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Baroness Ford: My Lords, I welcome the Statement and support the action that the Government are taking in this second, very important, phase of activity. It is greatly to be welcomed that we are about to get into a period where, we hope, we can have more competition in the retail and corporate banking sectors. Given the ongoing support for the Royal Bank of Scotland implicit in the Statement, it feels as if it is still a bank that is too big to fail. Can the Minister tell us why the Government still seem so opposed to decoupling investment banking from retail banking? The Governor of the Bank of England seems to have changed his mind on that. Can the Minister tell us why the Government have set their face against it?
Lord Myners: My Lords, the decoupling of investment banking from retail banking has never been achieved anywhere. There is logic to an integrated bank. The issue is how we ensure that the investment bank does not place the retail bank at risk. This is something that the Conservatives have not grasped, because last week Mr George Osborne was talking of limiting bonuses of £2,000 to retail banks. When is he going to understand that the problem did not arise with the retail banks but with the investment banks? Perhaps because he was speaking in Canary Wharf he was unwilling to be honest and upset people by suggesting it was the investment banks. I have no difficulty in doing that.
We are going to ensure that we never see a repeat of this situation by requiring much more capital behind the riskiest activities, higher liquidity and more robust regulation. I noted what the Governor of the Bank of England said in Edinburgh. I am still wrestling to try to reconcile it with what he said to the Treasury Select Committee in response to a question from Viscount Thurso, when he said that it would not be possible to separate investment banks from retail banks. He has changed his mind on that. I have not yet been able to find where he has explained why, but I am sure he has found good reasons for doing so. We do not believe that this is an appropriate and necessary line to pursue.
Lord Naseby: My Lords, I declare an interest as treasurer of the Lords and Commons Tennis Club, which banks with Lloyds, as do I, and as a modest shareholder. The truth of the matter is that it was not that 97 per cent of the shareholders of Lloyds really supported the HBOS amalgamation; it was simply that the Prime Minister of the day pinned the chairman of Lloyds in the corner in the best traditions of Chief Whips in another place and said, "We need your support. We need your help. We need you to see us through this difficult situation", and he responded. Does it not short-change that bank, which now, according to the Minister, has agreed to £11.6 billion in business loans and £3 billion in private loans, to find that there is a rights issue and that the Government are getting it half-price because they are requiring Lloyds to provide £2.5 billion, which is, roughly speaking, half of what the rights issue would cost any other shareholder in Lloyds?
Lord Myners: My Lords, before I became a Minister, I was at the occasion when Sir Victor Blank raised this subject with the Prime Minister. It was an event hosted by Sir Win Bischoff, who was then chairman of Citigroup
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On the terms, not taking up the rights would have cost us about £2.2 billion of diluted value. That would have been absolute folly, so I had no hesitation in advising the Chancellor that we should take them up. We own the same shareholding in a much stronger, better capitalised bank as a consequence. It is for others to express views on whether £2.5 billion was the right fee to charge for an insurance policy on which no claim had been made. I am quite content that we got £2.5 billion for the taxpayer.
Lord Acton: My Lords, I understood my noble friend to say that the Royal Bank of Scotland would divest itself of 300 branches. If I am correct, does a thread link those 300 branches and how many branches will the Royal Bank of Scotland be left with after those 300 have gone?
Lord Myners: My Lords, from recollection, I believe that the Royal Bank of Scotland will be left with approximately 2,400 branches. The branches that are being divested are the Royal Bank of Scotland branches in England and the NatWest branches in Scotland-plus, importantly, a number of commercial and service centres that are necessary to provide the infrastructure to make those branches a viable business collection.
Lord Northbrook: My Lords, the Minister said in the Statement that the Government had to carry out due diligence on RBS's assets. No mention was made of similar government due diligence on the assets of Lloyds. In view of the widespread concern about the value of assets of HBOS in particular, has this been carried out and, if so, what was the conclusion?
Lord Myners: My Lords, it was quite expensive to carry out due diligence on the APS. We have used a number of advisers but have ensured that the full cost incurred by the Government has been passed back to the banks. Indeed, Lloyds will pay its share of the work that was done to set up the APS, even though it will not participate in it. We have carried out due diligence on the assets of Lloyds TSB, as it was, HBOS and the Royal Bank of Scotland. As I said, we know more about the assets of those banks than their boards of directors did. On the question of whether Lloyds carried out sufficient due diligence before the Halifax transaction, I recollect that Mr Eric Daniels told the Treasury Select Committee that he would like to have done more but then revisited his conclusion and said that he had done enough.
Lord Whitty: My Lords, the Minister may recall that when we suspended the competition rules and, indeed, when we went ahead with the Lloyds/HBOS
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The Minister touched on another point when he said that we now know more about the banks' assets than their boards of directors originally did. Will he expand on his plans for changes to the governance of the banks? Whether there are five, seven or eight banks on the high street, if the same kind of people with the same myopia run our banking system in the future, we will be back with very similar problems.
