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"( ) For the purposes of this section, a person shall not be considered to have consented to the taking of section 63D material unless that person has been fully informed of its potential use and retention."
Baroness Hamwee: My Lords, my amendment deals with informed consent. It would provide that a person is not considered to have consented to the taking of material without having been fully informed of its potential use and retention. I am hoping that the Minister will tell me that this is not necessary because that happens and will happen. If I am correct in that assumption, I look forward to hearing on what basis the information is given, but if I am not correct, I look forward to assurances regarding how that will be put in place. I beg to move.
Baroness Royall of Blaisdon: My Lords, I do not wish to return to our earlier discussion about the desirability of a voluntary or mandatory DNA database. However, I seek an assurance from the Minister, pursuant to the amendment of the noble Baroness, Lady Hamwee, that citizens will still be able to give their DNA voluntarily should they so wish. I know that my right honourable friend David Blunkett did so to show that the DNA database was not something to be feared and that there was no stigma related to it. Listening to the debates in the Chamber this afternoon, I feel even more strongly about the retention of DNA now than I did before. I might well go along to a police station and voluntarily give my DNA.
The Earl of Erroll: My Lords, this is quite an important principle. I notice that when it comes to cautions and reprimands, particularly reprimands, the police certainly do not warn youngsters of the full implications of accepting one. They do not realise that it is a plea of guilt to a criminal offence, which will stay on their record for certain purposes throughout their life. In fact, I have discovered that even some solicitors in the county courts do not realise that. Therefore, it is important that the police have a duty to
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Lord Henley: My Lords, I start with the point made by the noble Baroness, Lady Royall, about her desire to give DNA voluntarily. I take note of that. There is nothing to stop her. I was going to suggest that a special database could be set up, possibly named after her noble friend, the noble Lord, Lord Campbell-Savours, who seemed so keen on the idea. However, we will now have to call it the Baroness Royall database, and it can collect the DNA of all those members of the party opposite who want to hand it over voluntarily, and all those others who want to deal with the problem of stigma that the noble Lord, Lord Campbell-Savours, talked about earlier.
There is, however, a much more serious point here: the informed consent of individuals when they come to give their DNA. They might be doing so as part of some operation that the police are mounting where they deliberately want to exclude certain people from their investigations and, therefore, want to take fingerprints or DNA. It is right that we get the appropriate consent set out. That is why comprehensive guidance on the operation of these powers is set out in PACE Code of Practice D, which was revised in March this year to take account of the 2010 Act. It will need to be revised again once the Bill receives Royal Assent. Code D sets out the information that needs to be provided to a person before their fingerprints and/or DNA are taken. Annexe F of the code specifically sets out the requirements to be followed. Note for Guidance F1-to confuse noble Lords even further-underlines the importance of true informed consent. I shall read an extract from it to give assurance that appropriate guidance is offered. It will be revised in the appropriate manner after the passage of the Bill. It states:
"Fingerprints, footwear impressions and samples given voluntarily for the purposes of elimination play an important part in many police investigations. It is, therefore, important to make sure innocent volunteers are not deterred from participating and their consent to their fingerprints, footwear impressions and DNA being used for the purposes of a specific investigation is fully informed and voluntary. If the police or volunteer seek to have the fingerprints, footwear impressions or samples retained for use after the specific investigation ends, it is important the volunteer's consent to this is also fully informed and voluntary".
are properly informed, under the code of practice, of just what they are consenting to and for how long their DNA will be retained. Therefore, I think my noble friend will accept that her amendment is not necessary. We will make sure that the code of practice is revised in the appropriate manner and that will be done at an appropriate moment after the passage of the Bill. I hope therefore that she will feel able to withdraw her amendment.
Baroness Hamwee: My Lords, that is very helpful. As the noble Earl has said, there are consequences of which not everyone is always aware. His point about
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Baroness Hamwee: My Lords, the destruction of material by way of batches, and what the material was which was to be destroyed, was dealt with in Committee in the Commons. Reading the debate of 5 April after I had received the Information Commissioner's briefing, it seemed to me that the discussion slightly petered out. My Amendment 21, which would provide for copies to be processed individually, is tabled to enable the Minister to give assurances-no doubt he will seek to do so-that the deletion of all DNA profile information will be the norm and that retention will occur only in exceptional circumstances. I understand from the debate in the Commons that there are some practical issues around how destruction is dealt with. Perhaps the Minister can reassure the Committee in regard to the subject of the amendment. I beg to move.
Lord Henley: My Lords, my noble friend is again right when she says that there are some technical problems with this issue. I shall say a little about that in a moment once I have set out the position. It might help if I set out a little of the background in this area. Because of the way in which DNA samples have historically been processed in batches-typically of 96, I am told-it is impractical to delete all processing records held within a forensic science laboratory, as batches will inevitably contain a mixture of profiles from convicted and unconvicted individuals, and records must be retained for evidential purposes of convicted individuals, not least in the event of a subsequent appeal or referral to the Court of Appeal by the Criminal Cases Review Commission.
Action is already under way, led by the National DNA Database Strategy Board and the Protection of Freedoms Bill Implementation Project Board, chaired by Chief Constable Chris Sims on behalf of ACPO, to address the potential for relinking records by removing any link between police barcode numbers and laboratory processing records. One forensic science provider already does this. The strategy board is already working with
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None the less, we understand the concerns that have been expressed in this area, and my honourable friend the Minister for Crime and Security recently met representatives of the company which supplies the DNA profiling machines which produce these interim records. They are working on a proposal to enable the deletion of these records rather than merely breaking the links as I have described. If the cost of doing so is not wholly excessive, we will require the destruction of these records. I hope that my noble friend will bear with me for a while until those discussions have been completed and the company can tell us what will be physically possible and what will not be possible. In the mean time, I hope that she will be satisfied by the fact that we feel that we can break the link between the police barcode and the laboratory reference. Once we have broken that link, it will not be restored. Therefore, Amendment 21 will not be necessary.
Baroness Hamwee: My Lords, that is very helpful information and updating. I suppose the obvious question is whether the Minister is asking me to bear with him for a period which may be longer than that between Committee and Report stage. I do not know whether he has been informed of how long the investigations may take.
Lord Henley: I certainly cannot guarantee to do anything between Committee and Report and I doubt even necessarily between Committee and Third Reading. We will do what we can. If I can bring any further intelligence to the House in the Bill's later stages, I will certainly do so. However, it would be wrong for me to give any assurances at this stage. The important thing to say is that we can at least break the link between the police barcode and the laboratory. Whether we can do something better will depend on what the company manufacturing these machines manages to do.
Baroness Berridge: My Lords, I would be grateful if my noble friend the Minister could confirm that the anonymising of these profiles in the batches of innocent people's material is compatible with our duties as outlined by the European Court in relation to the retention of innocent people's material. When speaking to the people in charge of this procedure in various companies, will he bear in mind the fact that the Government might in the future legislate to prevent innocent people's DNA being deleted from the database? If that should occur, what is the possibility of relinking people's profiles with the police national computer? Is there any way in which their names, addresses and identifying details on the national computer can be
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Lord Henley: I will have to take advice on this but my understanding is-I will write to my noble friend if I am wrong about this-that once we have broken the link between the police barcode and the samples, it is broken and cannot be repaired. However, if I am wrong on that, I will let my noble friend know. As regards whether we can get improvements made to the machines so that we can properly delete these things, that will have to wait on the discussions to which I referred earlier.
Baroness Doocey: My Lords, in moving Amendment 23, I shall speak also to Amendment 41. Both amendments deal with the collection of DNA under the Terrorism Act 2000 and the governance surrounding the storage of that DNA. I declare an interest as a member of the Metropolitan Police Authority.
Under Schedule 7 to the Terrorism Act, the police have considerable power and may act "whether or not" they have "grounds for suspecting". They may also, under Schedule 7, take DNA and fingerprint samples from suspects, although the proportion of cases where this occurs is rather small. However, there remains a need for clarity and transparency in relation to this biometric information, its storage, and the governance surrounding it.
The Bill limits to six months the retention of DNA profiles taken as a result of Schedule 7 examinations. This is a great improvement on indefinite retention, but it is still contentious to retain such profiles at all, bearing in mind the nature of the power under which they were first obtained. The six-month period is recognition of the time required to obtain a DNA profile and carry out the necessary checks to identify whether or not an individual poses a threat and then
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Therefore, in theory, a DNA sample obtained from an individual who has never been convicted of a crime can be retained by the police indefinitely. Amendment 23 would redress this balance by ensuring that whenever DNA is taken, the same governance rules apply, whereby the data are not retained if the person is subsequently not arrested.
Amendment 41 deals with the governance of all databases where DNA material is held-not just the DNA database. The Bill would strengthen the oversight and governance of the National DNA Database, but these rules should apply also in respect of all databases, including the counterterrorism DNA database. This would be in line with the findings of the 2011 Annual report of The Ethics Group: National DNA Database, which concluded:
"All databases containing DNA information including the counter terrorism database held by the police service should be subject to a robust statutory governance framework, appropriate systems and controls, and should be transparent and only be used for statutory purposes".
The Bill limits to six months the retention of DNA profiles taken as a result of Schedule 7, but there must be clarity in terms of where such profiles and the physical samples are retained. The National DNA Database retains all profiles obtained as a result of individuals being arrested for a recordable offence. However, if only certain DNA profiles obtained from a Schedule 7 examination, which are not recordable, are retained on the separate counterterrorism DNA database, we need clarity about where the remaining profiles are retained and, more importantly, who has access to them. We cannot have a system where DNA profiles from individuals not convicted of any crime are not stored and managed with the same safeguards as DNA obtained from an individual as a result of an arrest.
There are certain elements of governance that need to be observed for the counterterrorism DNA databases, including scientific standards, ethical oversight and meeting the Data Protection Act requirements. Amendment 41 would ensure that suitable governance arrangements are in place for all DNA samples and profiles that are retained by the police. I beg to move.
As I read the Bill, there are two circumstances in which material that has been taken in relation to a person who has been detained under Schedule 7 may be retained. In one case, it is retained indefinitely in circumstances where that person has previously been convicted of a recordable offence, other than a single exempt conviction, or is so convicted before the end of a further period. Therefore, if a person has been convicted previously of a recordable offence, DNA or
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For example, if this was the case as regards a person who had previously been convicted of a recordable offence, one would somehow have to wait to see whether that person was subsequently arrested-and I do not know within what period that would apply-for an offence that would also have to qualify as being directly related to the reasons for detention. Only in those circumstances could the material be retained. I do not understand how anyone will know at any point whether that person is going to be subsequently arrested. Nor do I understand why they should be,
I have to some extent demonstrated my colours in relation to DNA but, at least in the case of a person who has previously been convicted of a recordable offence, I see no reason at all why the material should not be retained. I do not see why one should add a condition whereby somehow you are going to be able to discover subsequently that a person would be arrested for an offence and, furthermore, that that offence is directly related to the reasons for the original detention-whatever, with respect, that means.
Lord Henley: My Lords, I do not know whether I can bring light to the noble and learned Lord, Lord Goldsmith, but I will see what I can manage. I will speak to my noble friend's amendments and, because they have been grouped together, in due course speak to the government amendments in my name-Amendments 24 to 37.
My noble friend helpfully set out her views on the provisions in Schedule 1 in respect of the retention of material taken as a result of a Schedule 7 examination. Schedule 7 to the Terrorism Act 2000 is a national security border power that enables examining officers to stop, search and question a person at a port or in a border area to determine whether they are someone who is or has been concerned in the commission, preparation or instigation of acts of terrorism, without reasonable suspicion that they are so concerned. Given that most major terrorist plots have involved individuals travelling across international borders to plan and prepare their attacks, it is only right that the police are given appropriate powers to examine persons, including through the taking and retention of biometric material-in this context, in order to identify and disrupt such individuals.
