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The restructuring of the bank successfully took place on 1 January 2010 and, as a result, two companies are carrying out the business formerly carried out by Northern Rock: Northern Rock plc, a new savings and mortgage bank, and Northern Rock (Asset Management) plc, the existing company, renamed, that holds and services the majority of the existing residential mortgage book, as well as the government loan. Everyone knows that our long-term objective is to restore these companies to the private sector when they are in a position to command a price which safeguards taxpayers' interests. Both entities will continue to be wholly owned by the Government and will operate at arm's length from them on commercial principles. I am grateful to the noble Lord, Lord Bates, for indicating that he takes a keen interest in the management of Northern Rock, for whom he has considerable regard. UK Financial Investments has taken on the management of the Government's shareholdings in the two companies.

As regards the restructuring, I understand the criticisms of the noble Baroness, who is right to test the Government on this order, but I hope that I am able to refute them. Her speech would have been rather better if she had recognised that the decisions are good news for Newcastle, the north-east region and the wider UK banking sector. They are important for Northern Rock and its staff, because the Government's actions to stabilise Northern Rock over the past two years have protected the savings and deposits of hundreds of thousands of British families. From 1 January, Northern Rock will offer savings and mortgage products, increase competition in the sector and provide consumers with more choice. I should have thought that there would be universal rejoicing in the House at that development, but noble Lords opposite have concentrated overwhelmingly on the down side.

With the restructuring process now complete, the bank and its team can move forward towards playing a full role in supporting the recovery of the economy. We should all note that the recovery successfully began in the last quarter of last year. The Government have made it clear that they want to see a well functioning mortgage market, where lenders lend responsibly and borrowers have access to a wide range of affordable mortgages. The successful launch of the new Northern Rock is a significant step towards meeting those aims. As we have stated, our objects are quite clear: we want to see Northern Rock flourish, to support financial stability, to protect depositors' money and, in due course, to protect the interests of taxpayers and to repay them. In the White Paper, Reforming Financial Markets, the Government announced that the conditions for the eventual sale of Northern Rock would be that it must promote competition for retail services, secure the best possible return to taxpayers and ensure that Northern Rock continues to lend to home owners.

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8.15 pm

In his Written Ministerial Statement on 8 December, my right honourable friend the Chancellor said that the Government will provide full details of the financial support provided by them to support the restructuring in January. One charge from the noble Baroness was: why was that not spelt out in detail in the order? Something like 40 or 50 pages would have been needed for the order to spell out all the details which the noble Baroness suggested should be in it. The Government have made clear what the order involves but I do not think that it is appropriate criticism to suggest that a parliamentary order would have been of that dimension. The Government have made it clear that they have provided Northern Rock with exactly £1.4 billion of capital support in order that the company can meet its Financial Services Authority regulatory capital requirements. The Government have also provided a commitment to the FSA that up to £1.6 billion of additional capital support would be provided to Northern Rock (Asset Management) should the need arise in order for Northern Rock (Asset Management) plc to continue to meet its regulatory capital requirements. Those amounts are within the £3 billion of capital support announced by the Government in August 2008. The Government have been perfectly open and clear about those matters. The outstanding government loan owned by Northern Rock (Asset Management), as at 31 December 2009, stood at approximately £14.3 billion. This loan increased on 4 January 2010 by £8.5 billion, taking the outstanding loan balance to £22.8 billion. It is suggested that all that could have been provided in advance. I make two comments about those figures. First, it will be recognised that there is market sensitivity about government commitments and resources of this kind until the order is through and action has been taken.

Baroness Noakes: My Lords, it is often too easy to cite market sensitivity as a reason for not giving information to Parliament. As I was asking only for information about how these transfers were being effected and what the Government's commitment was-the Minister was at pains to say that this was somehow within the envelope of money which had been described at an earlier stage-could he describe the market sensitivity in a little more detail?

Lord Davies of Oldham: My Lords, I want to emphasise that the Government have acted entirely properly in regard to this order; they are giving the facts and making the sum involved clear as soon as they are able to do so. The problem with regard to the position before 1 January was obvious enough; namely, that it is not clear what the total figures will be on the commitment in these terms. After all, it will be recognised that there is a constant flow of assets both ways as regards the company. Consequently, the Government have to be in a position where they can give quite definitive figures. That could not be done in December. The noble Baroness will recognise the reasons for that. The Government have acted entirely properly and have made clear what the figures involve.

