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House of Lords

Tuesday, 11 January 2011.

2.15 pm

Prayers-read by the Lord Bishop of Gloucester.

Introduction: Lord True

2.22 pm

Nicholas Edward True, Esquire, CBE, having been created Baron True, of East Sheen in the County of Surrey, was introduced and took the oath, supported by Lord Strathclyde and Lord Howard of Rising, and signed an undertaking to abide by the Code of Conduct.

Introduction: Baroness Jolly

2.27 pm

Judith Anne Jolly, having been created Baroness Jolly, of Congdon's Shop in the County of Cornwall, was introduced and took the oath, supported by Lord Tyler and Lord Teverson, and signed an undertaking to abide by the Code of Conduct.

Introduction: Lord Risby

2.33 pm

Richard John Grenville Spring, Esquire, having been created Baron Risby, of Haverhill in the County of Suffolk, was introduced and took the oath, supported by Lord Astor of Hever and Lord Mayhew of Twysden, and signed an undertaking to abide by the Code of Conduct.

Energy: Electricity

Question

2.39 pm

Asked by Lord Berkeley

The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Lord Marland): My Lords, the provision of third-party access to unlicensed networks will enable customers of those networks to take advantage of the competitive energy market by having the right to choose their energy supplier. As such, where alternative suppliers can offer a more competitive price than the incumbent supplier, customers will be able to make savings on their energy costs.



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Lord Berkeley: I am grateful to the Minister for that reply, but is he aware that in the solution that he has just set out, it will require all the operators-the landlords of these private networks-to upgrade their supplies to grid standards at the cost of many millions? This applies to railways, airports, ports, sports centres-anywhere where there is subcontracted electricity. Does he agree that the Government should look at an alternative, which would be for the landlord to get competitive quotes, and so avoid this enormous cost on British business?

Lord Marland: My Lords, this is a complicated issue, and we have been in consultation with all the ports, airports and railways. That has been an extensive consultation. If the noble Lord wishes to meet with officials for further explanation and briefing on the consultation, I will, as always, make my officials available. I agree with him: it would be perfectly acceptable, if private network customers are satisfied with their private network suppliers, to go out to tender to obtain cheaper electricity. The fundamental point, however, is that in these difficult times, it is important that the customer has the cheapest and fairest electricity supply that is available.

Baroness Parminter: My Lords, it is welcome that the proposed changes will help people switch suppliers and potentially save money on their energy bills. Does my noble friend agree that more market competition and greater transparency in wholesale costs and retail prices would assure consumers that they were paying a fair price for their energy?

Lord Marland: I totally agree with the noble Baroness, but in fairness, it is the role of Ofgem to ensure that electricity prices remain competitive. We strongly encourage Ofgem to be transparent and to challenge the fairness of prices. As noble Lords know, we are reviewing the role of Ofgem and ensuring that it is carrying out those methods so that we end up with a competitive electricity market in these very difficult times.

Lord Hughes of Woodside: My Lords, at Question Time after Question Time we keep hearing Ministers speak about competition and reducing prices. The facts are that prices still keep going up. Electricity has gone up by 9 per cent. How can 9 per cent on people's bills be justified?

Lord Marland: The noble Lord is completely right that electricity bills are going up and have been going up. This is very regrettable, but let us look at the facts. In the past five years, oil prices have gone up by 60 per cent and gas prices by nearly 60 per cent. Electricity prices have also gone up by nearly that much in that time. It is incumbent on us to get a competitive situation in the market and I can assure your Lordships that this Government are trying everything that they can to achieve that.

Lord Trefgarne: My Lords, is it not the case that owners of wind farms are to be paid a so-called facilitation fee, apparently to contribute to the costs of

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their facilities, even when there is no wind and they are not producing any electricity? What sort of a contribution does that make to these competitive policies?

Lord Marland: With all due respect, the noble Lord is slightly wrong in his sweeping judgment that there is no wind activity from wind farms. There is of course wind; we live in a windy country. Wind farms are seen to be an appropriate way for this country to generate electricity. However, his broader point is very well made: in order to achieve by 2050 probably twice the amount of electricity that we need now, we have to get on with obtaining it from a portfolio of ventures. That means new nuclear, wind farms, renewables such as anaerobic digesters and biomass, et cetera. We have to have a portfolio of ventures and this Government have set about achieving that.

Baroness Smith of Basildon: My Lords, with the announcement today of yet another energy company increasing its charges, I know that the Minister understands how worried people are about paying their bills, particularly as we have seen a spate of very cold weather. The noble Lord will be aware that his own department has forecast that the shift towards greener energy and a greener economy will increase the cost of electricity by 33 per cent and the cost of gas by 18 per cent. We welcome and support the move to greener energy, but what action will the Government take to ensure that the energy companies do not continue to make excessive profits while the costs fall on the consumers?

Lord Marland: The noble Baroness raises a very apposite question. As she says, E.ON has today raised its energy prices, which is absolutely regrettable in the current circumstances. We are very concerned about the margin that electricity companies are making in the current environment. As I said earlier, ensuring competitiveness is the role of Ofgem but let us make no mistake: we have to invest £110 billion in the next 10 years to upgrade our very redundant network. Therefore, I am afraid that electricity prices are going to go up because we have done nothing for a very long period.

Lord Geddes: Why are those who produce their own electricity-from photovoltaic panels, for instance-paid by the grid only a fraction of what they have to pay to the grid if they wish to draw electricity from it?

Lord Marland: The whole idea of incentivising people to produce electricity is for the Government to pump-prime alternative electricity uses. Photovoltaic energy is developing into a maturing market. We are reviewing whether it is mature enough and whether some of the benefits that that market has so far received should be reviewed.

Lord Campbell-Savours: My Lords, will the Minister ask his officials to reopen the file on rising block tariffs and the benefits that that would bring to consumers?



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Lord Marland: I do enjoy these questions, my Lords. I have never been the smartest tool in the box-

Noble Lords: No!

Lord Marland: Thank you. I appreciate the response from the opposition Benches-I fished for that compliment beautifully. The answer is no.

Air Passenger Duty

Question

2.46 pm

Asked by Lord Borrie

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, the Office for Budget Responsibility's November forecast estimates air passenger duty revenue at £3.6 billion in 2015-16. The estimate reflects forecast growth in passenger numbers and the November 2010 rate increases as announced by the previous Government. It also assumes that duty rates are uprated by inflation each year-a standard forecasting convention. However, at the Budget, the Government committed to exploring changes to aviation tax and to consult on any major changes. We are considering evidence from stakeholders, including on the impact on UK competitiveness.

Lord Borrie: I thank the noble Lord for his answer. However, it does not deal with the great problem that so many countries on the continent of Europe either do not have any duty at all or have a much lower duty than in Britain. Therefore, the competitiveness of our airlines, airports and tourist industry is at a disadvantage. Apropos the last Question and Answer, this is surely one matter on which the Government have a measure of control. It is their duty that has been imposed and is suggested to be higher. I am sure that the Minister will agree with me that the UK tourist industry must be very disappointed with the Answer that has been given, especially when tourists from countries such as India and China-growth economies-are wanted yet are being turned away by this unduly high duty.

Lord Sassoon: My Lords, I do not believe that the tourist industry will be either surprised or disappointed because I have merely restated that we are consulting a wide range of stakeholders and listening to views of the tourist organisations, among others. On UK competitiveness, it is important to see the APD in the wider context. For example, we do not levy the APD on transit or transfer passengers. As the noble Lord, Lord Borrie, points out, other countries are introducing similar taxes-Germany introduced a similar tax on 1 January. In the wider context of competitiveness,

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the Government are reducing corporation tax very significantly from 28 to 24 per cent over four years from April 2011. If we talk about competitiveness, we should look at it in a much wider context.

Lord Palmer: My Lords, can the Minister explain why those in private jets are not subject to APD? This might be a very good point for his consultation paper.

Lord Sassoon: My Lords, I am listening hard to points that are raised this afternoon. Although I cannot tell noble Lords where the consultation will get to, I am very happy to listen to points, including that made by the noble Lord.

Lord Rotherwick: Is the Minister not concerned that by raising the airport passenger duty in the way that is proposed he will damage the Government's objective of making this country one of the major tourist destinations? If a family of four from China travel to this country from their home, they will now pay £300, even though they are travelling economy.

Lord Sassoon: My Lords, it is certainly not the Government's intention to damage the competitiveness of any sector of the economy, least of all the tourist sector. I should remind noble Lords that the duty increase that came in on 1 November was announced by the previous Government and is something we are looking at. All these factors will be considered but this is not an easy matter; the previous Government reviewed the system at least once since its introduction.

Lord Clinton-Davis: I declare an interest as the president of BALPA. How does this proposed duty improve the environment? I do not think that it will at all, but I want to hear the Minister's response. Does not this duty impose a serious and further blow to the prospects of our beleaguered airlines, so why insist on this pernicious duty?

Lord Sassoon: My Lords, the Government have not proposed anything yet. The coalition agreement talks about a change from APD to a per plane basis. Clearly, different constructions of the duty have different effects on usage of aircraft and on the environment. However, as I say, the Government have not proposed anything yet. We are in listening mode. The effect on the airlines, environmental effects and competitiveness are all issues that must be considered.

Lord Newby: My Lords, is the Minister aware that the APD is seen to be particularly unfair on the Caribbean? Will he ensure that as part of the review which the Government are undertaking, particular attention is given to the effect of the APD on the Caribbean, not just on the tourist industry there, which is increasingly important as a proportion of its economic activity, but on the Caribbean diaspora who live in the UK?

Lord Sassoon: I am grateful to my noble friend for drawing attention to the Caribbean. The Caribbean Tourism Organisation has produced a very helpful report as a contribution to the debate. I have met the

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Heads of Government of the dependent territories in the Caribbean, so I have heard first hand their strength of feeling in respect of this issue. However, under the Chicago Convention we have to have an objective basis for distinguishing between one country and another.

Baroness Liddell of Coatdyke: My Lords, I declare an interest as a board member of VisitBritain. I take this opportunity to congratulate the Prime Minister on the very helpful speech that he made last week in which he recognised tourism as an engine of growth in the economy. However, will the Minister prevail on his officials to set up a monitoring committee with the Department for Culture, Media and Sport as APD will prove a significant challenge to the tourism industry at a time of huge opportunity, with everything from a royal wedding to the Olympics? Mitigating measures might well be introduced but only if there is a sufficiently adequate early warning system.

Lord Sassoon: I absolutely hear the point and I am sure that my right honourable friend the Prime Minister will be pleased that his commitment to the tourist industry has been noted. I say again that the previous Government increased the rates to where they are now, with the burden falling on tourists and all other passengers, but we are looking at the whole construct.

EU: Hungarian Presidency

Question

2.54 pm

Asked by Lord Dykes

The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford): During the Hungarian presidency, the Government will urge the EU to prioritise its support of growth and jobs, including specific actions to increase trade and competitiveness and to assist the transition to a greener, low-carbon, high-growth European economy and a common European Union energy market. We are also seeking progress on certain international dossiers, including deepening the EU's relations with strategic partners. Finally, we will focus on ensuring that the EU delivers better value for money.

Lord Dykes: I thank the Minister for that Answer. Does the Minister also agree that the beginning of the six-month presidency is a very important moment for Hungary? Is he satisfied that as a result of recent representations, both internally and externally, Prime Minister Viktor Orbán will recast the new press law in an appropriate way?

Lord Howell of Guildford: My noble friend is quite right to raise this issue, which has given rise to a certain worry. The appropriate bodies, which include

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the European Commission and the Organisation for Security and Co-operation in Europe, are reviewing the proposed legislation to check whether it complies with EU law and international norms. We look forward to hearing their findings. We place great importance on the freedom and independence of the media, obviously, and we hope that the Hungarian Government will soon resolve this issue satisfactorily and that it will not adversely affect the successful operation of the Hungarian EU presidency.

Lord Wright of Richmond: I draw the Minister's attention to a robust statement, reported in the press this morning, from the noble Baroness, Lady Ashton, on behalf of the European Union, strongly criticising continuing Israeli illegal settlement activity in east Jerusalem and the continuing expulsion of Palestinians from east Jerusalem. Can the Minister give us an assurance that one of the Government's priorities over the next six months will be to continue pressure on Israel not only to stop but to reverse its illegal settlement activity in the West Bank and in east Jerusalem?

Lord Howell of Guildford: Yes, it is certainly one of our priorities and one of the priorities of the European Union. We all share a concern about the illegal settlements and the blockage that they are placing on the prospective progress between Israel and the Palestinians. I totally agree with the sentiments behind the noble Lord's questions. These are matters that will have a high priority with us.

Lord Willoughby de Broke: My Lords, will the Minister, on behalf of the Government, inform the Hungarian presidency that they will now stop trying to push water uphill and will no longer bail out failing European economies with British taxpayers' money?

Lord Howell of Guildford: As for bailout provisions, after 2013 we will be under no obligation to do that sort of thing unless we voluntarily wish to do so or it makes sense from our national interest to do so. Before 2013, it is, of course, a fact that we are bound by decisions of the previous Government and are bound to be involved to some extent.