Imposing a requirement to arrest an individual for terrorism offences as a condition for retention and use of material taken under these powers, would fundamentally undermine their use as a means to identify those involved in terrorist activity and to gather intelligence.
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Attaching a requirement for arrest would furthermore offer no additional safeguards. The Bill already provides safeguards for material taken from a person detained under Schedule 7. There is a defined retention period of six months, which is considerably shorter than the three years' retention period that applies where a person has been arrested for a terrorist offence under Section 41 of the 2000 Act. The new biometric commissioner will also have a general oversight role in respect of the retention and use of biometric material taken under Schedule 7.
I hope that that helps partially to explain matters to the noble and learned Lord and reassures my noble friend that the provisions in the Bill are transparent and will provide strong protection against unnecessary retention of material taken from individuals detained under Schedule 7 to the 2000 Act.
Turning now to the governance arrangements for the DNA databases, the subject of Amendment 41, I think it is important to note that all DNA material retained by the police will as a result of the Bill be subject to comprehensive regulation, irrespective of the databases on which it is held. Indeed, although the overwhelming majority of DNA information retained by the police will continue to be held on the National DNA Database, where this is not the case, such material will be subject to the requirements of the regimes set out in the Bill, and covered by all the relevant safeguards.
Regarding the counterterrorism database, only DNA profiles obtained by the police in relation to national security-including counterterrorism investigations-will be held on the database. It has already, in effect, been placed on a statutory footing by virtue of the Counter-Terrorism Act 2008, which provides for all material not otherwise subject to statutory restriction, and is already overseen by the National DNA Strategy Board in respect of compliance with agreed national standards and protocols.
The Forensic Science Regulator is also closely involved in ensuring that DNA analysis and validation meet acceptable standards, as he is with the National DNA Database. In addition, we should not forget the new biometrics commissioner's general oversight function under Clause 20. If the commissioner had concerns about the governance arrangements, I am confident that he or she would not be reticent in bringing such concerns to the attention of the Home Secretary.
Perhaps I may briefly address the government amendments, starting with Amendments 24 to 28. These address three separate matters. First, Amendments 24 to 28 to Part 3 of Schedule 1 are intended to clarify the application and scope of the provisions for the retention and destruction of biometric material to which Section 18 of the Counter-Terrorism Act 2008 applies. Section 18 mostly covers biometric material acquired covertly and material supplied by overseas authorities.
The Government are clear that material obtained under Section 18 of the 2008 Act should be subject to a clear and robust regime for the destruction and retention of such material. As such, we have proposed limiting retention to three years-on the basis of a national security determination extendable for renewable two-year periods-after which it must be destroyed.
However, the proposed destruction requirements in Section 18 are not expressly limited to material obtained from known persons. We are concerned that this will lead to anonymous material and, in particular, material taken from crime scenes, having to be destroyed at the three-year point. Indeed, as currently drafted the Bill requires just that. This unintended consequence would result in the destruction of material before the police were able to identify the individual to whom it belonged, complete an investigation of an offence-potentially compromising prosecutions in the process-or make a case for its retention on national security grounds. For these reasons, the amendments are designed to prevent the automatic and premature destruction after three years of anonymous and unidentified crime scene material obtained by the police.
We do not consider that anonymous material or material taken from a crime scene-where it is also anonymous-should be subject to the same destruction requirements as material obtained from known individuals. Rather, it should still be possible for the police and other law enforcement authorities to retain such material indefinitely. However, we recognise that not all crime scene material will be anonymous in nature and as such want to make clear that where there is provision for indefinite retention of unidentified material, once identified, such material will be subject to the same retention and destruction requirements of material where the identity of its owner is known on acquisition.
Amendment 26 will exclude from Section 18 of the Counter-Terrorism Act material taken under the Terrorism Prevention and Investigation Measures Act 2011, as it will become shortly. This is consistent with the exclusion of other existing statutory regimes from the scope of Section 18 to avoid enacting overlapping and conflicting provisions. We consider that all these amendments enhance the provisions in Schedule 1 by making clear how they are intended to operate.
Amendment 29 would omit paragraphs 6(4) and 7 from Schedule 1 to the Bill. Those paragraphs, which contain provisions in respect of the retention and use of biometric material in Scotland for national security purposes have, in effect, been made redundant by the Criminal Justice and Licensing (Scotland) Act 2010 (Consequential Provisions and Modifications) Order 2011, which itself gave effect to the changes that those provisions would have made. Simply put, the provisions are no longer needed and can therefore be removed from the Bill. There are three consequential amendments to Clause 113 and Schedule 10 which we will need to come back to later in the passage of the Bill.
Finally, Amendments 30 to 37 to Parts 7 and 8 of Schedule 1 extend the list of purposes to which material taken under the Police and Criminal Evidence (Northern Ireland) Order 1989 and held pursuant to a national security determination may be used. They further
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Amendments 30 to 33 provide that the purposes for which material retained pursuant to a national security determination which was taken under the Police and Criminal Evidence (Northern Ireland) Order may be used are the same as for the rest of the UK. That is, that such material can be used for the prevention and detection of crime, the investigation of an offence or for identification purposes, in addition to that for national security and terrorist investigations.
Amendments 34 to 37 are technical amendments. They amend the Secretary of State's order-making powers so that the Secretary of State is able to make provision in respect of transferred matters where such provision is ancillary to excepted or reserved matters.
I apologise for taking so much time on those government amendments, but I hope that my noble friend will be content with the explanation I have given of her Amendments 41 and 23. I hope that she will feel able to withdraw her amendment, and I will move mine in their proper place.
Baroness Royall of Blaisdon: My Lords, forgive my intervening at this stage. I am grateful to the Minister for his response to the amendments tabled by the noble Baroness, Lady Doocey. From what I heard of his response, I think that I would agree with him that her amendments should not be pressed, but I imagine that they are probing amendments.
As I mentioned earlier this afternoon, I intend to bring forward amendments on Report relating both to a period during which evidence can be collected before the Government's proposals were introduced and to the period for which DNA samples and fingerprints could be retained-for six years rather than three years. If my amendments are accepted, a consequential amendment will be required to subsection (6) proposed in government Amendment 28, but that is for a later stage. For the moment, I am content to accept the noble Lord's amendments.
Baroness Doocey: I thank my noble friend for the clear way in which he addressed my concerns. I say to the noble and learned Lord, Lord Goldsmith, that as soon as he got to his feet, I thought to myself, "I hope I will never get to court and meet someone like him", because I think I would just throw my hands up in horror and plead guilty, regardless of how innocent I was. I beg leave to withdraw my amendment.
"(f) paragraphs 5 to 14 of Schedule 6 to the Terrorism Prevention and Investigation Measures Act 2011."
(a) it is held by the law enforcement authority in a form which does not include information which identifies the person to whom the material relates, and
(b) the law enforcement authority does not know, and has never known, the identity of the person to whom the material relates.
(a) the law enforcement authority comes to know the identity of the person to whom the material relates, and
(b) the material relates to a person who has no previous convictions or only one exempt conviction,
the material may be retained by the law enforcement authority until the end of the retention period specified in subsection (6).
"(c) for purposes related to the prevention or detection of crime, the investigation of an offence or the conduct of a prosecution, or
(d) for purposes related to the identification of a deceased person or of the person to whom the material relates."
(a) the reference to using material includes a reference to allowing any check to be made against it and to disclosing it to any person,
(b) the reference to crime includes a reference to any conduct which-
(i) constitutes one or more criminal offences (whether under the law of Northern Ireland or of any country or territory outside Northern Ireland), or
(ii) is, or corresponds to, any conduct which, if it all took place in Northern Ireland, would constitute one or more criminal offences, and
(c) the references to an investigation and to a prosecution include references, respectively, to any investigation outside Northern Ireland of any crime or suspected crime and to a prosecution brought in respect of any crime in a country or territory outside Northern Ireland."
35: Schedule 1, page 117, line 7, at end insert "and would deal with a transferred matter without being ancillary to other provision (whether in the Act or previously enacted) which deals with an excepted or reserved matter"
(b) is not prohibited by sub-paragraph (5)(a),"
"( ) The Commissioner must make a report to the Secretary of State about the impact of the retention periods for fingerprints and DNA profiles on the police service, in particular, the estimated cost of processing samples on an individual basis.
Baroness Doocey: My Lords, the Bill will place a large administrative and financial burden on all police forces. I believe that we need to monitor the impact of this, particularly in the current climate, when police budgets are under threat and facing severe cuts.
Each DNA profile and sample will need to be processed individually to ensure that they are deleted within the correct time parameters. Furthermore, this process must take into account any subsequent reoffending by the individual, as well as an application for extended retention.
The Metropolitan Police estimates that implementing the Bill will entail a one-off cost of £2.5 million, with ongoing costs of nearly half a million pounds a year. That is a huge sum of money when you consider how tight budgets are going to be, and it could pay for 10 police officers per year. Amendment 39 would ensure that the impact on the police service of the retention periods for fingerprints and DNA profiles and, in particular, the estimated costs of processing samples on an individual basis were reported back to Parliament.
An operational risk is also inherent in the complexity of the retention regime. While the Bill will in theory put in place mechanisms to ensure that DNA data are deleted at the right time, no system is perfect. If, as could well occur with the volumes involved, the deletion process were out of sync and not carried out at the appropriate time, DNA profiles which should have been deleted could remain on the database. If these profiles were then to be matched with the DNA from a crime scene or the victim of a serious crime, this evidence could not be used, since by law the profile should not have been there in the first place as it should not have been retained.
That is what happened in two cases, both of which necessitated changes to the Police and Criminal Evidence Act. In both, a DNA match was obtained but their profiles should already have been deleted from the DNA database. In the first case, which concerned a rape, the judge refused to admit the evidence and the prosecution was abandoned, and in the other case a conviction for murder was quashed by the Court of Appeal on the grounds that the DNA evidence should not have been admitted. The House of Lords subsequently ruled that it should be left to the discretion of the trial judge as to whether evidence in these circumstances should be admitted. We would not want history to repeat itself.
We therefore need some form of reassurance that we will not be put in the invidious position of perhaps identifying another rapist or a murderer but not being able to use the DNA match in evidence. I beg to move.
The Earl of Erroll: Does a case collapse just because one bit of evidence is not quite right? I cannot believe that that one bit of evidence would be the only thing to bring about a conviction, in which case why on earth do we let people off? That seems quite dotty to me, as a lay man, unless the whole thing hinged on that one bit of evidence, in which case there could be some ambiguity about it.
Lord Henley: I suppose that a case could collapse just because one bit of evidence fell apart, although in the main there would be other bits of evidence. However, the noble Earl, Lord Erroll, is right to make that point.
My noble friend, in moving the amendment, is obviously concerned about the costs of the Bill to the police and what that might do in diverting resources away from front-line policing. That has also been a concern of mine, and it is why, for example, I resisted an amendment from my noble friend Lady Hamwee suggesting that we should be looking at all the entries on the database on an annual basis. That certainly would have had major cost implications.
The reasoning behind my noble friend's amendment is to ask the commissioner to look at a number of issues, including the cost of implementing the Government's proposals. I can see why she wants to do that-I understand that she is a member of the GLA-particularly in view of the costs for the Metropolitan Police Authority, which, by virtue of its size, will have the largest single bill for implementing the proposals set out in this chapter.
