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31 Mar 2009 : Column 953

House of Lords

Tuesday 31 March 2009

2.30 pm

Prayers—read by the Lord Bishop of Chelmsford.

EU: Budget

Question

2.36 pm

Asked By Lord Campbell of Alloway

Lord Davies of Oldham: My Lords, the answer is no. The United Kingdom is required to make its contributions under obligations imposed by the treaties. The European Communities Act, and Section 2 in particular, gives effect within the UK to Community law. Inability to gain clearance on the majority of EU expenditure is unacceptable, and the Government will continue to engage with European institutions over these issues and to look for member states taking greater responsibility for the EU funds that they manage.

Lord Campbell of Alloway: My Lords, I am grateful to the noble Lord for his response, but with respect, it does not go to the essence of the problem. Does the Minister agree that the problem is that there is no regime for the presentation of these accounts, which is the basis of these projected increases to the budget? Some regime ought to be established with the agreement of the Court of Auditors, which for the past 14 years has refused to give a statement of assurance on grounds that the accounts are deficient as excluding waste, fraud and mismanagement. I have taken rather a lot of time so I will not ask another question.

Lord Davies of Oldham: My Lords, the noble Lord identifies a desirable state of affairs, but it is difficult to get from this position to the one that he outlines. It is clear that there is steady improvement with the accounts, but that does not alter the fact that it is unacceptable that the Court of Auditors has been unable to give a positive statement. However, as recently as 2003 only 6 per cent of the accounts were given a positive opinion by the auditors and last year it was up to 40 per cent, so there is improvement.

Lord Tomlinson: My Lords, does my noble friend agree that hidden within this Question something needs to be looked at, which is the statement of assurance itself? Would he reflect and come back to us on the possibility of encouraging Her Majesty’s Government and other Governments to set up a committee of statistical experts to look at the sampling system that is used for the statement of assurance,

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which is regarded by many, including some members of the European Parliament Budgets Committee, as inadequate? There is a statistical job to be done so can he undertake to raise that with fellow members of the Government?

Lord Davies of Oldham: My Lords, my noble friend, as ever, is constructive in his suggestion, and certainly we will look at his proposal. Knowing as much as he does about the European Union, he will know that our major priority must be to improve financial management by constructively engaging with the Commission on the issue, particularly in increasing the responsibility of member states for the expenditure.

Lord Waddington: My Lords, would the noble Lord help us by saying to what extent the increase in the British contribution is due to the abandonment by the Government of the rebate deal so painstakingly negotiated by my noble friend Lady Thatcher?

Lord Davies of Oldham: My Lords, the noble Lord will be aware that the abatement still holds its value as far as agriculture is concerned. There is a small increase in the budget as a result of the changes to the value of the abatement, but I think that he will recognise that other factors play their part, not least the relationship between sterling and the euro, which pushes figures up. I must tell the House that in terms of the overall expenditure of Britain, these are relatively marginal figures.

Lord Pearson of Rannoch: My Lords, in addition to our withholding our hard-earned cash, is it not about time that the European Union apologised to and compensated its former chief accountant, Marta Andreasen, who was sacked simply because she refused to sign off its fraudulent accounts and who has since been treated disgracefully?

Lord Davies of Oldham: My Lords, I think that that is a matter of opinion. The noble Lord has articulated that position for several years. The response of the European Community and the British Government to that position is that his views are, at the very least, somewhat contestable.

Lord Newby: My Lords, does the Minister accept that everyone in the House supports the Government’s attempt to get better financial management in the EU? Does he further agree that if ever there were a week not to be sabre-rattling, as proposed in the Question, this is that week, when we are attempting through the G20 and thereafter to get the EU to work together in fiscal stimuli, management of financial institutions and climate change?

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord. He builds on the response from the Council of Ministers, which was the basis for a Statement in this House by my noble friend the Leader of the House only last week on the constructive way in which the European Union is playing its part in the strategy that needs to be followed for recovery from the recession. The European Union is a very large economic unit indeed—it is the largest single market in the world. Its

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position with regard to the strategy to be employed for recovery is of the greatest importance. We should rejoice in the fact that there is a unity of purpose in that respect.

Baroness Noakes:My Lords, the suggestion from the Liberal Democrats that we should not sabre-rattle does not sit very well against the fact that in respect of structural funds, there is an 11 per cent fraud or error rate and, in respect of the CAP, the figure is 2 to 5 per cent. Those are big figures and way beyond any statistical error problems, as suggested by the noble Lord, Lord Tomlinson. If the Government will not use their ability to withhold funds from the EU, as suggested by my noble friend, what practical things will they do to get change, because change must happen?

