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Grand Committee

Monday, 23 April 2012.

Arrangement of Business

Announcement

3.30 pm

The Deputy Chairman of Committees (Baroness McIntosh of Hudnall): My Lords, Members will wish to be made aware-if they are not already-that the noble Baroness, Lady Thomas of Winchester, is not able to attend today and has withdrawn her Question for Short Debate, which would have been the third item of business today. Members may also wish to be made aware that the wording of the Question for Short Debate tabled by the noble Baroness, Lady Gardner of Parkes, was changed after House of Lords business was last printed but appears correctly on today's Order Paper. Finally, I remind the Committee that in the quite likely event of there being Divisions in the Chamber, the Committee will adjourn for 10 minutes from the sounding of the Division Bell.

Health: Pancreatic Cancer

Question for Short Debate

3.31 pm

Asked By Lord Aberdare

Lord Aberdare: My Lords, pancreatic cancer is in some respects the poor relation of major cancers. It is the fifth most deadly cancer in the UK after breast, lung, bowel and prostate cancer. However, its survival rate, unlike those of the other cancers, has hardly improved in the past 40 years. In addition, there is evidence that pancreatic cancer patients often do not receive an adequate standard of care. Pancreatic cancer is all too often seen as a death sentence, leaving little or nothing to hope for. I sought this debate to try to focus on ways in which the Government, working with others concerned, might help to bring some hope-something more to live for-to sufferers from pancreatic cancer and their friends and families.

My concern about the issue is purely that of a layman without medical or specialist expertise. Two friends of mine died from pancreatic cancer in recent years. One was a business acquaintance who battled with it for several years, the other a friend who died within weeks of diagnosis. At least three others lost parents at a relatively early age, while another currently has the disease and is doing his utmost to beat the odds. He has been lucky enough to be treated privately at the Royal Marsden Hospital. Through the efforts of his medical team he was given a drug called Folfirinox, which is not approved for this purpose by NICE but

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which shrank his tumour to the point where it could be operated on. He is convinced that without that operation he would have died.

As I prepared for this debate, I was struck by the number of people who have had direct experience of friends or relatives falling victim to pancreatic cancer. When I looked at the statistics relating to it, I found them shocking. There are more than 8,000 diagnoses of pancreatic cancer in the UK each year, which represents less than 3 per cent of total cancer diagnoses. However, it accounts for nearly 5 per cent of deaths, and the length of time between diagnosis and death is typically less than six months. More than 80 per cent of patients will die within a year of diagnosis. Three-year survival rates in the UK range from 3.6 per cent to 11.9 per cent, and five-year rates from 0 per cent to 10.4 per cent. Only 3 per cent of patients survive for five years. The figures have hardly improved since the 1970s, yet countries such as the USA, Canada and Australia achieve five-year survival rates that are twice as high, and a number of European countries also do better than the UK. Furthermore, there are significant variations in outcomes between different UK regions. London and the south-east have better results than the north of England, Scotland, Wales and Northern Ireland.

Of equal concern is that the 2010 NHS National Cancer Patient Experience Survey showed that pancreatic cancer patients had a poorer NHS experience than most other cancer sufferers, for example in the information they received, in the management of their pain, and in the confidence they had in their medical teams. One aspect of this is the support available from clinical nurse specialists. Although most pancreatic cancer patients surveyed said that they had access to a clinical nurse specialist, research by Pancreatic Cancer UK found that those specialist nurses were concerned that they were not receiving the support and resources they needed to do their job well. Moreover, although it is estimated that some 20 per cent of pancreatic cancer patients may be suitable candidates for surgery, which is recognised as the only effective way of tackling the disease, only about 10 per cent receive it. Noble Lords may share my view that these figures are deeply disappointing and raise serious questions about whether we in the UK cannot and should not do considerably better for those unlucky enough to contract this dreadful disease.

There are three issues I should like to highlight as needing to be tackled. The first is to increase research into the many aspects of the disease which are not yet adequately understood. Despite accounting for 5 per cent of cancer deaths, pancreatic cancer attracts only 1 per cent of cancer research funding. Any prospect of improving survival rates must start from better data about what causes or contributes to the disease and what sorts of treatment are effective in tackling it. Experience, for example with breast cancer, has clearly shown that research does lead to improved survival rates.

The second issue is to find ways of diagnosing pancreatic cancer earlier. There are no straightforward ways of recognising the disease, and many weeks or months often pass before a firm diagnosis is reached,

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with almost 30 per cent of patients visiting their GPs five times or more. However, the prospects for successful treatment-or even for high-quality palliative care-depend largely on how soon the disease is identified. In addition, many patients do not have the chance to participate in clinical trials for new treatments because their condition is already too far advanced by the time they are diagnosed.

The third issue I want to raise is the quality of care for all pancreatic cancer patients, which needs to be improved, for example through better information for patients and their carers, better co-ordination between those involved in treatment, better support from clinical nurse specialists and a more consistent service across the UK.

I know that the Government share my concern about the need to improve the experience of pancreatic cancer sufferers. Paul Burstow, a Minister in the Department of Health, has met Pancreatic Cancer UK and indicated his support for its Campaign for Hope, and I welcome the fact that two pancreatic cancer-related research studies are to be conducted under the aegis of the National Cancer Intelligence Network.

I very much look forward to the Minister's response to this debate, as well as to the contributions and suggestions of other noble Lords who have much greater experience and knowledge of this issue than I do, but who none the less get three minutes as opposed to my 10. I am sure they will do much better with it. Government, of course, cannot provide all the answers; but in partnership with other organisations and interested parties-the medical profession, research bodies, funders, charities, carers, and of course patients themselves and their families and friends-they can offer encouragement, support and resources.

In particular, I ask the Minister to answer four questions. First, will he look into conducting a full audit of current pancreatic cancer services, to assess why different regions currently achieve different results, and what structures and systems work best to provide pancreatic cancer patients with an optimum quality of care?

Secondly, will he ensure that pancreatic cancer is firmly included in the national awareness and early diagnosis initiative to assess what can be done to shorten the time to diagnosis?

Thirdly, what steps will he take to increase the amount of funding going to pancreatic cancer, both for research and care, in line with its significance among major cancers in the UK? Finally, how will he seek to improve the experience of care for pancreatic cancer patients?

Progress on other major cancers has shown how much improvement can be achieved through focused efforts to raise awareness and improve diagnosis and treatment. Surely we can also improve the outlook for pancreatic cancer sufferers and give them some real hope for longer lives, better care and greater fulfilment in the time that remains to them.



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3.38 pm

The Earl of Selborne: My Lords, every Member of the Committee will be enormously grateful to the noble Lord, Lord Aberdare, for making this debate possible. I am sure we all congratulate him on his speech. Pancreatic cancer is indeed the poor relation. It is disheartening to find what little progress has been made over 40 years compared to the great successes in most other cancers.

I shall confine my remarks to the need for earlier diagnosis and try to explore some of the reasons why it is difficult to achieve at the moment. Pancreatic cancer is usually diagnosed late in its progress, making surgery very much harder to accomplish. With earlier diagnosis, there is a small chance that the progress of the disease can be slowed down, thereby prolonging life and there is a possibility that the patient may be fit enough to take part in clinical trials. Again, with later diagnosis sometimes clinical trials simply are not an option.

The difficulties of early diagnosis cannot be denied, though. Like the noble Lord, Lord Aberdare, I stress that I am a complete layman, but I recognise that there are no simple tests and indeed that many patients do not experience symptoms until the cancer has spread from the pancreas. Sometimes, however, families are able to recognise with hindsight that a range of symptoms had manifested themselves which, had they led to a diagnosis some time earlier than was eventually the case, might have given some more hope for treatment and trials. Often this manifested itself in more frequent visits to GPs and to hospital before potentially triggering an emergency presentation like jaundice.

The barriers to early detection have been well set out by Pancreatic Cancer UK's Study for Survival. Its informative summary notes that GPs themselves record that there is a lack of sufficient information and knowledge about pancreatic cancer's signs and symptoms, a lack of sufficient formal evidence relating to them to support the development of effective referral guidelines, and a lack of access to risk assessment tools to support GPs to identify patients with a pancreatic cancer concern.

We need to develop tools, such as a risk assessment tool, and to improve access to diagnostics. Doctors should always include the possibility of pancreatic cancer in their index of suspicion when presented with a patient with symptoms that do not seem to add up, and should always be ready to refer the patient to a consultant for investigation in such circumstances and without delay.

3.40 pm

Baroness Warwick of Undercliffe: My Lords, I, too, thank the noble Lord, Lord Aberdare, for securing this debate and for his thoughtful and compassionate speech. It is clear that I am not the only speaker today who has had the harrowing experience of seeing a beloved family member or friend suffer from this lethal disease. My sister-in-law died of pancreatic cancer, and her story mirrors much that has been said today. She was prescribed pills for depression and had a late diagnosis, first of pancreatitis, which was not considered

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serious, and only much later one of pancreatic cancer. There was little understanding from her GP-not indifference, but perplexity over the symptoms of a disease that we know GPs will see as a new case perhaps only once every five years.

The statistics speak for themselves and I will not repeat them, except to remind the Committee that this is the fifth most common cause of cancer death in the UK, yet it receives less than 1 per cent of overall cancer research funding. For the 8,000 people a year in the UK who are diagnosed with the disease-that is 22 people for every day of the year-the outlook is grim indeed. Figures from the excellent body Pancreatic Cancer UK suggest that these patients have the least satisfactory health service experience of all patients diagnosed with major cancers. Its Campaign for Hope has two ambitious goals: to double survival rates within the next five years and to move the experience of pancreatic cancer patients from being one of the worst to one of the best.

How can we do that? We need, as others have said, to increase early diagnosis; we need greater investment in research and effective treatments; and we must improve the quality of patient experience for those with pancreatic cancer. A first step would be, as the noble Lord, Lord Aberdare, said, to place it firmly on the national awareness and early diagnosis initiative agenda, and I would like the Minister's response on that. A review would look at, for example, how we can develop and provide risk assessment tools for GPs.

Then we need to be sure that any new commissioning arrangements and guidelines provide GPs with sufficient information about pancreatic cancer and referral criteria. Will the Minister confirm that this cancer will receive the attention that it deserves within the Government's Improving Outcomes strategy for cancer?

We need a significant increase in research investment, and we need to increase clinical trials. What steps are the Government taking to ensure that clinicians and patients are fully informed about all available pancreatic cancer clinical trials?

Finally, we need to improve the experience of patients. I know that specialist nursing support-clinical nurse specialists-can make a huge difference to the experience of pancreatic cancer patients, but access to these amazing individuals is limited. Does the Minister recognise the vital role these CNS staff play in helping to improve the experience of patients, and can he offer any assurance about future provision?

There is no excuse for patients in the UK faring so much worse than those in other countries. We must improve survival rates and the quality of care-and of life-for those with this terrible form of cancer.

3.45 pm

Baroness Jolly: My Lords, I join with others in extending thanks to the noble Lord, Lord Aberdare, for securing this debate, and to Cancer Research UK and Pancreatic Cancer UK for such excellent briefings.

One in three of us will get cancer in our lifetime, and that diagnosis, for the most part, is quite straightforward. The past decade has seen phenomenal increases in survival rates, such that fairly soon 2 million

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people will be living with and beyond cancer. That number is growing. This is real cause for celebration, but sadly not yet for those with pancreatic cancer. It has one of the highest incident-to-mortality ratios for any disease. The problems of difficult and late diagnosis, leading to late treatment-often too late for surgery-have been well outlined by noble Lords.

The coalition Government's document, Improving Outcomes: A Strategy for Cancer, was published on 12 January this year. It set out a range of actions to improve cancer outcomes. Care Minister Paul Burstow said that the strategy,

He added that this,

He said that the Government estimated that of those additional lives saved, 75 would be those with pancreatic cancer. That is all to be welcomed, but 2014-15 is only three years away and we therefore need to understand what actions are being taken.

It is tragic that at the moment in England there is little hope for most patients with pancreatic cancer. The Government have acknowledged difficulties in late diagnosis, the need to consider biomarkers for pancreatic cancer because there are often no symptoms until late stages, the 2005 NICE guidelines for urgent referral of patients, the high incidence of late decisions around surgery-often too late-and some suggestion of reluctance on behalf of clinicians to recommend surgery.

In his summing up, I should be grateful if my noble friend the Minister could address three issues. What mechanisms and levers are there within the Health and Social Care Act that will be able to reassure carers and those who have pancreatic cancer that these aspirations can be met? What role does value-based pricing have in the long term? What engagement is there between the department and royal colleges to address the deficits in doctor training and continuing professional development in this area that is so particularly fraught?

Long-term research needs to be supported and accelerated and, on a brighter note, a few weeks ago, Kirtana Vallabhaneni, aged 17, from West Kirby, beat 360 other entrants to be awarded Young Scientist of the Year for 2012 for her work as part of the University of Liverpool's research projects. She-at 17-was working on identifying the harmful cells that cause pancreatic cancer. We need many more like Kirtana to increase the level of care and survival rates that are so deserved by those with pancreatic cancer and their carers.

3.49 pm

Baroness Morgan of Drefelin: My Lords, I congratulate my noble friend on securing this important debate and I declare my interest as CEO of a cancer research charity. I am also proud to be a patron of Pancreatic Cancer UK, and I am particularly proud of its work in its Campaign for Hope, which is a very important initiative. As a vice-chair of the All-Party Parliamentary Group on Cancer, I wanted to try to put together

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some of those interests and to talk about the work that the all-party group is doing that is important to patients with pancreatic cancer.