I have to say to my noble friend that the Government have been working very closely with ACPO, the National Policing Improvement Agency and private sector forensic science providers to keep the cost of our proposals as low as possible. We published a very full impact assessment of these proposals in February this year, setting out a transition cost of just over £10 million. I appreciate that my noble friend Lady Hamwee had some criticisms of one part of the impact assessment, and I said that even Homer nods from time to time. I contrast that figure of £10 million with the previous Government's impact assessment for, say, the provisions in the Crime
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We are not convinced that the proposed post-implementation review by the new commissioner would add significantly to our understanding of this issue, and it would impose an additional bureaucratic burden not only on him but on hard-pressed police forces. I also say to my noble friend that I believe the commissioner's first six months in office are going to be very busy indeed in terms of examining a number of applications for extended retention and setting out guidance under Clause 22 of the Bill, without giving the new officeholder the additional task of a financial review.
That said, Clause 20(6) confers on the commissioner a general function of keeping under review the retention and use of biometric material, so it would be within his remit to examine the impact of the retention periods provided for in the Bill without the constraints imposed by the amendment. I certainly reassure my noble friend that we take very seriously the issues highlighted by her amendment but we do not think that it is necessary.
My noble friend also touched on some of the issues relating to the batch processing of DNA samples, with which I think we dealt on an earlier amendment. Again, I reassure her that we think it will be physically impossible to relink anything held on a police file, including the original DNA sample barcode, with any information stored in a forensic laboratory. However, as I said, more work needs to be done in that area, and we will certainly do that in due course. I hope to be able to let the House know more about that at a later stage if at all possible.
Baroness Hamwee: My Lords, before my noble friend responds, perhaps I may say to the Minister that he really should not take every question from me as being a criticism. Questions are sometimes completely straight questions.
Baroness Doocey: My Lords, I thank the Minister for his response, which goes some way to reassure me but I still have major concerns, particularly about the financial implications on the Met. I would like to address these and the other issues that I raised perhaps outside the Chamber. At this stage, I am happy to withdraw the amendment.
The amendment would provide that as well as publishing the governance rules of the board, the Secretary of State would publish rules governing its composition. My question is an entirely simple one and there is nothing to be read between the lines. What will be the composition of the board and how will it be brought into the public domain? My noble friend Lady Stowell may say that governance covers composition, but clearly the membership of the board is important. It needs to be appropriate to its functions and the interests reflected in the composition are clearly a matter of public importance and concern. I beg to move.
Baroness Stowell of Beeston: My Lords, I am grateful to my noble friend for this amendment and I hope that my response will provide the reassurance that she is looking for. This is another issue that was covered in the letter from the Information Commissioner sent to several noble Lords before our Committee stage.
"The principal members of the Board are the Association of Chief Police Officers, the Association of Police Authorities (in future, following the enactment of the Police Reform and Social Responsibility Bill, a representative of Police and Crime Commissioners) and the Home Office, but there is also an independent element to the Board from non-police bodies, such as the Information Commissioner and the National DNA Database Ethics Group".
I am happy to put on the record that the governance rules set out in new Section 63AB(6) of the Police and Criminal Evidence Act 1984, as inserted by Clause 24, will include the full membership of the board and that members will continue to include an independent element in the form of representation from the Information Commissioner's Office and the national DNA database ethics group. If any of your Lordships have any suggestions for others that might join the board to strengthen the independent element, I will be happy to receive them. Having heard my remarks, I hope that my noble friend Lady Hamwee will feel able to withdraw her amendment.
Baroness Hamwee: My Lords, I am grateful for that. It did not occur to me to look at the Explanatory Notes. My noble friend is quite right; I should have done so. Her emphasis on the independent element from non-police bodies is important. As she read out that list it sounded police-heavy. The police have to operate the system so I am not suggesting that they should not be properly represented but as the debates today and throughout the passage of this Bill amply illustrate-if we need that illustration-it is not only
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What can I refer to? We have just been abolishing them but standards committees in local government have used an independent element. I am sure that there are plenty of examples but they always escape you on these occasions. Perhaps I can take what my noble friend has said as something of an invitation to explore this a little after the Committee stage. To have elements from what might be regarded as the usual suspects-I do not say that pejoratively-may not serve the purpose as well as we could.
Baroness Stowell of Beeston: I just want to re-emphasise that I would be grateful to any of your Lordships who have any suggestions to add on the independent element of the board after today's debate.
Baroness Hamwee: My Lords, I would also say that it is not uncommon for there to be advertisements for applications using the Nolan principles for an independent element to boards such as this. Perhaps after this evening I shall try to come up with some other examples. I am grateful for that and I put on the record that I am grateful to the information commissioner for the thoughtful way in which he and his office have briefed your Lordships. I warn the government Front Bench that I have not read through to the end of his briefing so there will no doubt be more to come in future parts of the Bill. Having said that, I beg leave to withdraw the amendment.
Lord Campbell-Savours: Before we agree this I wonder whether the Minister can give us advice on the costs of the collection of DNA and its retention. Will the Minister tell us the costs involved in the existing arrangements?
Lord Henley: I gave a figure earlier from the impact assessment that the costs on the police were some £10 million. I stick by that. If the noble Lord would like a copy of the impact assessment, I will make sure that he has it.
(a) the vehicle is not registered under the Vehicle Excise and Registration Act 1994; or
(b) the relevant person in question has reason to believe the vehicle is registered under the Vehicle Excise and Registration Act 1994, but that the registration details are incorrect.
(a) the vehicle is parked in such a way that it-
(i) prevents the parking of vehicles elsewhere on land under the same ownership or control as the land on which the vehicle is parked; or
(ii) prevents or restricts the passage of other vehicles or of individuals on that land; or
(b) the land on which the vehicle is parked is designated for parking by residents of specific dwellings or by their guests; or
(c) the vehicle is a vehicle designated or adapted for towing by a mechanically propelled vehicle.
(2C) The defences under subsection (2A) or (2B) are, in relation to a person who immobilised, moved or restricted the movement of the vehicle in question in the course of a business, only available if the person in question-
(a) was a member of a trade association accredited for the purpose of the subsection in question by the appropriate national authority; and
(b) acted in compliance with any code of practice approved for the purpose of the subsection in question by the appropriate national authority."
Baroness Hayter of Kentish Town: My Lords, Amendment 42 addresses the law of unintended consequences. The situation is similar to that of the Dangerous Dogs Act. As of some rogue dog owners, we had the Dangerous Dogs Act, and now we have some rogue wheel clampers, we have clauses that will outlaw not the rogues but the clamps. In doing so, they will trespass on the rights of residents and private landowners.
It is funny-funny peculiar rather than funny ha-ha-that despite drunk drivers killing pedestrians and passengers, we refuse to outlaw drink driving and only outlaw excess-drink driving; and that despite guns killing people, we outlaw the unauthorised ownership of guns rather than the guns themselves. We are now going to have a situation where guns, if they are licensed, will be legal on your own premises, but wheel clamping will be a criminal offence.
What have we done with wheel clamping? Instead of cracking down on rogue clampers, the Government seek to ban all wheel clamping on private land, even when it is undoubtedly of value and properly controlled. It is this part of the Bill that I seek to amend-not to give free rein to clampers but to build in robust and comprehensive regulation to the industry.
I will give six reasons for the amendment. First, how big a problem is posed by rogue clampers? We have seen them on television, but that does not necessarily make it a problem. No one likes being clamped, but the main reason for being clamped is that one has parked without authority on someone else's land. Vehicle immobilisation is one side of the coin, but the obverse side is irresponsible and selfish parking. However, without any consultation on this issue, the Government announced a complete ban on all clamping on private property. They provided no evidence for how many people are affected by rogue clampers and are putting the rights of unlawfully parked motorists above the rights of landowners who are only trying to protect their private property.
The issue of cowboy clampers was largely dealt with in the Crime and Security Act 2010. Sections 42 and 44 of the Private Security Industry Act 2001 introduced a series of regulations requiring wheel clamping companies to acquire licences and landowners to use only licensed companies, as well as an effective means of appeal for the motorist. However, the powers were never commenced and, strangely, the Government have set about reinventing the wheel.
How big a problem is it? Nick Clegg justified this part of the Bill by referring to his Your Freedom website on which 46,000 people left 14,000 ideas. Quite so-but I understand that only 24 of them wanted a ban on wheel clamping. Nevertheless, Mr Clegg suggested that those ideas led to this proposed ban on wheel clamping on private land.
Secondly, where does clamping work? Clamping or the mere threat of it probably deters more than 90 per cent of illegal parking on private land. The inconvenience of having a car clamped deters even the most persistent and selfish parker. This is fair when there are clear warning signs-and there are bound to be since the essence of effective clamping is not to clamp but to deter.
Thousands of residents will be badly affected by the Government's proposed ban. I remember when, on public rather than private land, I used to return late at night from a hospital where I worked to find that I could not park anywhere near my house, which was in the first non-parking controlled part of the street a couple of hundred yards from a Tube station and a famous music venue-the Forum, for noble Lords who know Kentish Town. Until we got residents' parking, it was all but impossible to park within 10 or 15 minutes' walk of my front door. It was a public road, but I fully understand what it must be like to come back to a block of flats like the one I used to live in near Highgate Tube and find that there is nowhere in the communal private parking area to leave one's car. I will quote a police spokesman from Gwent. He said:
What are the alternatives to which the rogues will turn if they cannot use wheel clamps? The Government want to deal with rogue clampers but have failed to add any provision to prevent such rogues moving from clamping to ticketing, where they will then be able to fleece the 40 per cent of drivers who pay their tickets. There is no requirement in the Bill for such operators to comply with any code of practice or provide an appeals service. Already, many rogue clampers have turned to ticketing as they do not need an SIA licence or to join an accredited trade association.
Meanwhile, drivers could end up facing a bill for hundreds of pounds. What's more, a ban will simply send a message to persistent fly-parkers that they have the freedom to flout private parking restrictions. This is a dangerous precedent to set with respect to private property, but those motorists who are pursued through the small claims court may find themselves wishing that they had been faced with a clamp on their car rather than a bailiff at their door.
Fourthly, who will suffer if all wheel clamping is outlawed? The effect of a blanket ban, no doubt unintended, would be myriad problems for motorists and property owners as it would leave some landowners with no redress against the rogue parker. People park on private land every day-at leisure centres, retail parks, local authority and other housing developments, parks, open spaces, hospitals, university campuses, school and church property, sheltered housing and railway stations. A ban on clamping and towing away would remove the right of the owner to protect their land. With a ban there would be nothing to stop selfish motorists parking across hospital ambulance bays, blocking emergency exits or wheelchair access ramps, or even parking on somebody's drive. Noble Lords can imagine if their private drive was near a pop festival, a railway station, a cinema or football ground and somebody left their car on it. On some housing estates, not just cars but trailers are left and the residents have no means of removing them from their parking areas.
The Reverend Adam Scott is a clergyman at St Michael and All Angels in south London, which is coterminous with a housing estate. He stated that the local amenity company serves thousands of people on the estate. It uses a reputable clamping firm, 70 per cent of whose work is for local authorities-but that 70 per cent is unaffected by the proposed ban. The Reverend Scott states:
"Our church halls are heavily used for a variety of community purposes including a nursery school, scouts and other youth activities, events for older people, blood donation and even as a polling station. We also have midweek services, weddings and funerals. Visitors to the church and halls are permitted to park and-with the current restrictions and clamping as a threat-there is usually space for their vehicles ... Our concern is that this clause would lead to a war by motorists against residents and visitors to this and other estates".