Baroness Farrington of Ribbleton: My Lords, will the Minister assure the House that one of our priorities in the European Union will be to help to encourage and insist on fair treatment for minorities in all EU countries, particularly the Roma people, who suffer massive discrimination in many member countries of the EU?

Lord Howell of Guildford: The noble Baroness is quite right to raise this concern about the Roma. We want to encourage the presidency to focus on practical co-operation between member states. Indeed, we have been working on practical co-operation ourselves with Romania on this issue. The Hungarian presidency is drawing up a framework strategy on Roma inclusion. We have strong and effective legislation ourselves and policies to tackle racial discrimination and to promote

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race equality, so we would not be in favour of further legislation, but very detailed practical co-operation to meet this particular minority problem is certainly very much at the top of the agenda.

Baroness Falkner of Margravine: Does my noble friend agree that while Hungary's internal problems and more authoritarian stance are indeed to be regretted, one of the principal problems facing the eurozone is the financial stability of countries such as Portugal and Belgium? Can he assure the House that we will take an active interest in ensuring that financial stability remains the defining issue that this presidency deals with rather than Mr Orbán's own political posturing?

Lord Howell of Guildford: Of course, we are a major financial power and we have a major interest in financial stability not merely in our region but at a global level, so these matters are bound to be at the top of the agenda. However, as I stated earlier, our actions will be governed-certainly after 2013-by our voluntary wish to move or not move in the direction of financial support. Before 2013, we are somewhat caught up in the existing mechanisms, but they will be used with the greatest care and discretion.

Lord Mawhinney: My Lords-

Lord Stoddart of Swindon: My Lords, it is the turn of a Cross-Bencher-and independent thinker. As noble Lords are aware, our net contribution to the EU this year will be some £8.3 billion. However, I noted from the Minister's Answer yesterday to a Written Question that we are also paying about £3 billion to accession countries. Bearing in mind what is happening in Hungary, I would have thought that we could ensure that all those countries that are allowed to join the EU will be democratic at least after they have joined if not before.

Lord Howell of Guildford: I am sure that that is right. One of the core principles of the European Union is a commitment to democratic values, good governance, human rights and the rule of law. That is obviously in the minds of all those considering accession countries, and in the minds of those who govern the accession fund to which I think the noble Lord refers. I have no disagreement with the desire to see democracy spread in the best possible ways throughout the eurozone, and indeed in the wider world.

Lord Mawhinney: My Lords-

Baroness Symons of Vernham Dean: My Lords, in the third of the priorities that the Minister enunciated a moment ago, he said that he wanted to see more concentration on the relationships with strategic partners. Which strategic partners will this country prioritise in that discussion within the European Union?

Lord Howell of Guildford: We have in mind Russia, China, the United States, India and Brazil. We are developing these strategic partnerships both bilaterally

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and, where it makes sense and where we can combine effectively, with our EU partners. Those are the strategic partnerships on our priority list.

Health: Influenza

Question

3.02 pm

Asked by Baroness Thornton

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, influenza-like illness, or ILI, has increased from 13 to 98 GP consultations per 100,000 people since November. The department does not currently collect data on hospital admissions. As of 6 January, there were 783 patients with ILI in critical care beds in England, and 50 flu- related fatal cases verified by the Health Protection Agency in the UK.

Baroness Thornton: I thank the Minister for that Answer. Last June, I asked him about the 50 per cent cut in the communications budget for the Department of Health. He said that,

We know that pregnant women are particularly vulnerable to the H1N1 strain of influenza, and HPA's data show that the risk of mortality for pregnant women is sevenfold greater than that for non-pregnant women. Even so, midwives received a letter from Andrew Lansley, dated 16 December, encouraging them to vaccinate pregnant women. Does the Minister think that it is possible that, had the Government acted earlier and had a public campaign, had they not cut their public health communications budget, and had Andrew Lansley sent a letter in October rather than December, the lifes of at least one pregnant woman might have been saved?

Earl Howe: My Lords, it is quite difficult to substantiate that suggestion, because the immunisation figures do not bear out the noble Baroness's argument. The level of vaccine uptake in the over-65s is 70 per cent, which is better than in most countries of Europe. Among the at-risk under-65s, it is 45.5 per cent, which is comparable to the past two years. Therefore, it is not clear that a generalised campaign would have added value.

On the question of pregnant women, the normal procedure is for the Chief Medical Officer to write to all GPs in the summer, setting out all the at-risk groups. She did that in June. We were then alerted in December by the Health Protection Agency to a worryingly high number of pregnant women who had contracted influenza, so we wrote to both the BMA and the Royal College of Midwives to emphasise the

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desirability of encouraging that group of patients to get vaccinated. We did the right thing, which was to respond to emerging data.

Baroness Hussein-Ece: My Lords, is it the case that the highest rate of flu has been among those aged one to four? Have the parents of children in that age group been encouraged to have their children vaccinated over and above others? Also, have the Government changed their policy of publicising the need for the flu jab, which they did during last year's outbreak?

Earl Howe: We did see a higher than expected number of under-fives contracting influenza, so we took urgent advice from the Joint Committee on Vaccination and Immunisation in December and asked it to confirm its previous advice that not all under-fives need get vaccinated unless they were in an at-risk group. It confirmed that advice and we have followed it.

Baroness O'Loan: There have been 14 deaths from swine flu in Northern Ireland from a population of 1.7 million. How would the Minister respond to the statement from the health protection agency in Northern Ireland, in which Dr Carolyn Harper said:

"Our sense and discussions with colleagues in the UK is that our reporting systems are more complete than in England so therefore we are more likely to capture more deaths here. England concede they have a larger degree of under reporting than we have here so you really cannot compare them"?

Will the Minister advise whether he is satisfied with the validity of the statistics that are available?

Earl Howe: I am satisfied with the validity of the statistics. The problem is, of course, that there is always a lag. The statistics that I read out earlier in my main Answer were supplied to us by the Health Protection Agency and regard verified laboratory tested results. We have another method of assessing the number of deaths that is retrospective. After the end of the flu season we can assess whether the number of deaths has been higher than expected. Of course, we are endeavouring to improve our statistical base all the time and no doubt lessons will be learnt from this season, as they are from every season.

Lord Patel: My Lords, what is the basis for the differing advice in the United Kingdom about the group of people who should be vaccinated compared with that given in the United States from the Centers for Disease Control and Prevention, which advise that everyone over the age of six months should be vaccinated?

Earl Howe: That is precisely why we have an independent Joint Committee on Vaccination and Immunisation: to advise Ministers on these matters. Ministers are bound to take that advice. Indeed, the previous Government determined that they were legally obliged to take the committee's advice, which is what we have done.

Lord Winston: My Lords, is the Minister aware that many pregnant women are particularly nervous about all kinds of vaccination during pregnancy, including

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the flu vaccination? I know that from first-hand experience. Does he feel that the Government are doing enough to inform pregnant women about the risks or otherwise in that instance? Could more be done?

Earl Howe: I am sure, as I have just said, that lessons can always be learnt about what more can be done. As I mentioned, we saw a lower than desirable uptake of the vaccine in the early weeks among pregnant women. I am happy to say that that has now been rectified and a lot more pregnant women are coming forward. However, it emphasises the noble Lord's central point that perhaps GPs have a special duty at the moment to encourage pregnant women and to reassure them that the vaccine is absolutely safe.

Arrangement of Business

Announcement

3.09 pm

Baroness Anelay of St Johns: My Lords, at a convenient time after 5.30 pm today, my noble friend Lord Sassoon will repeat a Statement on bank bonuses.

Public Bodies Bill [HL]

Main Bill Page
Copy of the Bill
Explanatory Notes
Amendments

Committee (6th Day)

3.09 pm

Schedule 1 : Power to abolish: bodies and offices

Amendment 31

Moved by Lord Hunt of Kings Heath

31: Schedule 1, page 16, line 24, leave out "Courts boards."

Lord Hunt of Kings Heath: My Lords, in moving Amendment 31 on behalf of my noble friend Lord Bach, I intend also to speak to other amendments in the first group.

The Government have, during the Recess, had a little time to reflect on the Bill. The Minister will know of the evidence given by the Lord Chief Justice to the Constitution Committee, which, as he knows, was highly critical of the Bill. We have also very recently received the report of the Commons Select Committee on Public Administration, chaired by a Conservative MP, Mr Bernard Jenkin, which was also highly critical of the Bill. As the Select Committee report states, the review leading up to the Bill,

Amen to that. The Select Committee continues:

"The Bill giving the Government the power to bring about these changes was equally badly drafted. It is being significantly re-written by the House of Lords and we intend to issue a further detailed report on the Bill once the Lords have finished their scrutiny".



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It seems that, gradually, the Government are beginning to recognise that there is a need to make substantive changes to the Bill. I am grateful to the noble Lord, Lord Taylor, for his recent amendments, most of them made before the Recess, taking out most judicial organisations from Schedule 7. I think that that is a belated recognition of the Bill's threats to judicial independence. I hope that the noble Lord will be able to do more in the coming weeks. I would like Schedule 7 to be removed in its entirety and the super-affirmative procedure to be used for every order pertaining to an organisation listed in the Bill.

I also hope that the noble Lord, and the noble Lord, Lord McNally, will listen sympathetically to the points made on this group of amendments. All of them, in one way or another, relate to the effective administration of justice. In moving Amendment 31, I shall speak also to my Amendments 32 and 45 and comment on Amendments 40 and 42.

Amendment 31 relates to the courts boards. The boards have not managed or administered the courts themselves but have given advice and made constructive recommendations to foster improvements in the administrative services provided. There is one courts board for each of the local management areas administered by area directors across England and Wales. Each courts board has members drawn from different communities and from a variety of backgrounds. The information from the Ministry of Justice states:

"Courts Boards were established because there was a fear that the voice of Magistrates would be lost within a unified HM Courts Service. These fears have dissipated because other structures-such as the Justices' Issues Group and the Area Judicial Forums-are in place to ensure that Magistrates' views are heard. There are also strong local relationships with Magistrates' Benches Chairs".

However, I have received a number of letters from chairs of local area courts boards expressing concerns. To summarise them, there are two. The first is that, at a time of a programme of court closures, no local independent review can take place. The chairs of the committees believe that the reduction in the number of local courts creates a greater need for mechanisms to keep in touch with communities and to identify local needs. The point is also made by the chairmen in the letters that I have received that boards can help to advise Her Majesty's Courts Service on ways in which policies can be implemented at local level so as to help to ensure the most effective use of resources. I would be grateful for the response of the noble Lord, Lord McNally, to the concerns raised by the chairs of those committees.

3.15 pm

Turning to Amendment 32, on the Crown Court Rule Committee, perhaps I may also speak to Amendment 42 in the name of my noble friend Lady Hayter concerning the Magistrates' Courts Rule Committee. On this, the Government have said that following the creation of the Criminal Procedure Rule Committee, which now makes all criminal rules under the Courts Act 2003, the Crown Court Rule Committee has lost the majority of its functions, making it a near-defunct body. I would be grateful if the noble Lord, Lord McNally, would indicate that the Government are happy with the work of the Criminal Procedure Rule Committee. I ask that because

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it originally appeared in the list of organisations in Schedule 7, but the noble Lord, Lord Taylor, has signalled, in his Amendment 142ZA, the Government's intention to remove it from Schedule 7. That leaves a question mark in my mind as to the Government's intention in regard to that committee.

The aim of the abolition of the Magistrates' Courts Rule Committee is to,

of the committee,

Can the noble Lord confirm that the Magistrates' Association was consulted and will he say what its comments were? I know that the Lord Chief Justice has indicated his agreement in principle to the abolition of the committee, but it would have been useful to obtain the views of the Magistrates' Association-no doubt, the Government have done so.

I shall comment briefly on Amendment 40, which I know that the noble Lord, Lord Ramsbotham, will want to speak to. The argument for the abolition of the inspectorate is that,

the prose of the Ministry of Justice rolls off the tongue. The Government therefore consider that,

I would be grateful if the noble Lord, Lord McNally, would amplify the thinking of his department on this and, in particular, the rationale for saying that the closure of the inspectorate,

I must say that I think that that is a heroic argument for getting rid of an independent inspectorate. One always has to raise issues and questions about any proposal to abolish an independent inspectorate and the House needs to pay very close attention indeed to that matter.

Amendment 45 concerns the Public Guardian Board, which was set up under the Mental Capacity Act 2005 to scrutinise and review the way in which the Public Guardian discharges his functions and to make recommendations to the Lord Chancellor. I want, first, to pay tribute to the work of the board and its members, particularly Rosie Varley, the chair of the board. I read with interest the annual report of the Public Guardian Board, particularly the chairman's foreword, where she says that,

She goes on to describe the active part that she played in discussions about more streamlined governance arrangements for the OPG. She says that she is clear about the need for effective accountability and challenge within an arm of government. She argues for the OPG to adopt a more businesslike model and to be freed from the judicial constraints of a central government

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agency. She says that such a transition, in her view, adds to the case for a strong and integrated governance structure to succeed the Public Guardian Board, which has operated until now alongside the internal management processes of the OPG, and I very much welcome the noble Lord's comments on that. I would also like him to reflect on the Mental Capacity Act and the role of the Public Guardian Board in acting as the independent watchdog for the rollout and effect of legislative change. After the board's demise, it would be even more important that the Government are alive to the provisions of the Act and its role in promoting active citizenship and protecting the vulnerable.

