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House of Lords

Tuesday, 7 July 2009.

2.30 pm

Prayers-read by the Lord Bishop of Exeter.

Death of a Member: Lord Blaker


2.36 pm

The Lord Speaker (Baroness Hayman): My Lords, it is with deep regret that I have to inform the House of the death on 5 July of Lord Blaker. On behalf of the whole House, I extend our condolences to the noble Lord's family and friends.

Disabled People: Independent Living


Asked By Lord Ashley of Stoke

Baroness Thornton: My Lords, the Government have made progress with a number of proposals to assist independent living for disabled people. These include the common assessment framework for adults; the fairer contribution guidance, which will be published soon; regulations to allow direct payments to be made to adults lacking capacity, from autumn 2009; ratification of the United Nations convention for disability rights on 9 June; and the soon-to-be-published Care and Support Green Paper.

Lord Ashley of Stoke: My Lords, I thank my noble friend for that very helpful reply, but would she agree that the Government and supporters of my independent living Bill may be in conflict, because the Government want to go slower and we want to go faster in our approach? Would my noble friend and the rest of the Government consider a compromise proposal, whereby the Government enact the Bill now but then take time in implementing it-say, over two years? That would be a beginning of a breakdown of the stances on both sides.

Baroness Thornton: My Lords, my noble friend is very tempting. I commend him for his passion and determination to drive progress on the very important issues of independent living and equality for disabled people. As I have already said, this Government continue to make real progress on this. I have listed some of the key actions that we have delivered since we discussed my noble friend's Bill in March. The Government's programme of action is making a real difference and will continue to do so. The work that we are doing and leading on, together with the Equality Bill being discussed in the other place, means that many of the goals that we all desire can be delivered without the need to enact my noble friend's Bill.

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Baroness Wilkins: My Lords, given the delayed publication of the Green Paper on adult social care, and given that the draft legislative programme contained no Bill about care reform, what is the Government's timetable for implementation of reform?

Baroness Thornton: My Lords, the Care and Support Green Paper will be published in July. I apologise for the delay. It will lay out the overall direction and series of choices for reform of the care and support system. It aims to ensure that care is both high quality and cost effective and that people have choice and control over their care. The publication of the Green Paper will be followed by a full and formal consultation to run into the autumn, to allow everybody to take part. This is a very large policy reform, which needs to be discussed by the whole nation. From that will flow the reforms that we hope will ensure that we get this particular issue of care correct.

Lord Addington: My Lords, do the Government agree that we have been going over this ground for a long time? The noble Lord is basically asking for something that represents best practice across the board. When the Minister responds, can it be borne in mind that the noble Lord, Lord Ashley, is not calling for anything new-nothing that has not been at least tacitly agreed by virtually all sides of the House?

Baroness Thornton: My Lords, the noble Lord makes an important point in support of my noble friend. The independent living strategy, of which the noble Lord will be fully aware, is a five-year strategy. It is about the needs of disabled people and the need to support them in their daily lives to have greater choice and greater control. The Government's whole programme of activity feeds into that strategy.

Lord Foulkes of Cumnock: My Lords, does my noble friend agree that the single most important thing to enable disabled people to have independent living is the provision of specially designed houses? What are the Government doing to provide independent housing for disabled people?

Baroness Thornton: My Lords, there is indeed a large demand for housing adaptations and housing specifically designed for disabled people. We regard the disability facilities grant as an important part of that. It has increased from £57 million in 1997 to £146 million in 2008. We have also made it clear to local authorities that, in the light of their local circumstances, they are expected to build into their planning the needs of specific groups such as disabled people. When considering housing, they are expected to take account of the need to build homes that are appropriate for the independent living of disabled people.

Baroness Gardner of Parkes: My Lords, I have raised this issue before, as have many noble Lords on the Liberal Benches. I declare an interest because I have a daughter with multiple sclerosis. Is the Minister aware that people who are severely disabled feel the cold much more than ordinary individuals? I have

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asked the Government to look into giving the winter fuel allowance to people of whatever age who are in receipt of full care allowance.

Baroness Thornton: My Lords, the noble Baroness makes a useful point. I will take it up with my noble friend in the DWP and get back to her.

