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Moved, That the Grand Committee do report to the House that it has considered the Legislative Reform (Lloyd’s) Order 2008. 13th Report from the Regulatory Reform Committee.—(Lord Davies of Oldham.)
Lord Newby: I thank the Minister for that introduction to the order. The document produced by the Treasury was a model of clarity and comprehensiveness. I found it, for those of us who do not live our lives worrying about the minutiae of the way in which Lloyd's operates, a particularly helpful document. Given that I spent some time criticising the Treasury for not telling us what it was up to, it is only fair to say that this is a particularly useful piece of work.
The governance proposals in the order seem to be perfectly sensible second-order changes and I have no comment on them. The two more significant changes are those in Articles 9 and 10. I can absolutely see the competition arguments for the Article 9 changes, expanding the number of people who can place business at Lloyd's. I am reassured by Lloyd's intent to require that additional people involved in the market have the same prudential standards as those
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I have rather more concerns about the second substantive change, removing the prohibition on associations between managing agents and Lloyd’s brokers. This provision, which is now being repealed, was introduced for a good reason, as there was a broadly perceived conflict of interest in the same organisation being able to undertake both functions. Once the changes have been made in Article 9, I can absolutely see why the changes in Article 10 follow on, but there is a real danger that the same conflicts of interest as applied before will rear their heads again.
I have received very detailed representations from an individual who felt—so far as I can see, quite fairly—that he lost out significantly as a result of those conflicts of interest being in operation before the change that we are now repealing. He is very concerned that, once this goes through, the regulatory regime will not be strong enough in practice to stop conflicts of interest re-emerging to the detriment of those doing business through Lloyd’s. I know that that concern was expressed by at least one of the people who made representations in the consultation process.
How is this conflict of interest to be avoided in future? The answer is that Lloyd’s is putting some rules in place and the FSA will also be keeping an eagle eye on how the new system operates. I am concerned about whether the FSA’s eagle eye will be sharp enough and whether its oversight will be sustained sufficiently from the start to avoid the likely conflict of interest that will emerge. If it were possible for the happy situation to arise in which the FSA’s oversight was effective, I would absolutely be able to see why, from a competitive market position, Lloyd’s would benefit from this change, but I remain concerned that the FSA will not be able to undertake that oversight as effectively as we would like. There is no way, a priori, of knowing whether that will be the case, but I hope that the Treasury will keep a very close watch on matters and that the FSA will report regularly on how it is exercising its oversight in that area. There was a major scandal in this area in the past and we do not want another one.
Lord Davies of Oldham: I am grateful to the noble Lord, Lord Newby, and I very much appreciate his anxiety in relation to his last point. On his earlier point concerning how soon the controls will be in place, there will be a slight delay following the passage of this order before the mechanism is in place, but I assure him that it will be very short and that it should not give cause for concern. Lloyd’s has published its draft by-law imposing the standards. It is intended that it will be in force in the new year, so all the work has been done and it will follow very rapidly on the passing of this order.
I turn to the question of whether the new system will provide sufficient protections, and I agree with the noble Lord, Lord Newby, that this is absolutely critical. The new rules will require additional disclosure from managing agents, so more information will be available. They will have to reveal any broker associations in their syndicate business plans and say how they intend
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On effectiveness, the FSA raises its head, and I am conscious that the noble Lord and I have debated such issues in a wider context in recent months. The FSA has rules on conflict of interest in financial services and has been operating these for a number of years. I recognise the pressure on the FSA with regard to crucial issues with the banking system in recent months and over the past year or so. But it has not been suggested that the FSA has failed to enforce the conflict of interest regulations. Our proposals will ensure that the FSA, Lloyd’s and syndicate members have much greater information at their disposal, which will ensure that the actions of managing agents are subject to monitoring at all three levels, assisting enforcement in this area. That point has been considered. The initial information and the necessary protection which the noble Lord has identified is a crucial aspect of the order with regard to the governance of Lloyd’s.
To end on a most unexpected note, I believe I heard—although I may have misheard—the noble Lord, Lord Newby, offering some praise to the Treasury. This is a rare event.
Lord Newby: The Minister is quite right, but I do not intend to make it a habit.
Lord Davies of Oldham: I never thought that for one moment, nor did I assume that it would be catching to the Opposition Front Bench. On this occasion it has been registered, however, and I do not propose to detain the Committee any further; I feel that I must move post-haste back to the Treasury with the glad tidings.
On Question, Motion agreed to.