These residents want the House to appreciate that they are against rogue clampers extorting unreasonable sums from motorists, but want the ability to exercise proper stewardship of a community resource.
The chief executive of the Association of Residential Managing Agents, which represents firms managing leasehold blocks, said that a survey of his members found that 93 per cent believed that a total ban on wheel clamping was not the answer. He said that,
"Illegal parking in areas belonging to a block of flats is already a major problem; by removing the deterrent of wheel-clamping it will further exacerbate this problem for many flat owners and tenants with a private parking space. The effectiveness of clamping lies in the threat that the illegal rogue car-parker may return to their car to find it immobilised. The rogue car-parker is not deterred by the threat of a parking ticket".
Tickets are anyway only enforceable against registered keepers, who are unlikely to name the driver who has actually caused the problem. Are we really asking companies to chase up the keeper through the DVLA, making even more private information available to a host more people? Furthermore, some of the offenders are likely to be among the 15 per cent of owners of unregistered cars, added to which trailers and even caravans are not on any DVLA database.
If wheel clamping were outlawed, as the Government want, many landowners would have to resort to pop-up studs, chains or expensive barriers. However, the barriers proposed in the Bill are still no answer to many residential areas for the simple problems, let alone costs, of constructing them. Sometimes the police or the planning authorities will not permit them where they may cause a traffic hazard on entrances leading to or from public roads. They are unfeasible for residents' parking spaces outside their own homes.
Imagine you are a disabled driver and cannot access dedicated parking bays because some selfish drivers think they would prefer to park there, but no one can remove or immobilise their car. Disabled drivers need to use parking bays reserved for them at supermarkets and in leisure car parks, but the proposed inability to remove parked vehicles at the owner's cost will remove the best deterrents to such rogue parking: the wheel clamp or having one's car towed away. Ticketing is pointless where cars are parked illegally in disabled bays or where access is needed. The Government say that the police can be called to tow the car away, but that will not be the case in disabled bays where they are not causing an obstruction but are just in the way of a disabled person who wants to park there.
I know that the noble Baroness will speak about the blue badge system, but I know that disabled motorists fear that car parking spaces reserved for them will no longer be available. Disabled Motoring UK, which represents disabled drivers and blue badge holders, is understandably opposed to this ban. Its chairman has commented:
"We are very concerned that should this clamping ban come into force, there will no longer be any way to deal with persistent abusers of these bays, or drivers who have parked in such a way
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I shall quote from a letter from Mr and Mrs Hubbard in Beckenham. One of them is diabetic and the other has MS. Their car park, for a small number of flats, has a few parking bays for tenants and a shared parking bay for health visitors and doctors, yet it was used by all and sundry despite signs saying "Allocated Disabled Parking Bays" until they employed a clamping firm whose signs alone have helped considerably, although very occasionally clamps are still needed. They are very effective. Mr and Mrs Hubbard write:
"Please can you help us by asking the Government not to stop clamping or towing away but to regulate this service? ... Please let us continue to get help and assistance from the genuine clamping or towing company ... We are not well people and suffer with incurable diseases. Please let us safely park our car and not go back to how it used to be".
The other issue is that, without clamping or towing, foreign or unregistered vehicles will be able to park with impunity since there is no way of enforcing ticketing against them. It is no good saying that these cars can be moved if they cause an obstruction. The person inconvenienced may not be qualified or insured to drive or move the car. They may be disabled and unable to get into that car and anyway, who would be covered by insurance if the car were damaged? The idea that they could just move it out and put it on the public road, even if it was not insured or MOT-ed, seems extraordinary.
What are the alternatives to an outright ban? We all strongly support the attempt to deal with cowboy clampers who have plagued the private parking industry, and the industry must be regulated to freeze them out, so we need legislation to require all parking operators to comply with robust regulation. Only compulsory membership of a licensing scheme and dispute resolution system will suffice. Without that, the cowboys will continue to flourish and reputable parking companies will suffer. We must take immediate action to reverse that position. That is what is set out in these amendments.
The amendment will mean that clamping and towing away on private land could continue where the vehicle is foreign-registered or not correctly registered with the DVLA, or where the vehicle is causing an obstruction or is on land attached to residential properties and used solely for the purposes of those residents. Schedule 4 would prevent any rogue clampers moving into rogue ticketing by requiring operators to sign up to a code of practice maintained by an accredited trade association. The appeals mechanism proposed in Schedule 4 would provide an independent appeals service for anyone receiving a parking ticket. Citizens Advice, trading standards and Consumer Focus have called on the Government to introduce independent dispute resolution in this Bill, funded by the industry and available to all motorists, so that cases where mistakes are made or where consumers feel that they have been unfairly treated-for example, by being pursued for excessive charges-can be quickly, fairly and cheaply resolved. I trust that the mechanism I have set out answers that
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The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, I refer the House to the autumn Statement made earlier in another place by my right honourable friend the Chancellor of the Exchequer, copies of which have been made available in the Printed Paper Office and the text of which will be printed in full in the Official Report. I commend my right honourable friend's Statement to the House.
"Let me start by placing squarely before the House of Commons and the British public the economic situation facing our country. Much of Europe now appears to be heading into a recession caused by a chronic lack of confidence in the ability of countries to deal with their debt. We will do whatever it takes to protect Britain from this debt storm while doing all we can to build the foundations of future growth.
Today we set out how we will do that by demonstrating that the country has the will to live within its means and keep interest rates low; by acting to stimulate the supply of money and credit to ensure that those low interest rates are passed on to families and businesses; by matching our determination on the deficit with an active enterprise policy for business and lasting investment in our infrastructure and education so that Britain can pay its way in the future; and at every opportunity by helping families with the cost of living.
The central forecast that we publish today from the independent Office for Budget Responsibility does not predict a recession here in Britain, but it has unsurprisingly revised down its short-term growth prospects for our country, for Europe and for the world. It expects gross domestic product in Britain to grow this year by 0.9 per cent and by 0.7 per cent next year. It then forecasts 2.1 per cent growth in 2013, 2.7 per cent in 2014, followed by 3 per cent in 2015 and 3 per cent again in 2016.
If they do not, the OBR warns that there could be a 'much worse outcome' for Britain. I believe that it is right. We hope that this can be averted, but if the rest of Europe heads into recession, it may prove hard to avoid one here in the UK.
We are now undertaking extensive contingency planning to deal with all potential outcomes of the euro crisis. Like the Bank of England and the OECD yesterday, the OBR cites the chilling effect of the current instability as one of the central reasons for the
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Secondly, the OBR today has shown new evidence that an even bigger component of the growth that preceded the financial crisis was an unsustainable boom, and that the bust was deeper and had an even greater impact on our economy than previously thought. The result of that analysis is that the OBR has significantly reduced its assumptions about spare capacity in our economy and the trend rate of growth. That increases the OBR's estimate of the proportion of the deficit that is structural-in other words, the part of the deficit that does not disappear even when the economy recovers. Our debt challenge is therefore even greater than we thought, because the boom was even bigger and the bust even deeper, and the effects will last even longer. Britain has had the highest structural budget deficit of any major economy in the world and the highest deficit in the entire history of our country outside war-and the last Government left it to this Government to sort that mess out.
The OBR's analysis feeds directly through to borrowing numbers that are falling, but not at the rate that had been forecast. In 2009-10, the last Government were borrowing £156 billion a year. During the first year of this Government, that fell to £137 billion. This year the OBR expects it to fall again, to £127 billion, then to £120 billion next year, followed by £100 billion in 2013-14, £79 billion in 2014-15, then £53 billion in 2015-16 and £24 billion a year by 2016-17. However, I can report that because of the lower market interest rates that we have secured for Britain, debt interest payments over the Parliament are forecast to be £22 billion less than predicted.
The House might also like to know, given the economic events described by the Office for Budget Responsibility, what would have happened to borrowing without the action that this Government have taken.
The Treasury today estimates that borrowing by 2014-15 would have been running at well over £100 billion a year more and that Britain would have borrowed an additional £100 billion in total over the period. If we had pursued that path, we would now be in the centre of the sovereign debt storm.
The crisis we see unfolding in Europe has not undermined the case for the difficult decisions we have taken; it has made that case stronger. We held our deficit-reduction Budget on our terms last year, not on the market's terms this year, as so many others have been forced to. In that Budget we set out a tough fiscal mandate: that we would eliminate the current structural
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The current structural deficit is forecast to fall from 4.6 per cent of GDP this year to become a current structural surplus of 0.5 per cent in five years' time, and the debt-to-GDP ratio, which is forecast to stand at 67 per cent this year, is now set to peak at 78 per cent in 2014-15 and to be falling by the end of the current Parliament. So borrowing is falling, and debt will come down. It is not happening as quickly as we wished, because of the damage done to our economy by the ongoing financial crisis, but we are set to meet our budget rules, and we are going to see Britain through the debt storm.
There is a suggestion from some in the House that if you spend more, you will borrow less. That is something-for-nothing economics, and the House should know the risks that we would be running. Last April, the absence of a credible deficit plan meant that our country's credit rating was on negative outlook and our market interest rates were higher than Italy's; 18 months later, we are the only major western country whose credit rating has improved. Italy's interest rates are now 7.2 per cent, and what are ours? They are less than 2.5 per cent. Yesterday we were even borrowing money more cheaply than Germany. Those who would put all that at risk by deliberately adding to our deficit must explain this.
Just a 1 per cent rise in our market interest rates would add £10 billion to mortgage bills every year: 1 per cent would mean that the average family with a mortgage would have to pay £1,000 more; 1 per cent would increase the cost of business loans by £7 billion; 1 per cent would force taxpayers to find an extra £21 billion in debt interest payments, much of it going to our foreign creditors. In other words, 1 per cent dwarfs any extra Government spending or tax cut funded by borrowing that people propose today-and that is the cost of just a 1 per cent rise. Italy's rates have gone up by almost 3 per cent in the last year alone. We will not take this risk with the solvency of the British economy and the security of British families.
The current environment requires us to take further action on debt to ensure that Britain continues to live within its means. This is what we propose to do. First, there is no need to adjust the overall totals set out in the spending review. Taken all together, the measures that I will set out today require no extra borrowing and provide no extra savings across the whole spending review period. Secondly, I am announcing significant savings in current spending to make the fiscal position more sustainable in the medium and long term; but in the short term-over the next three years-we will use these savings to fund capital investments in infrastructure, regional growth and education, as well as help for young people to find work. Every pound spent in this
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For some workforces the two-year pay freeze will be coming to an end next spring, and for most it will be coming to an end during 2013. In the current circumstances, the country cannot afford the 2 per cent rise assumed by some government departments thereafter, so instead we will set public sector pay awards at an average of 1 per cent for each of the two years after the pay freeze ends. Many people are helped by pay progression-the annual increases in salary grades to which many are entitled even when pay is frozen. That is one of the reasons why public sector pay has risen at twice the rate of private sector pay over the last four years. While I accept that a 1 per cent average rise is tough, it is also fair to those who work to pay the taxes that will fund it. I can also announce that we are asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets, and we will ask them to report back by July next year. This is a significant step towards the creation of a more balanced economy in the regions of our country which does not squeeze out the private sector. Departmental budgets will be adjusted in line with the pay rises I have announced, with the exception of the NHS and school budgets, where the money saved will be retained in order to protect those budgets in real terms. This policy will save over £1 billion in current spending by 2014-15.
The deal we offer on public sector pensions is also fair to both taxpayers and public servants. The reforms are based on the independent report of John Hutton, a former Labour Pensions Secretary, and he says:
than this. I would once again ask the unions why they are damaging our economy at a time like this and putting jobs at risk. I say call off the strikes tomorrow, come back to the table, complete the negotiations and let us agree generous pensions that are affordable to the taxpayer.