Financial Institutions: Auditors


2.43 pm

Asked By Lord Lea of Crondall

The Minister for Trade and Investment (Lord Davies of Abersoch): My Lords, Part 42 of the Companies Act 2006 prohibits the appointment of an audit firm where a partner in that firm is also a director or employee of the audit client, its parent or a subsidiary.

Lord Lea of Crondall: My Lords, I thank my noble friend for that reply, but a recent article in the Sunday Times states:

"As Goodwin went on to build RBS through an acquisition spree, he kept turning back to Deloitte",

his former employer,

The firm's fees rose from £4 million in 2000 to £32 million in 2007. How come all the accounts of the major banks were signed off as presenting no problem just one year ago? When will the necessary measures follow from the current spate of reviews so that, whatever vested interests stand in the way, the public can be assured that there can be no repeat of the tragedy that the banks and their auditors have caused for many millions of workers and their families?

Lord Davies of Abersoch: My Lords, I thank my noble friend for his Question, which covers a number of important issues. The independence of auditors has been the subject of increased regulation over the past 20 years. Indeed, the Treasury Select Committee recently recommended a consultation on the issue of auditors earning fees from non-audit work and the Financial Reporting Council is planning to consult later in the year. On the general point of where the auditors were during the financial crisis, there are lessons to be learnt for the accounting profession, just as there are for many different aspects of the financial services industry. As someone who worked in the industry, I know that auditors were involved in the risk governance and control side. We are not aware, however, of any evidence of an audit failure in one of the banks where the Government have had to intervene. Furthermore, the Audit Inspection Unit of the Financial Reporting Council, which reviews the audits of large firms, has concluded that audits are fundamentally sound.

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Lord Borrie: My Lords, is it not the case that, despite the Companies Act 2006 and the provision that the Minister has quoted, too often there is an altogether too cosy relationship between the audit company and the bank or financial institution-or, for that matter, large company generally? Does this not arise because there are too few auditors who are thought to be capable of doing the job of a major company or bank? Does my noble friend have any suggestions as to how to deal with that?

Lord Davies of Abersoch: My Lords, after Enron, considerable consideration was given to an outright ban on audit firms doing non-audit work. The conclusion was that that was not necessary and that the ethical standards board of the financial reporting system would ensure that the audit firms were independent. The FSA is also there to ensure that the audit firms are operating independently. Personally, I think that we could do with a few more audit firms. The industry is looking at that. It is important that we do not have just four firms, albeit that they are London-based and doing a great job.

Lord Lawson of Blaby: My Lords-

Lord Razzall: My Lords-

Lord Campbell of Alloway: My Lords-

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, shall we hear the noble Lord, Lord Lawson, first?

Lord Lawson of Blaby: My Lords, I am most grateful. Will the Minister, who has a background that we all respect, look at this again? This is a question not, in my judgment, of the major auditing firms being corrupt but rather of a degree of complacency and incompetence. Is the noble Lord aware that, when Johnson Matthey Bankers went bust on my watch, I authorised the Bank of England to sue the auditors-Arthur Young, a very respectable firm-for incompetence, in effect? The Bank of England won and the auditors lost. Is it not surprising that nothing of the sort has happened in the present, much worse, crisis?

Lord Davies of Abersoch: My Lords, first, we should stress that the choice of auditors is a matter for the board and shareholders. Secondly, we should remember that they have to seek re-election every year. That is the role of the board and the shareholders. We should also remember that the FRC is conducting a review of the combined code and that the Walker review is reviewing the governance of the industry. Putting all that together, I think that we are doing enough to review the lessons learnt. I also believe that it is incorrect to say that all banks have a cosy relationship with their auditors. That is not my personal experience.

Lord Razzall: My Lords-

Lord Barnett: My Lords-

Lord Hunt of Kings Heath: My Lords, we have not heard from the Liberal Democrats.

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Lord Razzall: My Lords, clearly there is overwhelming support in your Lordships' House for the point made by the noble Lord, Lord Lea of Crondall. Without wishing to give a heart attack to the noble Lords, Lord Stoddart and Lord Pearson of Rannoch, who I see is not in his place, does the Minister accept that a major driver for reforms in this area has come from the European Commission? Is he aware of any action that the European Commission now proposes to take in this area?

Lord Davies of Abersoch: My Lords, it is important to highlight the fact that Europe is looking at the future of the accounting profession and that issues are coming out of the Sarbanes-Oxley legislation on the limited liability of auditors. The profession will have to learn lessons from the crisis. Europe is looking at it and we in the UK are looking at it. It is important to wait for the FRC, Walker and other reviews and then put those all together and assess the implications.

