

ALPHABETICAL INDEX TO WRITTEN STATEMENTS

Col. No. Col. No. Committee on Standards in Public Life ...... 51 Finance Bill 2013 ...... 55

Employment Law ...... 51 Machinery of Government Change: URENCO ...... 55

Employment: Sickness Absence...... 53 Plasma Resources UK Limited...... 56

EU: Foreign Affairs Council...... 54 Regional Growth Fund...... 56

Thursday 17 January 2013

ALPHABETICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. Asylum Seekers...... 143 EU: Birth Rates ...... 147

Badgers...... 143 EU: Membership ...... 147

BBC Media Action ...... 144 Government: Correspondence ...... 148

Benefits...... 144 Government: Official Visits...... 148

British Antarctic Territory ...... 145 India ...... 149

Civil Servants: Political Activity...... 145 Legal Aid...... 150

Courts: Security...... 145 Migration...... 150

Debt...... 146 Religious Faith...... 151

Democratic Republic of Congo ...... 146 Trees ...... 152

Economy...... 147 UK Business Overseas ...... 157

Energy: Renewable Energy...... 147 Water Management: Urban Waste Water...... 158 NUMERICAL INDEX TO WRITTEN ANSWERS

Col. No. Col. No. [HL3840] ...... 152 [HL4379] ...... 148

[HL3958] ...... 147 [HL4423] ...... 150

[HL4183] ...... 143 [HL4424] ...... 144

[HL4288] ...... 158 [HL4430] ...... 145

[HL4296] ...... 145 [HL4438] ...... 151

[HL4297] ...... 145 [HL4439] ...... 151

[HL4324] ...... 152 [HL4449] ...... 147

[HL4368] ...... 145 [HL4457] ...... 143

[HL4372] ...... 148 [HL4459] ...... 144

[HL4376] ...... 146 [HL4470] ...... 149

[HL4377] ...... 150 [HL4497] ...... 147 Col. No. Col. No. [HL4543] ...... 157 [HL4576] ...... 147 [HL4567] ...... 146 Volume 742 Thursday No. 96 17 January 2013

CONTENTS

Thursday 17 January 2013 Questions Electoral Register: Young People...... 781 Severn Barrage ...... 783 EU: Budget ...... 786 Food: Waste ...... 788 Business of the House Timing of Debates ...... 790 Standing Orders (Public Business) Motion to Approve ...... 790 Electoral Registration and Administration Bill Order of Consideration Motion ...... 790 Taxation: Families Motion to Take Note ...... 791 Local Government: Finance Settlement Motion to Take Note ...... 835 Unemployment: Young People Question for Short Debate ...... 865 Grand Committee Defamation Bill Committee (4th Day)...... GC 307 Written Statements...... WS 51 Written Answers...... WA 143