Let me turn to other areas of public spending, starting with overseas aid. This Government will stick by the commitments they have made to the poorest people in the world by increasing our international development budget-and the whole House should be proud of the help our country is providing to eradicate disease, save lives and educate children-but the spending plans of the Department for International Development meant that the UK was on course to exceed 0.7 per cent of national income in 2013. That I do not think can be justified and so we are adjusting those plans so we do not overshoot the target.
Turning to welfare payments, the annual increase in the basic state pension is protected by the triple lock introduced by this Government. This guarantees a rise either in line with earnings, prices or 2.5 per cent, whichever is greater. It means that the basic state pension will next April rise by £5.30 to £107.45-the largest ever cash rise in the basic state pension and a commitment of fairness to those who have worked hard all their lives. I wanted to make sure that poorer pensioners did not see a smaller rise in their income,
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I also want to protect those who are not able to work because of their disabilities and those who, through no fault of their own, have lost jobs and are trying to find work, so I can confirm that we will uprate working-age benefits in line with September's consumer prices index inflation number of 5.2 per cent. That will be a significant boost to the incomes of the poorest, especially when inflation is forecast to be considerably less than that by next April. We will also uprate with prices the disability elements of tax credits, and increase the child element of the child tax credit by £135 in line with inflation too. But we will not uprate the other elements of the working tax credit this coming year; and given the size of the uprating this year, we will no longer go ahead with the additional £110 rise in the child element, over and above inflation, that was planned. By April 2012, the child tax credit will have increased by £390 since the coalition came into power. The best way to support low-income working people is to take them out of tax altogether, and our increases in the income tax personal allowance this year and next will do that for over 1 million people.
Let me turn to future public spending. Today, I am setting expenditure totals for the two years following the end of the spending review period: 2015-16 and 2016-17. Total managed expenditure will fall during that period by 0.9 per cent a year in real terms- the same rate as set out for the existing period of the spending review, with a baseline that excludes the additional investments in infrastructure also announced today. These are large savings and we will set out in future how resources will be allocated between different areas of government.
I am also announcing a measure to control spending which is not for today or next year, or even for the next decade, but it directly addresses the long-term challenge Britain and so many other countries face with an ageing population. Our generation has been warned that the costs of providing decent state pensions are going to become more and more unaffordable unless we take further action.
Let us not leave it to our children to take emergency action to rescue the public finances; let us think ahead and take responsible, sensible steps now. Starting in 2026, we will increase the state pension age from 66 to 67, so that we can go on paying a decent pension to people who are living longer. Australia, America and Germany have all taken similar steps. This will not affect anyone within 14 years of receiving their state pension today. By saving a staggering £59 billion, it will mean a long-term future for the basic state pension.
We are showing a world that is sceptical that democratic western Governments can take tough decisions that Britain will pay its way in the world. That is the first thing that the Government can do in the current environment: keep our interest rates low and protect our country from the worst of the debt storm. But we need to make sure that those low interest rates are available to families and to businesses. It is monetary and credit policy that is, in a debt crisis, the principal and most powerful tool for stimulating demand.
Last month, the Bank of England's Monetary Policy Committee decided to undertake further quantitative easing, and I have authorised an increase in the ceiling on its asset purchases to £275 billion. This will support demand across the economy, but we must do more to help those small businesses who cannot get access to credit at an affordable price.
We have already extended the last Government's enterprise finance guarantee scheme, and we are today expanding it to include businesses with annual turnovers of up to £44 million and accrediting new lenders, such as Metro Bank. But this scheme is by itself not nearly ambitious enough and never will be within the constraints of state aid rules, so the Government are launching a major programme of credit easing to help small business. We have set a ceiling of £40 billion. At the same time, I have agreed with Mervyn King that we will reduce by £40 billion the asset purchase facility that the previous Government gave the Bank to buy business loans. Only a small proportion of the facility was ever used. I am publishing my exchange of letters with the governor today.
We are launching our national loan guarantee scheme. It will work on the simple principle that we use the hard-won low interest rates that the Government can borrow at to reduce the interest rates at which small businesses can borrow. We are using the credibility that we have earned in the international markets to help our domestic economy. New loans and overdrafts to businesses with a turnover of less than £50 million will be eligible for the scheme, so that it stays focused on smaller companies. We expect that it will lead to reductions of 1 percentage point in the rate of interest being charged to these companies, so a business facing a 7 per cent interest rate to get a £5 million loan could instead see its rate reduced to 6 per cent and its interest costs fall by up to £50,000.
We have developed with the Bank of England a mechanism to allocate funding to different banks based on how much they increase both net and gross lending to firms. There will be a clear audit trail to ensure the banks comply, for we will use the experience of the European Investment Bank's loans for SMEs programme here in the UK to ensure that it works. We are getting state aid approval, so that the national loan guarantee scheme will be up and running in the next few months. Initially, £20 billion-worth of these guarantees will be available over the next two years. Alongside it, we are also launching a £1 billion business finance partnership. That is aimed at Britain's mid-sized companies-a crucial part of our economy, neglected for too long and now identified by the CBI director-general and others as a future source of growth. The Government will invest in funds that lend directly to these businesses, in partnership with other investors such as pension funds and insurance companies. It will give these mid-cap companies a new source of investment outside the traditional banks.
If the business finance partnership takes off, I stand ready to increase its size; and we will develop further partnerships ideas and ideas for new bond issuance to help Britain's small and medium-sized companies. No Government have attempted anything as ambitious as this before. We will not get every detail perfect first time round, but we do not want to make the best the
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The Government can use the low interest rates that we have secured to help young families, too, who want to buy a home but cannot afford the very large deposits that banks are now demanding. We will use mortgage indemnities to help 100,000 such families to buy newly built homes. We will also help construction firms that cannot get bank finance with a £400 million fund that will kick-start projects that already have planning permission; and we are going to reinvigorate the right to buy. This was one of the greatest social policies of all time. It brought home ownership within the reach of millions of aspiring families. It was slowly and stealthily strangled by the last Government, as discounts were cut and cut again. We will bring it back to life. Families in social housing will be able to buy their own homes at a discount of up to 50 per cent. We will use the receipts to build, for every home purchased, a new additional affordable home-so new homes for families who need them; new home ownership for families who aspire to it; and new jobs in the construction industry, so that we get Britain building. That is what our new right to buy will bring.
In the years leading up to the crash, our economy became dangerously overdependent on the success of a poorly regulated City of London. Meanwhile, employment by businesses in a region such as the West Midlands actually fell. By 2007, the previous Government were relying on finance for £1 in every £8 raised in taxation. That left Britain completely exposed when the banks failed, and I can confirm that, next month, we will publish our response to the report that we commissioned from John Vickers to protect taxpayers better.
It is this Government's policy to ensure that we remain the home of global banks and that London is the world's pre-eminent financial centre. That is why we will not agree to the introduction of an EU financial transaction tax. It is not a tax on bankers; it is a tax on people's pensions. Instead, we have introduced a permanent bank levy to make sure that the banks pay their fair share. I have always said that we wished to raise £2.5 billion each and every year from this levy. To ensure we do that, I need to raise the rate of the levy to 0.088 per cent. That will be effective from l January next year. We will also take action to stop some large firms using complex asset-backed pension funding arrangements to claim double the amount of tax relief that was intended. This will save the Exchequer almost £500 million pounds a year.
Financial services will always be a very important industry for the UK, but we have to help other parts of the private sector in other parts of the country to grow. That means uncongested roads and railways for businesses to move products that cannot be reduced to a screen on a City trading floor. It means providing secure power sources at reasonable prices. It means creating new superfast digital networks for companies across our country. These do not exist today. If we look at what countries such as China or Brazil are building, we see why we risk falling behind the rest of the world. So today we are publishing the national infrastructure plan. For the first time, we are identifying
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The savings that I have announced in the current Budget have enabled me today to fund, pound for pound, £5 billion of additional public spending on infrastructure over the next three years. New spending by Network Rail, guaranteed by the Government, will bring £1 billion more. We are committing a further £5 billion to future projects in the next spending period, so that the planning can start now. This is public money. By exploring guarantees and letting city mayors borrow against future tax receipts, we are looking for new ways to deploy it. But we need to put to work the many billions of pounds that British people save in British pension funds and get those savings invested in British projects. You could call it British savings for British jobs, Mr Speaker.
The Government have negotiated an agreement with two groups of British pension funds to unlock an additional £20 billion of private investment in modern infrastructure. We can today give the go-ahead around the country to 35 new road and rail schemes that support economic development. In the north-west, we will electrify the trans-Pennine express between Manchester and Leeds, build the Manchester Airport and Crewe link roads and work with Merseyside to turn the vision of the Atlantic gateway into reality.
In Yorkshire and Humber, there will be new stations and new tram capacity, and we will halve the tolls on the Humber Bridge. I want to pay tribute to my honourable friends the Members for Beverley and Holderness (Mr Stuart) and for Brigg and Goole (Andrew Percy), and indeed other local MPs who have campaigned for years to make this happen. Under this Government it has.
In the north-east, we will bring forward investment on the Tyne and Wear Metro. In the Midlands, the A45, the A43, the A453, the Kettering bypass, the M1 and M6 will all be improved. In the south-west, the Bristol link road and the A380 bypass will go ahead. For families across the south-west facing the highest water charges in Britain, the Government will cut the household bills of all South West Water customers by £50 a year. In the east of England, we are going to make immediate improvements to the A14. In the south-east, we will build a new railway link between Oxford, Milton Keynes and Bedford that will create 12,000 new jobs. We are going to start working on a new crossing of the lower Thames, and we will explore all the options for maintaining the UK's aviation hub status, with the exception of a third runway at Heathrow.
Here in London, we will work with the mayor on options for other new river crossings, for example at Silvertown. We are going to support the extension of the Northern line to Battersea, which could bring 25,000 jobs to the area. Devolved Administrations in Scotland, Wales and Northern Ireland will get their Barnett share, and we are working with them to improve the links between our nations, such as the M4 in south Wales and the overnight rail service to north of the border.
This all amounts to a huge commitment to overhauling the physical infrastructure of our nation. We will match it by overhauling the digital infrastructure, too. The Government are funding plans to bring superfast broadband to 90 per cent of homes and businesses across the country, and extend mobile phone coverage to 99 per cent of families. This will help to create a living, economically vibrant countryside.
Our great cities are at the heart of our regional economies, and we will help bring world-leading, superfast broadband and wi-fi connections to 10 of them, including the capitals of all four nations. We will go ahead with the 22 enterprise zones already announced, plus two further zones in Humber and Lancashire confirmed today. I can also confirm that capital allowances of 100 per cent will be available to encourage manufacturing and other industries into the zones in Liverpool, Sheffield, the Tees valley, Humber and the Black Country. Those allowances will also be available to the north-eastern enterprise zone, and we will consider extending to the port of Blyth to create new private sector jobs there, too. This Government's new regional growth fund for England has already allocated £1.4 billion to 169 projects around the country. For every one pound we are putting in, we are attracting six pounds of private sector money alongside it. I am today putting a further £1 billion over this Parliament into the regional growth fund for England, with support as well for the devolved Administrations. If we do not get the private sector to take a greater share of economic activity in the regions, our economy will become more and more unbalanced, as it did over the last 10 years.