As we have heard, people with rare cancers are often diagnosed later and suffer poorer outcomes than those with more common cancers. I should like to thank the Government for listening to the all-party group and others for including one-year cancer survival rates alongside five-year rates for breast, lung and colorectal cancer in the NHS outcomes framework.

We believe this focus on the NHS implementing interventions that improve early diagnosis-which is key to better survival-is important. However, we must not forget that 53 per cent of people who die from cancer in the UK have a less common cancer such as pancreatic cancer. We have to ensure that improvements are made across the board and that the gap in survival between patients with less and more common cancers does not widen but starts to narrow. This is why the All-Party Parliamentary Group on Cancer has called for the one-year and five-year indicators in the NHS outcomes framework to be expanded to cover all types of cancer. I would be grateful if the Minister could provide an update on what consideration his department has given to broadening out these indicators to include less common cancers and pancreatic cancer in particular.

I would like to make a couple of points on patient experience. We know that the experience of cancer patients must improve, particularly for those with pancreatic cancer. The 2010 National Cancer Patient Experience Survey revealed that patients with rarer cancers had less positive views of their treatment than those with more common cancers. Pancreatic Cancer UK has today illustrated this further through its briefing for this debate. If we are to encourage commissioners to take action to improve this situation, the National Cancer Patient Experience Survey must be conducted annually and be included as an indicator in both the NHS outcomes framework and the commissioning outcomes framework. It would be helpful to know what progress has been made towards this.

As we all know, cancer networks have been extremely important in driving up standards in the last few years. Once the reforms are implemented, CCGs will be responsible for non-specialised cancer services while the NHS Commissioning Board will undertake specialised commissioning. For patients with rarer conditions, such as pancreatic cancer, this means that some parts of their care pathway will be commissioned locally while others will be commissioned nationally. Cancer networks play an important role in overseeing commissioning plans and ensuring that seamless care pathways for patients are delivered. Could the Minister update us on the Government's plans for cancer networks?

I thank my noble friend Lord Aberdare once again for securing this important debate and Pancreatic Cancer UK for its vital work.

3.53 pm

Lord St John of Bletso: My Lords, I am grateful to my noble friend Lord Aberdare for giving us the opportunity for this important and very topical debate.

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At a time when there have been so many dramatic improvements in the cure and treatment of cancer, it is sad and very alarming that there have been little to no such improvements as regards pancreatic cancer. As my noble friend mentioned in his alarming statistics, the situation has not improved for almost 40 years.

It is also very concerning that the National Cancer Patient Experience Survey in 2010 showed that pancreatic cancer patients have some of the worst overall experiences of all cancer patients. In my allotted few minutes today, I want to touch on just two issues: diagnostics and research. There is currently no screening test for pancreatic cancer and, given that we now know that the disease takes 10 to 15 years to progress and that there is significantly more understanding of the biological and genetic makeup of the disease, what assurance can the Government give that more funding will be made available to provide this effective test?

Secondly, I understand that most drug trials for pancreatic cancer in the UK are currently focused on testing combinations of existing drugs. Given that there have been significant developments in the understanding of the biology of pancreatic cancer in recent years, what actions can the Government take to ensure that more trials are conducted on new drugs which build on the existing research? Essentially, we need a far more radical and creative approach to pancreatic cancer. Time restricts me from speaking on the scope for more surgery, but I cannot understand why, when 20 per cent of patients are eligible for surgery, only 10 per cent have the opportunity of having it.

In conclusion, I applaud the tremendous work of the charity Pancreatic Cancer UK and its Campaign for Hope. I sincerely hope that today the Minister can give us all some encouragement that more financial research and support can be given to address this important campaign so that the UK can achieve its potential for doubling survival rates.

3.55 pm

Lord Ribeiro: My Lords, I declare an interest as a retired general surgeon who previously operated on patients with pancreatic cancer but was wise enough to give way to more specialised surgeons of this condition.

I support the development of pancreatic cancer centres, as suggested by the noble Baroness, Lady Morgan of Drefelin, because these 28 specialist centres in the British Isles are endeavouring to improve the standard of care for patients with pancreatic cancer. However, there are marked variations between the centres, and their outcomes should be the subject of a national audit.

I join others in thanking the noble Lord, Lord Aberdare, for bringing this debate, in this short time, to highlight some of the problems that exist. The cardiothoracic surgeons have shown the way by their national survey, over many years, of cardiac surgery outcomes. For the second year they have published the National Thoracic Surgery Activity and Outcomes report. It is important that all specialist associations take part in an audit so that it is possible to compare the outcomes between different centres and, frankly, highlight the ones that are good enough and those that are not

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good enough, so that at least those who know that they fall outside a 95 per cent confidence limit will improve their practice, find out how to do it better, or perhaps desist, as I did.

The argument for centres undertaking large-volume surgery is now accepted, but this needs to be underpinned by proven expertise, and I would say it takes years to actually develop that, within teams, to come up to the standards. It also needs to be underpinned by good research. Resection rates as high as 20 per cent, with 2 per cent mortality, are achievable in some centres, while others report mortality of 14 per cent.

A German study found that cancer cells in the liver and bone marrow appear in some 36 per cent to 76 per cent of patients. Undetected, these patients may well be subject to surgery, only to develop recurrent disease later. Does my noble friend the Minister acknowledge that we need greater investment in research beyond the current 1 per cent of overall cancer research funding, as suggested by the noble Lord, Lord Aberdare?

Exciting new modalities involving genomics, gene therapy and immunotherapy to complement neoadjuvant therapy are in development and need support. Let us be clear: pancreatic cancer is a difficult and complex cancer. Unlike the one-stop-shop diagnosis that can be achieved for breast cancer-which, by the way, is a very visible and obvious cancer-it can take up to six weeks to investigate and diagnose pancreatic cancer in patients prior to surgery.

Commissioners of health need to understand that this is not a cheap cancer, and they need to negotiate with the providers of healthcare and make sure that the complexity and cost are taken into account when managing pancreatic cancer.

I hope that my noble friend the Minister will use the current anti-smoking campaign to draw attention to the 70 per cent increased risk of developing pancreatic cancer among smokers as compared to non-smokers.

3.59 pm

Lord Sharkey: My Lords, in preparing for this debate, three things struck me with a special force; the first was that 25 per cent of pancreatic cancer patients experience symptoms up to 12 months prior to diagnosis; the second was that nearly 30 per cent of pancreatic cancer patients visited their GP five or more times before diagnosis; the third was the alarming fact that the disease attracts less than 1 per cent of overall cancer research funding. With regard to the first and second areas, this seems to me to suggest very strongly indeed the need for better information to be made available both to the doctor and to the patient. Will the Minister give urgent consideration to putting in place quickly a pilot campaign whose objectives are to increase awareness among both patients and doctors of the possible symptoms of this disease? I know that the Government have done that very successfully for bowel cancer.

The third area is the question of the very low level of research funding for the disease. I realise that it is not a simple matter to increase the funding for one particular disease, no matter how pressing the case may be. In many ways this is because there is an

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analogue of the market mechanism in operation when it comes to the allocation of research funds. That is not a criticism of what happens in a general sense; I point out only that relying on the normal processes of allocating research funding is unlikely to result in much of an increase for the rarer types of cancer, such as pancreatic cancer, in any reasonable timeframe.

That is why I ask the Minister to see if there is any way of bypassing or supplementing the normal process of funding allocation and to see if there is any way of directly intervening to generate a substantial and urgent increase in funding. I realise that this is not easy, and it is consistent with the Government's commitment to improve the treatment of cancer in the UK and bringing our survival rates up to those enjoyed by many advanced countries.

I, too, thank the noble Lord, Lord Aberdare, for giving us the opportunity to debate this vital issue. I hope that the Minister may be able to give sympathetic consideration to the proposals that I have put forward.

4.01 pm

Lord Kakkar: My Lords, I join other noble Lords in congratulating my noble friend Lord Aberdare on having secured this important debate. In so doing, I declare my own interest as a practising surgeon and professor of surgery at University College London, where we have an important interest in the management of pancreatic cancer.

I shall focus on four issues in the time available. The first is to explore the problem of the diagnosis of pancreatic cancer in primary care. As we have heard from noble Lords, nearly 30 per cent of patients have three or more consultations with their primary care practitioner before a putative diagnosis of pancreatic cancer is made, along with referral to a specialist for further investigation. Are there any opportunities, or have arrangements been made or strategies considered, for trying to improve the ability of those practitioners in primary care to be sensitive to the rather non-specific symptoms attending the early presentation of pancreatic cancer, so that they might improve diagnostic strategies?

The second issue relates to specialist treatment. Improving the outcomes guidance, which has driven the cancer strategy over the past 10 years, has provided an emphasis on a focus on the management of patients with pancreatic cancer in specialist centres. What proportion of patients with pancreatic cancer is being managed in specialist centres with specialist multidisciplinary teams, comprising hepatobiliary surgeons with expertise in pancreatic cancer, specialist radiologists and specialist medical oncologists, who could well be in a position to provide the best care for patients once diagnosed, in terms of both understanding how later-presenting disease might be downstaged and of course providing the best curative surgical or palliative radiological procedures for these patients?

The third area is innovation. Your Lordships' Science and Technology Select Committee, chaired by my noble friend Lord Patel, presented an interesting report in 2008 on genomic medicine, which was widely appreciated. What arrangements have been made about the application of genomic and personalised medicine in the area of pancreatic cancer, particularly with

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reference to the chief executive of the NHS's recently published review on innovation and the putative development of academic health science networks? Will these networks provide an opportunity for the early adoption of innovation that might improve both the diagnosis of pancreatic cancer and, potentially, the development of biomarkers or other personalised medicine screening tools to improve therapeutic options tailor-made for individual patients to improve their outcomes with pancreatic cancer?

How many trials are open in the National Cancer Research Institute's portfolio of clinical trials specifically dealing with novel therapies in phase 2 or phase 3 for pancreatic cancer? What impact has the European Clinical Trials Directive, adopted some years ago, had on participation with regard to trials in pancreatic cancer? We know generally that, in our country, participation in clinical trials has fallen from 6 per cent prior to adoption of the European Clinical Trials Directive-that is 6 per cent of all patients in the world participating in clinical trials coming from our country prior to adoption of the directive-to only 1.4 per cent last year. Has the Clinical Trials Directive impacted on clinical research in pancreatic cancer?

4.05 pm

Lord Patel: My Lords, I want to report that the All-Party Parliamentary Group on Pancreatic Cancer is in the process of being set up, supported by Pancreatic Cancer UK. It now has the necessary qualifying members and will hold its first meeting soon. I hope that noble Lords present here will join it.

I had a speech prepared, but I have changed my mind because I can tell your Lordships the story of my noble friend Lord Turnberg, who is sitting on my left. He is reported to be a survivor of pancreatic cancer but he is not. His pancreatic cancer was diagnosed in 1997 and he was operated on. I have his permission to tell you this story, so I am not breaching any patient confidentiality. It subsequently turned out that it was acute pancreatitis, which his colleagues had diagnosed as pancreatic cancer. Although that was 1997, it highlights how difficult this disease is to diagnose. Nothing has changed and many noble Lords have commented on this. We need to improve our ability to diagnose pancreatic cancer. I also have personal stories of my own family: my mother and mother-in-law died of pancreatic cancer. Both faced their disease with courage. My mother was operated on and died a few days later. The surgeon was well meaning but did not have the competence to do the complicated surgery. I once watched my professorial colleague operate with a laparoscope for 18 hours. As the noble Lord, Lord Ribeiro, and the noble Lord, Lord Kakkar, have pointed out, it requires a great deal of stamina, courage and tenacity to do surgery for 18 hours through a laparoscope.

I was impressed by some aspects of Pancreatic Cancer UK's survey. I would like to highlight three issues. Nearly 25 per cent of pancreatic patients experience symptoms for up to 12 months prior to diagnosis. That is a difficulty in diagnosis. Survival rates are poor but, as has been pointed out, there are, importantly, great variations in survival rates across cancer networks.

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This needs to be explained, because we need experienced people, particularly surgeons, to look after these patients. Comments have been made about biomarkers and it is true that biomarkers are a way of screening. However, we are a long way from achieving that. Research is being done in this country and in the United States to identify a biomarker and to identify genetic variations and genetic associations of at-risk patients. There is currently funding for research-at Cardiff University there is a programme grant for research on understanding the diagnosis and the variations in results.

The timing of the debate has gone wrong-the clock indicates that I have been speaking for only .07 minutes. That is good-I have time left. I was going to finish by pressing the Minister to look further at providing a full audit of pancreatic cancer services-along the lines of the Healthcare Quality Commission's national bowel cancer audit-not just focusing on surgery but on all aspects of pancreatic cancers. Such an audit will also help better commissioning in the future and I hope the Minister will address it.

4.09 pm

Baroness Finlay of Llandaff: My Lords, I am grateful to the Committee for allowing me to speak in the gap. In this important debate, there has been much focus on research. However, results will take years to come through. Work on early diagnosis and necessary training will also take time. There are patients now with an advanced form of the disease, and there are patients whose disease will recur even when they have gone through treatments that put it in abeyance. Under the new contracting process, how will we ensure that patients with pancreatic cancer have access to anaesthetic intervention services for nerve blocks such as celiac blocks? How will we ensure that clinical nurse specialists work seven rather than five days a week, and that they work as part of multi-professional teams? Without expert medical back-up, the complexity of pancreatic cancer symptoms is difficult to deal with. How will we ensure anticipatory prescribing to reduce the complications of pancreatic cancer such as thromboembolism that sometimes kill patients before the cancer itself? Patients should also have access at all times of the day and night to drugs for pain relief and to combat vomiting.

