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There are financial and reputational rewards for those who use less energy. I know also that there have been concerns about what might kindly be described as erratic tenants. I would add that there is nothing to stop any port from asking its tenants to take responsibility for their own emissions by connecting directly to the grid. The noble Earl asked whether I would continue to look at the matter. I will continue to do so but, as I said, this is the start of a process. Noble Lords have not raised the issue of schools, for instance, but concerns have also been raised about schools being brought within a local authority's responsibility. I again give the assurance that we will be monitoring the scheme and its introduction very closely. If it proves that we have to make changes, we will want to do so. However, I also want to give certainty to businesses that we are not going to suddenly come in and change it after a few months. We need to see how it works in practice, and give some stability to those organisations as well.
I turn to the question of price and trading. We have had very happy debates on the EU ETS and issues to do with the carbon price. The noble Baroness is probably aware that because Copenhagen was not all we wanted it to be, the EU has not been able to say that it will go from a 20 per cent to a 30 per cent emission target. We wanted that as it would have had a positive impact on the carbon price, which is low at the moment and is undoubtedly causing some difficulties. Obviously, we do not want that to happen in relation to the allowances on this scheme. I am advised that we think we have got it right, but again, we will have to look at that very carefully.
On the issue of auditing, my understanding is that we are currently drafting guidance for the Environment Agency on the criteria that equivalent schemes must meet to be recognised as equivalent to the CTS under the early action metric. I take the point the noble Baroness raises: there has to be integrity in the system, and people have to trust the measurement; she is absolutely right. Throughout the whole emission trading sector, the point about clean development mechanisms is that integrity of the measurement system is critical. One of the unnoticed gains from Copenhagen was the agreement in the accord to have, for the first time, a much more vigorous process in relation to measurement. It applies just as much here as it does to wider international trading schemes.
As for the impact on business, I turn first to the noble Baronesses, and come back to the issue of price and the question of whether there will be sufficient robustness in the system to make businesses want to take this seriously. We think that it is going to work; it is designed to encourage cost-effective emission reductions. The problem has always been that although the amount of savings we think will come through reduced energy demand is £1 billion a year, energy costs in the budget of large organisations can typically be quite low. That is the problem we face: directors of finance going to
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In my opening remarks, I referred to the fact that government departments will be enrolled in this scheme, even though some of them do not reach the thresholds. League tables will have a very powerful impact on government departments themselves. Noble Lords know that my department moved into its offices in Whitehall Place in October 2008-in a building with the lowest rating for energy efficiency that you can have. We took a bit of punishment for this, but we have improved. This shows that external pressure, combined with leadership inside the organisation, can lead to that kind of change.
I turn to the issue of renewables and why they are not raised here. This is a question I asked my officials too. The noble Baroness is quite right; no differentiation is made in relation to where electricity comes from. The reason is that we are talking about ensuring energy efficiency; that, in essence, is taken as the currency. I suspect that we could have a theological debate about that, but this has been decided in terms of simplicity. That is why you do not get different recognition for renewable, nuclear or, hopefully in the future, carbon capture and storage, or whatever.
The noble Baroness, Lady Wilcox, asked why we group private equity funds with their investee companies. This raises the whole issue of what the correct governance structure is in these kinds of circumstances. We have taken the decision that grouping organisations in the CRC is determined by whether or not there is a parent-subsidiary relationship as defined in the Companies Act. Where such a relationship exists, we think it is appropriate for the subsidiary company to be grouped under the parent to ensure that accountability is applied at the correct level. The criteria set out in the Companies Act involve a level of influence of parents over their subsidiaries that should be sufficient for private equity funds to encourage their investee companies to become more energy efficient. Private equity funds have an excellent opportunity to use their strategic overview of different companies to facilitate the take-up of best practice, and can use their influence to raise energy efficiency up the corporate agenda. I also think that in deciding to use this approach, we will overcome the problem that the noble Baroness rightfully raised in her opening remarks.
I am encouraged by the generally positive response to this order tonight. We will be looking very carefully at implementation and at issues that arise when the scheme is introduced. Overall, however, I think that this could be very positive and powerful in ensuring that energy efficiency in this country takes a further leap forward in the next few years.