The suggestion has also been made that the issue has been wrongly presented as far as being an order is concerned. I am of course aware of the Merits

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Committee's anxieties-the noble Baroness identified some of them-and its concerns about the procedure adopted for the order. I want to address that point. The Banking (Special Provisions) Act 2008, in whose passage the noble Baroness participated and where we had rather more time for debate than we did on Northern Rock, provides that where a transfer order of this kind includes provision for determining the amount of any consideration payable by the transferee for the transferred property, the affirmative procedure applies. If that situation had obtained with Northern Rock, the Government would certainly have followed the normal form with an affirmative order.

If part of the business of Northern Rock was being transferred to a third party purchaser who was paying the purchase price of that transfer, and it was necessary to provide a process by which that price was to be determined, which would of course have involved a valuer, the affirmative procedure would have applied. However, that was not the case here. The value of the assets and liabilities being transferred to the new company is matched. The new company is not paying any consideration or price for the assets and liabilities being transferred to it, which is why it was entirely proper to consider this under the negative procedure.

I also highlight the obvious fact that the Joint Committee on Statutory Instruments has now considered the transfer order and did not consider it appropriate to draw it to the attention of the House, so I reject this issue of the procedures that the Treasury has been involved in and that the Treasury somehow had something to hide. It is clear that the Treasury has acted entirely appropriately, and we have the negative procedure because that was appropriate. However, there is the opportunity for a prayer to be heard against it, and we have the advantage of that in the noble Baroness's prayer this evening.

The noble Lord, Lord Newby, asked several important questions. I cannot at this stage give a timescale for when Northern Rock will emerge from its position into a situation where it can be ready for the market, but that is the Government's objective. As the noble Lord, Lord Bates, indicated, we have trust in the management making good progress with putting the bank on a very secure basis. The noble Lord, Lord Newby, was anxious also about the order, and mentioned that it might have been laid just before the Recess to avoid parliamentary scrutiny. I hasten to tell him that the order was laid well within time-21 days elapsed before it came into force-so it was entirely proper in this instance; I hope that he will accept that.

The noble Lord also asked whether there was any question of Bradford & Bingley and Northern Rock merging. That is certainly an option; the noble Lord would not have raised it if he did not think it a possibility. However, no decision has been taken either that it should happen, or regarding any possible timetable if the decision were that that was in the nation's interest.

The noble Baroness, Lady Noakes, asked about the creditors in the Northern Rock (Asset Management) position. Northern Rock (Asset Management) is going through an orderly wind-down, just like Bradford & Bingley, and all creditors will indeed be paid in full as and when liabilities mature. There is no question of

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creditors being sold short in those terms; nor would the Government be party to any position where that could possibly be so.

I am conscious that I have spoken for a considerable period and that, given the plethora of questions that I have been asked, I have not answered every single one. However, I hope that the noble Baroness will give me credit in two respects. Process was one dimension of the Motion. The Government are confident that they have addressed process and information entirely appropriately. We are conducting with Northern Rock a restructuring which honours our initial undertakings when it was nationalised; namely, that we act properly and in the nation's interest so far as the bank, its creditors, its depositors and those who hope in due course to borrow from it are concerned. We are acting entirely appropriately, as we were two years ago. We shall take the slings and arrows of somewhat outrageous criticism that come from opposition Benches, knowing full well that, when the two years have elapsed, following the degree of success which has attended the nationalising of Northern Rock, we shall see the prosperity also of the institutions.

Baroness Noakes: The Minister said that he had not managed to answer all my questions. In fact, I asked him relatively few questions. There is one that I would like him to answer before I conclude, which relates to the pension fund. The Minister responded in respect of creditors globally, but I raised some specific questions about the pension scheme and the defined benefit element of it. Mr Frank Field has said in an article in Pensions Week that the pension scheme has been left in the bad bank and that the only destination for it will be the pension protection fund, with the potential for less than full pensions being payable, because the PPF does not guarantee by a long way full payment of pensions. Is that so?

Lord Davies of Oldham: My Lords, when the noble Baroness looks at Hansard tomorrow, she will see the number of questions that she raised, which I manfully but probably unsuccessfully sought to answer as fully as I was able. However, I thought that I had perhaps failed to answer her question on pensions through my deficiency in handling my papers. Such is the complexity of the issue, I am not in a position to respond now, but I shall of course write to her.