Lord Myners: My Lords, given the very limited time available, I will say simply that I have high hopes for and expectations of the report on corporate governance from Sir David Walker later this month. He will lay down very clear calls for action from institutional shareholders. It is very frustrating that we as a Government are fighting hard on the bonus issue when the institutional shareholders are so supine in protecting the interests of their own customers, savers and investors.
Welfare Reform Bill
Main Bills Page
Copy of the Bill
Explanatory Notes
Amendments
Third Reading
5.05 pm
Clause 28 : Exemption from jobseeking conditions for victims of domestic violence
1: Clause 28, page 35, line 24, at end insert-
"( ) In section 37(1)(c) of that Act (regulations subject to the affirmative resolution procedure), after "or paragraph" insert "8B or"."
The Parliamentary Under-Secretary of State, Department for Communities and Local Government & Department for Work and Pensions (Lord McKenzie of Luton): My Lords, in speaking to Amendment 1, I shall speak also to the other amendment in this group, Amendment 8. However, with the leave of the House, before addressing this first amendment, I should like to return to some matters that we debated earlier.
On Report, I said that we would consider further the Government's position to require those lone parents with a child in receipt of disability living allowance to undertake work-related activity. This matter was raised by the noble Baroness, Lady Thomas. Work-related activity is an important part of our strategy to move lone parents from inactivity on benefits to an expectation of actively preparing for the time that they are able to work, but we are determined that lone parents must be able to balance these activities with family life. We have already announced that lone parents will be able to fit the work-related activities around school or free
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We realise that lone parents caring for younger children who receive disability living allowance may find fitting work-related activity around their caring responsibilities more difficult. We have already introduced a number of safeguards to ensure that lone parents can balance these responsibilities. After careful consideration, we have now decided to ensure that lone parents on income support who have a child under the age of 16 and in receipt of any rate of care component of disability living allowance will not be required to undertake work-related activities. Of course, they will still be offered full support to help them to prepare for work, which they can take up on a voluntary basis. As it was previously our intention that the exemption relating to children in receipt of the middle and highest rate DLA care component be dealt with in regulations, it is our intention that this procedure be applied to cover the extension to children in receipt of the lowest rate care component of DLA.
As regards Amendment 1, Clause 28 inserts a new paragraph in Schedule 1 to the Jobseekers Act 1995, which will introduce an automatic 13-week exemption from the jobseeker's allowance conditionality rules for victims of domestic violence. This clause, which was inserted in the Bill following a government amendment on Report, includes provision for secondary legislation to deal with more detailed issues, such as the exact definition of what constitutes domestic violence and the circumstances in which the exemption will be applied.
In considering this amendment, the Delegated Powers and Regulatory Reform Committee expressed concern that regulations under this new provision would be subject to the negative procedure. It was particularly concerned that the power to define what is meant by "domestic violence" should be subject to appropriate parliamentary control. Amendment 1 will ensure that the affirmative procedures apply to all regulations made under this new provision.
Amendment 8 corrects a drafting omission and will ensure that orders made under Clause 47 will be made by way of statutory instrument. Noble Lords will recall that this clause covers the power to remove the exclusion of community care services from the right to control provisions. Clause 48 provides that such orders will be subject to the affirmative resolution procedure in Parliament, the Scottish Parliament and the National Assembly for Wales. I beg to move.
Baroness Thomas of Winchester: My Lords, I thank the Minister most warmly for this welcome amendment. He and his whole team have bent over backwards to meet our concerns about lone parents on income support who have a child in receipt of the lower rate of the care component of DLA falling within the scope of mandatory work-related activity. His acknowledgement that it could be very difficult for some of those lone parents to undertake that mandatory work-related activity is much appreciated. We look forward to the regulations in due course.
As I have mentioned, the Minister's whole team has been helpful and I pay tribute to it, particularly to its leader, Andrew Latto, who has been helpfulness itself
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Baroness Hollis of Heigham: My Lords, I, too, thank my noble friend and the officials in the Box, because I know how difficult it can sometimes be to change policy quite so late when you are required to involve parliamentary counsel, even if you have been persuaded by the arguments. The fact that this is being carried by regulations gives everybody, including the Government, welcome elasticity in the system. I am grateful. There were many concerns about the Bill at the beginning. Like other Members of this House, I know just how hard my noble friend has worked to ensure that it has met the proper concerns of all your Lordships. We can confidently say as a result that the Bill goes forward to help lone parents to engage in the labour market without their children having in any sense to endure a penalty because of the commitments that their mother is required to undertake. I am grateful for my noble friend's amendment, which is splendid.
Baroness Turner of Camden: My Lords, I, too, thank my noble friend for the amendments and his statement. I, too, raised the matter of the pressure that might be exerted on lone parents to indulge in work-related activity if they were not in a position to do so-because they had a disabled child, for example. My noble friend's statement covered the concerns that many of us raised and I am grateful for it.
Lord Kirkwood of Kirkhope: I concur with everything that has been said in relation to the Minister's statement on disability living allowance. It was a tricky one: Ministers must have had some difficulty persuading the technicians, not to mention the Treasury, about the definitions. I think that this will affect a relatively small number of people, but, my goodness, it will make a transformational difference to those whom it does. It could not have been an easy battle and the Minister deserves the credit that he has been given today.