I shall end by referring to what Mrs Varley said about changes in the NHS. Here, I must declare an interest and refer noble Lords to the register in relation to the National Health Service. As she writes in her foreword,

I would be most grateful if the noble Lord, Lord McNally, would also comment on that. I beg to move.

Lord Ramsbotham: My Lords, I rise to support Amendment 40, which refers to Her Majesty's Inspectorate of Court Administration. In doing so, and in wishing to greet the Minister and wish him a happy new year, I say that I have nothing but respect and admiration for the way in which the noble Lord, Lord Taylor, has conducted what I can only describe as a hospital pass on what I think everyone I have spoken to regards as an extremely bad Bill. Frankly, the Bill needs to be taken back and thought through again because of the sheer amount of time and effort that is going to be taken going over ground that need not be gone over, although I am sure that everyone is respectful of the original intention, which was to look at unnecessary quangos, as they have been called, and other bodies. It seems that, in looking at the unnecessary, a number of the necessary have been swept up, which will require a great deal of time to eliminate or move. Therefore, I speak with interest in the outcome but with concern at the number of good things that are liable to go under the axe for all the wrong reasons unless there is some thinking again.

When I was Chief Inspector of Prisons, I was concerned that the prisons were a part of, not apart from, the criminal justice system. To an outsider coming in, the criminal justice system did not look like a system; it looked like a number of warring tribes competing with one another for ever diminishing resources, which in fact made the whole system less efficient. There were inspectorates of different parts of that system and collectively we came together to decide what we could do to bring to the Government's attention the fact that, if all these different agencies worked better together, the result would be better.

Six inspectorates came together to discuss that: the Inspectorate of Prisons, the Inspectorate of Probation, the Inspectorate of Constabulary, the Crown Prosecution Service Inspectorate, the then Magistrates' Court Service

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Inspectorate and the then Social Services Inspectorate. We did so because we felt that all of us had something to contribute not just overall when all six of us were involved, but where, as studies showed, two or more might come together in order to produce an outcome. The first report that we produced was a study of casework and information needs within the criminal justice system, which pointed out exactly what each of these six areas needed of the others, what was available, what was not available and what was available with difficulty. When we presented this report to the Ministers, it caused considerable confusion. The report showed the need for joint cross-government working, but the Government were unable to receive it. The strength of that report was that each of those separate inspectorates was able to contribute its expertise to come up with a combined whole, which would not have been possible unless they had all worked together.

In 2003, the Magistrates' Court Service Inspectorate was overtaken by Her Majesty's inspector of the courts, which looks at Crown Courts, county courts and magistrates' courts. Its job is to report on the system that supports the carrying on of their business. At the same time, the Police and Justice Act 2006 requires the courts inspectorate to work with other criminal justice system inspectorates-in the way that I have just outlined and as we were doing ourselves until then-to look at the end-to-end justice process and to improve the experience of all people who use or work within the justice system. That is a very large remit.

The remit of the courts inspectorate covers three types of inspection: area inspections to look at court services within particular areas; thematic inspections to look at particular themes, including examples of good practice, to see how improvements can be made; and joint inspections of the type that I have just outlined. For example, recently, there has been a joint thematic inspection by the Crown Prosecution Service Inspectorate and the inspector of constabulary on victim and witness experiences. That could not have been carried out unless experts were working together and bringing their expertise jointly to the result.

The courts inspectorate recently carried out an inspection of the Coroners Service for Northern Ireland. It provided a very useful report, which of course has great relevance in the context of this Bill if, as I hope, the chief coroner is appointed, as was intended in the previous Bill. In order to make the coroners service work, there has to be someone to ensure that the courts in which that service functions are working.

In addition to that, the Government have announced that 93 magistrates and 49 county courts will be cut. Inevitably, that will have an impact on the delivery of court services throughout the country. An experienced inspectorate will be needed to go around examining the impact of this and to come up with firm recommendations and advice to Ministers as to what may need to be done to ameliorate the problem or to introduce other arrangements.

Clause 8 stipulates the objectives to which the Minister must have regard when making an order under Clause 1. One of the objectives is,



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I put to noble Lords that nothing that I have seen in practice and in the research that has been done has been more efficient, effective and economical than the functioning of this inspectorate. The Cabinet Office, in producing the impact assessment on this Bill-I have spoken about this many times already-says that it is ridiculous to have an impact assessment on a Bill that says that there is no impact on the criminal justice system. Yet here we are in Amendment 40 getting deep into the heart of the criminal justice system, which is being affected.

Why is there no impact assessment? It is because the Cabinet Office is not the right place to produce an assessment of the impact of removing a courts inspectorate on the working of a justice system that is the responsibility of the Ministry of Justice. The Cabinet Office says:

"It is therefore not possible to provide details of the likely costs and impacts of the Bill, as any costs or impacts arising from its use relate to orders made under its powers rather than to the Bill itself".

That, I suggest, is a cop out. The Explanatory Notes go on to say:

"When Departments use powers, they will produce full impact assessments of the change or changes they are seeking".

In that case, why has this House not been given an impact assessment by the Ministry of Justice of the impact of removing this inspectorate and the costs of what it will have to put in its place? If you are going to have a criminal justice system that works properly, you need the courts and, if you need the courts, you need an inspectorate to oversee their functions. I hope very much that the Government will think again about this thoroughly unnecessary proposal. If they do not, I suspect that it will be essential for this House to vote on the issue.

3.30 pm

Lord Woolf: My Lords, it is a while since I first addressed the House with regard to this Bill. I start my present remarks by saying that I acknowledge that the Government have made a significant improvement to the Bill in the action that they have taken. I congratulate the Minister and his team on the attention that they have given, particularly to the bodies associated with the courts that had been in Schedule 7. I feel much more comfortable with the Bill in consequence of the changes that have been made. However, I have to say that this Bill, which is sometimes referred to as achieving a bonfire of quangos, would in my view be further improved if there was to be a bonfire of Schedule 7. I hope that the further consideration of the Bill, which I believe is still continuing, will bring about that result.

I listened with great care to what the noble Lord, Lord Hunt, said about the provisions that are the subject of his amendments. I do not think that I can usefully add anything to that, apart from saying that when the boards were introduced-I was Lord Chief Justice at the time-arrangements were made for a senior judge, one no less distinguished than the present Lord Chief Justice, to serve on that board to express the views of the judiciary. However, I think that things have moved on since then, so the topic is much more debatable than it would have been some time ago. The arrangements for consultation between the judiciary and the departments with which they are particularly

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concerned are in general working smoothly, so the boards are no longer as important as they were in the early days of the unified criminal justice system.

On the inspectorate, I would urge that the speech that we have just heard from the noble Lord, Lord Ramsbotham, who probably knows more about inspectorates than anybody else in the country, should be listened to with care. The inspectorate for the courts system was not, if my recollection is correct, a proposal about which the judiciary jumped with joy when it was first suggested. It was thought-I would say with good reason-that there could be insuperable problems over the independence of the courts system if an outside inspectorate was to look in at what the courts were doing. All that I can say is that, in practice, the inspectorate has worked remarkably well, as have all the inspectorates, of each of which I am a fan. The inspectorates make a significant contribution to the proper functioning of the administration in the areas in which they operate. I do not think that it was intended to be suggested-and if it was, I would not agree with the suggestion-that the inspectorate should act as a sort of court of appeal. If the inspectorate keeps to administration, it can perform a useful function. That function will still have to be performed even if the inspectorate does not exist and, if the inspectorate is abolished, proper arrangements will need to be made to ensure that that happens.

Lord Lester of Herne Hill: My Lords, I apologise to the noble Lord, Lord Hunt, that I was not able to be here to hear his speech. I was upstairs in the Joint Committee on Human Rights, which has authorised me to ask the Minister whether, as we were given to understand, we will receive the human rights memorandum from the Cabinet Office so that our committee can do its job properly. That memorandum has still not been received and we want to finalise our report by next Tuesday. I hope that the Minister can tell us in his reply that what was promised many weeks ago will happen.

My second point in general support of the amendments is that, although it is admirable that some bodies of a judicial nature may be removed from the schedules by other amendments, if Amendment 175 in my name and in the name of the noble Lord, Lord Pannick-a paving amendment for which was approved by the House on the first day in Committee-is accepted by the Government and not sought to be reversed in the other place, the provisions in Amendment 175 will be relevant to our discussions today and hereafter. It is unsatisfactory that we are having this debate without knowing whether Amendment 175 will stand. Importantly, Amendment 175 would apply not only to courts but to any body-whether a court or not-that performs a judicial function and it would deal with the issue of independence raised by the noble Lord, Lord Ramsbotham.

In a sense, we are putting the cart before the horse because a failure to insert into the Bill the criteria against which all these decisions can be measured means that we are having to proceed piecemeal, body by body, at enormous and appalling length in the Committee process. I respectfully urge the Government to accept these amendments for all the reasons that

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have been given so far but to deal with the system of the Bill as a whole by indicating at an early stage that Amendment 175 or a similar provision will bind Ministers when they exercise their delegated powers. That is the price that Ministers must pay if they are not to proceed by way of primary legislation. There need to be constitutional limits on the powers exercised by Ministers, as Committees of this House have indicated in the past.

Lord Newton of Braintree: My Lords, I am afraid that I cannot claim, like the noble and learned Lord, Lord Woolf, not to have taken part recently in proceedings on this Bill, because I have been a persistent defender of my Front Bench, nor do I intend to stop being so today.

However, I want to associate myself in two respects with the remarks of the noble Lord, Lord Ramsbotham. First, I think that the Bill leaves-to put it mildly-a lot to be desired. Secondly, I think that the noble Lord, Lord Taylor of Holbeach, is to be congratulated on the way he has dealt with this poisoned chalice. I am glad to see that, if I have read the runes aright, the person speaking to the proposals today will be a Minister from the Ministry of Justice, which is where the proposals originated from and where any blame for them, if blame is justified, should lie.

By way of other brief preliminary, I should say that when I first saw the schedule of headline decisions that was published in early October-this picks up a point made earlier by the noble Lord, Lord Lester-I could find no intellectual coherence at all in the Ministry of Justice's proposals, which seemed to be piecemeal suggestions with no connection between them whatever. I hope, therefore, that at least we may have some coherent explanation about the pattern of these proposals and decisions for procedure rule committees, justice councils and other bodies, including CAFCASS, that are scattered about, most of which are now to be withdrawn from Schedule 7 by the amendments that have been helpfully tabled by the noble Lord, Lord Taylor of Holbeach.

However-I do not know whether the noble and learned Lord, Lord Woolf, has spotted this-unless my eyes have deceived me the Civil Justice Council will potentially remain on the list of bodies in Schedule 7. If I have that wrong, I would be glad to be told. That links with my own frequently expressed concern about the Administrative Justice and Tribunals Council-in which I have declared an historical interest-which has been separated out and put down for the chop in Schedule 1. There is no intellectual coherence at all to the proposals. I would like to hear some coherence this afternoon.

I will make three other points. First, the noble Lord, Lord Hunt, asked some good questions. My answers might not necessarily be the same as his in all cases, but those questions need answering. Secondly, I share almost completely the doubts of the noble Lord, Lord Ramsbotham. We are getting rid of too much independent outside inspection or oversight of bodies and are being told, in effect, that the Ministry of Justice can take care of itself and does not want these bodies breathing down its neck. That does not correspond with my views about how government in this kind of society should work or how it works best. Thirdly, I

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echo the concerns expressed by other noble Lords about the way in which the proposals have been handled. I reiterate what I said at the beginning because, as a House, we need some reassurance that, frankly, the Government know what they are doing.

Lord Mackay of Clashfern: My Lords, we have to keep it in mind that, at this stage, the Bill seeks to confer powers and does not provide the final decision on any of these matters. I respectfully agree with my noble friend Lord Lester of Herne Hill that Amendment 175 needs to be taken into account in this connection. From the point of view of propriety in this House, one considers the Bill on the basis that Amendment 175 has been accepted. Therefore, from my point of view, we approach the Bill at this stage following a decision by this House that has accepted that amendment-an extremely important amendment-which very much restricts the powers that the Bill provides.

In connection with reviewing the work of these quangos, as they have been called, the position has to be that, if such a review is to take place on a fairly large scale, there is a need for an all-embracing Bill that provides the powers, with the detailed consideration following at a later stage of whether, and how, it is appropriate to exercise those powers in any particular case. For example, Schedule 1 provides a power to amalgamate or hand over a body's power, principally to another body.