4.10 pm

Baroness Thornton: My Lords, as ever with these debates, particularly when we are disciplined by having a short time, I find that most of the questions that the Minister needs to address have been asked-some of them more than once, and certainly much more ably than I can manage. I start by thanking Pancreatic Cancer UK for its excellent briefings, and also the Library for the excellent and detailed briefing that it produced for this debate.

I will focus on two issues. One is a catch-up on research that I know was published last December and January and was featured by the BBC and at least one national newspaper. I will then ask a question about research that will amplify things. The research linked processed meat to pancreatic cancer. It was done by researchers in Sweden. The World Cancer Research Fund joined in the discussion on that research, which

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focused on eating red and processed meat. We knew that this had been linked to bowel cancer, but the study published in the British Journal of Cancer analysed data from 11 trials and 6,643 patients with pancreatic cancer. It found that eating processed meat increased the risk of pancreatic cancer. The risk increased by 19 per cent for every 50 grams that someone added to their daily diet. Eating an extra 100 grams increased the risk by 38 per cent.

Professor Larsson, who conducted the research, made the obvious point that pancreatic cancer has poor survival rates, so as well as diagnosing it early it is important to understand what increases the risk of the disease. Has any further research been done on the issue of the link with diet? We know that smoking, too, is a risk factor. I am thinking of the responsibility campaign on food and diet that the Government have been running. Are they using those statistics as part of the campaign on what people should or should not eat?

My second question is about research. We know that there is a commitment to further investment in research into pancreatic cancer. However, I am aware that unless the research is properly commissioned, even if the funding is there, the money will not be spent in a timely fashion. My question echoes that of other noble Lords: are the Government increasing the spend on research in this area? How will they ensure that we develop the kind of critical mass of UK talent that will enable us to deliver world-class, groundbreaking research into pancreatic cancer, as we have done in other areas?

4.14 pm

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe): My Lords, I thank the noble Lord, Lord Aberdare, for tabling today's debate. I am aware that this is a very important issue for him and for countless other people and families across the country. The coalition Government's cancer outcome strategy was published in January last year. It sets out how we will make sure that people with any form of cancer get care and outcomes as good as anywhere in the world, whoever they are and wherever in the country they live.

Probably the most important factor affecting the survival rates of any cancer is the speed with which it is diagnosed-I think all noble Lords mentioned that issue. We have addressed that in the cancer outcome strategy, and that is why we are supporting the strategy with more than £450 million over four years. This funding is part of more than £750 million of additional funding for cancer over the spending review period to support our ambitions for cancer care. On top of that, or course, a range of support is already available to help GPs assess when it is appropriate to refer patients for investigations for suspected cancer, such as a NICE referral guideline. However, we can do more to support them.

Cancer Research UK and the National Cancer Action Team are working together to develop a new GP engagement programme for the coming years that will allow them to increase awareness and improve training. This will all help diagnose cancer cases earlier. I can say to my noble friend Lord Selborne that

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Professor Willie Hamilton is currently developing a risk assessment tool to support GPs in the investigation of pancreatic cancer.

The noble Lord, Lord Aberdare, asked if the National Awareness and Early Diagnosis Initiative could do some specific work on pancreatic cancer. Our cancer outcome strategy says that we will work with a number of charities linked with rarer cancers. There have already been meetings with several, including Pancreatic Cancer UK and Pancreatic Cancer Action, to see what more might be done to diagnose these cancers earlier. The Government's future work on pancreatic cancer will be informed by what we learn from those charities.

I am aware also that Pancreatic Cancer UK is hosting an early diagnosis workshop in June. The National Cancer Director, Professor Sir Mike Richards, my honourable friend the Minister of State for Care Services and officials from NAEDI will be attending. The workshop will be looking at practical steps that can be taken to help GPs and secondary care health professionals diagnose pancreatic cancer at the earliest stage possible. We look forward to receiving the findings of the workshop.

My noble friend Lord Sharkey and the noble Baroness, Lady Warwick, talked about the possibility of awareness campaigns. Decisions on campaign work in this financial year will be based on the evidence from the pilots that we have run regionally in 2011-12. To further address the need to improve awareness of rarer cancers such as pancreatic cancer, consideration is being given to piloting a symptom-based awareness campaign based on covering multiple cancers. We are talking with stakeholders, including rarer cancer charities, about that work.

Once pancreatic cancer is diagnosed, patients need to have access to appropriate and consistent treatment, delivered to a high standard, across the board. I am aware that there are variations in survival rates across the country and across cancer networks. Pancreatic Cancer UK's Study for Survival 2011 confirmed that. Quite simply, it is not good enough and it must change. That is why we are providing data to help the National Health Service tackle regional variations. For example, the National Cancer Intelligence Network has made available data collections on survival rates and surgical resection rates across a range of cancers, including pancreatic cancer. These data will allow providers and commissioners to benchmark their services and outcomes against one another and to identify where improvements need to be made. They will then be able to channel resources into improving services in the areas that need to be brought up to an acceptable standard.

The noble Lord asked whether we would develop an audit of pancreatic service and care. The National Advisory Group on Clinical Audit and Enquiries recently considered a proposal for an audit of pancreatic cancer as part of the National Clinical Audit and Patient Outcomes Programme. I understand that the proposal was not recommended for inclusion in the national programme. However, the advisory group suggested that elements of the proposal could be taken forward as part of the existing bowel cancer audit when this is retendered in 2012. I will ensure that this option is

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considered when the department reviews the existing arrangements for the bowel cancer audit later this year.

In Improving Outcomes: A Strategy for Cancer-First Annual Report, published in December last year, we said that continuing to provide the NHS with benchmarked data,

is a priority for 2012.

Of course, a hugely important element in all this is the patient experience, to which the noble Baroness, Lady Warwick, referred. In December 2010, we published the report of the 2010 cancer patient experience survey, which recorded the views of more than 67,000 cancer patients across 158 trusts. The survey showed that 90 per cent of patients with an upper gastrointestinal cancer, which includes pancreatic cancer, reported having a clinical nurse specialist. The survey also showed that cancer patients who had support from a clinical nurse specialist had a better overall experience of care. We expect the National Health Service to consider this in developing its policies to improve patient experience. A 2011 survey is now in progress. We will be looking closely at the results of the survey to see where improvements have been made and where more needs to be done.

Research featured large in this debate, including in the speeches of the noble Lord, Lord Aberdare, my noble friends Lord St John of Bletso and Lord Sharkey, the noble Lord, Lord Kakkar, the noble Baroness, Lady Thornton, and others. The National Institute for Health Research is making a significant contribution to the search for scientific breakthroughs in pancreatic cancer. The institute's clinical research network is currently hosting 17 studies of pancreatic cancer and is recruiting patients as we speak. In August 2011, the Government announced £6.5 million of funding for the Liverpool biomedical research unit for gastrointestinal disease. About half this investment will support pancreatic cancer research. The NIHR clinical research network, as mentioned by the noble Lord, Lord Kakkar, is currently hosting 17 trials and other well designed studies in pancreatic cancer that are recruiting patients. In 2010-11, a total of 687 patients were recruited to pancreatic cancer studies hosted by the CRN. The National Cancer Research Institute's upper-gastrointestinal clinical studies group is dedicated to developing a portfolio of research studies in pancreatic cancer, and has a pancreatic cancer subgroup, which has developed a number of internationally run trials. That is a cause for some encouragement.

The noble Baroness, Lady Thornton, referred to the research involving processed meat. She is right; Swedish research published in the British Journal of Cancer in January 2012 said that two rashers of bacon or one sausage a day increases the risk of pancreatic cancer by 20 per cent. There is also a link with bowel cancer. The department urges everybody to have a balanced diet. As with other forms of cancer, higher consumption of fruit and vegetables seems to be protective, but I will write to the noble Baroness if I have any further information on that subject.



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The noble Lord, Lord Aberdare, referred to new cancer drugs. Our priority is to ensure that cancer patients get the drugs that their doctors believe are best for them. We have delivered on our promise in the coalition agreement for a cancer drugs fund, with £650 million, all told, devoted to it. This funding has so far helped more than 12,500 cancer patients in England to access the cancer drugs that their clinicians recommend. We have listened to feedback on the first year of the fund's operation, and today are publishing new guidance on the cancer drugs fund, which will further speed up access for patients. The new guidance makes it clear that patients will not normally need to go through the primary care trust funding processes prior to applying to the fund. In most cases, it will mean that patients are able to access drugs within a matter of days of an application being made to the fund. In the longer term, our intention is to introduce a system of value-based pricing for new drugs, with the aim of enabling patients to have greater access to effective and innovative new medicines. The whole premise of value-based pricing is to ensure that the price of a drug will be linked much more closely to its assessed value. It will bring the price that the NHS pays more into line with the value that a new medicine delivers.

My noble friend Lady Jolly asked about that. She also asked about mechanisms in the Health and Social Care Act that might assist cancer patients. The main mechanism is the outcomes framework, which will of course pervade everything that the NHS Commissioning Board does in the way of commissioning guidance, and will inform the way that the commissioning outcomes framework is developed. She also asked about engagement with the royal colleges. Ministers are currently meeting representatives from the royal colleges on education and training-I do not think on pancreatic cancer specifically but certainly on the training of doctors.

The noble Baroness, Lady Morgan, asked me a number of questions. The NHS outcomes framework- I pay tribute to the work of the All-Party Group on Cancer over a number of years-will be updated annually to ensure that the most appropriate measures are used for comprehensiveness, while recognising that we need to keep a broad continuity of indicators year on year. The refreshed NHS outcomes framework 2013-14 will be published alongside the mandate in the autumn. To support the ongoing development of the framework, we are in the process of establishing an independent technical advisory group that will provide advice to the department and the board about current indicators and proposals for new ones.

The noble Baroness asked about the national cancer patient experience survey. With the leave of the Committee, as there is a small amount of time left I propose to utilise it, unless there are any objections. In the first NHS outcomes framework we explained that the approach to Domain 4, which is patient experience, was evolutionary and the initial set of improvement areas for this domain was drawn from existing nationally co-ordinated surveys or from surveys that would be available in 2011-12. Collectively, the improvement areas aim to achieve wide coverage of the interactions that people have with the NHS and focus on different features of

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patient-centred care. Future work will involve refining surveys and developing new questions and measures to allow existing indicators to be replaced over time as necessary.

With regard to cancer networks, we have already made clear that there is a role for clinical networks such as cancer networks in the reformed NHS, as a place where clinicians from different sectors come together to improve the quality of care across integrated pathways, and the cancer networks are a clear example of how that way of working delivers better quality. That is why the Secretary of State announced last May that we would continue to fund cancer networks this year and that, subject to legislation, the Commissioning Board will support strengthened cancer networks.

The noble Lord, Lord St John of Bletso, asked about quality standards. There is no intention to produce a quality standard for pancreatic cancer as such, but in future there will continue to be flexibility in the library of quality standards to take account of new and emerging priorities, should such need arise.

Our ultimate goal is to improve survival rates and the quality of life for those living with all cancers, including pancreatic cancer. There are many challenges to be overcome but they are not insurmountable. Because of the Health and Social Act, clinical commissioning groups will be free to pursue innovative ways of delivering care that bring better results for all patients, including those with pancreatic cancer, and NHS provider organisations will have the operational independence to determine how best to meet the needs of commissioners.

We have set five ambitious but measureable goals: to prevent people from dying prematurely from cancer; to improve the quality of life for people with cancer; to help people recover from episodes of ill health; to improve the experience of care; and to ensure that all patients are treated and cared for in a safe environment. We will continue to deliver on those goals.

Lord Patel: I am not sure if it is in order for me to do this, but I know that whatever the Minister says is taken as gospel, and he quoted a study from Sweden about the association of eating meat with pancreatic cancer. I do not know about the quality of that study, but it sounds surprising that that amount of meat-eating increases the risk of pancreatic cancer by 20 per cent. I presume that he was talking about relative risk, not absolute risk.

Earl Howe: My Lords, I will be happy to clarify that point in a letter.

The Deputy Chairman of Committees (Lord Geddes): The Grand Committee stands adjourned until 4.30 pm, or indeed there may be a Division during that time, in which case it will be 10 minutes from the time when the Division is called.

4.29 pm

Sitting suspended.



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Housing: Flats

Question for Short Debate

4.31 pm

Asked By Baroness Gardner of Parkes

Baroness Gardner of Parkes: My Lords, I have declared my interest in the register as a long-standing leaseholder. Having always seen the leasehold situation from a personal point of view and how I have been affected by changes, I had not appreciated that it is a vast subject which affects over 2 million people in the UK-half a million in the capital alone pay more than half a billion pounds annually in service charges. This March, the London Assembly produced Highly Charged, an 80-page report on residential leasehold service charges in London. The foreword states,

and looks, in particular,

I urge your Lordships to study this report and the Lords Library briefing pack, most capably prepared by our Library staff, in detail.

There are many different issues in leasehold. Here is a brief list of some of the key ones: simplification of the law-a consolidation Act; regulation of managing bodies; transparency-complaints processes; closing loopholes-protecting leaseholders' rights; easier change to commonhold; right to manage-tenants' associations; standard of services-value for money; exit or transfer fees; and financing home ownership.