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Lord Best: My Lords, I have already declared my interest as chair of the Hanover Housing Association, which provides extra-care housing. I must now declare an interest as president of the Local Government Association. I am grateful to the LGA for its briefings on the Bill.
The first amendment in my name in this group, Amendment 17, and Amendment 44, which is also in the name of the noble Earl, Lord Howe, both raise questions about the real cost of providing care free of charge to people with high needs living at home. Amendment 44 calls for a regular appraisal of the actual expense in place of the unsure estimates that are all we have to go on at present. Amendment 17 seeks to put back the date of commencement of the legislation by six months.
My motivation for pursuing these amendments comes from the real anxieties felt throughout local government that, first, the Government's "guesstimates" of the costs involved may turn out to be highly inaccurate; secondly, that the financial penalties, possibly in hundreds of millions of pounds if the figures turn out to be underestimates, will be borne entirely by the local authorities, which are already expected to contribute £250 million by making efficiency savings on other spending; and, thirdly, the current planned deadline of 1 October 2010 represents for local authorities an impossible task.
Let me explain why these fears, expressed very plainly by the LGA, seem likely to prove well founded. However, I preface my remarks with some positive comments about the financial arrangements which the Bill seeks to deliver. It must be a good thing that the Bill has helped to trigger this national debate on paying for personal care for older people and others. In the mid-1990s I organised an inquiry by the Joseph Rowntree Foundation into paying for long-term care. We recommended a national care service, with no boundaries between health and personal care, free at the point of delivery, but paid for by a compulsory national care insurance scheme funded by payments from earnings over one's lifetime alongside national health insurance contributions. We failed at the Joseph Rowntree Foundation in 1996-as did the King's Fund with an excellent financial analysis from Sir Derek Wanless 10 years later-to provoke sufficient debate for this issue to become a central concern for politicians of all parties. The publication of this Bill has helped to bring these issues centre stage and, I hope, will eventually lead to the essential consensus that we need on how the dramatically rising care costs of the future can best be met.
My second positive comment about the Bill is that its financial framework is built on removing some of the divide between health and social care budgets. The Government intend that this will lead to £420 million moving from the central health budget to the local social care budget. This is just the kind of holistic, joined-up thinking, pooling resources across old boundaries, that will achieve sensible outcomes for those who need personal care at home.
My third commendation for the Bill is that it should lead to equality of treatment in the assessment of care needs throughout the country, along with, I hope, the portability of that assessment for those who move from one place to another, as proposed by the noble Baroness, Lady Campbell. This approach to assessment of needs should lead to greater fairness all round. However, I believe that these amendments are necessary if local authorities are to be able to carry out the new duties now laid upon them.
Amendment 44 would make sure that Parliament and the wider public know the real cost of free personal care at home and understand where the cost will fall. They can then decide whether any in-flight corrections are needed to make the arrangements affordable at central and local government levels. The amendment would require the Secretary of State to commission an independent review, initially and then annually, reporting to Parliament on what the measures really cost and what they are likely to cost over the next five years. The amendment calls for the itemisation of any efficiency savings which the Government expect will arise from a reduced use of residential care by people for whom the local authority has to pay. I am not sure how real these savings may be, but if there are savings, the independent review will identify them.
The noble Earl, Lord Howe, spelt out at Second Reading some of the key concerns of the LGA's members. I want to underline and expand on these points. I fear that the accuracy of the Government's estimate of a £670 million total cost is very much in doubt. The Bill's impact statement says there is "inherent uncertainty" in estimating the costs. It is not known how many people who currently fund their own care at home will come forward and claim the costs of care from the local authority. It is unknown how many people who have gone into residential care and pay their own way will move back to their homes or into new homes or extra-care housing where their care will be free. Statistics are not collected on the number of people who are defined as being in "critical" need of care under the Fair Access to Care Services assessment process. Nor are there figures for the numbers already receiving reablement services or what proportion of those receiving reablement services will need no further help once that reablement exercise is over. Therefore, there are lots of uncertainties.