3.45 pm

I go along with the approach to these amendments that the noble Lord from the opposition Front Bench has taken. Having had some responsibility for originally introducing Her Majesty's Inspectorate of Courts Administration, I recall-my recollection is somewhat akin to that of my noble and learned friend Lord Woolf-that the proposal for such an inspectorate was not embraced with wholehearted unanimity by all magistrates or judges. There was a fear that the inspectorate could interfere with the independence of magistrates and the judiciary. Since then, the Lord Chancellor and the Ministry of Justice have taken over complete responsibility for the magistrates' courts. In those days, the magistrates' courts were independent and the best that the Lord Chancellor could do was address the Magistrates' Association annually-usually followed by a fairly difficult question and answer session, of which I have distinct recollections.

Regarding the amendments, we have to bear in mind-as did the opening speech-that these decisions will not be taken by this House today. The only question is whether the power should be conferred in respect of these bodies. I can see arguments there, but I do not believe that the detail of that power is not appropriate for consideration today.

On courts boards and the like, the reorganisation of the administration of the courts has an important bearing. For my part, I do not feel strongly that the courts boards should be retained.

On the Crown Court Rule Committee and the Magistrates' Courts Rule Committee, I am reminded that my noble and learned friend Lord Woolf examined

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the civil justice system some years ago because it was important to get coherence between the way in which the county court and the higher court dealt with criminal matters. Tremendous and useful work was done under the chairmanship of my noble and learned friend to produce a coherent system of civil justice. There is a good deal to be said for the view that a coherent system of criminal justice requires the same treatment. As has been said, the body that is central to that is to be deleted from Schedule 7. We have to salute improvement. It is true that we might have started better, but few people in government have started perfectly and never had to improve-experience teaches Ministers as well as others.

The court inspectorate is Her Majesty's Inspectorate of Court Administration. When the administration has been remodelled, there is certainly a question whether the administration inspectorate is still required. It is not necessary at this stage to decide that question-that is not what we are doing-but it is wise to leave the matter open for consideration. The criteria in Amendment 175, which have been accepted by the House, are fundamental in that regard because the matters will be considered against a background of considerable protection.

I salute the improvements that have been made in the Bill and I hope that improvement may continue. In the mean time, I think that it would be impossible to carry out an effective review of the quangos except by an over-riding Bill of this kind. Primary legislation for each of these quangos would occupy the whole of the parliamentary session without room for anything else. Most of us agree that there are other things that require doing as well as dealing with quangos.

The Minister of State, Ministry of Justice (Lord McNally): My Lords, the noble Lord, Lord Ramsbotham, said that this Bill was a hospital pass. If anyone wants a definition of a hospital pass, it would be to have to reply to a debate on the criminal justice system when the contributions have come from the noble Lords, Lord Hunt, Lord Ramsbotham, Lord Lester of Herne Hill and Lord Newton of Braintree, the noble and learned Lord, Lord Woolf, and, just for good measure, the noble and learned Lord, Lord Mackay of Clashfern. It makes you feel plumb inadequate. However, I shall do my best to take the responsibility of the Ministry of Justice for the proposals that these amendments seek to change.

In some ways, to sound a philosophical note on this, I have never seen it as being a weakening of our system when a ministry takes responsibility and says that it will be responsible to Parliament and to the scrutiny of Parliament for what it carries out in its remit. In some ways, in recent years, with proper and due respect to the work of independent inspectorates, we have sometimes got over-reliant on, and have tended to reach for, the independent inspectorate for responsibilities which should be the responsibility to Parliament of the department and Ministers in that department.

In answer to the question asked by the noble Lord, Lord Hunt, we believe that the Criminal Procedure Rule Committee has made an important contribution and have no intention of abolishing it. We have now

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removed it from Schedule 7. As the noble and learned Lord, Lord Mackay, said, the problem in Committee is that if you make changes you are accused of U-turns and if you do not you are accused of inflexibility. Those are the burdens that we carry.

I shall try to address the issues raised by the group of amendments, which would remove the courts boards, the Crown Court Rule Committee, Her Majesty's Inspectorate of Court Administration, the Public Guardian Board and the Magistrates' Courts Rule Committee from Schedule 1. We oppose these amendments because it would mean the retention of five arm's-length bodies whose functions will no longer be required, either because their role has significantly diminished over recent years and is now being performed by other bodies or because alternative ways of performing these functions have been identified.

I am surprised that the noble Lord, Lord Bach-who is not here today-has tabled these amendments in relation to the courts boards and Her Majesty's Inspectorate of Court Administration, given that he was the Minister in the Ministry of Justice when the decision to abolish them was originally taken by the last Administration.

For the convenience of the House, I intend to respond to the five amendments in this one speech, because part of the rationale asked for is overlapping. I hope that it is compelling in the reason for the abolition of these boards. The first reason is, in following their review of all arm's-length bodies, the coalition Government have agreed with the judgment of the previous Administration that the function of certain of these bodies is no longer required. Like the last Administration, we believe that the courts boards and Her Majesty's Inspectorate of Court Administration should be abolished and that this Bill represents the best mechanism to effect these reforms. The second reason is that the function of some of these bodies has greatly diminished over recent years and is now largely performed by other bodies. The Crown Court Rule Committee and the Magistrates' Courts Rule Committee fall into this category. It was exactly to identify these sorts of near-defunct bodies that the coalition Government's review of the arm's-length bodies was conducted. Again, the Bill provides an excellent and timely opportunity to remove such bodies from the statute book. I am pleased to note that the Lord Chief Justice agrees with the Government's proposals in relation to these two bodies.

The third reason is that although the Government recognise the need to perform particular functions, we believe there are more efficient ways of doing so. The oversight function performed by the Public Guardian Board falls into this category, and I will explain in a moment how the Government propose to develop new governance arrangements to oversee the work of the Public Guardian.

Beyond these three broad reasons, I will outline our reasoning for each of the five bodies covered by the amendments. In the case of the 19 remaining courts boards, this decision was first taken by the previous Administration, and announced in March 2010. Courts boards were established partly because there was a fear that the voice of magistrates would be lost within

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a unified courts system. These fears have dissipated and there are now other structures in place such as the Justice Issues Group and area judicial forums to ensure that magistrates' views are heard. There are also strong local relationships with magistrates' bench chairs. The Magistrates' Association was not consulted before inclusion, but of course will be available for the consultation which will precede implementation of any of these proposals.

Courts boards only ever performed an advisory function, and the function was significantly diminished over the last five years. As I mentioned, as a result of amalgamations, the number of courts boards has reduced from 42 to 19.

In terms of those functions, I should emphasise that courts boards do not themselves manage or administer the courts, but rather give advice and make recommendations to enable Her Majesty's Courts Service to improve the service it provides. The Courts Service sought the views of the judiciary. It is the view of the Courts Service and members of the judiciary that courts boards are no longer necessary to assist in the administration of the courts in this way. Not abolishing the courts boards will cost the Ministry of Justice approximately £450,000 a year.

The senior presiding judge himself recognises the difficult decisions needed to be made in the light of the financial pressures which Her Majesty's Courts Service faces. Although clearly it is a matter for Parliament, the senior presiding judge does not take the view that courts boards constitute an essential part of the business of the courts. He agrees that the savings which will result from that abolition, although relatively minor, could be used to support front-line services.

In terms of maintaining an oversight on the local delivery of court services, it is true that the role of the courts boards is to use their judgment to ensure that the perspective of the local community and of those who use the courts is taken into account. But there are other ways to ensure that the needs of the community are met, such as customer surveys, open days and more effective use of court user meetings. Her Majesty's Courts Service is committed to building and maintaining links with local communities, and local areas will be encouraged to explore other options to ensure that links between the courts and local communities is not lost, specifically within the wider context of the current proposals to modernise and improve the use of courts.

The previous Administration originally took the decision to abolish the courts boards, and the coalition Government have agreed that their function is no longer required and have introduced this Bill to effect this reform.

The noble Lord, Lord Ramsbotham, referred to Her Majesty's Inspectorate of Court Administration, and I will discuss the rationale behind the Government's decision to abolish that. The context within which the inspectorate operates has changed significantly since its inception in 2005. The inspectorate's predecessor, Her Majesty's Magistrates' Court Service Inspectorate, was set up before the magistrates' courts were part of a national Courts Service. It was right that an independent body existed to inspect court administration. However, Her Majesty's Courts Service has since been established

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as a single body, responsible for the administration of all courts, with its own robust management information systems and internal audit processes. The Courts Service is subject to external scrutiny by the National Audit Office and, by extension, the Public Accounts Committee. I draw the Committee's attention to the 2009 National Audit Office report on the administration of the Crown Court as an example of this external scrutiny. For these reasons, Her Majesty's Courts Service will no longer be subject to independent inspection.

4 pm

In terms of the inspectorate's other functions, consideration is being given to the option for enabling future joint criminal justice inspections to include inspection of the Courts Service for the purpose of end-to-end inspection: for example, in tracking categories of cases from initial arrest to charge, court appearance, court result and rehabilitation or custody. Similar consideration is being given to the inspection of court custody areas and how the UK may comply fully with requirements under the optional protocol to the UN convention against torture. As noted, the decision to abolish the inspectorate was made in December 2009 by the previous Administration and reaffirmed by this Government as part of our review of arm's-length bodies. Reform of the court estate has no bearing on this decision.

The Crown Court Rule Committee is the first of two bodies whose functions have now greatly diminished over recent years, and I shall set out the reasons for the Government's proposal to abolish it. This amendment would lead to the retention of a body which is effectively defunct. The committee was created by the Supreme Court Act 1981. Following the creation, under the Courts Act 2003, of the Criminal Procedure Rule Committee the overwhelming majority of the functions of the Crown Court Rule Committee have been absorbed by the former, making the latter effectively obsolete. The Committee may be concerned that the Government are seeking to abolish the Criminal Procedure Rule Committee. That is not the intention. The Criminal Procedure Rule Committee has effectively replaced the Crown Court Rule Committee and the functions of the latter, if not the body itself, will continue to exist. I note for your Lordships that the Lord Chief Justice has again indicated his agreement, in principle, to the abolition of this committee.

I turn to the Magistrates' Courts Rule Committee and the amendment tabled on it by the noble Baroness, Lady Hayter; it is the second of the bodies whose remits have been circumscribed. Removing the Magistrates' Courts Rule Committee from Schedule 1 would mean retaining a body with a very limited remit. Moreover, it would be likely to prove very difficult to attract suitable candidates to apply to serve on a body with a much reduced scope. The existing statutory rule-making committees are in a very good position to advise and be consulted by the Lord Chief Justice.

Finally, I turn to the rationale for the proposed abolition of the Public Guardian Board. I share the concern of the noble Lord, Lord Hunt; the role of the Public Guardian is extremely important across a wide

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range of responsibilities. Therefore, when I saw this proposal I wanted very much to be assured that we were going in the right direction. The Public Guardian Board was set up under the Mental Capacity Act 2005, to scrutinise and review the way in which the Public Guardian discharges his function and to make recommendations to the Lord Chancellor. I stress that the abolition of the Public Guardian Board will not alter the duties or statutory functions of the Public Guardian. On the contrary, the Government are seeking to strengthen the oversight mechanisms to ensure that the important work of the Public Guardian continues to be supported.

Before I outline the reasons behind the decision to abolish the board, I should stress that the Government are committed to the important principles of the Mental Capacity Act 2005, which puts individuals who may lack capacity at the centre of any decision that affects them. However, we need to assess whether it remains the right mechanism to achieve the appropriate level and form of oversight of the work of the Public Guardian. The Public Guardian Board has recognised this and needs to establish more streamlined governance arrangements in the current economic climate. I quote directly from the chair of the board's foreword that the noble Lord, Lord Hunt, referred to:

"Given the current financial constraints and the Government's obligation to concentrate public expenditure on essential functions, we agree that an advisory board such as ours cannot continue into the future, and we support the proposal in the Public Bodies Bill, currently before Parliament, that we should be one of the bodies that ceases to exist".

The Government recognise the need to ensure that the vulnerable people who rely on the Public Guardian and his office are properly protected but, having undertaken the assessment outlined above, have decided that this can be covered by other means.

I refer to what was said by the noble Lord, Lord Lester of Herne Hill, and the noble and learned Lord, Lord Mackay, about Amendment 175. I understand that discussions are still going on between the proposers of the amendment and the Bill team. I am told-and much reassured-that there is a meeting between the Bill team and the noble Lord, Lord Lester, tomorrow on this matter. I am reasonably confident that, when Amendment 175 is reached, it will mesh in and give the reassurance that both the noble Lord, Lord Lester, and the noble and learned Lord, Lord Mackay, referred to.

The five amendments before us relate to bodies whose functions the previous Administration agreed are no longer required or are either defunct or near obsolete. On the particular issue of the Public Guardian, the Government are determined to seek alternative arrangements that will ensure that whatever is put in place will include independent non-executive input from individuals who can represent the range of interest in the work of the Public Guardian and his office. I realise that a quite long response gives certain coherence to what is always a difficult decision by a department in terms of meeting-we have never hidden the fact-demands for expenditure cuts. We feel that those that are covered by the Ministry of Justice get the balance right in that we are taking the responsibilities within the department where necessary. We are recognising changes that the previous Administration recognised in the role of some of them.



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In the light of that explanation, I hope that the noble Lord will be content to withdraw the amendment.