Regarding simplification of the law, many people who buy leasehold property have no idea what is involved. They are looking for somewhere they can afford to live and, generally, their focus is on buying the flat. They look at the service charge for that year but many will not be looking at this going up or at large capital outlay in the future for block repairs-these are often nasty surprises. They expect to be able to rely on managing agents-normally appointed by the freeholder or some other tier of landlord-to act fairly on their behalf. The leaseholder is always at the bottom of the pile.

As Act after Act has constantly altered sections in earlier Acts, ordinary leaseholders-and even lawyers-find it difficult to navigate through the morass of legislation covering leasehold in England and Wales. There is real need for a Consolidation Act and I support the views of the Federation of Private Residents' Associations as set out in their paper Forgotten Leaseholders.

There is a strong call for regulation of managing bodies. I am ambivalent on the point as the necessary changes in the law are far greater and a Consolidation Act which could clarify and simplify would be better. Regulation may be a helpful first step. The Government

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do not seem to have sufficient data on the working of leasehold law. For instance, in 2009, the British Property Federation wrote to the then Government stating that it fully supported better regulation, yet it is often quoted by Ministers as opposing regulation. Sections 152 and 154 of the 2002 Act were due to be in force by now but the Government have not implemented these protective clauses. Residential tenants' deposits are protected by the law but the much larger amount, the leaseholders' money held by managing agents, has no protection.

Transparency, a major news topic in recent weeks, is vital in the matter of service charges, works and repairs. Leaseholders are entitled to know how their money is spent and to be confident that they are getting what they have paid for. Shocking cases of massive overcharging have appeared in the press. In 2011, the Daily Telegraph on 3 December and the Mail on Sunday on 11 December published reports. There was a September case settled almost on the doorstep of the leasehold valuation tribunal where residents of St George Wharf, opposite Parliament, had received a refund of £1 million after a battle that went on for some years.

In the Charter Quay case against the same landlord, Mr Tchenguiz, in December, the leasehold valuation tribunal found that many interconnected companies were entering into contracts with other Tchenguiz family-owned companies and in that case received an excessive commission of 23.5 per cent for insurance. The chairman said:

"The result of entering these contracts has been extremely damaging financially, because the break clauses are so onerous".

Peverel, the management company owned until recently by the Tchenguiz family, had a very poor record of dealings with its leaseholders.

There are too many cases where intermediate landlords or management responsible for arranging services such as insurance have agreed contracts which mean that they are pocketing money themselves to the detriment of their tenants. Transparency is necessary to reveal these situations and stop this abuse. The organisation Leasehold Knowledge Partnership is actively working to ensure good practice.

Easier change to commonhold was included in the 2002 Act and it is sad that so little commonhold has been developed since. It is so clearly in the interest of the resident. It gives people real ownership of the home in which they live. It should become government policy to facilitate commonhold. The 2002 Act allows leaseholders to convert to commonhold, but only if they are 100 per cent in agreement on the matter. That is an almost impossible percentage-just one flat can thwart it. Reduction to a simple majority would make a great difference. When residents see the benefits, as I have myself in my homeland, they would appreciate the great advantages of such a system. I support the views in favour of commonhold held by CARL, the Campaign for the Abolition of Residential Leasehold.

The right to manage and tenants' associations can each be very beneficial. The difficulty arises in getting sufficient leaseholders in a block to agree on any option. This is particularly difficult in cosmopolitan

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areas where many tenants live only part time or property is in foreign ownership. At least some residents have to be willing to take on the work of handling contact with the relevant landlord or managing agent and this takes time and effort. There is no right to manage available if more than 25 per cent of the building is in commercial use. Procedures and percentages merit reconsideration.

My housing experience in GLC days showed me that the number of people willing to take on such a role on a voluntary, unpaid basis is very small and the work can be very demanding. A reputable managing agent has sent me interesting views about the need to train leaseholders to improve their knowledge of the system and obtain certification for this. He favours advisory bodies, alternative dispute resolution and mediation. He states that,

In an ideal world, he would be right, but many leaseholders find that whatever attempts they make fail to produce any response or necessary action from their managing agents. Agents change but are no better. Where routine inspections and long-term maintenance planning used to be the norm, little, if anything, is done now.

As regards loopholes, there is evidently a defect in the leasehold Acts. Some process exists whereby a landlord can avoid the obligation of offering their interest to the leaseholders in a block, by setting up what I think is called a sister company. In my block this has produced a very bad result for leaseholders who would, I believe, have wanted to buy in that head lease. It is wrong that we did not have the opportunity.

Exit or transfer fees have a very adverse effect on older people who wish to move to a retirement village home and when the time comes to move, perhaps to a care home. They find themselves faced with quite a high charge. This is often money that they need. If they have died, their family find that the property might be almost impossible to sell because of the high charges. This certainly needs to be looked at. It has a doubly bad effect in housing terms. Older people living in a house too large for them and who are keen to move to a sheltered housing facility are deterred from doing so because they have such a financial disincentive. This means that a large property is underoccupied and unavailable for a family in need of that size of accommodation. I support the Campaign Against Retirement Leasehold Exploitation-CARLEX.

As to financing home ownership, bridging finance-so common years ago-was short-term money advanced by a bank or building society to enable you to secure the home you wished to move to, and to give you time to sell your present home. This enabled people to move up or down in accommodation size or location, and it worked well. Today, lenders are clear that no such type of finance is available at all.

After a recent housing debate, the noble Lord, Lord Best, told me that Hanover Housing Association, of which he is the chairman, offers an older person the right to move into appropriate accommodation and gives them two years within which to decide whether they are happy and want to buy and stay, or to return to their original home. I find this a marvellous system. It should be more available.



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Recently, I was involved in trying to help someone who wanted to buy a flat in a high-rise former council block-

The Deputy Chairman of Committees (Lord Geddes): With apologies to the noble Baroness, a Division has been called in the Chamber. The Grand Committee stands adjourned until 4.51 pm.

4.41 pm

Sitting suspended for a Division in the House.

4.51 pm

Baroness Gardner of Parkes: I will repeat the first sentence of my paragraph: otherwise, it will not hang together. Recently, I was involved in trying to help someone who wanted to buy a flat in a former council block that had been bought under the right to buy. Application for a mortgage with a high-percentage deposit was approved in principle by the bank, and a valuation fee paid. The valuation report attached a zero value to the flat. Thinking that this must be an aberration, the prospective buyer went through the same process with another bank and got exactly the same response: the value was listed as nil. A valuer's note said that no one was willing to lend on blocks that had a past or present connection with a local authority, particularly if they were high-rise. The two banks had been willing to offer terms, but neither would do so with a zero on the valuation report. Several other banks said that they would not offer mortgages on any high-rise blocks. The policy of Barclays is not to lend on property above four floors, with the exception of expensive new buildings such as One Hyde Park-and, I suppose, the Shard.

The implications of this are wide, particularly at a time when the Government are keen for more people to buy the flat in which they live. I sent details of the case to the Minister for Housing on 8 March, pointing out that people need to be able to move on if their circumstances change and they need larger or different accommodation, and asking who would want to buy if they were locking themselves in to a totally illiquid asset. His reply of 30 March stated that he had,

The acknowledgement card from the Treasury was dated 28 March. I await a reply. I hope that my response will be swifter than that to the consumer group Which? It has not yet had a reply from the Minister for Housing to its letter on leasehold property charges sent last October. I received the Which? article only today. I have no time to comment on it but I hope that other noble Lords may do so.

As I followed up on the high-rise case I was most impressed by how well blocks were managed by the local borough-a point made in the London Assembly report. The standard of consultation with tenants and of explanation of the work done was very clear, and far above anything that I had seen in private blocks. There are lessons to be learnt.

My brief time has run out. All I have been able to do is list some of the issues. They are complex and far-reaching, and affect many people. We all want to

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live in a fair and just society. We do not want to spend hours and days trying to get things done that should be done routinely and correctly. Having to complain, let alone having to do it formally through tribunal proceedings, is a slow and laborious process. Life does not need complication but simplification, and above all clarity. The issues need to be studied in detail for the benefit of all. I hope that the Government will consider the many points that I am sure your Lordships will raise today.

4.54 pm

Baroness Maddock: My Lords, I should declare an interest: I am a vice-president of the Local Government Association. We should all be very grateful to the noble Baroness, Lady Gardner, for securing this debate on this very important subject. I am only sorry that it is such a short debate. I am sure that all of us have been paring our words, having been inundated with information.

There are 1.5 million leasehold homes in Great Britain. This means that between 2 million and 3 million people are living in long-term leasehold properties. As the noble Baroness, Lady Gardner of Parkes, showed-and as other speakers, too, will show-there are still considerable problems for those with homes in this sector. This is despite the many Acts of Parliament that have covered leasehold tenure, going back half a century. There were Acts in 1967, 1985, 1987, 1993 and, most recently, in 2002. I was involved in the 2002 Act and was surprised to realise that it was 10 years ago. There is much agreement, I think, about the need for helpful reform of leasehold across the parties. However, it is a complicated area, as we have already heard, and there is less agreement about how to make this reform a reality, and a reality that works.

The leasehold system that we are discussing today is almost a uniquely Anglo-Welsh system. The rest of the world has developed alternative approaches, to which the noble Baroness, Lady Gardner, alluded in her opening comments. The problems in the leasehold sector persist in large part because our present system is one of high legislation but low regulation. At the heart of most of the problems is the fact that the interests of the leaseholder-the one who usually has the most financial, practical and emotional investment in a property-are all too often excluded. As the noble Baroness, Lady Gardner, has pointed out, the balance of power between the freeholder and the leaseholder too often seems to be to the advantage of the freeholder. Furthermore, the root of many problems is that lessors are excluded from management decisions despite the fact that they are the people paying.

There is no independent or compulsory regulation. This situation allows unscrupulous and incompetent managers to continue operating and undermines the influence of those living in managed properties. The lowest source of redress for leaseholders is the land valuation tribunal, but it is often lengthy, expensive and bureaucratic. It is particularly detrimental for poorer households. Many living in leasehold properties are retired; in fact, more than a third of leasehold flats are occupied by economically inactive people-I believe that the noble Baroness, Lady Greengross, is going to

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talk about people in retirement and the problems that they have. In the short term, the existing infrastructure could be improved by focusing on levering in the interests of all leaseholders to the management process, with a compulsory ombudsman service, and improving the management of leasehold properties through licensing. This would incur some costs for leaseholders, and it would create limited hurdles for those entering as managing agents, but I feel it would improve the value and quality of the service. Greater leaseholder empowerment could be promoted by the Government taking steps to encourage the process of right to manage and the long-term expansion of commonhold.

Since 2002, complaints about managing agents have risen sharply; in fact they have more than quadrupled in the past 10 years. The number of people living in leasehold properties is growing. The Government are committed to unlocking the housing market, and leasehold properties will be an important part of this. We know that they will be particularly important in London, where the majority of new homes will be leasehold flats. In addition, the Government plan to reinvigorate the right to buy for social housing, and this is already creating more leaseholders. Surely leasehold reform should be a priority alongside increasing the housing supply. I am aware that the Housing Minister, Grant Shapps, has stated that the interests of freeholders and managing agents are balanced and that reform should be driven by a more proactive approach from the sector, not by greater regulation. However, it is clear that there are severe problems for leaseholders, and, as voluntary regulation allows companies to operate completely outside any regulatory regime, such problems will continue unless some action is taken.

The noble Baroness, Lady Hanham, who is here today, took part in debates on the 2002 Act, as perhaps did others in the Chamber. I do not know whether the noble Lord, Lord Best, was here at the time, but the noble Lord, Lord Rooker, was then the Minister. I can still hear him saying that the local valuation tribunals would improve matters for leaseholders. However, they are proving costly, lengthy and bureaucratic. What monitoring have the Government done of the operation of local valuation tribunals, and do they have any plans to improve the operation of the tribunals? What research have the Government undertaken on the take-up of commonhold? In 2002, it was supposed to take over from the old system, particularly for new build. I understand from the statistics that that just is not happening. People prefer to go to the old system. What are the Government planning to do to assist the take-up?

I conclude by saying that we have regulation across various areas where there is competition and the regulation is often there to try to look after the interests of consumers. We have not done that properly for leaseholders, and that is one of the best arguments for looking seriously at how we can regulate in the interests of leaseholders. I hope that this short debate this afternoon will assist the Minister in trying to bring home to the Housing Minister, Grant Shapps, how important this is if he really wants to ensure that we have more affordable homes for people.



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5 pm

Baroness Greengross: My Lords, I start by congratulating the noble Baroness, Lady Gardner, on securing this debate. It is a very important issue. I declare an interest as president of the Association of Retirement Housing Managers. I just want to make a few points about older people in retirement leasehold schemes, as the noble Baroness, Lady Maddock, suggested I might.

I start with the resolution of conflict situations, and there are quite a lot of them. As someone who for many years headed a charity which set up a mediation scheme for people in leasehold housing schemes, I was aware of the conflict. It is difficult, not least for the providers of schemes, who are dealing with people who are often prepared to spend 12 or more hours a day focusing on those issues and who can make amazing barrack-room lawyers-I do not want to be insulting-because they have so much time to concentrate on that. So it is a difficult as well as an important issue.

The industry might be better served in conflict resolution by stronger regulation through an independent regulatory body or, in the absence of that, some form of self-regulation underpinned by guidelines and codification-the sort of thing that the Association of Residential Managing Agents has proposed and supports. That is worth considering. To help residents avoid costly litigation processes, perhaps the Government could implement a dispute resolution structure based on compulsory mediation as a first step, as recommended by the London Assembly report on service charges. That might be helpful. We know that increased clarity is required on what is included in the annual service charges, what is not, and what is retained in reserve for contingency funds and what precisely those funds cover. People are often greatly lacking in knowledge about that.