Government should not assume that this will happen by itself. We must help businesses to grow and succeed, and we can do that at a national level too, with our commitment, for example, to British science. At a time of difficult choices, we made ours last year when we committed to protect the science budget. Today we are confirming almost half a billion pounds for scientific projects, from supercomputing and satellite technology to a world-beating animal health laboratory, and Government can encourage many more of our small firms to export overseas for the first time. We are doubling to 50,000 the number of SMEs we are helping, and extending support to British mid-caps, who sometimes lack the overseas ambition of their German equivalents.
We will make it easier for UK-based firms to compete for Government procurement contracts and make new applications out of government data. We will provide funds for smaller technology firms in Britain that find it difficult to turn their innovations into commercial success. We have listened to the ideas from business groups about encouraging innovation in larger companies, and we will introduce a new 'above the line' research and development tax credit in 2013 that will increase its visibility and generosity.
We will give particular help to our energy-intensive industries. I have not shied away from supporting sensible steps to reduce this country's dependency on volatile oil prices and reduce our carbon emissions. I am the Chancellor who funded the first ever green investment bank and introduced the carbon price floor. Our green deal will help people to insulate their home and cut their heating bills. I am worried about the combined impact of the green policies adopted not
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This amounts to a £250 million package over the Parliament, and it will keep industry and jobs here in Britain. It is a reminder to us all that we should not price British businesses out of the world economy. If we burden them with endless social and environmental goals, however worthy in their own right, not only will we not achieve those goals, but the businesses will fail, jobs will be lost, and our country will be poorer.
Our planning reforms strike the right balance between protecting our countryside while permitting economic development that creates jobs, but we need to go further to remove the lengthy delays and high costs of the current system, with new time limits on applications and new responsibilities for statutory consultees. We will make sure that the gold-plating of EU rules on things such as habitats do not place ridiculous costs on British businesses. Planning laws need reform, and so too do employment rules. We know many firms are afraid to hire new staff because of their fear about the costs involved if it does not work out. We are already doubling the period before an employee can bring an unfair dismissal claim and introducing fees for tribunals. Now we will call for evidence on further reforms to make it easier to hire people, including changing the TUPE regulations; reducing delay and uncertainty in the collective redundancy process; and introducing the idea of compensated no-fault dismissal for businesses with fewer than 10 employees.
We will cut the burden of health and safety rules on small firms, because we have regard for the health and safety of the British economy too. This Government have introduced flexible working practices and we are committed to fair rights for employees. But what about the right to get a job in the first place or the right to work all hours running a small business and not be sued out of existence by the costs of an employment tribunal? It is no good endlessly comparing ourselves with other European countries. The entire European continent is pricing itself out of the world economy. The same is true of taxes on business. If we tax firms out of existence, or out of the country, there will not be any tax revenues for anyone. We have set as our ambition the goal of giving this country the most competitive tax regime in the G20. Our corporate tax rate has already fallen from 28 per cent to 26 per cent, and I can confirm that it will fall again next April to 25 per cent.
We are undertaking major simplification of the tax code for businesses and individuals, including, this autumn, consulting on ideas to merge the administration of income tax and national insurance. We are publishing next week rules on the taxation of foreign profits, so that multinationals stop leaving Britain, and instead start coming here, and we will end low-value consignment
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I also want to help existing small businesses which find the current economic conditions tough. Business rates are a disproportionately large part of their fixed costs. In the Budget, I provided a holiday on business rates for small firms until October next year. I am today extending that rate relief holiday until April 2013. Over half a million small firms, including one-third of all shops, will have reduced rate bills or no rate bills for the whole of this year and for the whole of the next financial year too. To help all businesses, including larger ones, with next year's rise in business rates, I will allow them to defer 60 per cent of the increase in their bills to the two following years.
I also want to help any business seeking to employ a young person who is out of work. The OBR forecasts that unemployment will rise from 8.1 per cent this year to 8.7 per cent next year, before falling to 6.2 per cent by the end of the forecast. Youth unemployment has been rising for seven years and is now unacceptably high. It is little comfort that this problem is affecting all western nations today. The problem is, of course, primarily a lack of jobs. But it is made worse by a lack of skills. Too many children are leaving school after 11 years of compulsory education without the basics that they need for the world of work.
Our new youth contract addresses both problems with the offer of private sector work experience for every young person unemployed for three months. After five months, there will be weekly signing on. After nine months, we will help pay for a job or an apprenticeship in a private business. Some 200,000 people will be helped in this way but, as the Deputy Prime Minister has said, this is a contract. Young people who do not engage with this offer will be considered for mandatory work activity, and those who drop out without good reason will lose their benefits.
If we are to tackle the economic performance of this country and tackle Britain's decades-long problems with productivity, we have to transform our school system too, so that children leave school prepared for the world of work. My right honourable friend the Secretary of State for Education is doing more to make that happen than anyone who ever had his job before him. The previous Government took six years to create 200 academies. He has created 1,200 academies in just 18 months. Supporting his education reform is a central plank of my economic policy, so today, with
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Half of that will go to help local authorities with the greatest basic need for school places. The other £600 million will go to support my right honourable friend's reforms and will fund 100 additional free schools. These schools will include new maths free schools for 16 to 18 year-olds. This will give our most talented young mathematicians the chance to flourish. Like the new university technical colleges, these maths free schools are exactly what Britain needs to match our competitors and produce more of the engineering and science graduates so important for our long-term economic success.
To ensure that children born into the poorest families have a real chance to become one of those graduates, we will take further steps to improve early education. Last year, it was this coalition Government who not only expanded free nursery education for all three and four year-olds, but gave children from the poorest fifth of families a new right to 15 hours of free nursery care a week at the age of two. I can tell the House today that we can double the number of children who will receive this free nursery care: 40 per cent of two year- olds-260,000 children-from the most disadvantaged families will get this support in their early years.
On education and early-years learning, this is how we change the life chances of our least well-off and genuinely lift children out of poverty and that is how we build an economy ready to compete in the world. It will take time. The damage that we have to repair is great. People know how difficult things are and how little money there is, but where we can help with the rising cost of living, we will. I have already offered councils the resources for another year's freeze in the council tax. That will help millions of families, but I want to do more.
Commuters often travel long distances to go to work and bring an income home. Train fares are expensive and they are set to go up well above inflation to pay for the much needed investment in the new rail and new trains that we need, but RPI plus 3 per cent is too much. The Government will fund a reduction in the increase to RPI plus 1 per cent. This will apply across national rail regulated fares, across the London Tube and on London buses. It will help the millions of people who use our trains.
Millions more use their cars to go to work, and pick up the children from school. It is not a luxury for most people; it is a necessity. In the Budget I cut fuel duty by 1p. The plan was for fuel duty to be 3p higher in January and 5p higher by August next year. That would be tough for working families at a time like this, so despite all the constraints that are upon us, we are able to cancel the fuel duty increase planned for January, and fuel duty from August will be only 3p higher than it is now. Taxes on petrol will be a full 10p lower than they would have been without our action in the Budget and this autumn. Families will save £144 on filling up the average family car by the end of next year. At this tough time, we are helping where we can.
All that we are doing today-sticking to our deficit plan to keep interest rates as low as possible, increasing
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People in this country understand the problems that Britain faces. They can watch the news any night of the week and see for themselves the crisis in the eurozone and the scale of the debt burden that we carry. People know that promises of quick fixes and more spending that this country cannot afford at times like this are like the promises of a quack doctor selling a miracle cure. We do not offer that today.
What we offer is a Government who have a plan to deal with our nation's debts to keep rates low; a Government determined to support businesses and support jobs; a Government committed to take Britain safely through the storm. Leadership for tough times-that is what we offer. I commend this Statement to the House."
Lord Myners: My Lords, the Minister must be delighted that he is the first Minister to be able to take advantage of this new procedural protocol so that he does not have to repeat the dire message that we received in the other place earlier today. Twelve months ago, when my noble friend Lady Kennedy of The Shaws introduced the debate on the Autumn Statement, he beguiled us with visions of sunlit uplands, growth, prosperity, low inflation and a resurgence in private investment. I fear that he would be deeply embarrassed and would squirm if he reread the words he used 12 months ago in the light of the Chancellor's Statement today.
The Autumn Statement metamorphosed from a mid-year review of where we are with the economy into a Budget as it became clear that the growth and fiscal targets set by the Government are going to be missed by a country mile. The OBR has now reduced its forecast economic growth for this year, next year and the year after on no fewer than four occasions as a consequence of government policy.
Remember why we were invited to sign up to the agenda of unprecedented austerity. Cutting public expenditure, we were told, would free up resource for private sector expansion, the economy would spring back to life, unemployment would fall and inflation would subside. In fact, as we were told by the Chancellor today, what we are getting is lower growth and record unemployment: a 17-year peak for unemployment; a million young people out of work; female unemployment at the highest level since 1988; and the International Labour Organisation is forecasting that unemployment will increase by another 500,000 to 2.8 million. Inflation is way outside the target, more than double the rate of any of our major competitor countries. So much for the sunlit uplands that the Minister told us to expect 12 months ago.
The OBR tells us in paragraph 1.11 that the economy was in fact growing more strongly in 2009 and early 2010 than previous figures suggested. The policies pursued by my right honourable friend Mr Alistair Darling were working and government borrowing was
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There is no sign of a let-up: the OBR forecasts a surge in unemployment and makes two very vital points. First, the OBR now believes that the productive capacity in the economy has been permanently diminished and hence the structural element of the deficit is even higher. Secondly, the OBR and the Bank of England are unable to account for a marked decline in productivity. Yet the Government have no policies to address this decline in structural capacity and productivity. The Government and the Treasury in particular are suffering from collective cognitive dissonance. The Prime Minister told us a fortnight ago that getting the deficit down is,
The second area of cognitive dissonance relates to the sources of growth. Growth can be achieved from household consumption, but we know, and the OBR confirms, that that is falling as increased job uncertainty and a squeeze on real incomes-a squeeze that the OBR describes today as a post-war record-are having a severe impact on consumer confidence. The Government are clearly trying to take demand out of the economy. Large companies are sitting on cash and not investing because of the uncertainty. Small and medium-sized businesses cannot get credit to expand, and we are lecturing other countries to adopt the same austerity policies. From where is the demand going to come to increase economic growth? Is the Minister not familiar with John Maynard Keynes's paradox of thrift? Where is the growth going to come from?
The third area of cognitive dissonance is along the lines of, "It's all Europe's fault". Europe is no doubt very significant and we will be discussing this in Grand Committee on Thursday, but noble Lords should be clear that the economic slowdown in this country is primarily a result of a decline in domestic demand. In fact, the OBR and ONS data show that economic growth in the first nine months of this year, inasmuch as there has been any, has come from exports. Exports to Europe are up 17 per cent over the last nine months. It is domestic demand that is down; it is domestic demand that is forcing up the deficit and forcing up unemployment. Of course, as noble Lords will know, the flatlining of economic growth in the United Kingdom preceded the euro crisis by at least nine months.
This is the context, therefore, for an emergency Budget that has done nothing to add to aggregate
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I will look at a few items in the Chancellor's Statement, and allow other Members of the House to bring up other issues. I shall start with credit easing. On the Andrew Marr programme on Sunday, the Chancellor said the Government would be lending to SMEs. Now it sounds as though it is more like an interest rate subsidy or that we will be lending to the banks to lend to SMEs. Can the Minister tell us when the policy changed? It cannot be that the Chancellor did not know his own policy, yet he very clearly said on the Andrew Marr programme that the Government would be lending to SMEs. Why did the policy change over a matter of three days? How will it work in practice? How much will it cost? Where do the skills lie in Government to evaluate risk?