National Assembly for Wales (Legislative Competence) (Social Welfare and Other Fields) Order 2008
4.27 pm
Lord Davies of Oldham rose to move, That the Grand Committee do report to the House that it has considered the National Assembly for Wales (Legislative Competence) (Social Welfare and Other Fields) Order 2008.
The noble Lord said: This order, which relates to safeguarding and promoting the well-being of children and young people in Wales, will confer legislative competence on the National Assembly for Wales under Section 95 of the Government of Wales Act 2006. The Order in Council process created by the 2006 Act provides an enhanced mechanism to enable the Assembly to achieve its legislative priorities. The order is subject to affirmative resolution in both Houses and to the approval of the National Assembly. It was considered in the other place earlier today.
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The powers being sought in the draft order will enable the Welsh Assembly Government to deliver on their aspirations for children and young people in Wales and to place greater emphasis on supporting those who are most vulnerable and disadvantaged. While the Welsh Assembly Government have had wide-ranging executive powers in respect of children and young people for many years, those powers have proved insufficient for them to achieve their aims. That is why they have sought legislative competence for the Assembly, so that primary legislation relating to Wales can be reformed.
The Welsh Assembly Government’s principal aim is to consolidate and reform the law in relation to the safeguarding and welfare of all children and young people in Wales; to strengthen preventative measures; and to tackle child poverty. For some time there has been a growing difference of approach between England and Wales in the policy, planning and delivery structures for children’s services. Wales, for example, does not have children’s trusts. Children’s services in Wales are based on agencies working in partnership, with the director of social services and chief education officer responsible for the welfare of vulnerable and disadvantaged children and their families.
The view of the Welsh Assembly Government is that the current restrictions in the law on child welfare limit them in developing policies to tackling Welsh solutions to child poverty and their agenda to strengthen support to vulnerable children and families. For this reason the draft order before you will insert a number of matters into Schedule 5 to the Government of Wales Act 2006, principally in the field of social welfare. These matters concern the provision of social care services, the making of arrangements and planning to help vulnerable children, children and young people more generally, and those who care for children. The matters also cover adoption, fostering and the Children’s Commissioner for Wales. The draft order also inserts matters into the education and training and sport and recreation fields, ensuring that any Assembly legislation relating to children and young people can also cover aspects important to their welfare, such as play facilities and pre-school activities for children.
Taken together, these matters will enable the Assembly to legislate to consolidate and reform the law relating to the safeguarding and welfare of all children and young people in Wales, consistent with the Welsh Assembly Government’s policy aims. On 15 July, the National Assembly considered and unanimously agreed the draft order before the Committee. Prior to that, the Constitution Committee of this House considered the proposed order and confirmed that it raised no issues of constitutional principle. It was also scrutinised by the Welsh Affairs Committee and a committee of the National Assembly for Wales. The Government are grateful to all those who worked so hard to examine the issues in the order prior to its presentation today.
The process of scrutiny was rigorous and provided members of the committees, along with interested parties and stakeholders, with an opportunity to comment on, question and propose amendments to the proposed order. This led to significant improvements being made. I am pleased to say the committees supported the
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The Welsh Affairs Committee sought assurance that the order did not provide competence to allow the National Assembly for Wales to remove the defence of “reasonable chastisement” relating to the punishment of children. I recognise that that is a point of some controversy and debate in Wales, as it is in England. I make it absolutely clear that the draft order before us today does not provide scope to allow the Welsh Assembly Government to legislate to prohibit smacking. Following pre-legislative scrutiny, this order’s accompanying Explanatory Memorandum has been amended to make this point crystal clear.
The Welsh Affairs Committee also recommended the inclusion of the UK Border Agency and the Welsh fire and rescue services in the list of bodies upon whom the Assembly could place a duty of co-operation to safeguard and promote the well-being of children and young people. I can confirm that the fire and rescue services are included by virtue of matter 15.2. The draft partial immigration and citizenship Bill published in July, subject of course to widespread consultation, places this duty on the UK Border Agency as regards its activities across the UK. I am sure that the Committee would agree that it would be inappropriate and presumptive for this order to pre-empt that legislation by including the UKBA within the scope of the draft order, when a Bill is out for consultation, which both Houses will scrutinise with the greatest care in the usual manner in due course.