On other charges, we know that the Office of Fair Trading is currently investigating transfer fees, which are payable to the landlord by the owner or their family once the property is sold. The level of fees is set out in the original lease, but the scale of the fee varies widely between property companies. Would the Government consider a scaled fixed fee of some sort, which might be helpful? There also appears to be some ambiguity on the issue of the house manager flat rental, charges for which are levied with the service charge. If people are dissatisfied with that charge, it is not entirely clear what can be done to resolve the issue. Might part of any new guidelines help to address that, and will landlords as well as management companies be expected to sign up to codes of practice which would cover allied issues such as the placement and cost of buildings insurance and any associated premium commission, which require a consistent and open approach across the industry?

Finally, older residents in retirement housing are much more likely to experience unforeseen events, such as a decline in health status or the death of a partner, than younger people and that might mean that they have to change accommodation or-more likely-have to make adaptations to their accommodation fairly rapidly. Codes of practice should include provisions

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to help older people and their families in those circumstances and to consider the additional provisions they may make to help older people in particular.

Housing designed for older people whose needs change as they age faces an almost built-in conflict of interest. They need more services as they age, so the costs are going to rise as more care is provided. Their income tends to be less over the years. They wish to reduce the cost but they need more services. Older and frailer residents are more costly, so when residents manage the schemes themselves they may wish to sell to active, fit and therefore younger people. There is a conflict in what extra-care housing is intended to do. It is there so that as you get older and, perhaps, more frail, the services increase to meet your growing needs but if only younger, fitter, stronger people are invited into a complex you are almost defeating the object. I do not know if this problem can be solved but it is there unless people massage the criteria for entry into this sort of housing. This is sad but it presumably happens from time to time.

These are issues which the Government and Members of your Lordships' House who are expert in this sort of thing need to consider carefully.

5.06 pm

Baroness Miller of Chilthorne Domer: My Lords, I, too, congratulate the noble Baroness, Lady Gardner of Parkes, because this is an enormously important issue. As she rightly said in her extremely good introduction, when people are looking at these flats they are just looking for something they can afford. They are not looking in great detail at the implications of becoming a leaseholder. I must declare an interest, having become a leaseholder in Kennington in 2002. What I say this afternoon is not because I am an expert but because our block is a microcosm of the issues raised by noble Lords in this debate. We have had the issue of residential service charges which have not gone up as much as some that I have read about but have nevertheless seen a steep increase.

In terms of capital repair charges, this year we have had a projection several years forward. As our managing agents have said, this is the first time ever for this and it is a terrific breakthrough. If there were going to be regulations, a five- or 10-year forecast should be obligatory and would help tremendously. Last year, the surcharge for external works was £2,000 on a two-bedroom flat. That is a huge amount when it has not been foreseen more than 12 months before. Not many people can just find £2,000 in a year.

If you happen to want to sublet your flat, there are charges for assignment of leases. This is an issue because if someone is marginal about subletting it might put them off. At a time when accommodation is at such a premium, we want to make sure that those charges are at least proportionate to the work done. I have come across charges for assignment of a lease where it was going to someone who was already a tenant in the block and was simply moving flats, so the taking up of references was pretty academic.

The issue of insurance was highlighted in the London Assembly report. Interestingly, it highlighted terrorism as one of the unnecessary things to insure against.

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Many insurance companies discount terrorism as something that you can insure against. However, in preparing for today's debate I went back to the budgets for the block in which I live, and there was a £5,000 a year charge for insuring against terrorism. That is against the background of a number of restrictions. You cannot keep pets, you cannot keep bikes in your flat, you cannot have wooden floors and you cannot hang out washing. Perhaps all the prohibitions are reasonable. At least when we took on our leases we were aware of them.

What made the biggest difference over the decade was the revival of the residents' association under the chairmanship of somebody who devotes a vast amount of time and energy, entirely voluntarily, to making the sorts of improvements that we should expect good regulation to make. She has made, single-handedly, a tremendous difference to the accountability of the management company. She has made it more transparent by asking lots of questions and then informing us on the structure of the freeholder and the management company, on the relationship between the two, and on the trustee whom the management company appoints. If anyone was going to speak this afternoon it should have been her, because she is a truly great expert on this. She also managed to end the perhaps unintentional divide-and-rule culture of the management company, whereby leaseholders did not come together to take on the management company over issues. Giving information about issues, and getting a consensus among leaseholders on how to resolve them, is tremendously important.

Given how difficult it is at the moment to form a residents' management association, I hope that the Government will give at least some thought to making it easier to form one. Beyond that, I hope that they will give some thought to giving more resources to residents' associations. I do not mean that the Government should give the resources. Perhaps the service charge could be top-sliced to give residents associations a minimal amount of funding to bring leaseholders together. That is the start point that is so difficult to achieve with no resources and few people willing to volunteer their time. If the issue is one of the David and Goliath-which is what it feels like most of the time for the management committee and the chairman of the committee-we should give a few stones for David to hurl at Goliath with his catapult. That would make an enormous difference. If we achieve anything as a result of this debate it should be in that direction.

5.13 pm

Lord Best: My Lords, I, too, am very grateful to the noble Baroness, Lady Gardner of Parkes, for initiating this important debate on the management of leasehold flats. Since I agree with virtually everything she said, and virtually everything that everybody else said, I will not dwell on those points.

Since most leasehold property is managed by managing agents, we need to consider whether the current arrangements are satisfactory in ensuring that they do a good job. I declare my interest as chair of the property ombudsman TPO, which handles complaints by tenants and, significantly, by landlords about managing agents. I feel able to speak in this debate despite my

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interest because the property ombudsman TPO is principally concerned with estate agents that handle sales, where 95 per cent of agents are members, and managing and letting agents that handle rented properties, where the TPO accounts for some 60 per cent of the sector. There is another ombudsman service, quite separate from us, that handles the great majority of complaints about agents who look after leasehold property.

On ombudsman services in general, the resolution of disputes without the need to go to the courts, or in this case to take matters to tribunal hearings, has considerable advantages. Ombudsmen are not champions of consumers any more than they are on the side of providers. They must be entirely independent of both. They can in that capacity not only resolve disputes in individual cases but play a significant role in raising standards in an industry. For example, complaints against estate agents in relation to property sales have fallen, and the level of awards that agents have been required to pay has also fallen over recent years. It seems very likely that the pressure and publicity from the work of the property ombudsman in judging the behaviour of agents against a clear code of practice contributed significantly to this improvement.

Throughout their professional bodies, and in professional and trade magazines and journals, there is constant reference to the standards to be expected of agents in treating with consumers. Where the ombudsman's decision leads to an offending agent being expelled from the scheme, local publicity has a powerful impact. The ombudsman cannot deal with the more extreme cases, not least because his powers are limited to making a maximum award of £25,000 in the case of the TPO, and some matters must still go to the courts. However, the ombudsman service means that huge numbers of disputes can be resolved at low cost-indeed, at no cost to the complainant.

I recognise that there can be additional complications for leaseholders. An individual leaseholder may be insistent that the managing agent should take action, perhaps in accordance with their contractual agreement, where the cost of the agent doing so may mean that the management company, comprising the residents who will all have to pay, is not so keen for the managing agent to proceed in this way. In other words, there may be three parties engaged in a dispute: the individual leaseholder, the leasehold management company and the agent. This will require additional sorting out. One hopes that such cases are in the minority, and I would advocate much greater use of the existing ombudsman service to settle disputes and to raise standards for residential leaseholders.

We know that the Government are not keen on any new regulation in the private rented sector. The property ombudsman has argued for the same requirements on managing letting agents as exist for estate agents under the Consumers, Estate Agents and Redress Act, which would make it compulsory for all agents to belong to an ombudsman scheme. In the absence of such legislation, it seems that we must rely on voluntary action by agents to join an ombudsman scheme. The advantage to the agents will be that as consumers become aware of the difference between agents that belong to an

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ombudsman scheme where they can get their disputes addressed and agents that are outside such schemes, the market will ensure that few agents remain beyond the pale. In the private rented sector, a number of agents have got together with the National Approved Letting Scheme, and with the professional bodies representing agents, to launch a safe agents scheme that in particular requires all agents to have client money protection insurance. A publicity campaign by bodies representing leaseholders, such as the Federation of Private Residents' Associations, to ensure that leaseholders choose only agents that belong to an ombudsman scheme, would certainly help to raise accountability and standards.

I will also comment on the practices surrounding payments that are required of leaseholders or their successors when they leave or die. Some contracts in retirement housing stipulate payments to the freeholder, and these exit fees have been the subject of serious complaint. Here I declare an interest as chair of the Hanover housing association, which has taken on the freeholds of several thousand leasehold retirement flats. From this I know that practices in the sector can vary from the good to the bad. At the positive end it can be beneficial to offer to occupiers the option that some part of the service charge-usually that covering the building up of a provision for major repairs, the replacement of lifts and so on-should be deferred until the occupier leaves. This will mean that every month those on tight incomes will have more spending money, and the accumulated service charge will come out of the sales proceeds when they leave or die.

At the other extreme are cases of small print where the occupier-or their heirs and successors-is required to pay 5 per cent of the sales proceeds to the freeholder in return for no discernible benefit. There have been complaints that purchasers did not understand such requirements buried in their contracts. The Office of Fair Trading looked at these questions, and it would be helpful to have an update from the Minister on the action that the OFT intends to take-not to throw the baby out with the bathwater but to clamp down on unfair and misleading contractual arrangements that are discovered. Although I recognise the Government's aversion to statutory regulation, will the noble Baroness comment on the value of extending the role of ombudsman services?

5.20 pm

Lord McKenzie of Luton: My Lords, like other speakers, I thank the noble Baroness, Lady Gardner of Parkes, for the opportunity to reflect on a particular aspect of housing policy and I am grateful for the briefings that we have had. I start by declaring an interest because I am, jointly with my wife, a long leaseholder of a flat in London. This debate has, if nothing else, spurred me to be more diligent in reviewing the paperwork.

As others have said, issues of residential leaseholders touch on a particularly complex area of legislation. The noble Baroness has previously sought a view from the Government about whether they will consolidate landlord and tenant legislation and was told, back in November, that there were no plans to do so. However,

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that exchange at Question Time brought forward suggestions that the matter might be referred to the Law Commission. Has anything been taken forward in this respect? In the same exchange, the Minister indicated that a wide range of housing regulations were being looked at as part of the red tape challenge. How is that progressing, which particular regulations are being reviewed and what areas are being looked at? In a further exchange on 17 January, the noble Baroness, Lady Hanham, reaffirmed that there were no plans for a wide ranging review of leasehold law, but indicated that the Government were keeping a watching brief and would not rule out making changes. Have any changes currently been ruled in?

Issues of leaseholders are just one part of the housing problems facing our country and, to be frank, are not the most pressing. House building has fallen by 11 per cent in the first 18 months of the coalition Government, private sector rents have risen and are unaffordable for too many and home ownership has declined as people struggle to get mortgages. We know that the Government have set their face against further regulation, scrapping Labour's plans for a national register of landlords and regulation of letting and managing agents. This is at a time when some of the most vulnerable are having their housing benefit cut and are being directed to the cheaper and shabbier end of the private rented sector. Nevertheless, the issue raised by the noble Baroness is important and, as others have said, is likely to be of increasing significance if more blocks of flats are built, shared ownership schemes are promoted and-as the noble Baroness, Lady Maddock, mentioned-the Government attempt to reinvigorate the right-to-buy programme.

It is not just private sector freeholders and landlords who are involved with leaseholders. Some quite outdated ARMA data from 1998-99 suggests that 20 per cent of landlords are social landlords. The same survey suggested that less than half of leasehold flats were using a managing agent. Can the Minister update us on those data? I do not have time to cover it today, but there were issues about social landlords, leaseholders and the implications for decent home standards where a lot of money was being applied by local authorities to upgrade their stock and the implications of that for people who had bought a flat.

It must be acknowledged that this area is not entirely unregulated. The law requires consultation with leaseholders before works above a certain value can be carried out; demands for service charges must be in writing; there is an expectation under the law that service charges are reasonable and there is a right for landlords and leaseholders to seek a determination from a leasehold valuation tribunal. Leaseholders are entitled to a summary of service accounts and to inspect documents. Service charge funds are deemed to be held on trust but do not have to be held in separate trust accounts: thereby hangs a problem. However, as I understand it, where there is a residents' management company or a right-to-manage company, service charge moneys are subject to a statutory trust.

Apart from the law, managing agents who are members of RICS or ARMA-the Association of Residential Managing Agents-are required to adhere to the RICS

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code of conduct on service charges for residential management. There is a separate code for retirement housing managers. New best practice guidance has been introduced by the RICS in co-operation with the accountancy bodies, in the face of the Government's refusal to implement what was previously proposed. Is that considered fit for purpose, and will the Government reconsider giving it some statutory backing?

Despite the voluntary code, as we have heard and seen from our briefings, difficulties abound. Barriers to the managing agent industry are low; and not all managing agents belong to the RICS or ARMA schemes and are therefore not bound by the code. There are no ombudsman arrangements to which all managing agents are required to adhere, and the noble Lord, Lord Best, made a powerful argument to change that. It has been suggested that some of the difficulties arise from the essential imbalance of power between freeholders and landlords on the one hand and leaseholders on the other-the David and Goliath syndrome. Notwithstanding this, it would seem that some of the conflicts arise because insufficient attention is paid when a lease is entered into or required in the first place.