The Association of Directors of Adult Social Services reckons that the true cost of offering free personal care to those with high needs could well exceed £1 billion rather than the Government's figure of £670 million. Because the Department of Health has capped its own contribution at £420 million, the balance will all fall on the local authorities. I have noted that local councils are already expected to fund £250 million in very uncertain efficiency savings. For sure, there are few
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Amendment 17 would put back the start date for the implementation of the new arrangements from the Government's planned 1 October 2010 to 1 April 2011. It seems unreasonable to expect local authorities to be fully geared up and ready to go by 1 October when the following points are taken into account. First, a new national assessment tool is to be provided to local authorities in the summer of 2010. This will be essential to them in implementing the Bill's measures, but they might not receive the details until as late as 31 August. There has to be training and the organisation of administrative structures. New IT systems will be needed to record assessments and capture all the necessary data. If guidance came out much earlier than late August, it would be sure to find people away on holiday. All this work will have to be done in a space of perhaps four short weeks. To expect local authorities to handle all the necessary training and organise internal administrative structures in that timescale is simply not realistic.
Secondly, the Government are also planning to revise their guidance on fair access to care services. Eligibility for free care will depend on that, which, again, will mean new software, with providers having to develop the requisite systems and councils having to procure them. More training will be necessary on top of that already required.
Thirdly, new staff will need to be recruited to take on the expected extra workload, not least covering the additional reablement services envisaged in the Bill. Fourthly, councils will have to have their budgets set in early March, as they always do, and most are well down that road. The Bill comes very late to reorganise 2010-11 budgets. With local and national elections ahead, it seems unreasonable to expect local authorities to budget for the Bill's provisions for the financial year that is just about to start. Moreover, although costs would start to fall on local authorities on 1 October 2010, the Government's Pre-Budget Report indicates that the savings, if ever they materialise, from reduced expenditure on residential care will not be achieved at the target level of £250 million before 2012-13, which means that a new financial burden will fall on local authorities during 2010-11 and 2011-12. Under the agreed new burdens directive, government are committed to funding fully any such burdens that result from new legislation. That adds another good reason for holding back implementation of the legislation. Amendment 17 would put back the start date to 1 April 2011. I have pleasure in moving it and commending also Amendment 44.
Earl Howe: My Lords, the noble Lord, Lord Best, has succinctly summed up the case. The Government's timetable for implementing the Bill is unrealistic in the extreme; in fact, I am afraid that I go so far as to say that it is grossly irresponsible.
Local authorities have already set their budgets for the coming financial year, which already include substantial efficiency savings. They are therefore coming at this exercise not only not knowing how they are going to find the money to fund free personal care but completely unprepared for the practical aspects of implementation, as the noble Lord rightly said-never mind having to get used to a new system of assessment, which is a major task in itself. They will have to have enough people on the ground capable of responding to what in some areas will be a tidal wave of applications. In many councils, those trained people on the ground are simply not there.
We know-and the Government themselves admit-that the costings underpinning this policy are of the weakest kind. They are based almost entirely on assumptions which themselves rest not even on vague data but on no data at all. Even supposing that areas for further efficiency savings can be identified, the Government themselves concede that such savings do not just happen overnight. They happen gradually, over a period of years. Therefore, to expect councils collectively to find £125 million as from October this year, and £250 million per year thereafter, is to place upon them a burden which not even the most well managed of them will be able to sustain.
Make no mistake, this is a new burden. It defies belief that the Minister can claim that it is not. It would not be a new burden if central government were funding the whole policy, but they are not. Central government have limited their own liability, while at the same time inflicting unlimited liability on to local government. The result of that is likely to be that councils will find themselves making ill thought-through and perhaps arbitrary decisions in order to achieve instant savings.
These rushed decisions are almost bound to impact adversely upon council residents. We cannot predict in what ways, because that will depend on the budgets that are cut, and/or the new charges that are levied. Even then, councils will still be groping about in the dark prior to 1 October as regards the costs of implementation. London councils have pointed out that if the Government's estimates are incorrect even by 1 per cent in the first year, the additional costs nationwide could amount to another £40 million.