Baroness Noakes: My Lords, I thank the noble Lord, Lord Newby, and my noble friend Lord Bates for their important contributions to the debate. As the Minister knows, I was keen to raise issues related largely to process and whether Parliament had been given a proper opportunity to consider the order. I remain unconvinced by the Minister's answers. At one stage, I think that he suggested that if a certain number of pages had to be included in the paperwork that came with an order it would make it unacceptable or too detailed. That rather misses the point of the role of Parliament. As the noble Lord, Lord Newby, was kind enough to point out, we should not have to go devilling around websites looking for several hundred pages of information and to interpret them ourselves.

I remain concerned at the Government's saying that selling something to a third party would be a consideration and might require an affirmative order, but if one

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transfers to something that is not a third party-although as between two companies, they are third parties-it is simply mathematics and it is not paying a price. However, it is a price and it could be argued that it was a consideration which should have received an affirmative order. I shall not pursue that line further today. In addition to the process orders, where I think the Minister has not answered, I raised some substantive issues. I hope that he will write to me on the pension scheme. If necessary, we will debate that further in the Chamber.

I was interested to hear the Minister say that in the orderly wind-down of the bad bank, all the creditors would be paid in full in Northern Rock (Asset Management). I would like to study further in Hansard what the Minister has said, because it is an extremely interesting statement which may result in further discussions in your Lordships' House. I beg leave to withdraw the Motion.

Motion withdrawn.

Equality Bill

3rd Report from the Delegated Powers Committee

Committee (5th Day) (Continued)

8.30 pm

Clause 148 : Public sector equality duty

Amendment 108S

Moved by Baroness Young of Hornsey

108S: Clause 148, page 94, line 9, at end insert "take such steps as it reasonably considers appropriate and necessary to"

Baroness Young of Hornsey: My Lords, my noble friend Lord Ouseley offers his apologies for not being able to attend this evening to move this amendment. He has asked me to do so instead.

The public sector equality duties under existing legislation are groundbreaking. They require public authorities to have due regard proactively to eliminating discrimination and promoting equality of opportunity in the design of all their policies and practices. These duties have been invaluable in bringing about a culture shift in such organisations. However, the duty has failed to achieve the coherent, broad, systemic and co-ordinated culture change which is needed to eliminate discrimination, or at least mitigate its impact; and to effect equality of opportunities and outcomes.

The duty in Clause 148 of the Bill, which closely follows the models in existing legislation, could go even further by making it clear that public authorities must not only have due regard to equality considerations, but take action. A key benefit of the existing duties is that public authorities are required to think about equality in everything they do, not just those activities which are most obviously relevant to equality, such as employment. This has been useful in bringing attention to the more subtle causes of inequality and the proposed amendment in no way alters this, retaining the requirement that a public authority should have due regard to equality considerations in everything it does. However, the duty would be improved if public authorities were required not only to have due regard to equality but to take steps that they reasonably consider appropriate and necessary to the achievement of equality.

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Public authorities would be required to identify and take steps which are appropriate, and those which are necessary. Necessary steps are those without which equality of opportunity is impossible; appropriate steps are those which, while not strictly necessary, are desirable and proportionate in the circumstances, having regard to their importance and a range of key considerations, including, for example, cost. At present, public authorities on the whole pay lip service to this duty and are able to avoid taking the meaningful action that can lead to equality outcomes and being held accountable for their actions or inactions.

The amendment also seeks to ensure that there is no regression from the level of protection afforded to disabled people by the existing disability equality duty. Therefore, the Bill should be amended to reflect the duty under the Disability Discrimination Act, which requires public authorities to take account of people's disabilities, even where that involves treating disabled people more favourably than others. This is important to draw public authorities' attention to the distinction between more favourable treatment which is permitted under the Bill, such as positive action, and that which is obligatory for disabled people under the Bill. It is essential that the duty under the Bill should fully recognise that true equality for disabled people will not be achieved if they are simply treated in the same way as others.

Cases on the existing public sector equality duties have been important in establishing that they have teeth. To meet the duty, a public authority must have regard to equality considerations before a decision is made in relation to a policy. It must do so rigorously and with an open mind.