The London Assembly report suggests a requirement for more specific advice at the point of agreement. Estimates of service charges for the next five years, I think, were suggested in that case. It was interesting to hear the experience of the noble Baroness, Lady Miller, currently. The concerns around service charges are inflated prices, not having to achieve value for money, undisclosed commissions, awards of contracts to related companies of managing agents, and the lack of security for leaseholder moneys. The report prepared by the London Assembly also raised issues concerning the leasehold valuation tribunal, suggesting that the process was getting increasingly complex, with an impact on cost. There was difficulty in getting information from landlords, who were increasingly employing counsel, reflecting on-costs. What is the Government's assessment of how the tribunal is currently working?

There is a case for more regulation-if not by government, by industry bodies-but this must be effective. We have a policy review under way, and in this connection the principles that we would deploy to address this issue require ensuring good practice is promoted, improving transparency, supporting a register of competitive tendering processes for services, and having systems, perhaps mandatory, for the resolution of disputes.

The Deputy Chairman (Lord Geddes): The noble Lord times it quite beautifully. A Division has been called in the Chamber. The Grand Committee stands adjourned until 5.37 pm.

5.27 pm

Sitting suspended for a Division in the House.

5.40 pm

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): My Lords, I thank noble Lords who have taken part in this debate-most especially the noble Baroness,

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Lady Gardner of Parkes, for introducing it. She has taken a long-term interest in housing and has great experience. It is therefore important to be able to deal with the issues that she has raised and those raised by subsequent speakers. I have a limited time, and I say at the outset that if there are areas that I miss, we will make sure that letters are written afterwards.

We believe and understand that most leaseholders are, in fact, satisfied not only with their property but with the way it is managed. However, I accept immediately that there are a number of exceptions to this rule. We also know that leasehold tenure can be complex, and problems and disputes arise, which cause concern, frustration and, in some cases, real distress to the people concerned. We have a statutory framework in place that aims to balance the different parties' interests in the same property. The goal is to provide leaseholders with the rights and protections they need, while recognising the legitimate interests of landlords.

The current legislative framework, if properly dealt with, can deliver the right balance between the parties involved-but provided it is matched by an increasingly proactive and socially responsible approach by the professionals who are working within the sector. In taking this approach, the Government are, I recognise, presenting a real challenge to those professionals. I am therefore pleased to see this challenge being taken up by various professional bodies such as the Association of Retirement Housing Managers, to which the noble Baroness, Lady Greengross, referred. This can only help leaseholders and others concerned within residential leasehold.

The noble Baroness, Lady Gardner, referred to the London Assembly report, as did other noble Lords. We have noted that the London Assembly's report on its investigation, Highly Charged, is a thorough and thoughtful contribution to these issues. Most of the report's recommendations to government in fact relate to the procedures of the leasehold valuation tribunal. As such-although I will refer to the LVT later-they are issues for the Ministry of Justice, and it is up to that ministry to address these issues. It is also now for the Mayor of London and the Assembly to decide what steps they will take, but I suspect that as purdah is in place, I should not continue on that matter.

The noble Baroness, Lady Gardner, also raised the case for consolidation of legislation. This matter is unbelievably complicated. I do not know if the noble Lord, Lord McKenzie, had anything to do with consolidating legislation when he was in government, but it is not to be undertaken lightly at all. We recognise that sometimes it can be beneficial to bring together all relevant legislation, but it takes a long time. You have to bring not only the law but the regulations into one place. At the moment, it is probably not justifiable to spend time consolidating legislation in this area. The noble Lord, Lord McKenzie, referred to the Law Commission and asked whether we were planning to ask it to look at this issue. I said when we previously discussed this issue that we did not think that the Law Commission would be grateful for our recommendation, and that it was very much up to it to decide what it wanted to do. If the commission felt that there was a

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position or role for it, it would be in a position to take the matter up itself, but we are not at the moment planning to ask it to do so.

Service charges and the management of property were mentioned by the noble Baronesses, Lady Miller and Lady Maddock, as were the role of managing agents and their capability. Noble Lords will know that leaseholders have a range of legal rights concerning service charges and the management of property. They can hold managers and landlords to account if they believe that their service charges are unreasonable or if they are facing continuing poor management. Again, I recognise that this is not an easy area. It throws a lot of responsibility on to tenants' associations and leaseholders' associations. The noble Baroness, Lady Miller, referred to that.

However, I do not think that it is for government to intervene any further. People who buy leasehold properties first need to be very careful with the lease they are buying, to know what they are buying, to know what are the service charge implications and management implications. They need to know whether the managing agent has been appointed by the freeholder and what responsibility they take if that managing agent is not standing up to proper scrutiny. At the end of the day, leaseholds are the responsibility and under the ownership of the people who live in a block of flats and it is very much in their interests to have an organisation or association to use to help manage it. Although I accept that that involves a big responsibility on those who do that, there are some very determined leaseholders who manage to achieve it.

I touched briefly on the question of the leasehold valuation tribunal, which caused some ripples early on. I know that there are leaseholders who have had successes with the London valuation tribunals. Although I appreciate that there are difficulties and discrepancies between the amount of costs involved and those who pay for them, it is a fact that the leasehold valuation tribunal is there to be the arbiter in cases where otherwise landlords and tenants cannot agree.

The current maximum fee payable to a tribunal is £500. Sometimes no fee is payable at all, but of course as cases continue each party is responsible for their costs of representation. Leasehold valuation tribunals are independent and do not seek to favour one party or another. They are viewed as the most appropriate forum for dealing with a wide range of leasehold disputes. Any research on the effectiveness of leasehold valuation tribunals would, I fear, be for the Ministry of Justice. It seems ridiculous that that has got out of our hands, but that is where it is. They are given jurisdiction to determine leasehold disputes and parties can of course go to court. Again, I appreciate that that is all quite daunting for people who think that they might want to just go to live a quiet life, but that is not always possible.

Yes, managing agents are appointed by the freeholder.

Baroness Maddock: Before the Minister leaves leasehold valuation tribunals, having said that it is the responsibility of the Ministry of Justice, I would be grateful to know whether it has undertaken any review. As I said in my remarks, I can still hear the noble Lord, Lord Rooker,

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telling me in 2002 how wonderful it was going to be for everybody. I realise that it is not the Minister's responsibility now, but I would be grateful for that information at some stage.

Baroness Hanham: May I get back to the noble Baroness in due course? I will have to find out whether that has been undertaken.

Managing agents, as I say, are put forward by the freeholder. The leaseholders have some rights if they consider that they property is not being properly managed, and can go to the leasehold valuation tribunal about that or begin to think about taking over the right to manage the property for themselves, which would mean that they were then fully in charge.

Service charges are an issue. All sorts of issues have been raised today about the protection of money and service charges, how much they are and what is involved with them. Again, I am afraid that that is a matter for the leaseholders to watch carefully. It is important that what the managing agents do and the costs that they put forward are transparent, and that the leaseholders have a number of rights. They can and must ask for a summary of service charges, and those charges should be consulted upon. They must be able to see the supporting documentation. They have a right to see insurance documents and the right to have a management audit carried out, albeit at their own expense. So they have some control over the service charges, although I think my noble friend Lady Miller mentioned capital charges and the fact that some people had not understood that they were going to come in.

There are two codes of practice, one from the Association of Retirement Housing Managers, mentioned by the noble Baroness, Lady Greengross, and one from the Royal Institute of Chartered Surveyors, which I think the noble Lord, Lord McKenzie, mentioned. These pay particular attention to the disclosure of commissions. Although the issue has not been entirely raised today, there have been concerns about the commissions taken on insurance. There are good codes of practice that ought to be adhered to. The Association of Retirement Housing Managers code is in the process of being reviewed-we expect that to come off quite soon-and we hope that RICS will also look at that issue and revise what it says.

The noble Baroness, Lady Gardner, and other noble Lords raised two or three other points. I shall comment briefly on commonhold, something that I remember debating with the noble Baroness, Lady Maddock, in 2002 when we were, it is fair to say, vigorously opposed and saw all sorts of pitfalls coming up. Those pitfalls are still there but we could make it easier for a leasehold property to be changed to commonhold. This would now be a matter for the Lord Chancellor, which slips it away from me, and the Secretary of State for Justice. They will be required to have a look at it, and I am sure that we will refer them to this debate so that they will know what has been said about it.

The noble Lord, Lord Best, and the noble Baroness, Lady Greengross, raised the question of exit fees. We could not possibly comment on the practice of any particular company, but we are well aware that these are causing practical issues and great distress. The

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Office of Fair Trading, as the noble Lord, Lord Best, said, has been considering whether the exit fees might breach the unfair terms in consumer contracts, and if they do indeed constitute a breach, the OFT can take action and can take such companies to court.

I have been advised by the Whip at my right hand that I have truly run out of time. The only point that I have not covered is that on the ombudsman, which the noble Lord, Lord Best, raised. May I write to him about that, since I do not now have time? I have a note of it. I shall also write regarding the red-tape challenge.

There has been too much in this debate for me to go into as much detail in my response as I would have liked. We will scour Hansard and, if we have missed anything, I will write to noble Lords who have taken part. I thank everyone for their contribution on this extremely important subject, and I assure noble Lords that I will draw the Housing Minister's attention to this debate and the concerns that have been raised.

The Deputy Chairman of Committees (Lord Faulkner of Worcester): The Grand Committee will adjourn during pleasure until 6.30 pm.

5.55 pm

Sitting suspended.

Armed Forces: Personnel

Question for Short Debate

6.36 pm

Asked by Baroness Dean of Thornton-le-Fylde

Baroness Dean of Thornton-le-Fylde: My Lords, the opening words of the current military covenant say that,

to all those,

and that they deserve our

That is the basis of my Question for Short Debate this evening. I ask myself whether the Government are fulfilling their obligation on the military covenant. It is an undertaking that goes back many centuries, indeed to the first great Queen Elizabeth-Elizabeth I-when an Act was passed which compelled parishes to contribute to the care of veterans. This nation has a very long history of seeking to give good support not just to our service men and women but to their families as well, both during and after their time in the services. The Armed Forces do not have the channels to speak out

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for themselves. They are not permitted to join a trades union, although if you look at the blogs and the chatter on the wires, you would see that many in the Armed Forces are now agitating that they should have a trades union. I make no comment on that.

They do not have the same right to speak freely in the public arena about their position as we do. However, in January this year, Catherine Spencer, speaking on behalf of the Army Families Federation, suggested that Ministers were close to breaching the military covenant. She said:

"I have to ask if the future has ever seemed more demoralising".

I have always believed that you should look on the upside of things and not just the negatives. I have had a pretty awful weekend doing the research for this speech because I have become increasingly concerned about the state of our Armed Forces-I am talking about the personnel side, not the equipment, obviously. I recognise the need for austerity measures but my interpretation of the wording of the 2012 AFPRB report is that it expresses deep and serious concerns on the range of those austerity measures and how they are being applied to the Armed Forces.

I declare an interest as a former chairman of the Armed Forces Pay Review Body for six years. I am currently a vice-president of the War Widows' Association and a trustee of the Armed Forces Pension Scheme. I have been in contact with none of them for this debate; I am not speaking to any external briefing. This is based on my experience.

It is a long time since I read a report from the Armed Forces Pay Review Body which has been so direct in talking about decreasing morale in the Armed Forces. The report states that the operational tempo remains "very high". We know that, but that is almost a blanket for a number of problem areas: people not being with their families for as long as they should, going off on operations, coming back, going on training, not having the time that we have, in the military covenant, tried to ensure for them. Indeed, chapter 2.8 states:

"The 2011 Armed Forces Continuous Attitude Survey ... indicated decreasing satisfaction ... and declining morale",

in the services.

Written and oral evidence from the services family federations highlighted uncertainty from those people about, for instance, the future of the pension scheme and the related transitional arrangements; changes to the Ministry of Defence allowances package; the impact on family life of the operational tempo; and the recurring theme of poor-quality accommodation and maintenance. These are ongoing issues that have been raised not just with the present Government but with the previous Government.

Those concerns are coupled with a pay freeze for 75 per cent of Armed Forces personnel for the past two years and a pay award for the remaining 25 per cent of just £250. In my view, the decision now to extend the pay restraint for a further two years, with no exclusions and a limit of 1 per cent, is having a cumulative and potentially damaging impact on the

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morale of our Armed Forces personnel and their families. We should be worried about that and we should try to address the issue.

A staunch pillar of the covenant going back generations has been the provision of housing, particularly in the Army. The Navy has a high proportion of its personnel who buy their own homes. To be in a community of forces families in similar situations-young families, often with Dad, or now sometimes Mum, absent for a lot of the time on operations-provides great mutual support. In the recent, successful television programme, "The Choir", we saw how being there supported those young women. Just 45 per cent of Army personnel are buying or renting their own homes-two-thirds as many as the rest of us in the population. So the reasons for the drop in morale are obvious.

If this situation is to change, more help is needed. The home is at the heart of the family. It is somewhere we all retreat to when we have issues. The £8,500 from the current Long Service Advance of Pay Scheme to assist in buying a home is, in my view, insufficient; it was insufficient some years ago. I am not even sure whether it is still being applied, but the conditions for it are pretty onerous. It will not bring about the change that the Government-particularly the Minister-want. The Armed Forces Home Ownership Scheme is a good and very welcome initiative, but it hardly touches the problem. Just 93 personnel benefited from April 2010 to July 2011, so it needs a lot more resourcing. I accept that in a period of austerity that is very difficult; nevertheless, it needs more resource. With the number of personnel returning from Germany, what are their hopes for decent housing either within or without the services?