Lord Barnett: My Lords, following the question from the noble Lord, Lord Lawson, does not my noble friend find it surprising that the major audit firms of the major banks were giving clean, unqualified certificates and yet a week or two later billions of pounds were being written off the balance sheets for which the auditors had given a clean certificate? Therefore, is it not surprising that some auditors have not been sued?

Lord Davies of Abersoch: My Lords, it is important that we are clear on the purpose of an audit, which is to examine the accounts prepared by the directors of a company and to state whether they have been properly prepared and give a true and fair view of the results. That is exactly what the industry believes that it did. The banks are comfortable. It is their duty under the Companies Act to make sure that that happens.

Lord Campbell of Alloway: My Lords, from across the House may I support the noble Lords, Lord Borrie and Lord Barnett, and hope that the Government will take sensible account of what they have said?

Lord Davies of Abersoch: My Lords, it is important to say that there are lessons to be learnt. We will take noble Lords' comments on board, but to blame the accounting profession for the problems of the industry would be a huge mistake.

Lord Peston: My Lords, is my noble friend aware that he has put his finger on precisely the people who are at fault here-the accounting profession? Many of us have asked questions about this several times, but at no point has the accounting profession-namely, its professional bodies-got involved. Separate from whether we are ready for prosecution, we are simply ready to see whether professionally these firms have behaved properly. All the indications are that the incentives that confront them are to behave improperly, because if you query the accounts you lose the business.

Lord Davies of Abersoch: My Lords, let me be clear: there are lessons to be learnt. The causes of the problems were greed, mismanagement and mispricing of risk. A whole series of issues caused the crisis. I do not disagree that it is critical that the accounting profession learns lessons from the crisis. It cannot

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walk away and say, "We weren't involved in it". I agree with the comments that have been made. The profession is a very important part of the industry and it is important that it learns lessons.

Disabled People: Toilets


2.52 pm

Asked By Lord Rix

The Parliamentary Under-Secretary of State, Department for Communities and Local Government & Department for Work and Pensions (Lord McKenzie of Luton): My Lords, as well as the Changing Places campaign being highlighted in last year's Improving Public Access to Better Quality Toilets-A StrategicGuide, and this year's revision of British Standard BS8300, which includes for the first time guidance for such toilet facilities, a review of Part M of the building regulations on access to and use of buildings will begin this year, and will consider the possible inclusion of Changing Places facilities.

Lord Rix: My Lords, I thank the noble Lord for that Answer. Is it not possible to amend Part M of the building regulations to ensure that toilets for people with profound and multiple disabilities are fully in operation in the next year or two, rather than waiting for a further review?

Lord McKenzie of Luton: My Lords, I congratulate the noble Lord on the leading part that he has played in the powerful campaign around Changing Places. There is a process for changing the building regulations, which generally occurs when looking at a range of issues that might need to be taken into account. There is a process around consultation and research before that can be fully implemented. Currently, it is expected that the review of Part M of the building regulations will not be completed until 2013.

Lord Morris of Manchester: My Lords, what have Ministers done, and what will they be doing, to persuade commercial companies to adhere to the revised British Standard?

Lord McKenzie of Luton: My Lords, my noble friend is right to flag up the revised British Standard, BS 8300, on the design of buildings and the needs of disabled people that was published in March of this year. For the first time, this document contains guidance on the design and installation of Changing Places toilets.

The standard helps companies to make good judgments on how they can meet their obligations under the Disability Discrimination Act and demonstrate alternative means of complying with the requirements of the

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building regulations. While the standard is not mandatory, it is widely used by commercial companies and public bodies. We would expect the revised guidance to continue to play an important role, but we will watch its impact closely.

Baroness Wilkins: My Lords, I welcome that government policy promotes the idea of community participation and active citizenship. The lack of Changing Places toilets means that thousands of disabled and older people do not have the freedom to use community facilities. How will the Government work with large supermarkets and train stations to help them to provide these facilities?

Lord McKenzie of Luton: My Lords, we have to engage fully. For noble Lords who have not been particularly focused on this issue, the availability of suitable toilet accommodation determines very much the pattern of the lives of people with profound physical and learning difficulties, their families and carers, and is extremely limiting for them.

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