The Minister knows, without me telling her, that introducing any new policy brings with it upfront costs. It is no different here; upfront costs will be incurred at the precise time when councils are expected to make savings. What estimates have the Government made about the additional manpower resources needed to deliver reablement on the scale envisaged? If no such estimate has been made, do we not owe it-at the very least-to local authorities to think about this in a measured and considered way? The money for reablement is one thing, but you need trained people to deliver it to the right standard of quality. If you do not have that, you are creating false expectations among the public.
The Royal College of Nursing is very concerned about this, as is the United Kingdom Homecare Association. I have seen some of the responses from local authorities to the department's consultation exercise and a note of panic is detectable in some of them. This is not just on the funding question but also on the issue of manpower resources. Again, I say that it is irresponsible of the Government to take things at this breakneck pace. It is not being straight with the public. There is only one logical way forward, which is to revise the timetable for implementing this Bill and the regulations.
The Government need to get round a table with local government and to put together a more robust impact assessment based on much more accurate and reliable figures. This can be done. Only then, when proper costings are in place, and everyone agrees that the plans are workable and affordable, should the policy be implemented. Whether the policy can ever be made workable and affordable has to be a matter of doubt but it is certainly neither of those things at the moment. I very much hope that the Minister will take on board the very serious concerns expressed on this issue and be prepared to act accordingly.
Lord Lipsey: My Lords, I shall speak in favour of the two amendments to which I have appended my name, Amendments 38 and 46. The first of these prescribes that regulations under the Bill should be subject to the affirmative resolution procedure, not the negative resolution as now, and the other that there should be a commencement date for the Bill, which again would be subject to the affirmative procedure.
In moving these amendments, I am delighted to be quite confident that this time the Minister will not be able to say that these are wrecking amendments. They are designed specifically to improve the Bill, and I hope therefore that I shall be more seductive with my arguments on these than I proved to be on the "wreckers".
I can be pretty brief because the case for the amendments is self-evident. The Bill is the thinnest of skeleton Bills; it does not in itself do anything except remove the limitation on local authorities. All the substance-the flesh, the bones, the blood, the brains-is to come in the regulations, which are of course out for a consultation that closes tomorrow. It is sad indeed that the House has to consider the Bill today when the consultation on the regulations does not even close until tomorrow, and it is a sign of what the noble Lord, Lord Butler, who has participated in this debate, said earlier: that the Bill is being treated as if it were a piece of emergency legislation.
I see that the noble Lord, Lord Sutherland, is with us, and it is good to see him. It is quite strange: for 10 years he and I, with different solutions in mind, have tried to get long-term care up the policy agenda. We took one step forward sometimes, but usually two steps back. Then, suddenly, as a result of the Prime Minister's conference speech, it has become a subject so urgent as to require emergency legislation without any of the safeguards that this Parliament and this country's unwritten constitution usually demand in such cases.
It is not often that you get a Bill without a commencement date. It is certainly not often that you
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There is a further argument for a commencement date, which arose earlier in our debates: there is widespread agreement, although it seems harder to turn this into reality, that we need some form of consensus over this. It is no good producing a Bill to last the four weeks until a general election; we want a Bill that will take us forward in policy in this area not over days, months or even years but over decades, because decades are the time horizon for the Bill's effects. It therefore makes sense for a commencement date to be after a general election. The proposal, which would insert a commencement date to be agreed by affirmative resolution in both Houses, would have that effect. In my judgment, it would not be possible for the Government to get an order of that kind through before an election.
Our second proposal is that this be subject to the affirmative resolution procedure. Frankly, I am astonished that the Government have tried this one on. The argument is that the regulations that are being amended by the Bill were under the negative resolution procedure, and therefore the Bill should be too. That is rather like saying that a home that was fit for a mouse will of course be appropriate for an elephant. The House is clearly required to look at the amendments in detail in full debate and, if they will, agree them. We talk sometimes about Henry VIII powers. On that sort of scale, Henry VIII was an uxorious monogamist in comparison with the Bill, which is simply unsuitable to be taken under the negative procedure.
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