I read the review body report over the weekend, and from personal experience I know how much care goes into writing this report. The authors do not want to be negative when they write the report or cause problems by overspinning it, but the report brought home to me just how serious the concerns must be. Normally the authors would put it across very calmly and without exaggeration-and I believe there is no exaggeration in this report. So I was alarmed at the overall message in sections of it. One reference on its own would not be too concerning, but reference after reference to morale must lead to concern.

The review body deals with serving personnel, not veterans; the military covenant covers those serving and those who have served, and rightly so. The plight of some veterans is concerning and has been raised in this House over a number of years. It is not getting much better. Last year the Veterans Aid charity provided 19,700 nights of accommodation for former Armed Forces personnel. A disproportionate number of people who live on the streets come from the Armed Forces; we know that from debates that we have had in the House. The link with the poverty that those people live in must be of concern to us all.

The House has a reputation for taking a keen interest in Armed Forces personnel issues. I think that we all recognise the work and dedication that the noble Lord, Lord Astor, has applied to this. Nevertheless, there are still areas of criticism. I will bring together the list of issues of concern that contribute to a lack of

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morale. There has been pay restraint for two years for 75 per cent of personnel, yet they see in the Budget that people with plenty of money will get tax cuts next year. Job security is disappearing and career prospects have been cut, against a background of high operational tempo and the negative impact on family life.

Sometimes when I raise issues, for example on pensions, I am told that things cannot be changed because the consequences will bounce back on the public sector. I do not accept that as a rational argument. People in the public sector do not go off and give their lives. More than 400 of our men and women have lost their lives in Afghanistan up to March this year. It cannot be said that this is the same kind of job as working in an office or in a local authority. We need to look at this.

I am not asking for special treatment. I hope that on this occasion the Minister will not trot out the usual mantra that it is all the previous Government's fault. I am asking that we honour the military covenant. It is our moral obligation. We are in serious danger of not meeting that obligation. Perhaps in his reply the Minister will kindly consider committing to remedy what people in the Armed Forces have lost. They face four years of pay restraint-a pay cut in anyone's language-and a lack of job security and career prospects. We need a renewal of our commitment to the Armed Forces, and we need to carry out that renewal.

6.47 pm

Lord Palmer of Childs Hill: My Lords, I thank the noble Baroness, Lady Dean, for initiating this debate, which is very appropriate. In reaching its recommendations, the Armed Forces Pay Review Body, which the noble Baroness mentioned, must have regard to,

I make no excuse for raising in this debate a subject that I raised at each stage of the Armed Forces Bill: Armed Forces housing. Surely the state of availability of such housing must be a major factor in recruitment, retention and motivation. Adequate housing must be one factor to balance against the "high operational tempo" that the Armed Forces pay review report identifies. The report described the lack of choice in accommodation, the variable maintenance performance and also what constitutes family eligibility for accommodation.

In answers given by Ministers to my many previous comments on Armed Forces housing, the proposal was made that in future families will be enabled to own their homes. This was mentioned by the noble Baroness, Lady Dean. I said at the time that I agreed with this as an alternative and as an aspiration but that home ownership should not be a requirement for our forces. The report rightly says that the MoD will need to continue to make a significant provision of good-quality housing for a mobile workforce.

A significant part of the report deals with the levels of rents and the size of any subsidy. My criticism is that the financial and economic requirements laid down in the report are divorced from the state

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of maintenance and the modernisation of services accommodation. The report states that there are 49,000 service family units in the UK, and that the 39,600 units in England and Wales-80 per cent of the 49,000-are leased from the commercial concern to which the MoD sold the properties. Only 20 per cent are owned by the MoD or by others.

The good news is that in 2010-11, £62.5 million was spent on improvements, with 900 properties being upgraded. The bad news is that there will be a three-year pause in the improvements programme from April 2013. The report shows that the MoD's procurement strategy was to sell off most of its English and Welsh SFA estate for £1.7 billion in 1986, whereas the rent it has paid for those often badly maintained properties has been a massive £2 billion compared to the money received by the MoD of £1.7 billion. I hope that when my noble friend replies, he will comment on that procurement policy of the Ministry of Defence. Putting my accountant's rather than my defence hat on, given £1.7 billion with interest of, say, half a billion pounds over the six years, one could have borrowed the £1.7 billion, paid the interest of roughly half a billion, and the MoD would still own the properties having received £2 billion-worth of rent and, at that stage, the rent roughly equalling the cost of repaying the loan and the interest. The MoD, would still own the properties which it has to repair and maintain although they are owned by someone else. I ask my noble friend whether it is right to make a judgment on forces' housing on purely financial grounds without a strong consideration of the debt we owe our service personnel as contained in the Armed Forces covenant.

I do not want to be all negative, because I take account of the fact that I am part of a Government coalition party. There are many things which we have not highlighted. For instance, there has been a rise in council tax relief to 50 per cent for service personnel overseas, a pupil premium of £250 for every child with a parent in the services and a yearly fund of £3 million to support state schools with service children. I was delighted that the operational allowance was doubled for Armed Forces personnel serving in Afghanistan. The community covenant scheme was launched to strengthen support between civilian communities and the forces with a grant of £30 million and the establishment of a veterans' information service-they often need it.

Members of the House will know that during various debates I have made a big thing about treatment of veterans and medals. I am pleased that the Armed Forces compensation payments have been ensured as not being required as payments for social care. Improvements to the Army's education programme have also been secured. I was also delighted that during the passage of the Armed Forces Act, thanks to input from many Members of this House, there was movement, with the Minister's help, on medals which had been awarded but were not allowed to be worn. That was a move of great sensibility in which I thank the Minister for taking such a great part. I hope that the commission set up to look into medals and veterans, which seems to be clouded in a measure of obscurity, looks at the whole question of medals, the treatment of veterans and the National Defence Medal itself.



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The review is important and I hope that when the Minister replies to comments made by me and the noble Baroness, Lady Dean, we can feel more comfortable on behalf of our valuable Armed Forces personnel.

6.54 pm

Lord Ramsbotham: My Lords, like the noble Lord, Lord Palmer, I congratulate the noble Baroness, Lady Dean, on obtaining this debate. It is very important and there is no doubt that word of it will get out to the Armed Forces that we have taken an interest in what, as I know from personal experience when serving, is regarded as the highlight of the year almost on the personnel side: the annual report of the Armed Forces Pay Review Body, of which the noble Baroness was herself a most notable chairman.

I must admit that what struck me when reading the report was its similarity with what I regarded as one of the low points of my career, which was in 1977, when we had to face what became known as the Irishman's pay rise, when the pay rise we were given was less than the increase in the accommodation and food charges. The result was that a number of commanding officers resigned because they refused to read out to their men what they were told to read-that this was a good pay settlement and that there was also to be a considerable increase in what is now called voluntary outflow. The result of that, thank goodness, was that the incoming Conservative Government had taken note of what was happening. There was an almost immediate pay rise, following the new Government taking over in 1979, which rescued a very dangerous situation. I was struck by the similarities of that situation when I read that there will be rental increases varying from 2.9 per cent for grade 1 to nothing for grade 4, and a 4.9 per cent increase in the daily food charge, when so few people are getting any increase in their pay. That strikes me as being along exactly the same lines as the previous situation. People are not silly and will see it as such.

I was for a time the Adjutant-General, the personnel director, for the Army. I was fortunate with the Armed Forces Pay Review Body of the time. It was extremely well led and it listened. It was encouraging to me that the board always came back and discussed what it had heard from us. There was therefore a partnership between the board and the military. The board recognised that the military welcomed the board, rather than not liking having it around, and particularly welcomed this partnership.

I was therefore intrigued that this AFPRB, which, as the noble Baroness said, has produced a very direct report, is clearly listening. I noted that it pointed out, among other comments, that it had heard,

In other words, it was looking widely and looking for causes to report about, not just for individual things. Why is that serious? It is very serious because here we are faced with another two-year pay freeze, and we are told that the achievement of what was set out in the strategic defence review depends on a financial upturn in 2015. Frankly, looking ahead, it does not seem that that financial upturn is likely to provide what people

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were talking about in the SDSR. Again, soldiers, sailors and airmen are not silly, and they can see this. Coming on top of a freeze, with jam tomorrow being promised to them, and with 2015 not looking like it will provide the jam that was suggested in the SDSR, they are understandably concerned-particularly when they see that against the natural requirement for an upturn in personnel costs, which have been so adequately and fully described by the noble Baroness, the equipment programme is so vast that it is likely to swamp or dominate the personnel side, if we are not careful.

However, two sentences in the report worried me more. They were:

"We were due to undertake a number of scheduled reviews this year. For some reviews, MoD did not submit the evidence we required at the start of the round and we made clear that further evidence was needed".

Frankly, I find that utterly disgraceful. Despite all the evidence that is there every time you talk to a serviceman, the MoD could not establish the evidence on which the Armed Forces Pay Review Body was due to do its work. No one should know this more than the current Permanent Under-Secretary, with whom I once worked when she headed the Prime Minister's Social Exclusion Unit. She knows all about the impact on people of the things we have been talking about.

I know that we are very fortunate in having in the Minister someone who listens, cares and will take note. This is not just criticism for criticism's sake-it is serious alarm that the MoD should be reported on by the organisation to which service men and women look up to more than any other to look after their interests. It should not be accused of not providing the evidence needed.

This leads me to the one recommendation that I would like to put to the Minister, based on the Armed Forces covenant. As the noble Baroness said, the covenant is about the services and their families, and veterans and their families. I am not talking about veterans and their families. The key part, as we discussed during the Armed Forces Bill, is when the Secretary of State reports to Parliament on the covenant. At the moment there is no set date for that, but bearing in mind the importance of the Armed Forces Pay Review Body and its report, and the fact that we in this House-and, I hope, the other House-will take a keen interest in this, I suggest that the timing of the Secretary of State's report on the Armed Forces covenant should be related to the annual report of the AFPRB so that the Government's comments on the AFPRB can be included in that covenant report. I believe that that is what service men and women will be concerned about more than any other issue.

7.02 pm

Baroness Warwick of Undercliffe: My Lords, I thank my noble friend for introducing this debate and providing us with an opportunity to consider issues of such importance to our Armed Forces personnel. As she has highlighted, our Armed Forces are currently under great pressure. As the report puts it, "operational tempo remains high". Gruelling tours in Afghanistan, and the Libya campaign, have placed a heavy burden on our services personnel and their families. This

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summer, there are the added operational demands of providing security for the London 2012 Olympics and the Diamond Jubilee.

These demands are being met with commitment and good will, at a time when our forces are experiencing a two-year pay freeze, cuts to MoD allowances, continuing cost-of-living increases and uncertainties over changes to come from the strategic defence and security review. While the Armed Forces Pay Review Body's 2012 report notes carefully that recruitment and retention are,

it also highlights a "difficult year" for services personnel and their families. We know that to be true. While the pay freeze affects the whole of the public sector, it is not the case that all those in the public sector risk their lives when doing their jobs on our behalf.

I support my noble friend in contrasting the discomfort of pressures on the cost of living with the unrelenting day-to-day pressures on those we expect to serve us in battle. Those pressures make it vital that we get right anything that influences the retention of experienced personnel in our Armed Forces.

We have been reminded that, since November last year, the principles of the Armed Forces covenant are now enshrined in law. The covenant promises that the Armed Forces community should not face disadvantage because of its military experience. It sets out what safeguards, rewards and compensation military personnel can expect in return for military service. Fairness on pay and pensions, therefore, lies at the heart of the covenant.

The Government's decision to implement a pay deal for our Armed Forces amounting to a real-terms cut seems to be at odds with the spirit of the covenant. At the very least, the Government should have allowed the pay review body to make its recommendations before deciding to cap pay rises at 1 per cent from next year. This decision cannot but harm the morale of serving personnel, even while they accept their share of austerity, and the PRB rightly makes the point that this will have an impact on recruitment.

However, my key point today concerns pensions, an issue that was raised by personnel of all ranks during a visit I made to HMS "Dauntless" recently under the auspices of the splendid Armed Forces Parliamentary Scheme. There is real anxiety over the proposed reforms to the Armed Forces pension scheme. The scheme is a highly valued part of the total remuneration package for the services, and a key recruitment and retention tool. Indeed, Armed Forces pensions are hugely important to satisfaction with the forces' way of life.

Pensions can be taken at 55. Generally, people stay on longer if they believe that they have a good chance of getting promoted. Many do not, and there are several early-departure payment schemes whereby an individual can get some pension on leaving. As Major-General John Moore-Bick, general secretary of the Forces Pension Society, said, the unique nature of military service and employment patterns means that service men and women generally need to draw their Armed Forces pension for longer than they draw their

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pay. The average length of service is nine years; only 2 per cent of personnel serve to the age of 55; 34 per cent will earn an early-departure payment; and 64 per cent will not serve to the age of 40.

Service men and women rely on these small payments to see them into civilian life. I know this from what they told me on "Dauntless", and from the experience of a friend whose father came out of the Army and returned to the UK aged 40, with two small children, no job and no house. The EDP housed and fed them for many months until he found work. These payments matter enormously. Therefore it is essential that the new pension scheme being designed by the MoD should protect and preserve the interests of service personnel. Confidence in their pension is crucial to morale-but it was not what I saw on HMS "Dauntless".