On domestic violence, the 30-week exemption is extremely welcome. That was again hard fought for in a very constructive Committee stage. However, I hope that the 30 weeks will allow some discretion. I do not think that many cases will need more than half a year, but there may be some. As a former divorce lawyer in a previous age, I know that some family circumstances mean that domestic violence cases can become intractable and go on for years, so a little discretion at the edges for some of the advisers dealing with these tricky decisions would be welcome. I hope that the Minister will bear that in mind. I am absolutely in favour of the amendment as it stands, but if he could assure the House that some flexibility might still be available in exceptional circumstances, to make sure that we protect people in danger of some really vicious violence at the hands of their former spouses and partners, it would be welcome.
Lord McKenzie of Luton: My Lords, I thank every noble Lord who has spoken in support of the amendment. I also appreciate their thanks to members of the Bill team-I think that they will have chance to do that more fully in a little while. The noble Lord, Lord
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5.15 pm
Clause 31 : Contracting out functions under Jobseekers Act 1995
Lord McKenzie of Luton: I shall speak also to the other government amendments in this group. The amendments will place in the Bill the reassurances that I gave on Report in relation to drug testing and mandation to treatment. The main thrust of the amendments deals with voluntary and mandatory rehabilitation plans, drug testing and the replacement of the substance-related assessment with two assessments. The remaining amendments are consequential and I shall deal with them at the end. In making the amendments, we have taken account of the opinions both of drug professionals who work on these issues and, of course, of noble Lords, with their great experience.
Mandating individuals to medical treatment is not going to work for those who are not ready, but doing nothing is no longer an option, and problem drug users must be expected to engage with the rehabilitation process where their drug use is a barrier to their finding work. After careful thought, we have also amended the drug testing provisions to make the policy more effective.
Amendments 10 to 12 for jobseeker's allowance and Amendments 19 to 21 for ESA divide the substance-related assessment into two stages: an initial assessment and a follow-up interview a few days later to discuss matters arising at the initial assessment. Where problem drug users are not already in treatment and are neither prepared nor ready to engage with treatment services, they will be required to attend a series of assessments with the aim of encouraging them into treatment. If they fail to attend these assessments without good cause, they will be subject to a benefit sanction. Amendment 13 inserts a provision into the drug testing provisions that enables us to offer an individual who refuses to attend an assessment because they are adamant that they are not a drug user a drug test in order to demonstrate this. If they refuse the test, they can be sanctioned and re-referred for the assessment.
As indicated in the debate at the Report stage, we have looked at further limiting the circumstances in which mandatory drug tests would apply. To this end, individuals will be directed to undertake a mandatory drug test only where they have not self-identified their drug misuse, are not already in treatment, have not been referred to a substance-related assessment on the strength of information obtained from the criminal justice system, and have been subject to sanctions for
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Amendment 15 introduces powers to mandate problem drug users who refuse or are not ready to enter into treatment to agree a rehabilitation plan, which will require in particular that they attend a six-week education and motivational programme. The programme will encourage problem drug users to engage with treatment services. If the individual refuses to attend or does not complete the programme, a sanction will be applied. If the individual attends the educational and motivational sessions and decides that treatment is not for them at the present time, no sanction will be imposed. If, however, after a period of time signs of drug use being a barrier to work are displayed, they will be referred back to the assessment process. This ensures continuity of contact with treatment providers until such time as a person feels ready to receive treatment.
It is important that those identified as problem drug users take the first steps on the journey to overcome their addiction. Where claimants take up treatment voluntarily, they will be offered a treatment allowance and a place on a new drug and employment support programme that will provide integrated and personalised support for problem drug users on JSA or ESA. This allowance will be paid to the claimant as long as they agree via a voluntary rehabilitation plan to maintain their treatment and take advantage of the additional support available. It will remove some of the normal conditions of entitlement for benefit in order to allow drug users the time and space to focus on their recovery. For example, this will mean that those on JSA will not be required to sign on or show that they are actively seeking work.
Concerns have been expressed as to the extent that being labelled as being in receipt of a treatment allowance could expose the recipient to stigma and discrimination if they were to apply for housing benefit or concessionary rates of paying for goods and services. I therefore take this opportunity to provide reassurance that on any supporting documentation, and therefore from the perspective of the outside world, the individual will be recorded as being either on ESA or JSA and that there will be no mention of either a treatment allowance or relaxed conditionality.
If an individual drops out of the programme because they are not adhering to their voluntary rehabilitation plan, they will be returned to mainstream benefit with no sanctions. If, after a period of time, signs of drug use being a barrier to work are displayed, they will be referred back to the assessment process. Amendment 24 makes the same changes to the provision for ESA customers.
Finally, consequential Amendments 18 and 28 insert the new rehabilitation plan provisions into the evaluation report for JSA and ESA respectively, while Amendment 2 inserts the voluntary rehabilitation plan's functions into the contracting-out clause for JSA. Amendment 26 carries out the same function for ESA.
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