Compliance with the duty is not a question of ticking boxes. Rather, regard to equality must be integrated into public authorities' core functions and is a continuing duty requiring attention throughout the development and implementation of a policy. However, the courts have been equally clear that the duty,

The distinction is vital.

The overwhelming lesson to be learnt from our experience of equalities legislation over the past 40 years is that we need systemic reform, not solely individual redress. Now is the time to build on the success of the current equality duties by making them more effective. The amendments provide the opportunity to make this clause effective to achieve the impact and outcomes intended. I beg to move.

Baroness Coussins: I rise to speak to Amendment 110A in my name, supported by the Discrimination Law Association and the Disability Charities Consortium, representing the views of 12 organisations.

Clause 148 is one of the most important clauses in the Bill. Its potential impact is huge so it is vital that it states clearly what Parliament expects of public bodies and others carrying out public functions. My amendment ensures that public authorities take action to meet their duties and do so in a transparent way. The key difference between my amendment and the ones in the

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name of the noble Lord, Lord Ouseley-spoken to by the noble Baroness, Lady Young-is that mine focuses on the demonstration of compliance rather than a more closely defined duty in itself. All these amendments are complementary; mine simply goes one step further and could arguably subsume the others.

The extra step on demonstrating compliance is needed because the track record to date on compliance with the public duty in the various existing laws is, as the noble Baroness, Lady Young, said, far from perfect. Some of the 40,000 relevant public authorities have taken action: changing policies and practices, training staff and involving service users in making changes. Sadly, this has not been the case in all authorities. Far too many have barely begun to consider their functions from an equality perspective, or at most have produced a form of words on paper and little more.

The basic requirement in Clause 148 as drafted is that due regard must be had to the three matters listed in paragraphs (a) to (c) of subsection (1). Having due regard to equality should not merely be the setting of aspirational goals, showpiece displays or events but direct and concrete actions within all relevant functions of a public body. Due regard does not mean, for example, that race equality is less important when the ethnic minority population is small. Neither does it mean that an authority can claim that it does not have the resources needed to meet the duty.

One way I expect the duty to be fulfilled in line with my amendment is, for example, if a primary healthcare trust became aware of higher infant mortality rates among certain ethnic mortality groups in its area. To comply with the duty, I would expect the trust to identify the particular needs of women in those communities and the gaps in their services in order to make suitable and effective ante-natal and post-natal provision, including if necessary increasing or reallocating resources.

I am looking for something similar to the existing disability equality duty and there are many examples where that has made a significant difference. An example provided by the Disability Charities Consortium is the complaint from a local group against a large metropolitan authority which had not produced an equality scheme, saying instead that it had included relevant actions in various parts of its business plan. The local group was unable to understand precisely what the authority was doing specifically to improve services for disabled people. The disability equality duty requirement meant that the DRC was able to insist on a clear statement with all the details being asked for. Without this it would have been enormously resource intensive and difficult to evaluate the authority's actions.

The aim of my amendment is simply to set a similar statutory minimum standard for compliance with the public sector equality duty to ensure transparency and accountability. I believe that with such a standard in place, the bodies responsible for enforcement or monitoring would have a clearer and more effective basis to track progress and to challenge bodies with poor evidence of compliance.

The Government are rightly concerned to promote evidence-based policies and this mechanism would deliver the means to do just that. I ask the Government

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to agree to think again between now and Report about how best to put in the Bill an acceptance that minimum compliance standards with the public duty must be explicitly required if this section of the Bill is to stand any chance of fulfilling its rich potential and not be just a token gesture.

Baroness Campbell of Surbiton: My Lords, I would like to begin by speaking to my amendments while I still have the puff. Then I would like to make a few comments on the other amendments in this group. The noble Baroness, Lady Wilkins, will assist me, as the usual channels have agreed, and we will see how far I can get.

I am extremely pleased to speak to Amendments 109CA and 109CB. They address what is for me the holy grail of the Equality Bill-the public sector equality duty. They provide that, in having due regard to the need to advance equality of opportunity, a public body must give consideration to the fact that meeting the needs of disabled people may, in particular, involve taking steps to take account of their disabilities. This specific requirement is missing from Clause 148 as it stands, giving rise to well-founded fears of potential regression in the rights of disabled people.

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