Lord Lester of Herne Hill: Before the Minister sits down, perhaps I may first confirm that there will be discussions tomorrow. We very much hope that the pith and substance of Amendment 175 will be retained, subject to drafting improvements. One hopes that that will lead to a result that we can all agree upon. The one matter that my noble friend the Minister has not dealt with-because it is not his responsibility-is the question that I raised at the beginning about the Joint Committee on Human Rights. Can my noble friend the Minister please nudge my noble friend the other Minister for some kind of assurance for the committee so that we can do our job properly by getting the human rights memorandum this week so that we can deal with it when we meet next Tuesday?

Lord McNally: Like the seventh cavalry coming over the hill, my noble friend Lord Taylor nudged me to say that the Government will answer any questions that the JCHR has and will deal with that in correspondence with the committee. The Government consider that the provisions of the Bill are compatible with convention rights but I am sure that the promised exchange of correspondence will clarify that matter.

Lord Lester of Herne Hill: I am sorry but that answer is not compatible with the general approach of this Government and previous Governments to that committee. The undertaking that has been given in the past is that the Minister's compatibility statement in every Bill is followed by a proper Explanatory Memorandum to enable the committee to do its job properly. Therefore, it is for the Government first to come forward with their account of why the Bill is considered to be compatible and the committee then comments on that, rather than the other way round. I very much hope that that can be reconsidered because otherwise the committee will have to complain about the fact that it has not had the usual memorandum from the Cabinet Office and therefore cannot do its job properly. That simply wastes public money and time.

Lord McNally: My Lords, one of the advantages of having Hansard and of having my noble friend Lord Taylor sitting next to me is that he will have heard that exchange, will read it carefully in the morning and respond to it appropriately.

Lord Newton of Braintree: My Lords, as the troublemaker, or one of them, it would be churlish of me not to acknowledge that I thought that was a pretty reasonable reply overall. If it were my amendment, I would be minded to withdraw it while reflecting on some of the points that have been made, particularly about inspectorates.

Lord McNally: That now puts me 3:2 up as regards interventions by the noble Lord, Lord Newton-by that I mean that he has supported me three times and has caused trouble twice-so I think I shall quit while I am ahead.



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Lord Hunt of Kings Heath: My Lords, I congratulate the noble Lord, Lord McNally, on that quick pass to the noble Lord, Lord Taylor, in relation to the memorandum. I can helpfully confirm that it was the practice of the previous Government to submit very lengthy memorandums to the Select Committee, and no doubt the Cabinet Office will be pleased to do so to the committee of the noble Lord, Lord Lester, in due course.

I agree with the noble Lord, Lord McNally, that it is a privilege to take part in a debate in which the noble and learned Lords, Lord Woolf and Lord Mackay of Clashfern, and the noble Lords, Lord Ramsbotham, Lord Lester and Lord Newton, have spoken. The noble Lord, Lord Lester, went to the heart of the matter when he talked about the architecture of the Bill. We are going through the schedules, debating each organisation, without knowing the final outcome of the architecture. It would be helpful if, at an early stage, the Government could set out some of their thinking about whether they are prepared to make changes to the architecture.

I have added my name to Amendment 175. I agree with the noble Lord, Lord Lester, and the noble and learned Lord, Lord Mackay, that it is very important. I certainly believe that it is consequential to Amendment 1 and would expect the House to accept it formally when we reach it. However, we have yet to hear whether the Government intend to seek to reverse it in the other place or to make substantial amendments to it. The noble Lord, Lord McNally, made some very promising comments in relation to the meeting that is to take place tomorrow between the noble Lord, Lord Lester, and the officials of the noble Lord, Lord Taylor. However, we will have to await the outcome of that. To a certain extent we are still working in the dark with regard to the final architecture. I believe that the architecture would be immeasurably improved, as the noble and learned Lord, Lord Woolf, has suggested, by removing Schedule 7 altogether. That would commend itself to many noble Lords in all parts of the House. I also believe that the super-affirmative procedure order should be used when it comes to the use of orders in the Bill. In the mean time, it is right to treat each body listed in the Bill on its merits. I was very happy with the response given by the noble Lord, Lord McNally, to my Amendments 31, 32 and 42. I shall certainly not seek to press Amendment 31 this afternoon.

I also understand what the noble Lord, Lord McNally, has said about the balance between the contribution of independent bodies and the role of departments and Ministers. There is a balance to be drawn. It is right that Ministers should be held to account for the major decisions that are made, albeit within individual government departments. Equally, I think we all agree that independent bodies have a role to play as well. It is a question of where you draw the line. My own party is not opposed to the abolition of a number of the bodies that are listed in this Bill. We support the general proposition that these kind of bodies need to be reviewed regularly and that no public body has a right to exist for ever. On the other hand, I listened with great interest to the powerful speech of the noble Lord, Lord Ramsbotham, on Her Majesty's Inspectorate of Court Administration. He made a very good case.

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The noble Lord, Lord McNally, is right; this appeared in a Green Paper in 2009 as a candidate for abolition. None the less, when we come to Amendment 40, the House needs to listen very carefully to what the noble Lord, Lord Ramsbotham, said.

On the Public Guardian Board, I am very grateful to the noble Lord, Lord McNally, for his response and for his commitment to the Mental Capacity Act. He recognised the role that has been undertaken by Mrs Rosie Varley and her committee members. I take it from what he said that his department will wish to ensure that this work, albeit in a different form, will continue in the future.

4.15 pm

Lord Ramsbotham: My Lords, perhaps I may speak briefly to Amendment 40. I agree with the noble Lord, Lord Newton, that it would be churlish at this stage to press for a vote. I am enormously grateful for the explanation given by the noble Lord, Lord McNally, which frankly I and many other Members of the House would have welcomed before this stage. If all that information was available, why could it not have been put in the Explanatory Notes and given to us in another form? We are going to have the same sort of debate when other issues, such as the Youth Justice Board, come up for discussion. If alternative plans have already been made it would be enormously helpful to know those in advance so that we can weigh them against the bald statement in the Bill.

I listened with great care to noble Lords' contributions, particularly that of the noble and learned Lord, Lord Mackay, whose wisdom I respect hugely and whose advice I listen to. In that spirit, it would be sensible to withdraw Amendment 40 with, I hope, discussions to follow with the possibility of resuming it later. I have read the National Audit Office report-I worked for the National Audit Office in other respects. I am not sure that it completely fills the remit, although it fills some of it. Again, this is an issue it would be sensible to look at in detail before necessarily pressing it to a vote.

Lord Hunt of Kings Heath: We are, of course, on Amendment 31. I beg leave to withdraw the amendment.

Amendment 31 withdrawn.

Amendment 32 not moved.

Amendment 33

Moved by Lord McKenzie of Luton

33: Schedule 1, page 16, line 26, leave out "Disability Living Allowance Advisory Board."

Lord McKenzie of Luton: My Lords, I shall also speak to Amendment 34. These two amendments start life as probing amendments. They in effect seek further information about the proposed demise of the Disabled Persons Transport Advisory Committee and the Disability Living Allowance Advisory Board. For the former, the October 2010 announcement merely recorded that the

11 Jan 2011 : Column 1312

Government are exploring options for continuing to gain the disability advice that is needed through a more flexible, accountable structure. For the latter, it is proposed that the functions can be carried out between the DWP, external specialist advice and Equality 2025. It seems that in respect of these two particular organisations, the decision has already been taken that they will be terminated. What is to go in their place is as yet unclear.

We are promised consultation on the successor to DPTAC. Perhaps the Minister will advise us on the exploration of the options and on what precisely is so inflexible about the current arrangements. One complaint about the current structure that seems to drive the proposed change is that DPTAC has a degree of independence and takes forward areas of work that reflect its own priorities and not necessarily those of the Government. This seems a particularly perverse reason to close it down. Surely this is a case where independence should be welcomed. DPTAC can rightly claim that much of the improvement over the past 20 years in the mobility of disabled people can be traced to the work that it has undertaken.

The Minister will be aware that DPTAC started life as an informal group and, because of its success, was placed on a statutory basis in 1985 by a Conservative Government. The Transport Act of that year requires the organisation to consider any matter referred to it by Transport Ministers, and to give advice on any issue that is relevant to the transport needs of disabled people.

I am advised that DPTAC also has statutory functions through other legislation. For example, the Equality Act requires the Secretary of State for Transport to consult it before making rail vehicle accessibility regulations. Who will be consulted in future when such regulations are made? Has the Minister given equivalent consideration to other duties that are currently imposed by statute? I thought that we had common cause with the Government in recognising that disabled people were experts in their own lives. How will the Government ensure that their voices are not drowned out by those of transport providers?

The Minister will be aware that DPTAC publishes guidance and statements, carries out research into disabled people's experiences, promotes accessible transport and solutions, and develops training. Who will do this in future and where will the funding come from? I will give one example. The DPTAC Olympic working group has been working closely with the delivery authorities on an accessible transport system for the Olympic and Paralympic Games in 2012. Why is it imperative that this should be changed now? Big strides have been made over the past decade towards more accessible public transport. Rights of access to public transport are in place, along with end dates for the accessibility of all buses, coaches and trains, and a new EU directive on access to air travel for disabled people.

However, the Royal Association for Disability and Rehabilitation contends that a major investment in accessible transport has not yet been matched by a major increase in disabled people's confidence in getting out and about. It states that there remains a huge amount of awareness-raising to be done and some

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gaps in the regulatory framework to be plugged, for example around taxes. It states that, despite considerable progress, the building blocks are not fully in place to deliver a truly integrated system that guarantees independent, safe mobility. Such a system is vital for ensuring that disabled people have proper access to services and jobs. RADAR acknowledges that DPTAC has greatly influenced progress to date and that there is a great need for its role in future. The loss of an independent voice will need considerable justification by the Minister if we are not to return to this on Report.

The Disability Living Allowance Advisory Board was set up in 1991-again by a Conservative Government. Its statutory role is to give advice on request to the Secretary of State for Work and Pensions, to advise medical professionals working for the DWP on cases as and when requested, and to produce annual reports. The board draws members from across the health and social care field and must include at least six disabled people. The Government's justification for its demise is that they now have available to them a number of sources of advice, including medical practitioners and experts in the disability field such as Equality 2025. We acknowledge that. They suggest that the board has not been commissioned to provide any advice since November 2008 and that this position is likely to continue. One presumes on this basis that the board is not being consulted on reform of the DLA.

As we know, the Government propose to introduce the replacement to the DLA-the personal independence payment-in 2013-14, and will start with a reassessment of the working age case load. It is proposed that there will be no automatic entitlement to the PIP, and each case will be looked at individually to consider the impact of the impairment or health condition. Key to the benefit will be an objective assessment of individual need, which is being developed in collaboration with a group of independent specialists in health, social care and disability, including disabled people. Does not this description fit the Disability Living Allowance Advisory Board? Are you not in danger of removing it from the scene at the very point when its expertise might be brought to bear in aid of government policy?

It is accepted that the Government have sought to involve a wide range of individuals and organisations in the consultation, and that is how it should be, although the Minister might explain why the consultation period is shorter than the recommended 12 weeks and included the Christmas and new year breaks. Although we hold no particular brief for the board-it might perhaps be refreshed rather than terminated-we are entitled to ask the Government what mechanisms they will put in place to ensure that disabled people and experts working in health and social care can monitor the implementation of the new arrangements and provide independent advice to ensure that the descriptors are accurate and relevant, that the process will be fair for disabled people, and that assessments are carried out by appropriately qualified individuals with capable and confident decision-makers-in other words, learning the lessons of the ESA.

Now is not the time for a detailed debate on the proposals to reform the DLA other than to say that we will examine the detail of the final proposals

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specifically to see that they maintain the principles of a universal benefit that recognises the additional cost of living for someone with a disability and supports those who can work as well as those who cannot, and that disabled people are fully involved in the design of the gateway. We accept that the Government have made clear that they accept their obligations under the UN Convention on the Rights of Persons with Disabilities to consult disabled people in the design and monitoring of decisions and policies affecting disabled people.

However, the removal of the mobility component of the DLA for people living in residential care has increased apprehension in the disabled community that the thrust of policy has more to do with budget cuts than with the modernisation of support for disabled people. Removing this disability component will have a huge and regressive impact on the independence of thousands of disabled people, with many left unable to afford to leave their homes and denied the independence that most people take for granted.

Appropriate advice from the advisory board on this proposal would have made it abundantly clear up front the damage that it would inflict. Promise of a full consultation after the announcement and before implementation will not do much to allay the fears of some 80,000 people whose lives will be impaired if this proceeds. If the advisory board is to go, what will replace it? How will the independent knowledge and expertise of disabled people and others be systematically brought to bear in shaping and monitoring government policy. I beg to move.

Baroness Turner of Camden: My Lords, I support my noble friend's amendments and speak as someone with recent experience of the situation. I was disabled for six months and realised in that time how difficult life can be if you do not have mobility. It is often difficult to move outside your own front door, to do your shopping, or to come to this place, which I like to do. You rely entirely on the services available to enable you to go outside your front door. Unless there is a body to see that the facilities you need are available, many disabled people will simply be prisoners in their own homes.