It is clear that the Governor of the Bank of England wants nothing to do with credit easing. How will credit easing be co-ordinated with quantitative easing, and who will make the credit judgments? What assumptions have the Government made about the probability of default and loss in the event of default as a consequence of credit easing? There is absolutely nothing on this in the Chancellor's autumn Statement. Has credit easing actually been approved by the Permanent Secretary? Does it pass the tests for value for money? How much will the banks benefit? My sneaking suspicion is that this is another back-hander to the banks, something that the banks will benefit from more than SMEs. We have the abject failure of Project Merlin as evidence of the ability of the banks to constantly outwit this Government.
Much was made in the leaks over the weekend about infrastructure expenditure: an extra £5 billion. I am not going to look a gift horse in the mouth-this is a good move-but let us put it in context. This Government cut public expenditure investment by £50 billion a year ago. It is now increasing it by £5 billion over a four-year period: £1 billion per annum is going to be spent by the Government on additional infrastructure expenditure out of total government expenditure during that period of about £2.8 trillion. Mr Fallon said on "Newsnight" last night that pension fund participation in this programme was guaranteed. I invite the Minister to name some of the projects where agreements have been reached, to tell us what the pay arrangements are or the tolls that will be charged.
Quite frankly, this does not cut the mustard. I remind the House that in this autumn Statement, the Government have said they will cut investment by public funds by the following amounts over the next four years: £2.4 billion, £3.2 billion, £2.5 billion, £2 billion, £2.4 billion and £4.1 billion. Those are the real numbers, not the figments of imagination that we got out of the proposals for infrastructure investment. Nor does the Treasury seem to have given any thought to how these funds would displace funds that otherwise would have been used to support new private sector investment.
I will also say a little about the bank levy. Project Merlin has clearly failed. The Governor of the Bank of England has said that lending to SMEs has contracted-not increased, contracted-by £5 billion over the last 12 months. Does the Minister agree with that number? What assumption have the Government made about how the bank levy will operate in the future? Will it be passed on to customers? Let us remember that the Government are not increasing the total tax paid by banks; they are merely adjusting the rate. This Government do not believe that the banks can pay any more tax but are planning to increase the tax on women and families by £1.3 billion a year through adjustments to the family tax credit. This is contemptible, verging on the wicked.
On spending cuts, the Chancellor says that he has been able to meet his moveable fiscal rules because he will cut spending by an additional £8.3 billion in 2015-16 and £15.1 billion in 2016-17. But other than the cut in the family tax credit, he says nothing about where these cuts will come from. Can the Minister tell us what will be cut?
In conclusion, plan A is no longer credible. It is no longer responsible, respectable or worthy of being taken seriously by anyone. These plans today have been hastily cobbled together. They do not come even close to passing the tests for a plan for growth. The Budget was described by the Chancellor as a march of the manufacturers. Today, we have had a march of the myth-makers. The Government have killed confidence in the economy. Labour's five-point plan is practicable, fundable and implementable, and worthy of implementation compared with the dross that we have had in the autumn Statement today.
Lord Sassoon: My Lords, was not all that fun? I really think that at least the noble Lord, Lord Eatwell, studied the documents, to which we will come in a minute, unlike the noble Lord, Lord Myners. There is nothing of substance from the opposition Benches, so we have the noble Lord, Lord Myners, brought out of retirement to give us a bit of theatre to cheer up our early evening. But we really have got some serious things to talk about.
The Statement made by my right honourable friend the Chancellor was made against a very difficult situation in the eurozone. The Government's overriding priority is to demonstrate our commitment to live within this country's means and to keep our interest rates low and stable. We have to ensure that we work to stimulate the supply of money and credit to make sure that those low interest rates are passed on to families and businesses. My right honourable friend's Statement supports our business and invests in our infrastructure. I am pleased that the noble Lord, Lord Myners, at least welcomes that increased investment in our infrastructure because that is what will lay the foundations for sustainable growth into the future.
If the noble Lord, Lord Myners, had spent time reading the documents today, he would understand some of the facts that have been laid out by the independent Office for Budget Responsibility. Let me remind him and other noble Lords of some of that.
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Having said that, the OBR goes on to lay out its growth projections for the next few years. In terms of the top-line growth from 2012 through to 2016, those numbers in each year are forecast to be higher than the growth of the eurozone. So we should not talk down the prospects of the country. The noble Lord asked what the sources of that growth had been. If he had got as far as chart 1.4 in Autumn Statement 2011, which is not very far in, it shows exactly where the OBR expects the growth to come from. For example, it expects total investment to contribute four percentage points to growth between 2010 and 2016, while net trade will contribute two percentage points. The noble Lord, Lord Myners, shakes his head. Does he have better numbers? Does he not share the analysis of the OBR? Those are its numbers.
If the noble Lord was to look a bit further into the masterly document that the OBR has produced, its latest forecast for reduction in general government employment over the period 2011 to 2017 will be 710,000 jobs. It forecasts that in the same period the private sector will generate not 700,000 new jobs but 1.7 million new jobs. Again, I say to the noble Lord and others on the opposition Benches that the policies that this Government are driving through are those which will underpin sustained growth and, that the private sector is already delivering that growth.
On borrowing, we had all sorts of contradictory thoughts from the noble Lord. I am not sure whether he wants us to go faster or slower on the pace of balancing the budget. It was not at all clear to me. All I know is that, if we were sticking in the current environment to the previous Labour Government's plans, borrowing in 2013-14 would not be the £79 billion which this Government will be borrowing, but £100 billion. To look at it another way, over the spending review period, under the plans of the previous Government, there would be an additional £100 billion of borrowing. That would not be just borrowing: it would be £100 billion of additional debt, with which a Labour Government would have wished to saddle this country.
The noble Lord also gets it wrong on the pension funds and infrastructure. The pension funds have come to us and have said that they wish to allocate something
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After all, this is the noble Lord who a few months ago-perhaps last month-was advising HSBC's retail bank to move to Paris. This is a man who does not have the best interests of British banking or the British economy at heart.
Lord Myners: I think that that borders on an accusation of treachery and that the noble Lord owes me an apology. What I said was that it would not surprise me, in the circumstances, if the board of HSBC felt that it had to consider matters of location, which is exactly what it confirmed it was doing when it gave evidence to the Treasury Select Committee. To suggest in some way that I am guilty of some form of treachery is a monstrous suggestion, which I hope that the Minister will withdraw.
Lord Sassoon: The noble Lord, Lord Myners, mentions treachery, which never passed my lips. He was reported as saying that he suggested that HSBC should be moving its retail bank to Paris. If in fact that was not the advice he was giving, I am very glad that he has now clarified that.
This Government are making sure that we deal with the legacy of our predecessors-of his Government -and return our economy to sustainable growth. That means sticking to our deficit plan to keep interest rates as low as possible, which is what was at the heart of my right honourable friend's Statement this afternoon.
Lord Newby: My Lords, first, I thank the Minister for not repeating the Statement made by the Chancellor in another place. This is a welcome change in your Lordships' procedure. I wonder if I could ask him two questions about infrastructure.
We welcome the fact that the pension funds have said that they are prepared in principle to invest £20 billion in infrastructure, but as the noble Lord, Lord Myners, said, it is clear that there is a long way to go before those plans are concrete. Can the Minister tell us something about the timetable that the Government envisage before the first tranche of that £20 billion starts to flow into specific infrastructure projects? Clearly, time is of the essence on this.
Secondly, on infrastructure more generally, the Statement is silent on the question of social housing, which in my view is a very serious omission because we have a housing crisis. Not only is housing necessary in itself, it is also one of the quickest and easiest ways of creating employment up and down the country. Does the Government's definition of infrastructure, particularly in relation to the pension fund money which may be coming in, extend to social housing and, more generally, what plans do the Government have on this front?
The situation with the pension funds is that two groups of funds approached us to ask if we as the Government could facilitate their creation of a collective vehicle through which they might invest. We have signed a memorandum of understanding with the groups of pension funds, and we will work quickly to help them set up a vehicle that will then be in place for them. We will be reporting on progress certainly by the Budget next year. Of course, there is nothing to stop those pension funds from investing now, and indeed some of them do so through private sector vehicles.
Further, the UK pension funds are not the only bodies putting up their hands and recognising the attraction of this asset class. Noble Lords may have seen only yesterday an interesting article by the chairman of the Chinese sovereign wealth fund, the CIC, in the Financial Times, saying that it was looking to invest in this sector. The appetite for investment in UK infrastructure is very strong. The UK pension fund vehicle will be additive, and we welcome that.
The housing strategy was published on 21 November. The Government have a clear plan for supporting the housing market in order to achieve a more stable and sustainable position. Without going in detail through every element of what that strategy consists of, we are introducing the new build indemnity scheme to support builders and lenders in increasing the supply of new homes by increasing the supply of affordable mortgage finance. We are launching the new £400 million "Get Britain Building" investment fund. We are bringing more empty homes and buildings back into use. We are invigorating the right to buy, and for the first time within that, the receipts from additional right-to-buy sales will be used to support the funding of new affordable homes for rent on a one-for-one basis. We are supporting locally planned large-scale developments and we are consulting on various planning obligations. What was set out on 21 November is a substantial and important package for housing.
Baroness Lister of Burtersett: My Lords, can the Minister explain to the House the justification for reneging on the pledge to increase in real terms child tax credit, given that that increase was supposed to stop child poverty rising? Can he tell the House what the impact of that will be on the number of children living in poverty?
Lord Sassoon: My Lords, the original £110 rise over inflation was announced at a time when the expectation as regards inflation was significantly lower than has turned out to be the case. The inflation increase that will be made is much higher than intended. Inflation in all the independent forecasts is expected to come down significantly next year, so by April 2012 when the uprating comes in, the inflation expectations are going to be different. That is the basis for the change now. On the distributional effects, those have been set out in considerable detail in a document that was put up on the Treasury's website this afternoon.
Lord Empey: My Lords, I welcome many of the comments made in the Budget Statement but there is one that I want to ask the Minister to clarify. He announced that he was asking the independent pay review bodies to consider how public sector pay can be made more responsive to local labour markets. Can he explain what that means? How are the regions geographically defined? Further, if there were to be a reduction in public sector pay in some of the regions, would that lead on inevitably to reductions in benefits in those areas as well?
Lord Sassoon: My Lords, I am grateful to the noble Lord, Lord Empey, for drawing attention to this critical issue because it is potentially an important structural change in the economy. We want to make sure that in the labour markets in all the regions of the country there is no unfair competition or crowding out in any way of the ability of the private sector to hire people. Private sector pay has to be reflective of local market conditions where until now public sector pay has been set on a national basis. We have said that we will be asking the independent pay review bodies to consider how pay can be made more responsive to local labour market conditions, and they will report to us by July 2012.
Lord Higgins: My Lords, I think that it is perhaps rather unfortunate that the Statement was not repeated today because it is very well worth repeating. It includes a remarkable number of individual proposals that are going to help the recovery without endangering the Chancellor's overall objective of maintaining what I think has become known as plan A, which will result in the deficit being reduced. Is it not rather surprising that the shadow Chancellor in another place continues to say that the proposals of the Government are cutting too fast and too soon? We have seen how very difficult it is to make cuts quickly, and in fact that is one of the problems we have had to face.
In answer to the noble Lord, Lord Myners, saying just now that the Government's proposals are not respectable, does my noble friend accept that the OECD-perhaps as respectable a body as one could possibly imagine-has warmly endorsed the overall drive of the Chancellor's policy? Moreover, is it not clear, since we have the advantage of the IBR forecast taking into account what is in the autumn Statement rather than making a forecast based on not knowing what the effects of the Chancellor's Statement would be, that what the Government have proposed in the autumn Statement will effectively bring matters back on course so that the plans that the Chancellor originally had will be fulfilled?