Lord Davies of Oldham: My Lords, withholding our funds is not an option. That would be to take our bat, go home and sulk rather than stay in the game. If we are to get improvements to the accounts in Europe, which we must do, the important thing is to reinforce all those who want a more perceptive approach to those accounts on the part of those who spend money in Europe. The crucial thing is that all member states have an interest in that matter. The problem in the past has perhaps been that they have not exercised their authority with sufficient force. We intend to do so.

Homelessness: Rough Sleepers

Question

2.44 pm

Asked By Baroness Scott of Needham Market

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Andrews): My Lords, as part of the new rough sleeping strategy, No One Left Out, we are bringing in changes that will clarify the scope of the count and enable more in-depth reporting of the level and nature of need in different areas.

Baroness Scott of Needham Market: My Lords, is the Minister aware that many people who work in the homelessness sector struggle to reconcile government figures with what they see on the streets, and that one reason for this is the way in which they are instructed to count? For example, someone must be bedded down in the same place for two consecutive nights, and counters are forbidden from going into dark and secluded places, which is exactly where rough sleepers tend to hide. Would it not be better if the emphasis went on finding and helping them instead of counting them?

Baroness Andrews: My Lords, I certainly agree that the emphasis must be on finding and helping them, which is exactly what we are doing. The counts might

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not capture all those who sleep rough, but because the methodology has been applied consistently from area to area and year on year, it is the most accurate measure of the relative scale of the problem and the change over time. Those are not my words; they are those of the National Audit Office. Its figures show that, in 1998, 1,850 people were sleeping rough and that, in June 2008, there were 483. That is significant progress. It is recognised across the voluntary sector, but it is only a platform for our ambition to get rid of rough sleeping by 2012.

Lord Roberts of Llandudno: My Lords, I am sure that we all appreciate the work done by voluntary organisations in helping rough sleepers, but in this economic recession what additional resources will the Government give to these organisations to help them to meet the needs of what is likely to be a larger number of people who, because of repossessions and so on, will find themselves on the streets?

Baroness Andrews: My Lords, I had the privilege on Friday of visiting Shelter’s advice centre in Chatham, where I saw the excellent work that Shelter and other voluntary agencies are doing. The noble Lord is quite right. We are aware that what is happening in the economy is likely to lead to a loss of jobs and a loss of homes, which is why we brought forward the mortgage rescue package of £200 million, the mortgage support packages, which are led by lenders, and so on. We have also increased the money going into advice for these shelters, which are very grateful for that. When I talk about our ambition to get rid of rough sleeping by 2012, I should say that in addition to refining the count, we are setting up a streets audit to look at the exact individual help that rough sleepers will need—they are all very different—and how we can best offer that.

The Earl of Listowel: My Lords, does the Minister keep separate figures for the number of young people under the age of 25 who have left public care and are rough sleepers? Is she doing all she can to improve access to appropriate, good-quality supported accommodation for young people leaving care?

Baroness Andrews: My Lords, we do not have separate figures, but I can tell the noble Earl—I know he has a real interest in this issue—that one of our cross-cutting targets, PSA 16, has identified children who are coming out of care and who we know make up a large proportion of people on the streets. Such people have multiple problems, including mental health problems and addiction problems, and we have identified them as a particular target in the provision of housing. We find that these young people turn up regularly in places such as the Passage in London, and we really do have a care for them.

Baroness Gardner of Parkes: My Lords, what is the position at the moment in central London? While local authorities in central London always felt that they should do what they could to help people, they found that the situation in some areas was very frightening for tourists, so they tried to find ways of helping that would relieve the tourist situation as well.



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Baroness Andrews: My Lords, it is true that London has roughly half the country’s rough sleepers. Part of the challenge is to stop people coming to London in the first place, which is why we are investing £200 million in homelessness prevention services across the country. Westminster has a particularly acute problem because it is in a way the depot for the A10 groups of people coming from eastern Europe. That is why we have put additional resources into Westminster to help, for example, people reconnect to services in their home countries, and so on. Westminster has approximately 1,800 rough sleepers on the streets each year. It is a serious problem, which is why it needs more resources.

The Lord Bishop of Chelmsford: My Lords, does the Minister accept that on the frontline of work with rough sleepers and those experiencing homelessness are a lot of small voluntary organisations run and staffed by volunteers? Does she accept that many of these are reporting to people like me a growing problem in the present climate? What resources and help can they turn to at this time of growing difficulty in this field?

Baroness Andrews: My Lords, the small voluntary organisations are critical in identifying people on the streets. They do most of the outreach work and most of the counting for us. As I said, we have put more funding into advice services. In addition, our third-sector strategy is about enabling voluntary organisations and local authorities to commission the right services for the right length of time so that we can get proper delivery and use the third sector in the most effective way possible.

The Countess of Mar: My Lords, do Her Majesty’s Government know how many rough sleepers are mentally ill or suffering from learning difficulties? What special provisions are made for them?