This is an increasing problem, because, as we get older, more of us become disabled. I hope that I am not permanently disabled, but I do not know whether I will be. It is certainly a difficult life. It is no longer possible to pop round to the shops or to post a letter. You are entirely dependent on the support provided by other people. I am fortunate in that I have some very good neighbours and some very good friends, but not everyone is in that situation. There is no doubt that an increasing number of people can find themselves simply unable to move outside their front door.

We need to maintain bodies of the kind that is referred to here to ensure that the facilities that are available are maintained, because a lot of them are provided by local authorities and, as we all know if we have read some of the material issued by the Government, local authorities will have their financial resources cut. Will they be able to maintain some of the excellent services that exist in many places? We want to ensure that the services that we have are available and are improved so that many people are not simply unable

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to utilise services that ought to be available because the finance is not there. What will be done if those two bodies disappear? They should not disappear. It is evident that they have done a lot of work already to maintain services. We want the services to be improved. Please keep them and ensure that they are available to us.

4.30 pm

Lord Newton of Braintree: My Lords, I had not thought of declaring my disability as an interest but, in view of what the noble Baroness has said, perhaps I had better. I certainly sympathise with some of the points that she has made.

However, I had been going to declare two other interests in a speech which I do not think will count on the McNally scorecard, partly because it is not related to his department and partly because it will be as neutral as I can possibly make it. One interest is that I must have been the Minister responsible for disabled people at the time when DPTAC was established-albeit not by what was then the DHSS, or the DSS; I have forgotten which. I was certainly the Minister responsible, as Secretary of State, for creating the disability living allowance in its current form and therefore for establishing the advisory committee. I do not regard either of those points as an argument for me to defend the status quo without regard to what has happened in the intervening period, but it clearly gives me an interest in the matter.

I am bound to express some caution, particularly in respect of the Disability Living Allowance Advisory Board, when I am told that one reason why it is thought to be no longer needed is that its function is to give advice only when asked for by the Secretary of State, so that when the Secretary of State decides that he does not want the advice-which may well be because he knows what he is going to get but he does not want it-it should become redundant. There appears to be a certain amount of circularity about that argument, which I hope that my noble friend from the DWP will be able to deal with.

As to DPTAC, I understand that some alternative arrangement is to be made, but no one knows what that will be. I hope that we can be told today but, if not, we are back in the situation of the previous debate. As the noble Lord, Lord Ramsbotham, said, all of this would be much easier if the Government came clean and said, "We need something. It isn't this, but this is what it is". What we are being told time after time is, "We don't need this. We know we need something, but we don't know what it is". That is very unsatisfactory indeed.

Lord Knight of Weymouth:I support the amendments in my name and that of my noble friend Lord McKenzie. There is not much that I want to add to the excellent case made by my noble friend. In some ways, I want to echo the points made by the noble Lord, Lord Newton. These are two advisory bodies affecting disabled people and there are some fairly standard questions about both of them that it would be useful for the Minister to answer. How are the bodies being replaced? How much money, if any, is being saved by their abolition?

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Given that these are advisory committees made up of people with disability, rather than people who might describe themselves as experts in matters of disability, how will the Minister ensure that the voices of people such as my noble friend Lady Turner, who spoke of her own experience of being disabled, are heard and that people's experiences of the transport system in relation to the disability living allowance are properly heard by Ministers as they make their decisions?

More specifically, I note that the Disabled Persons Transport Advisory Committee has as its aim that,

On its website, it says:

"We want this to happen by 2020".

Why not let it run on until 2020, when it thinks that it might have achieved its aim? Why not give it that target and that very clear end date? The chair of the committee, Dai Powell, in response to the announcement by the Government that, under the Bill, DPTAC would be abolished, said:

"I and the Committee consider there is still so much to be done, the transport system is still inaccessible to many people, and we have more work to do with our stakeholders (not least the Olympic Delivery Authority)".

If the Minister is not willing to be as generous as 2020, would it not be sensible at least to be clear, here and now, that he will not use the powers that he is seeking in the Bill to abolish DPTAC until after the Olympics? Then at least it could continue the good work that it is doing with the ODA to ensure that the Games and the Paralympic Games are successful and accessible for people with disabilities.

Finally, in respect of the Disability Living Allowance Advisory Board, clearly the Minister shares our concerns that consultation is important and has been consulting over the changes to disability living allowance to create the new personal independence payment. However, is the normal, statutory consultation process enough? Is he getting consistent expert advice from people with disability, given how regularly problems around DLA are in the news? Within the last month we have had the Public Accounts Committee report on 16 December, which said that the appeals procedure needs improvement. Already this month we have had reports that the new payment may be in breach of people's human rights. Clearly, as we move from one system to another, there are going to be sticking points and difficulties. It would seem sensible for the Minister to seek advice from the advisory board that he has at his disposal to try to iron out some of those difficulties as we move from one system to another. If, after that, he thinks that he can make a good case for getting rid of the board, perhaps he should seek to do so at that point.

Lord Low of Dalston: My Lords, I should like to say a few words about these two amendments. In so doing, I declare my interest as a recipient of disability living allowance. The noble Baroness, Lady Wilkins, had very much hoped to be present to speak to these amendments this afternoon but, sadly, she is not well and very much regrets that she cannot be here. However, she has asked me to say that she would like to be associated with my remarks.



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The Disability Living Allowance Advisory Board seems already to have disappeared. Its website has been removed and the telephone numbers associated with it are now being answered by other DWP staff. This might be thought to be jumping the gun somewhat. DLA, as we know, helps many thousands of disabled people with the higher cost of living as a disabled person, but, as we have heard, the Government have announced that they wish to make significant changes to the benefit. The June emergency Budget announced plans to cut working-age DLA expenditure and case load by 20 per cent. This would represent well over 360,000 disabled people aged 16 to 64 losing their disability living allowance. The Government opened a formal consultation on this proposal in December, but have indicated that they are considering extending the changes to children and to people over 65, potentially affecting many more thousands of disabled people and their families. However, the consultation is full of inaccuracies. One example is the repeated claim that there is no process to check that awards remain correct, but the DWP can require a review with an independent medical adviser of any DLA award at any time. The Disability Living Allowance Advisory Board would, of course, have been able to advise the department on this issue, had it been asked.

The October spending review also made it clear that the Government want to end mobility payments to disabled people in residential care. This has been particularly controversial. Not enough detail is yet available on this proposal, but the DWP has already had to recalculate its figures on how many disabled people will be affected. Originally, the Government suggested that it would be about 50,000 people, but they now suggest that it will mean 80,000 disabled children, adults and pensioners losing benefit. One might have thought that, in the context of such significant DLA reform, an independent expert advisory body would have been useful to the Government and could have helped to ensure that reform was effective. Instead, it is apparent that the Government made their DLA pledges without expert support or full consideration of the impact. An adequately resourced DLA advisory board properly involved in policy development could have saved the Government some red faces. Axing the body risks undermining the Government's ability to understand the benefit and provides ammunition to those who suggest that the Government's plans are unfair. The inaccurate statements and the need to revise figures on the numbers of people affected only add weight to the belief that quango reform has been botched, as the Public Accounts Committee has suggested.

The Minister for Disabled People has now convened, as we have heard, a new expert panel to help to design a different DLA assessment procedure and to facilitate a new stakeholder group on DLA reform more generally. I believe that the work of these groups could have been informed, if not led, by the advisory board, possibly, as has been suggested, in a revised form, and I hope that the Government will reconsider abolition.

On Amendment 34, DPTAC has a strong record of bringing about change in a considered and measured way. Its influence can be seen across all forms of transport, from bus design specifications to guidance for the aviation industry. By recognising the constraints

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and characteristics of transport industries, it has been able to win over those in that sector who might otherwise have been resistant to change and it has ensured that the transport needs of disabled people are better met. For example, features that we now take for granted on buses today, such as colour-contrasted handrails, bell pushes that can be reached by passengers in wheelchairs, clear information displays and so on, were all introduced as a result of the work of the committee. The DPTAC spec, as it came to be known, was a standard accessibility specification for the bus industry and to this day remains a central part of the Public Service Vehicles Accessibility Regulations.

Of course, one cannot make a case for retaining a body on the basis of past glories alone, but in recent years the Department for Transport has, I am sorry to say, lost its focus on transport and disability issues, as witnessed by the complacent attitude that it has adopted towards the development of so-called shared surface schemes, in which pedestrians are expected to take their life in their hands and mingle indistinguishably with motorised traffic as all pavements and security barriers are dismantled. This has come about as a result of the closure of the specialist unit in the department, which had for 20 years led on these policy issues and provided secretariat support to DPTAC.

4.45 pm

The loss of DPTAC would be a further retrograde step. Rather than looking at abolishing the committee, the Government should recognise that DPTAC is a model that should be extended to other departments. It was one of the first bodies representing disabled people to require that at least 50 per cent of its members were themselves disabled. In its press release, the department has indicated that it will put in place measures to ensure that the needs of disabled people continue to be understood and represented. However, as other speakers have said, there is no detail on how that will be achieved. Like others, I very much hope that we may hear a lot more on this from the Minister today.

However, I have to say that what little has leaked out so far is not encouraging. In a recent meeting on a different matter with representatives from the disability sector, the Transport Minister, Norman Baker, indicated that he would be looking to appoint a single disability representative to his bus advisory group. The needs of disabled people-the blind, the deaf and those with mobility difficulties-are so diverse that a single individual cannot possibly represent the interests of disabled people as a whole. If this is the kind of approach that the department has in mind, it is clear that it has learnt nothing and has understood nothing and that the interests of disabled people will not be well served.

DPTAC is not a costly body. Payments for members were introduced only in the past year. The overheads of the committee are relatively modest. They include the salary costs of around four DfT officials, payments to members and out-of-pocket expenses, and some admin costs, such as stationery. The committee staff are located in the DfT. There are no other property overheads. This is not the kind of quango that commands a multimillion pound budget. The financial savings that will be made by abolishing it will not be significant

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if one contrasts that with the negative impact on the mobility and transport needs of disabled people that the abolition of the committee will have. I hope very much that the Government will think again about its abolition.

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, this group of amendments would remove the Disability Living Allowance Advisory Board and the Disabled Persons Transport Advisory Committee from the list of bodies to which the Public Bodies Bill applies. I can see no circumstances in which this would be desirable. Both these bodies were set up for very good reasons but they no longer reflect the world in which they operate.

Let me first turn to the Disability Living Allowance Advisory Board. The board was established in 1991 to provide advice to the Secretary of State on matters relating to disability living allowance and attendance allowance. I am delighted to thank members of the board for the advice that they have provided over the years, which has contributed to policy debate in the department. However, as other noble Lords have pointed out, it should be noted that the board has not been asked to provide advice since November 2008 by the present or the previous Administrations.

Medical experts in the department are already providing the department, including disability living allowance decision-makers and departmental medical officers, with medical advice and medical input into policy decisions. When required, the department can obtain expert medical advice in specialist medical fields using "task and finish" groups. Members of Equality 2025, a public body, are well placed to provide personal insight into the effects of policy initiatives.

One of the things that has changed since 1991 is the creation of the Office for Disability Issues. The fact is that it has managed to organise a much wider range of channels from disabled people's organisations and groups which completely changes the environment in which this advisory body, among others, operates. It is in that context that we should look at this step.

I turn now to a specific point raised by the noble Lord, Lord McKenzie, about the reform of the DLA and the involvement of experts in that reform. We have a group of independent specialists in health, social care and disability, as well as disabled people. The group includes individuals from a range of professions such as occupational therapy, psychiatry, physiotherapy, social work, general practice, community psychiatric nursing, and representatives from RADAR and Equality 2025. We are pulling in from widespread channels a huge variety of relevant expertise.

A question was raised by the noble Lords, Lord McKenzie and Lord Knight, about the length of the consultation period. We did consult widely with disability organisations, letting them know our thinking well in advance of the publication of the consultation, and we will continue to work with and involve them in the overall process going forward.

Let me finish my remarks on this particular board. This is a classic example of a body that was set up for a very good reason, but which has now outlived its

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useful life. Things have moved on since 1991 and the Public Bodies Bill will allow the Government to reflect those changes by abolishing this body.

Lord Knight of Weymouth: I am grateful to the noble Lord. Can he tell us how much he is saving by getting rid of it?

Lord Freud: This is not a change being made with any view to making savings because I think that this board does not cost anything at all. I believe the services of the board members are given on a pro bono basis, for which we have been very grateful. Neither of these are money-saving measures since in money terms these bodies are rather inexpensive sources of advice, but the point is whether they are a relevant and necessary function in a changed environment.

Let me turn to the Disabled Persons Transport Advisory Committee. The Government's approach to disability and transport has moved forward significantly since 1985 when the committee was established and the important issues of disability equality are now a core element of departmental policy and delivery. At a practical level, although there is still more to be done about the kind of improvements that still need to be made-no one would disagree with the points made by the noble Baroness, Lady Turner, and the noble Lord, Lord Low-nevertheless it is the case that access to all modes of transport has been transformed over the past two and a half decades. Rather than seeking access for disabled people as a specialist topic, transport operators across the sector are now expected to incorporate their needs into the mainstream of transport planning and delivery. All public bodies have a statutory duty under the Equality Act 2010 to take equalities issues into account in their decision-making. Against this background, and while recognising the valuable work that the committee has done for the department in areas such as accessibility and mobility policy, there is scope to reform the way in which disability advice is delivered to increase flexibility and accountability to the taxpayer.