The Welsh Affairs Committee recommended making it clear that the draft order did nothing to weaken the Children’s Commissioner’s powers in relation to whistleblowing. The Welsh Assembly Government fully agree that whistleblowing is an essential safeguard, but they wish to ensure that the Assembly can legislate on all aspects of the commissioner’s role and are concerned that making specific reference to whistleblowing could restrict its ability to do so.
The draft order will enable the development in Wales of distinct legislation on child welfare, an area which has been devolved for many years. It will enable the Welsh Assembly Government to improve the lives of and outcomes for some of Wales’s most vulnerable children and families. It will enable the National Assembly to pass Assembly measures to ensure the welfare of all children and young people in Wales, to tackle poverty and social exclusion, to better define public bodies’ role in contributing to ending child poverty and to rationalise and consolidate the statute book on vulnerable children. This is sensible and worthwhile legislation and I commend the order to the Committee. I beg to move.
Moved, That the Grand Committee do report to the House that it has considered the National Assembly for Wales (Legislative Competence) (Social Welfare and Other Fields) Order 2008. 28th Report from the Joint Committee on Statutory Instruments.—(Lord Davies of Oldham.)
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Lord Glentoran: I thank the noble Lord, Lord Davies of Oldham, for his clear explanation. I seem fairly regularly to be sitting opposite him; first it was on sport, then on gold, and now, of all things, on Wales, and children in particular, which is one of the most important issues in the order.
In principle, my party and I support the order, so we are not at loggerheads or fighting about it in any one way. The Explanatory Memorandum comprehensively sets out the policy background to the proposed order and includes the worrying statistic that some 28 per cent of children in Wales live in poverty, in households with incomes below the 60 per cent median. I say to the Bill team that I found the notes for the order comprehensive. They put me into the picture pretty quickly, which is a significant advance on notes to previous legislation associated with Wales. As I think everybody knows, there are 13 different ways of legislating for Wales. It has been complicated, but if the notes are an example of the way we are to go, it is clear that it is getting simpler.
I draw the Government’s attention to the report of the Welsh Select Committee—HC 576, published on 26 June 2008—and its conclusions and recommendations. I shall not read them all out, but paragraph 1 states:
“We do not believe that the process for the scrutiny of this proposed Order has been satisfactory”.
I know that my noble friend Lord Roberts will expand on that. Paragraph 8 states:
“We note with concern the Deputy Children’s Commissioner’s evidence that the split in responsibilities between England and Wales for safeguarding and promoting the well-being of children and young people has resulted in vulnerable children not receiving the services they need”.
The report makes quite clear what she found and quotes what she said. I would like an undertaking from the Minister that the Government have taken it on board and are moving to remove the gap into which those poor young people are liable to fall.
A number of other matters arise from the report on which I would appreciate the Minister’s observations. First, although the evidence of the deputy commissioner to the Select Committee contended that there were legislative constraints on the Welsh Assembly Government’s ability to legislate in the proposed area, as a consequence of which enhanced legislation and competence were sought, those constraints were not made overwhelmingly clear. We still wonder what they actually are. A reference was made by the witnesses to the need for a Wales approach, but that in itself did not take things much further. What I am saying now is similar to what would have been heard by those listening in the House of Commons, because my honourable friend David Jones was there. He was ill this morning, so I have not had time to put my head together with his, but I have some of his script so that we are on the same line.
The Select Committee recommended that in future it would be helpful if, when existing legislative constraint is cited as a reason for applying for an order, a comprehensive explanation of that constraint were included in the Explanatory Memorandum. Can the Minister confirm that the Wales Office accepts the
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Perhaps most importantly, the Select Committee noted with concern the evidence received from the Deputy Children’s Commissioner for Wales, which I have already mentioned, and the split in responsibilities between England and Wales for safeguarding and promoting the well-being of children and young people. Interestingly, the evidence from the deputy commissioner was extremely disturbing; she noted the gap that I have already mentioned and went on to say:
“To sit here and say it objectively is one thing, but when you are meeting these children and seeing the impact on them, you would not believe that these things are happening in the UK and there is not an organisation there which is able or empowered to properly champion their rights”.
I hope the Minister and the rest of the Government will quickly find a way in which to put that right.
Most worryingly, perhaps, is that the deputy commissioner believes that in the aftermath of the LCO, after this order is passed, the cross-border problems could actually increase. Can the Minister assure me that that will not happen—and I do not mean may not happen, but will not happen—because of government action? Will he indicate whether the Government are already taking steps to put in place an overarching framework that will cover those things mentioned by the deputy commissioner in her evidence?