Having said that, there are some concerns about the situation with regard to monetary policy. Paragraph 3.53 in the forecast of the OBR is very strange. It is important that we should maintain growth in the money supply if we are to see recovery. Can my noble friend tell us what the situation is so far as the money supply is concerned?
Lord Sassoon: I am grateful to my noble friend Lord Higgins. I wondered whether we would get through this debate without mention of the money supply, but he has not disappointed me. We have had it as well.
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Lord Davies of Stamford: My Lords, the economy has already suffered two major negative demand shocks, one from the Government's excessively rapid fiscal retrenchment and the other from the crisis in the eurozone. Will the Government try to avoid creating a third substantial negative demand shock by allowing banks which have under Basel II to increase their capital in relation to risk assets to do so by the simple expedient of reducing their lending and their banking book? Will the Government take powers to ensure that this increase in capital is done exclusively as a result of rights issues, other capital issues or issues of synthetic capital such as contingent convertible bonds, or by increasing retention of earnings at the expense of dividends and bonuses? Does the Minister agree that, if that is not done, the Government will cause a devastating blow to the economy, which is already on the ropes from these other causes?
Lord Sassoon: My Lords, the first thing to remind the House of is that it was my right honourable friend the Chancellor who took the lead in ensuring that the Basel III reforms on capital were phased in over a period to 2019, which was accepted by the G20 precisely for the reasons that the noble Lord gives; that is, that we did not want to place more burdens on the credit situation in the short term. Similarly, the Vickers commission has recommended that certain of its reforms be on a similarly extended timetable for the same reason. As for today's measures, the £20 billion of underpinning of the national loan guarantee scheme is directed at ensuring that the flow of credit to small and medium-sized businesses continues, as it must do as we go into the recovery phase of the economy.
Baroness Wheatcroft: My Lords, the noble Lord, Lord Myners, referred to the march of the myth-makers. Does the Minister agree with me that perhaps the biggest myth was that we had done away with boom and bust? As a result of that, what we are paying in interest on our debt is more than what we are spending on education, and that is with interest rates at the low level that plan A had assumed. What does the Minister think will happen to those interest rates if we do not stick to plan A?
Lord Sassoon: My Lords, I dread to think what would happen to interest rates. The interest rates on our 10-year money have stayed rock solid. They are
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Lord Sassoon: My Lords, I can only refer again to the numbers in the OBR's document. I do not want to detain the House by repeating them all, but they show the cumulative effect of all these measures, including the infrastructure measures. I am grateful to the noble Lord for drawing attention to those measures because they are now more central. The economic infrastructure in particular has become central to the Government's thinking and planning in a way that it has never been under previous Governments.
Baroness Kramer: My Lords, there are some key measures in the Statement on which I congratulate the Government and which completely change the framework for both businesses and infrastructure to access financing. Over the long term, they will create the capacity for accelerated growth that we should all have seen more than a decade ago.
I have two questions for the Minister. First, micro-business is obviously the beginning of the business pipeline. The national loan guarantee scheme works through the banks, which pay no regard to micro-businesses. That does not seem to be a scheme that particularly helps them. They also seem to be too small for the business finance partnership. Will there be, or are there, mechanisms within credit easing to address that particular group of essential businesses?
Secondly, the Minister will guess that I am absolutely delighted that the Northern line will be financed against the community infrastructure levy and that similar powers may be given to various city mayors through tax increment financing mechanisms. Will he look at applying this far more widely, because many small infrastructure projects could come very quickly out of the pipeline, be well managed by local authorities working in co-ordination with each other and give us a much wider distribution of infrastructure as a spur to growth?
Lord Sassoon: My Lords, on the first of the questions which my noble friend raises, money will indeed flow through the banks as a result of the guarantee scheme to micro-businesses, although I appreciate that it will always be tougher for them. It is worth noting that there will be banks coming into the credit easing framework that were not there previously-some of the new entrants into the market-so we are maximising the footprint through the banks. I draw attention to
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On my noble friend's second question, I well take the point about the importance of locally driven infrastructure schemes, which is why my right honourable friend the Chief Secretary announced the initial £500 million fund specifically for that purpose earlier in the autumn. Beyond that, the use of the CIL is being considered, but I would just caution that we need to think about the fiscal impact of widening that scheme.
Lord Wills: My Lords, since I came into this House some 18 months ago, one of the most notable features week after week has been the presence on the Bench to the right of the Minister of former Ministers who served with great distinction in previous Conservative Administrations, including three former Chancellors who served in the Treasury during the 1980s. Can the Minister shed any light on why not a single one of them is in their place today to support him in this most depressing Statement?
Lord Sassoon: My Lords, I take it as a sign of great confidence in the direction of policy of my right honourable friend the Chancellor of the Exchequer because former Chancellors are never shy of giving their advice. If they are not giving it today, I assume that they are satisfied.
Lord Cormack: My Lords, I am sure that my noble friend is entirely right in what he has just said. Am I right in believing that the money that has been earmarked for HS2 is still there? If that is the case, could I suggest to him, bearing in mind the stimulating effect on the economy that infrastructure plans have wherever they take place, that it might be better to abandon that scheme and to use that money for reinstating more Beeching lines and other things, so that people all over the country have the benefit of the money that my right honourable friend the Chancellor has said they should have? Could we abandon that scheme in favour of others?
Lord Sassoon: My Lords, I am delighted that not only can we continue with the HS2 scheme, although it does not impact in any material way on the current spending review period, but also that a number of other exciting rail projects have been announced or confirmed today; for example, the reopening of the Oxford-Bedford link as part of the overall possible link between Oxford and Cambridge, the electrification of the trans-Pennine line, and lots more that is going in rail infrastructure.
Lord Lucas: My Lords, the noble Baroness, Lady Hayter, is being optimistic in thinking that she will achieve what she sets out to achieve in her amendment. Governments usually have their heads well sunk into the sand by the time legislation gets this far, particularly with the Daily Mail behind it. However, I hope she achieves success in making sure that this business is properly regulated.
As the noble Baroness said, the real problem was that motorists were being subjected to rogue clampers and treated in completely unacceptable ways. That situation might have been dealt with in other ways but it is now being dealt with in this way. There is nothing that I can see in the Bill at the moment that will save motorists from being done in by rogue ticketers. Indeed, the clampers will not have to change their tactics much because in Clause 54 there is a provision for movable barriers. All they will need is a gate across the entrance to a car park and they will have effectively immobilised a car and put it in exactly the same position as if there was a clamp on it.
There are also individual barriers on individual parking places-those little posts that have a key turned in the top-and so individual parking spaces may, under the provisions of Clause 54, continue to be subject to the kind of practice the Bill objects to-that is, the immobilisation of a car, subject to a stiff penalty, without any regard to the needs of the occupant, or of a blue badge holder and so on.
Not only is the Bill deficient in that it allows a slight change of tactics to continue the practices objected to but it opens the business of ticketing to a whole range of untrustworthy organisations. It does not take much to find someone who will sell you a book of 20 parking tickets. You then go and slap them on any car you like and if the motorist pays up you get a cheque back-very nice. This can be done under the guise of protecting your own property-which you might be-or you might do it randomly. There is no proper control over this.
The people doing this are, as the noble Baroness said, being given access to the DVLA database; they are entitled to know whose car it is. If the police are occasionally corruptible, what do we think of these people? If you want to know whose car is parked somewhere, you make sure that you make friends with the person who gives you the ticket that you stick on the car and they will drop you the name and address as if it was public property. We have to make sure that there are tight regulations under the Bill for anyone engaged in ticketing, and also on those who are allowed to continue operating fixed barrier car parks, whether of the conventional kind such as you might find under the National Theatre or others where you drop in coins as you exit. There needs to be proper regulation of those people to make sure that we do not get the cowboys back in another guise.
I believe that the Government intend to license the British Parking Association-it is a totally reputable body and I am quite happy that it should be in charge of the scheme-but any organisation such as that will
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We need to sort out the business and to make sure that anyone benefiting from the structures in the Bill is reputable; that it is easy to obtain redress when things have gone wrong and that it is cost-free to obtain that redress. This Bill does not do that yet. I hope the noble Baroness will receive support from her Front Bench in pushing for changes, even if she cannot get all that she asks for.
Baroness Randerson: My Lords, unlike the noble Baroness, I start from the point of view that clamping must be stopped. I have concerns about some aspects of the Bill, including the role of the accredited trade association. In practice, as the noble Lord said, there is only one and, although it may be a perfectly reputable organisation, not all of its members live up to the expectations that one has of them. As has been said, it is very difficult to police a members' organisation. There needs to be a further effort, via legislation, to raise standards in the industry and there need to be mechanisms that ensure standards are raised, such as a guaranteed right of appeal.
The code of conduct must include a provision on clear bay markings, lighting and adequate size of parking bays. There have been too many cases of people being fined exorbitant amounts of money because one wheel of their car protrudes into the neighbouring parking bay. Irritating as that may be to you and I when we go to the supermarket and it is the last available parking bay, it is nevertheless the case that at night in a dark car park, when the markings have long ago rubbed off, that can be-and is- exploited. There is plenty of evidence of that.
Penalty charges and tickets should be levied only by companies that adhere to the code of conduct, to which I have referred, and the charges must be reasonable. A good benchmark would be the charges levied by local authorities. They vary of course from area to area, but the joy of that as a measure is that it takes account of the local market in parking provision and enables variation from one part of the country to another. It gives a reasonable comparison.
I should like to ask the Minister about the experience in Scotland. I understand that wheel clamping is illegal in Scotland: has there been the explosion in unfair and extortionate ticketing that the noble Baroness fears? I do not recall reading or hearing about that problem but it would be useful to hear about the experience in Scotland.
As I understand it, that means that it would be legal to wheel clamp foreign vehicles. I wonder where that places us in terms of EU law and international law and whether it is possible to discriminate against foreign vehicles in that way. I am not for one minute suggesting that it is desirable to do so and I do not know whether the noble Baroness intended that outcome but, as far as I can see, included in those vehicles that are not registered would be foreign vehicles. That could cause a problem.
I am aware of one example near where I live, in what was my constituency. I dealt with this thorny problem for a very long time. There was a block of flats where it was not practical or possible, for reasons of geographical layout, to have erected a barrier or gate. The block of flats is next to a university that charges for parking, so the students and the staff park all over the place, including in the area designated for residents of the blocks of flats, and some of them are even prepared to trap people in their garages, let alone take their parking spaces in their front gardens and on the private road. The residents of the flats are not in the position where they can erect a gate or barrier; they surely do not want to set up a system where they charge people through ticketing, which would be a sledgehammer to crack a nut. It is a difficult nut to crack but, nevertheless, the expense, complexity and legality of setting up a system for ticketing and levying tickets on people is ridiculous. So the obvious answer was wheel clamping, because there is nothing more annoying than not being able to drive your car home at the end of the day. We cannot work on exceptions such as that one, but the Government need to look at how to solve the problem for the people in that block of flats. The problem referred to in that part of the amendment needs to be looked at again.
Proposed new subsection (2C) in Amendment 42 sets up a system to allow clamping to continue, which has not been successful in the past. I cannot support amendments that establish a major regulatory system, because one desirable thing about this Bill is that it narrows down the number of people who have the right to get information from the DVLA. It is important that information is channelled down so that it has to go via the accredited trade association, and only companies that are members of that are eligible to get that information. In my experience, it is extremely worrying how easy it is to find that information and the misuse to which that information is put. The Bill takes the right approach in narrowing that down, so I do not believe that the amendments that we are discussing take the right approach from that perspective.
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