The question was raised by a number of noble Lords about what or whether anything replaces the DPTAC advice. We intend to commence a consultation in the near future on successor arrangements to DPTAC in order to ensure that we continue to get the advice that we need, thus improving accountability and flexibility and, therefore, value for the taxpayer. It is worth noting that the policy divisions within the Department for Transport increasingly seek advice from specific modal groups. For example, in aviation the department tends to use sources of information closer to the aviation sector-airlines, airports, the CAA, and so forth. The question of timing was raised by the noble Lord, Lord Knight, particularly in relation to the Olympics. DPTAC continues to exist until such time as it is abolished by order and this is unlikely to occur before 2012. Therefore, the Olympic work will carry on as routine.

The noble Baroness, Lady Turner, raised the point about whether local authorities would continue to perform their duties in this respect. No local authority should ignore the needs of disabled travellers. Local authorities are subject to clear equalities duties and, as

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such, should be actively promoting equality for disabled people. All transport operators within local authority areas are subject to provisions under the Equality Act 2010.

Let me pick up one or two other points. First, moving back to DLA and the mobility component, local authority contracts with care homes oblige those care homes to make sure that their clients or inhabitants have access to doctors, dentists and other local services and to help residents pursue their independence. That is part of the confusion of obligations that we are trying to disentangle and will do so under the DLA reform that we are undertaking.

Secondly, to pick up the point made by the noble Lord, Lord Low, on the replacement of DLA with PIP, or personal independence payment, about 14,000 people on DLA have never had their claims looked at since getting the benefit in the period from 1992 to the present day and around 20 per cent of people on DLA have not had any contact with DWP in 10 years. The reduction in the forecast working age expenditure, which we are looking at in the DLA reform, effectively brings expenditure in 2014-15 back down to what it was in 2009-10. We are talking about a cut in a projection, not an absolute cut.

I close with our reason to abolish DPTAC. The Secretary of State for Transport and his department will continue to ensure that transport policies promote equality. We will also, as I said, be taking forward a consultative process on successor arrangements to the committee in the coming months. As part of that process, the Department for Transport will of course publish the full impact assessment. Given that, I ask the noble Lord, Lord McKenzie, not to press the amendment.

5 pm

Lord Newton of Braintree: Before the noble Lord responds, I do not want to make too much trouble, but I must say that I did not find that terribly persuasive. I can well understand that the Secretary of State did not wish to seek the advice of the Disability Living Allowance Advisory Board on the proposals that have just been put forward because he would have got a major flea in his ear. I do not want to enter into that argument, which is not for today, but there is serious concern of the kind that various noble Lords have alluded to in the debate and that would have been reflected. The easiest way of not having that reflected is to say that you do not need the body that gives you that type of advice. Having been a Minister myself, I have to say that I have an unduly cynical view of what the real motivation may be, but it is very unreasonable of me to say that.

On DPTAC and the two bodies taken together, if I hear the Minister right, he is a very self-sacrificial man. He is saying that these bodies cost nothing, do no harm and we are going to have to spend money to get advice somewhere else, presumably also at nil cost. I am bound to say that if I were one of his ministerial colleagues, certainly in the Government in which I served, I would have said, "Why do you want to stir up all this trouble? Why put off all these people who have been giving their services pro bono in order to spend time and trouble consulting about how to replace their efforts? It does not make sense". I rest my case.



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Lord Freud: I ought to respond to that, especially to the creator of the board. The core point is that these advisory bodies are rather narrowly focused and we are now looking at a much wider set of obligations and a much wider capacity. We have the Office for Disability Issues, which was never thought of in the 1990s. That provides a whole range of channels into the community that did not exist. We are talking about moving from a narrowly focused piece of advice to a much wider set of interchanges with the disabled community. My noble friend was right. This has not been done for monetary reasons, but to reflect the world that we live in and to get advice on the broadest possible scale in the right way when we need it.

Lord McKenzie of Luton: My Lords, I am grateful to all noble Lords who spoke in this short but well informed debate. I am doubly grateful to the noble Lord, Lord Newton. I said when I introduced these amendments that I did not propose to press them today and I do not, but he has given me special food for thought when we come to Report. Like the noble Lord, Lord Newton, I was not totally convinced by the Minister's response although as ever he did a sterling job trying to hold the government line.

To summarise the contributions of all noble Lords other than the Minister, I say that they recognised the importance of hearing the voices of disabled people in these situations and not just a lone voice-a point made by the noble Lord, Lord Low. We need to hear about the full range of issues that disabled people face. We heard about the importance of an independent voice, as the noble Lord, Lord Newton, said-not just speaking when you are spoken to and asked a question. There needs to be an independent means for people to input. I agree with that point about not just responding when you are asked a question.

Each noble Lord who spoke did so from a particular standpoint. My noble friend Lady Turner spoke of her own challenges with mobility in recent times. She raised the issue of local authorities and the Minister reminded us of the equality duties imposed on local authorities. We have to recognise that the financial constraints currently imposed on local authorities are draconian-the worst they have faced for decades. That provides them with challenges.

I was not aware that the noble Lord, Lord Newton, was the creator of the DLA and DPTAC that we are discussing today. To date, before his Government's measures, they have stood the test of time. We are not opposed to a recasting of DLA. I mentioned in my presentation the sort of issues we look to come out of the review. My noble friend Lord Knight of Weymouth raised some important issues. On the timing, I am delighted that DPTAC will at least outlast the 2012 Olympic Games. That is to be welcomed.

The other general theme on which all noble Lords focused was that of knowing, if you are going to get rid of something, what is going in its place. We had one veil lifted this afternoon in relation to the advisory board and the engagement on the recasting of DLA, although the noble Lord, Lord Low, rightly pointed out some of the problems with the consultation. If the input the Government are now getting is, as they argue, so important, valuable and different that it

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displaces the advisory board and DPTAC, how have they ended up with this huge challenge around the mobility component of DLA and the need to revisit and revise the numbers? There is an inconsistency in the Minister's argument.

Prompted by the question on cost of my noble friend Lord Knight, the noble Lord, Lord Newton, said that if something costs nothing then we do not need to spend money on putting something in its place. We can get advice for free so why change it? I acknowledge the role of the ODI and the new engagement that it has brought to the whole issue of dealing with disabled people and their challenges. However, that in itself is not a reason for doing away with these bodies, particularly DPTAC. I was not aware of the issue raised by the noble Lord, Lord Low, about the Department for Transport having just one person along to their bus advisory board. How can that one person possibly represent the full range of issues faced by disabled people needing to access public transport and buses in particular?

There are some issues there that the Government need to be clearer on if we are not to take forward at least one of these amendments on Report. For the time being, I beg leave to withdraw Amendment 33 but we need to look at the record of this debate and think seriously about what we will do on Report.

Amendment 33 withdrawn.

Amendments 34 to 36 not moved.

Amendment 36A

Moved by Baroness Thornton

36A: Schedule 1, page 16, line 30, at end insert-

"Food Standards Agency."

Baroness Thornton: I realise that putting down an amendment to add something to this hotchpotch Bill may seem perverse in the extreme but assure the Committee that there is method in my madness. This is a probing amendment, designed to achieve what we seem to have signally failed to achieve so far with this Bill: that is, to gain some understanding of the rationale, the explanation or the philosophy that lies behind (the arm's-length institutions that are included in the Bill and those that are not). I use the Food Standards Agency as an example of a body that is not in the Bill but about which reform is being proposed.

The Food Standards Agency, is, as it says on its website,

What has already been announced is that some of its functions will be taken away and given to Defra, and nutrition and dietary health will be moved back to the Department of Health. That is a very retrograde step in the view of many people concerned with diet and health. I think we can safely say that the Food Standards Agency was specifically formed after the BSE food scandals to try to re-establish public confidence in food advice by creating an arm's-length body and an independent organisation. If the Government wish to change that fundamentally, they have to have some

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justification for addressing those issues specifically. Even if they wish to make the FSA a leaner and more cost-effective body, as they have done and to which the FSA has responded very well, cost-cutting is not the point here. It would seem that the FSA can be changed and its powers taken away without recourse to Parliament, without consultation and without this Bill.

Why is the FSA not included in this Bill? I was tempted to table an amendment for all the non-departmental government bodies that are not included in this Bill just to try to make sense of the Bill, and I have not ruled out that idea. For example, we will address later the other health bodies that are included in this Bill: the HFEA and the HTA. They were created with a similar motivation to that behind the Food Standards Agency-the need to have an arm's-length body independent of government that could be trusted by the public to give good advice.

So far, the passage of this Bill has resembled a familiar song that we may all know, "The Hokey Cokey". You put Channel 4 or Ofcom in the Bill, then you take them out of the Bill-or you think about it-and maybe shake them all about a bit. In the case of the recent government amendments on the Criminal Procedure Rule Committee, and a host of the other judicial-sounding bodies, they are out, but why? Perhaps we should rename this Bill the Hokey Cokey Bill.

Since tabling this amendment, the Public Administration Select Committee in another place has very obligingly published, Smaller Government: Shrinking the Quango State. I had intended to use the Treasury's admirable publication, Reforming Arm's Length Bodies, and the Institute for Government's document, Read Before Burning, as a theme for this discussion, because both contain a sensible description of the different kinds of arm's-length bodies, what they do and how they might be reviewed and reformed. However, I think that they have been overtaken by the admirable report from the committee under Mr Bernard Jenkin MP about the dog's breakfast that is not just this Bill but the whole process of reforming arm's-length bodies.

To go back to basics, the coalition agreement merely said:

"We will reduce the number and cost of quangos".

I have to say that my own Government's policy was along the same lines. The Reforming Arm's Length Bodies document outlined how to do this in an orderly fashion over a period of time and save money in the course of doing that. So the Government started a cost-reduction exercise. Shortly after the election, they undertook to review public bodies sponsored by departments, including executive agencies. The stated aim of the review was primarily to increase the accountability of government. To achieve this, the review attempted to indentify functions that could be transferred from public bodies to central departments. The Government argued that Ministers could then be directly responsible for those activities and could be held to account by Parliament for the discharge of those activities. Indeed, Francis Maude, the Minister in the Cabinet Office-I particularly like this bit-said:

"I have led an intensive review into public bodies, subjecting each to four tests. The first test was existential and asked, does the body need to exist and do its functions need to be carried out at all?".-[Official Report, Commons, 14/10/10; col. 505.]



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I think that existential is a really good word to use in the process of these discussions. Those tests were whether,

The second area was,

The third area was,

The fourth area, of course, was the existential test.

Added to that, we have another test, which appeared slightly late in the day: transparency. According to the report:

"The Ministry of Justice has retained bodies on the grounds of 'transparency'",

so we know now that we have at least four or five tests that the Government have said need to be applied to arm's-length bodies.

The report goes on to say:

"It is also unclear whether all three of the tests the Government set were necessary in determining whether a function should remain at arm's length from Government".

The report adds that the Institute for Government,

That test applies completely to the FSA, and indeed to several bodies that are included in this Bill. We therefore have the importance of the independence test.

The additional test that is brought to bear is that of value for money. As well as the four or five tests that I have already outlined, the Select Committee says that the Government,

The report concludes:

"The Government did not consult properly on these proposals. When undertaking such a fundamental review of the machinery of government it is desirable and sensible to do so".

Our own Merits Committee did, as I recall, agree with that.

The report goes on to say that the Government do not apply the tests consistently and have declined, in some cases,

It seems to me that asking for an explanation of why the Food Standards Agency is not included in this Bill is exactly the point of this Select Committee report. The Government have been inconsistent about what is in the Bill, what is out of the Bill, and what tests should be applied to the bodies that they intend to keep and to reform. The conclusion of this very critical report says:

"We are not convinced that the Government has applied its tests consistently. Neither can we find any evidence to suggest that it took any steps to ensure a uniform approach was taken. We

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recommend that the Cabinet Office publish details on how the tests have been applied to all public bodies that are still under review, so we can ensure that in future these tests are applied consistently.

The lack of consultation and inconsistent application of the tests, which are themselves confusing"-

I would agree with that-

I return to the Food Standards Agency, which I would not wish to include in this Bill. Whether or not I proceed to add a whole host of other bodies into the Bill in a desperate attempt to understand the rationale is dependent on the Minister's explanation. I would really appreciate him addressing the very important issues that are raised in this report-and this is the first opportunity we have had to say this. I would like an explanation of the broader implications that this report has for the Bill. Obviously, it involves not just the Food Standards Agency but many, many bodies.

Finally, we on these Benches are not opposed to modernising arm's-length bodies. Indeed, in March last year we published a document about the reform of arm's-length bodies that said that we intended to reduce their number by 123 and to save money by doing so. However, we intended to do it in an orderly fashion with consistent and consistently applied criteria. This Government have not done that, and we need an explanation of what they intend to do next. I beg to move.