Finally, there was a recommendation from the Select Committee that the proposed order be amended to make it clear that nothing in it would weaken the Children’s Commissioner’s existing powers in relation to whistleblowing, which the commissioner described as one of his essential safeguards. The Minister gave that undertaking in his opening remarks, but it would be nice to hear it substantiated. Notwithstanding that recommendation, no provision appears to have been inserted into the draft order before us, so I welcome the Minister’s explanation for why nothing in the order substantiates the powers of the Children’s Commissioner.
I have pointed out some of those very important areas that still need work done by the Government. I hope that noble Lords and the Government will agree with most of what I have said, because I do not believe it to be contentious. I believe it to be caring and of interest to the families of children and others in Wales.
4.45 pm
Lord Roberts of Llandudno: I support most of this order, but it makes clear the shortcomings of the Government of Wales Act. We could have done so much more in the Act than we did. We urged the Government that the Welsh Assembly should be given more powers, which would have met these concerns. But we will have to await further debate and a possible referendum before the Welsh Assembly is given those powers.
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Certain things were not tackled properly and there are grey areas—for instance, the relationship of the health service in Wales with health facilities on the other side of the border. I know how much we in north Wales have used and have been able to praise 100 per cent the Alder Hey children’s hospital on the other side of the border, where our children receive some incredible treatment. Yet, these are grey areas that have yet to be resolved.
An order in council shows that our children’s issues are paramount in the thinking of the people of Wales. They are always of real concern. We might not have children’s trusts, but we were the first to have a Children’s Commissioner. That became the model for the rest of the United Kingdom. We would like to be seen as ahead in proposing initiatives with which the other countries of the UK follow suit.
We welcome any new powers that come from an order in council, but as the new powers are devolved, there is need for further scrutiny. I wonder whether a 60-Member Assembly is sufficient to scrutinise effectively the additional powers devolved to it. Many county councils in Wales have more than 60 members. If only we had been listened to when we debated the Government of Wales Bill, we would have an 80-Member Assembly, as the Richard commission recommended. That is important.
We welcome this order and the opportunity for co-ordination. We see in the order a recommendation allowing a better understanding between the various areas of concern regarding children in Wales. There will be co-ordinated efforts to eradicate poverty. When one considers that so many children in Wales, some 28 per cent, are brought up in relative poverty and that places such as Merthyr Tydfil have the worst record in the United Kingdom, a great deal needs to be done to ensure that poverty belongs to the past and that the well-being of every child in Wales is safeguarded.
We look forward to further discussion and, who knows, there may one day be a senate or a parliament in Wales with the same powers as those enjoyed by the people of Scotland.
Lord Elystan-Morgan: I, too, warmly welcome the draft order and the spirit in which it has been generally received by the official Opposition and the Liberal Democrat party. The measure is very much in the mainstream of powers that were transferred in an administrative capacity to the Welsh Assembly and which were previously enjoyed by the Welsh Office before the creation of the Assembly. Therefore, the powers are very much near the heart, core and kernel of functions which have for some time been administered at an executive level in Wales.
More importantly, as noble Lords have suggested, the powers represent a specific Welsh approach to these matters. Such matters are, of course, common to every part of Britain, but there are many Welsh aspects that are dealt with in a particularly Welsh way. Members of the Committee have pointed out that there are no specific directors of children’s affairs in Wales. Indeed, the work is done through the agency of the children and young people’s partnerships. Those are controlled
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I should like to make two brief points. First, the order does not, of itself, create any legislative authority for Wales. It creates a potential, nothing else. Very often I am asked by people in Wales how Part 3 of the 2006 Act operates. I try to explain it in this way: the general field—think of it in physical terms—has already been designated under the term “field” in Schedule 5 to the Act. The signs are up there, designating it as a field where generally the Welsh Assembly can operate. An Order in Council, such as we are dealing with here in draft, designates, as it were, a building plot within that field. It does not create anything, but designates an area within whose boundaries something can be built. What can be built, of course, is an Assembly measure which essentially is exactly the same as an Act of Parliament as far as Wales is concerned. So we have the field, the plot, and, ultimately, one hopes, the structure that is specifically built upon it.
My second point is also very obvious. The Government of Wales Act 1998 was not meant to be a static picture. It created a dynamic system, a system of devolution. Indeed, one could say that it had been commenced with the creation of the office of Secretary of State for Wales in 1964. It speeded and made more efficient and transparent a development which had long been in train. The 2006 Act accelerated that process.
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