Baroness Andrews: My Lords, there is no doubt that many of the people who do not access formal health and welfare services have mental health difficulties and by definition find themselves on the streets. Our cross-cutting strategy, PSA 16, also focuses help with accommodation precisely on those with mental health problems. One of the problems is that we do not have a database or sufficient evidence to know how many people are in that group, but we are engaged in that task.

Financial Services Authority

Question

2.51 pm

Asked By Lord Renton of Mount Harry

Lord Davies of Oldham: My Lords, we envisage the Financial Services Authority continuing to be at the heart of regulation of financial services, including being a part of the tripartite system.



31 Mar 2009 : Column 958

Lord Renton of Mount Harry: My Lords, I listened carefully to what the Minister has said, but—there always is a “but” in these matters—with the collapse of the Dunfermline Building Society and with the urgent need now for financial stability, is it not just the right moment to reconsider the relative roles of the Financial Services Authority and the Bank of England regarding the supervision of banks, building societies and the City generally? Does the Minister agree that, ultimately, there can be only one supervisor with the necessary full authority? At the moment, the danger is that either both the FSA and the Bank of England will do the job or neither.

Lord Davies of Oldham: My Lords, the noble Lord has also to consider the history. When the previous regime obtained before 1997, there were bank failures then as well. The lifting of the eyebrows of the Governor of the Bank of England did not save Barings Bank or BCCI. We should be careful about suggesting that this is all a matter of the nature of the regulatory system rather than the difficulties of regulation. Of course, lessons have been learnt by the Financial Services Authority, which is why the chief executive and chairman have been concerned to identify and enhance a significant role in supervision. As the noble Lord has identified, the Dunfermline issue adds to the importance of the crucial role of the FSA in getting things right.

Lord Lea of Crondall: My Lords, does my noble friend agree that any question about the future role of the FSA must have some regard to the excellent first report of our colleague, the noble Lord, Lord Turner? He obviously needs time to bring some of these reforms to fruition. But, in due course, would it not be useful for this House to have a proper debate on the Turner report so that people who have any other critique can bring it to bear? Otherwise, is it not timely for us to give full support to the job that he is doing?

Lord Davies of Oldham: My Lords, I am sure that such a debate would be helpful if it could be arranged through the usual channels. There is no doubt that the FSA is destined to play a critical role in the supervision of the financial system. The financial collapse of the past year has occurred in countries with a whole range of regulatory regimes, some close to ours and some very different, and yet banks and financial institutions have fallen all over the world during this desperate financial situation.

Lord Howe of Aberavon: My Lords, does the noble Lord recall the purpose-built Building Societies Commission established in 1986? Does he further recall—this is a non-partisan question—that the Building Societies Commission was merged with the Financial Services Authority in 1997? The purpose-built commission was required by law,

and,

That supervision was to be based on,



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and,

Is it not clear that the standards prescribed statutorily have been increasingly disregarded as a result of the changes made in 1997? Does that not underline the unwisdom of aggregating in giant authorities the functions and purposes of purpose-built organisations? I refer, for example, to the health industry and mergers among the equality bodies. Throwing purposeful bodies together into giant organisations does not promote better supervision.

Lord Davies of Oldham: My Lords, I have listened with care to the points made by the noble and learned Lord, but he will know that the regulatory system in the United States has had to deal with Freddie Mac and Fannie Mae, equivalent building societies that are vastly larger than ours. The House will recognise that the United States Government were obliged to instigate the biggest bail-out in world history in order to support those institutions. We should not be too parochial about this matter. The Chancellor has asked for a report from the FSA on Dunfermline, which will be produced shortly. I have not slightest doubt that lessons will be drawn on the necessary regulation of building societies in circumstances where, up to now, we had been able to take some solace in the fact that while some building societies which had converted into banks had got into desperate trouble, the societies themselves had been relatively unscathed until Dunfermline.

Lord Newby: My Lords, the Minister referred to the report that the Chancellor has commissioned on Dunfermline. Is he aware that the Chancellor said yesterday in the other place that the FSA had been in “constant touch” with the building society since last November? Will he ask the Chancellor to tell the FSA that it needs to be in constant touch with all building societies that have been giving reckless loans over a long period? It should not wait until things reach a crisis point.

Lord Davies of Oldham: My Lords, I understand the point made by the noble Lord, but when the Financial Services Authority acts adroitly and effectively we hear no more about its actions; we hear only about the calamities. The noble Lord will appreciate that the regulatory agencies, for which the Government are responsible, must take their share of responsibility for the issues behind the collapse of a building society like Dunfermline. However, it is the management which took, even quite late in the day, the foolish, absurd and extended positions. At that point it is very doubtful whether a regulatory authority could have saved the situation and prevented Dunfermline getting into difficulties. I must not be premature: a report is due shortly, and all the facts will be available to Members of the House.

Lord Borrie: My Lords—

The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, we are now in the 24th minute.

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