Lord Hunt of Kings Heath: My Lords, I am grateful to my noble friend Lady Thornton for raising three very substantive matters with this amendment: first, what is to happen to the FSA; secondly, the process by which the Government have undertaken this review; and, thirdly-coming back to the debate on the first group of amendments-the architecture of the Bill.

I was the Department of Health Minister who, with the noble Baroness, Lady Hayman, as the Defra Minister, took through the legislation that created the Food Standards Agency. The noble Lord, Lord Newton, and I are singing off the same hymn sheet here. I remind the noble Lord that the reason for this was that there was a great deal of public distrust, it would be fair to say, arising out of the BSE issue along with some concern about the advice that the relevant government departments had been giving to the public. Therefore, the decision was taken to create an independent agency sponsored not by Defra but by the Department of Health.

Overall, that agency has worked very well indeed. I pay particular tribute to the noble Lord, Lord Krebs, and to Mr Geoffrey Podger, the first chair and chief executive of the FSA-and, indeed, to their successors-for doing what I think has been an outstanding job. It has certainly advanced the credibility of the advice that that body gives to the public and, importantly, has also enhanced the credibility of the British food industry. I therefore have some reservations about the changes that are now being proposed to the FSA. I understand that there will be a transfer of some of its responsibilities to the Department of Health. I must declare my interests in relation to the health service and to public health as they are recorded in the

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Register. The FSA has a tremendous reputation and, in the Government's place, I would hesitate before making substantive changes.

However, the second point raised by my noble friend relates to the rationale for the Government's approach both to those bodies that are contained in the Bill and those that are not. It is still not clear to many noble Lords what the rationale is. This is a good opportunity for the Minister, who, as noble Lords have already remarked, has been very helpful to the House, to explain some more about the rationale for the bodies contained in the Bill and those that are not, even where those that are not are actually to have substantive changes made to them.

The noble Lord, Lord Taylor, will be a little tired of having Select Committee reports quoted back to him because it would be fair to say that all of the Select Committees that have so far looked at the Bill and at the review undertaken by the Government have been not exactly complimentary. The noble Lord, Lord Taylor, has to answer the central charge of the Public Administration Select Committee, chaired by Mr Bernard Jenkin, which said:

"This review was poorly managed ... no meaningful consultation, the tests the review used were not clearly defined and the Cabinet Office failed to establish a proper procedure for departments to follow".

Apart from rejecting the Select Committee's report out of hand, the Government have been rather silent in responding so far. We are entitled to some comment on the review process itself.

My noble friend Lady Thornton referred to the Bill as being the "Hokey Cokey Bill". I think it is more Gilbertian myself. The noble Lord, Lord Taylor has a little list. In fact it is a very big list that is gradually becoming smaller. I note that the Jonathan Miller production of "The Mikado" is back at the Coliseum yet again. The noble Lord might take care and reflect by going to see it.

It brings us back to the architecture of the Bill. In an earlier debate the noble Lord, Lord Lester, raised the question of Amendment 175, which is consequential on the paving Amendment 1 that the House passed. That is a very important amendment because it sets very clearly the restrictions on ministerial powers to be used in the Act. If, as a result of the discussions that I know that his officials are having with noble Lord, Lord Lester, tomorrow and other discussions, the Government were able to accept the principle of Amendment 175, while making it clear that they do not intend to reverse this in the other place, then we would make more progress.

There are other substantive issues in relation to the architecture. I have already mentioned the use of the supra-affirmative procedure and the deletion of Schedule 7. Some reassurance that public consultation will take place when it is proposed to deal with any of the bodies in this order would go some considerable way to reassuring noble Lords. In the absence of the House understanding what changes the Government are prepared to make to the architecture, we go inevitably through these bodies one by one and, in a sense, in a vacuum-a point made earlier by the noble and learned

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Lord, Lord Mackay of Clashfern. We are due a Committee day next week when, no doubt, we will hear when further Committee days are to take place. I hope that in a fairly short time the Government will be able to make a little clearer their sense of where they are on the Bill and whether they are prepared to make the kind of changes to its construct that would reassure noble Lords considerably.

Lord Taylor of Holbeach: My Lords, I thank the noble Baroness, Lady Thornton, for tabling this amendment. I know that she has done so with good intentions but we have enough on our plate without adding an extra dish to the menu. I thank the noble Lord, Lord Hunt of Kings Heath, for his recommendation to see "The Mikado". I saw it when it was previously on at the Coliseum. In fact, I have tickets. Should time allow, I hope to see it in revival.

As your Lordships are aware, the Public Bodies Bill exists to take forward the review of public bodies undertaken across the Government in 2010 to enable changes to be made. I acknowledge the report of the Select Committee produced by another place and no doubt we will be replying to that report in due course. However tempting it might be, I do not want to use this debate as an opportunity for expanding on arguments that the Government will bring forward in their discussions with that committee. We are negotiating with the opposition Front Bench and the Select Committees of your Lordships' House to try to improve the Bill. It is interesting that, as the noble Baroness said, there is a determination across the House to ensure that we have a public bodies sector that is fit for purpose.

Perhaps I may address the changes that have occurred within the Food Standards Agency in the context of the recent history of the department. The previous Government announced in their public health White Paper, published shortly before the election, that they would bring dietary health and nutrition away from the FSA into the Department of Health. That is the background against which, under the new Government on 20 July 2010, the Department of Health announced its decision to retain the Food Standards Agency as an independent regulator, while transferring some of its functions to the Department of Health and Defra. I shall shortly put those into the context of the size of the organisation. These changes are non-statutory in nature and do not therefore require the use of the Public Bodies Bill, or any another legislative vehicle, to bring them into effect.

The proposed changes to the role of the FSA are designed to contribute to the Government's objectives to improve efficiency and are paramount to the key priority of improving the health of the nation by creating a public health service. To achieve this coherence, some policy-based functions are to be brought in-house to give a more co-ordinated approach on health and food issues. These changes affect approximately 5 per cent of the 2,000 staff employed by the Food Standards Agency. About 25 labelling policy posts will move to Defra and 85 nutrition policy posts will move to the Department of Health. These proposed changes reflect the Department of Health's desire to bring together all the policy levers to enable it to deliver a coherent public health strategy. This will allow the FSA to focus

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on its key core remit of food safety underpinned by scientific expertise. It has been mentioned that the noble Lord, Lord Krebs, in establishing the Food Standards Agency, provided a foundation of science which has greatly benefited that organisation. The proposed changes will enable government food policy to be communicated and delivered in a coherent and consistent manner. The Department of Health, Defra and the FSA-we must not forget that the Food Standards Agency is classified as a government department-will work together to ensure that this structure protects consumer interests, reinforces efforts to improve the public's health and supports a competitive food industry.

I acknowledge that the last thing the noble Baroness seeks is the extinction of the Food Standards Agency. On the basis of the assurances I have given, I hope that she will feel able to withdraw the amendment.

Baroness Thornton: I thank the Minister for that Answer. I assure him that we are in agreement about not adding the FSA to the Bill. I will read his remarks and consider how we might usefully take forward the process of injecting coherence into this modernisation. However, I shall not do so now. Therefore, I beg leave to withdraw the amendment.

Amendment 36A withdrawn.

House resumed.

Banking: Bonuses

Statement

5.34 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, with the leave of the House, I will now repeat in the form of a Statement the response given by my right honourable friend the Chancellor of the Exchequer in another place. The Statement is as follows:

"Mr Speaker, we inherited from the previous Government a failed system of banking regulation and a situation where billions of pounds had been provided to bail out bankers with nothing demanded in return. It was a something-for-nothing deal that rightly left the British people seething with anger. Let me explain what we are doing to change this.

First, we are replacing the disastrous tripartite system for regulating banks established in 1997. Instead, our plan is to put the Bank of England clearly in charge. Secondly, we have created the Independent Commission on Banking to review the structure of the banking sector and address the issue of banks that are too big to fail-an issue that the previous Government's failure to address brought this country's economy to its knees. The commission will report this autumn. Thirdly, we have introduced a permanent levy on the banks in the face of opposition from the previous Government. This new banking tax started coming into effect last week and once fully operational will raise £2.5 billion each and every year-£8.8 billion over this Parliament. We are looking at the IMF's proposed financial activities tax and we will work with international partners to secure agreement. Fourthly, we have demanded that

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the banks sign up to the code of practice on taxation. The previous Government created the code in a flourish of press releases, but we discovered that only four out of Britain's 15 main banks had actually signed up to it. This coalition Government have made sure that every one of those 15 banks signs up. We are legislating in this year's Finance Bill for tough anti-avoidance measures directed at some of the practices in the financial services sector that no one had previously attempted to stop.

Specifically on remuneration and bonuses, on 1 January this year we introduced the most stringent code of practice of any financial centre in the world. There will be for the first time a strict limit on the amount of bonus payable in upfront cash. There will be a requirement that 50 per cent of bonuses are paid in shares or other non-cash instruments, which bank employees will not be allowed to sell on for an appropriate period. Guaranteed bonuses will become the exception and not the rule. Crucially, the new bonus code has been significantly extended. It will cover payments and bonuses at 2,500 firms, while the code that we inherited covered pay and bonuses at only 25 individual financial firms.

When it comes to the Royal Bank of Scotland, I am having to deal with the thoroughly inadequate contract negotiated by the previous Cabinet, which this House is probably not aware puts no constraints at all on RBS's bonuses this year. Indeed, it explicitly encourages it to pay bonuses in line with market rules. But despite this we have made it clear that RBS will have a smaller bonus pool than last year and should be a back-marker in the industry, instead of the front-runner that it once was.

In the coming weeks all the banks will be announcing their pay and bonuses for this year. I can confirm that we are now in discussion with the banks to see whether we can reach a new settlement where the banks pay smaller bonuses than they would otherwise have done, are more transparent about those that they do pay, make a greater contribution to local communities and the regional economy, treat customers fairly and, above all, lend materially and verifiably more than they were planning to the businesses of Britain, especially the small businesses, so that they can grow and create jobs this year. That is what a new settlement with the banks looks like-one where they lend to the British economy, contribute to the British Exchequer and provide jobs for the British people, where they are responsible on pay and bonuses and where Britain can be the world centre of a properly regulated and internationally competitive financial services industry. If the banks cannot commit to that, I have made it clear to them that nothing is off the table. I will keep Parliament informed of our discussions and, if the Opposition who created this banking mess have a better idea, let us hear it".

My Lords, that concludes the Statement.

5.38 pm

Lord Eatwell: My Lords, I am most grateful to the noble Lord for repeating as a Statement the Chancellor's reply to an Urgent Question asked by my right honourable friend Alan Johnson in another place, although it is

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notable that the Chancellor's Answer had very little to do with the Question asked, which was about the Government's view on the level of bonuses to be paid in the current round.

Is the noble Lord aware that the Government's cut in taxation of the banks and the Chancellor's rather obvious evasion of the substance of the Urgent Question will be received in the country with a mixture of despair and indignation, but not with any surprise? There will be despair because it was the reckless behaviour of the banks and others in the financial sector that imposed economic hardship, even misery, on millions of British people, particularly the most vulnerable. Does he agree with the Financial Services Authority that the bonus policies of the banks encouraged that reckless behaviour? Would he agree that the payment of large bonuses at this time is morally indefensible? Of course, there are lots of things in economic life that are morally indefensible, but the payment of large bonuses now is not just immoral but also against the national economic interest. That is why despair will be laced with indignation.

I believe that no one in Britain objects to the view that those who work hard and take risks with their own money deserve substantial rewards, but would the noble Lord agree that the profitability of the banks over the past year is due less to hard work and more to the financial support provided by the Government and to the low interest rate policies and other policies of the Bank of England? Is it not the case that the banks were reckless with our money, then we bailed them out and then they hoovered up the funds to pay themselves bonuses? Would the Minister agree with me that socially responsible banks will be using their profits to rebuild their balance sheets, strengthening their underlying finances, rather than frittering away our money in excessive bonuses?

Turning to the question of the taxation of bonuses, will the Minister tell the House whether the Government are considering following the practice in the United States, where remuneration in excess of $1 million is not allowable as an expense against corporation tax? The Chancellor asked for ideas and there is one. Members of the House will be aware that in the United States there is not a single non-dom, so will the Minister tell the House his estimate of the proportion of bonuses paid here to residents claiming non-dom status? What proportion of bonuses to non-doms is paid via non-UK jurisdictions? More generally, is the Minister able to tell the House what proportion of gross value added is paid in tax by the financial sector as compared to other major sectors of the economy?

Of course, once issues of taxation are raised, the bankers seek to hold the British people to ransom by claiming that they will simply leave these shores rather than pay their fair share. Will the Minister tell the House what proposals Her Majesty's Government have made to the G7, the G20 or the European Union for a concerted international policy on financial sector remuneration?

The truly distressing factor about this Statement is that there is really nothing surprising in the Chancellor's reply, other than his flagrant disregard of the heartfelt and legitimate concerns of the British people.



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