If the Armed Forces fear that they are being stitched up, there is a desperate need to stem the tide of doubt. The commission on public sector pensions, chaired by the noble and learned Lord, Lord Hutton, recommended a switch to options based on average earnings over a career. The noble Lord acknowledged that in the Armed Forces the switch would take longer than the expected target date of 2015, and stressed that Armed Forces schemes should be tailored to the unique requirements and hazards of military careers. He also recommended that accrued rights for those in existing pension schemes should be protected. This was accepted by the Government, yet widespread uncertainty remains. As the review body report noted, this is not least because the Government made clear commitments to other public sector groups but so far have not offered similar clarity on how the commitments will apply to services personnel. Will the Minister tell the Committee whether the MoD and HM Treasury will undertake to resolve any outstanding issues on accrued rights as soon as possible, and end the uncertainty over the protection of earned pension provision?

Rumours spread like wildfire in the services. Good communications are essential. The PRB stresses the importance of clear, jargon-free messages. I would like reassurance from the Minister that the MoD has a communication strategy to ensure that whatever it proposes in this complex area is explained and thus understood at all levels. The PRB asks, too, that in the absence of trade union representation, the MoD will ensure that service men and women are enabled to express concerns about pension changes, and to articulate priorities for future provision.

My final point concerns the importance of the role played by the AFPRB. The review body's independence is vital. It is right that it should question plans for further pay increases and should challenge the MoD to show more flexibility on military wages. Service men and women trust the AFPRB as an independent, honest broker, and rely on it to make their case on pay and remuneration and to keep in mind its remit to take account of the particular circumstances of service life. Those circumstances, and the risks that service men and women take on our behalf, should be kept in mind by us all.



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7.09 pm

Lord Craig of Radley: My Lords, the House should be most grateful to the noble Baroness, Lady Dean, for bringing this topic to attention. Her experience of the Armed Forces' Pay Review Body was extensive, both as a member in 1993-94 and as the chair from 1999 to 2005. The Minister and Government should pay most careful attention to her remarks and criticisms, and those of other noble Lords who spoke. I will add my slant to the thrust of their remarks.

Noble Lords will recall that the early 1970s were a time of acute national economic difficulty. A series of government steps such as the pay and prices code and the Counter-Inflation Act 1973 were applied nationwide. Looking at the Government's strictures on public sector pay, have we not all been here before? However, for the Armed Forces of today, things are not as they were then. Experiences of dealing with the Cold War and the threat from the Soviet Union are far removed from the expensive and extended expeditionary warfare of today, in which large numbers of an ever dwindling cohort of service men and women are now involved, at greater risk of being killed or severely wounded or of being long separated from their families.

This significant change was recognised by the previous Government in their Command Paper, The Nation's Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans, and by this Government with the passage into law of the Armed Forces Covenant last autumn. That special recognition of the distinctive nature and value to the nation of the Armed Forces receives scant attention in this year's AFPRB report. The Government's across-the-board imposition of pay freezes in the public sector treats service personnel once more-as was the practice in the 1970s and 1980s-on a par with the rest of the public sector. However, it was the prime thrust of the Armed Forces Covenant and the previous Government's White Paper that the services and their families were distinct from the rest of society and merited preferential treatment.

As this year's AFPRB report makes clear, far from being independent and able to make its recommendations to the Prime Minister, the board has been directed by Ministers to observe the public sector pay restraints. This seems somewhat at odds with the response that I got to a recent Written Question about the Government's attitude to the AFPRB. I asked the Government whether it was part of their commitment to the military covenant to implement the recommendations of the Armed Forces' Pay Review Body in full. Their reply stated:

"The Government believe that the recommendations of an independent body such as the Armed Forces Pay Review Body (AFPRB) should constitute an integral part of the process used to determine the pay of the Armed Forces."-[Official Report, 10/2/12; col. WA 113.]

That hardly describes the process followed this year and is some way, at least, from the assurances given by successive Governments in the past that the independent review body's recommendations would be accepted unless there were clear and compelling reasons for not doing so. It would have been a more independent

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review if the body, after taking account of how comparators were faring, had been freer to reflect the increasing pressures of service life. The board stated:

"The Chancellor's announcement in November 2011 of two further years of public sector pay restraint, with average increases (excluding increments) capped at one per cent, disappointed Service personnel who had made clear their expectation that we"-

the board-

I hope that the Minister will say something about that. The Board has perforce danced to the Government's economic tune.

What gets overlooked in these immediate restrictions on pay and increases in charges is the longer-term impact on an individual's financial circumstances. The baseline for calculating remuneration increases in future years has been debased and lowered while that for charges has been raised. As we heard from a number of noble Lords, at this sensitive time for morale and motivation in the services, the importance of treating service men and women-as both this Government and the previous one set out in statue and White Paper-is critical. Positive action, not vapid assurances that "we are all in this together", is required to sustain the calibre of the forces that the nation must have to defend its interests.

7.15 pm

Lord Lyell: My Lords, I apologise to the noble Lord, Lord Tunnicliffe, and to other noble Lords, for speaking now. I did not expect to arrive in time to ask the Minister my very brief question. The noble Baroness, Lady Dean, will know of the excellent work that our committee tried to do, I think four years ago, when we went to Colchester. I was detailed to take account of services family accommodation, and what was said to me then was quite chilling, although things seem to have improved considerably.

The Minister does not have to answer this point tonight; he can write to me. In paragraph 4.13, which begins,

"In its evidence, the Ministry told us that"

something was going on, the penultimate line on the page is:

"However, we received a rather more mixed impression on our visits".

I will not say that that is necessarily what happened when your Lordships' committee went down to Colchester. The report found that 42 per cent of respondents were satisfied with the quality of maintenance and repairs. I ask the Minister and indeed the rest of the Committee to glance at table A6.4 on page 76, labelled "2011 Armed Forces Continuous Attitude Survey results". It is encouraging that 57 per cent of respondents declared that they were satisfied with the overall standard of service accommodation, and the figure for satisfaction with value for money was 65 per cent. So, in spite of the fact that a majority was not entirely happy with one aspect of value for money and service, the results

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were encouraging I hope that my noble friend will be able to give us further encouragement on the issue. I apologise and thank the noble Lord, Lord Tunnicliffe, for his forbearance.

7.16 pm

Lord Rosser: I am actually Lord Rosser, not the noble Lord, Lord Tunnicliffe. Anyway, I, too, add my thanks to my noble friend Lady Dean of Thornton-le-Fylde for securing this important debate.

In a Written Ministerial Statement on 13 March this year, the Secretary of State for Defence said that he was pleased to confirm that the Armed Forces Pay Review Body recommendations would be accepted in full. But what he did not remind us of was the fact that his predecessor had previously told the PRB to confine its recommendations to a small overall pay increase to just those earning £21,000 or less, because of the two-year pay freeze imposed across the public sector.

The PRB has made it clear that, following its previous report it had heard a strong message from service personnel about the cumulative impact of the pay freeze, the Ministry of Defence allowance cuts and cost-of-living increases on their everyday lives, which implied a noticeable reduction in real income for many personnel. However, any suggestion that the PRB will soon be able to address the concerns also expressed by service personnel about perceptions of its independence appear to have been dashed.

In his Autumn Statement at the end of November last year, the Chancellor of the Exchequer made clear that the Government intended to continue to hold back pay in the public sector, including the Armed Forces, with awards at an average of 1 per cent for each of the two years following the freeze. The pay review body has told the Secretary of State for Defence that it believes that the Armed Forces would be disappointed by this, which seems a bit like the understatement of the year. It asked the Secretary of State to give it a degree of flexibility. This he has declined to do. Will the Minister confirm that this continues to be the Secretary of State's position in relation to the next two years, despite service personnel regarding the two-year pay freeze as exceptional and making it clear to the PRB that they wanted it to resume its normal role in 2013?

The Government's argument is that the Armed Forces' pay has to be frozen and, after that, held back, because the United Kingdom is, to use their words,

that the overall value of the reward package to Armed Forces personnel remains "generous", with pension provision being significantly better than in the private sector; and that, because of continued pressure on public finances, public sector pay awards must continue to be severely restricted following the end of the pay freeze.

However, a key reason for the continuing freeze and future heavy restraint on Armed Forces pay is the result of the Government's economic and financial policy, which has led to the growth rate of the economy, which had been restored when the Government took office in 2010-some 1 per cent growth in GDP in the April-June quarter of that year-vanishing by the end

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of the year and not reappearing since. Growth provides increased tax revenues for government as well as more jobs and lower unemployment. This Government, in their enthusiasm to cut public expenditure too fast and not pay sufficient regard to the issue of growth, have killed the growth rate in the economy and thus the increased revenues that they inherited. That has made the financial situation more difficult than it could and should have been, and with it has given us at least the intended level of heavy restraint on Armed Forces' pay over the next two years.

It is also worth mentioning that a continuation of severe pay restraint for our Armed Forces lies ahead at a time when well over 50 per cent of pay increases in the private sector are of at least 3 per cent, and the economic climate that the Government say necessitates their approach to severely restricting the pay of the Armed Forces does not also apparently prevent them from implementing next year a tax cut of 5p in the pound on incomes in excess of £150,000.

It is of course not only pay that is an issue, as my noble friend Lady Dean and others have so powerfully reminded us. The PRB itself referred to the significance of pensions as a top issue for many service personnel. As has already been said, personnel were already concerned about how pension changes might affect them, and particularly about how far a commitment to protect accrued rights would apply and how changes will affect the early-departure provisions in the current pension schemes. Pensions are important to service personnel, not least because they will be dependent on them for rather more years than people in other walks of life, and adverse changes-for example, in the basis of determining pensions and determining increases in pensions in payment-will have a much greater cumulative financial impact on service veterans and widows than on others.

On top of that, there are the uncertainties for personnel because of the redundancy programme at a time when unemployment is high in the external labour market, the continuing pressures arising from the sustained high operational tempo, issues over housing, the long hours worked by many service personnel, and the impact of separation from families. This is all having an effect on morale and motivation, as the Armed Forces Continuous Attitude Survey shows. The PRB said that, in general, levels of satisfaction fell in 2011 compared to the 2010 survey results, with significant falls observed around basic pay, allowances and pension benefits. Morale was less positive, it said, as was satisfaction with service life in general.

The question is: what does the Secretary of State for Defence-and I mean the Secretary of State, not the Minister-intend to do about this? Is he able to say anything about what will happen when the financial position improves? The holding back of pay and adverse changes in allowances and pensions will be permanent, unlike the present financial situation, unless the Minister can give an undertaking that the position will be looked at again as the financial situation improves, with a view to reversing the impact of the adverse effect of current policy on Armed Forces' pay, allowances and pensions. Since the Government acknowledge the unique nature of military life, including the threat of

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loss of life or life-changing injuries, and we now have the military covenant enshrined in statute, will the Minister back up the Government's view of service life and conditions by giving such an undertaking as I am asking about?

The Ministry of Defence is obviously determined to save money. One hopes that the Minister will now be equally enthusiastic over saving morale and motivation in our Armed Forces, to which the pay review body has drawn attention.

7.24 pm

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Astor of Hever): My Lords, I should like to start by congratulating the noble Baroness, Lady Dean, on securing this important debate. This is a subject about which she is well informed, having chaired the Armed Forces' Pay Review Body until 2004, as other noble Lords and noble and gallant Lords said. As a result of her important work, service men and women trust the AFPRB. As the noble Baroness, Lady Warwick, said, that is very much down to the important work of the noble Baroness, Lady Dean. She has influenced Governments-not just this Government but the previous Government-and they have listened to her.

She is well aware of the independence of the pay review body. It retains a fundamental independent role in ensuring that the remuneration package of our service personnel is sufficient to recruit and retain the right people. We value its work, as do the Armed Forces, and the House can be assured that there are no plans to change this important principle.

The 41st report that noble Lords mentioned was published in March this year, and I am pleased to say that the recommendations have been agreed in full, with many of the changes taking effect from 1 April this year. However, we cannot ignore the financial crisis and the need to exercise restraint, and that is why it is necessary to freeze pay. None the less, pay for those earning less that £21,000 has increased, and it is important that we ensure that those who are experiencing the greatest challenges receive additional money. For those deployed for an average of six months, individuals will receive the tax-free operational allowance to the value of £5,280, and, as my right honourable friend the Chancellor announced in his Budget, council tax relief has doubled to some £600.

With Afghanistan in mind, the deployed welfare package has been increased. However, our forces are deployed not just to Afghanistan, and the noble Baroness mentioned in the title of this debate the operational tempo. It is true that some service personnel are now on a third or even a fourth tour, and it is testament to the work of the strategic defence and security review that we had the required capabilities to achieve what we did in support of the Libyan uprising. The increased separation from loved ones has been recognised and, as recommended by the pay review body, the qualifying period between increases in levels of the longer separation allowance has been reduced from 240 to 180 days. This means that progression through the 14 levels, ranging from £6.69 to £28.24 for each day separated, is attained more quickly.



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We do understand that prolonged periods away from home impact on morale-an important point made by the noble Baroness. We do all we can to minimise this and use harmony guidelines to allow for operational rest. However, there will always be occasions where specialist skills are needed, often at short notice. This may mean that for some, harmony guidelines cannot be prescriptively followed, but we will make every effort to return the individual to their unit as soon as possible. The noble Baroness, Lady Dean, discussed morale at length. We recognise that this is a very difficult time for Armed Forces personnel and their families. Some tough policy decisions that may have had an effect on morale have had to be made as a necessary part of the department's contribution to the overall government programme to reduce the United Kingdom's deficit.

As my right honourable friend the Prime Minister has repeatedly set out, our combat troops will withdraw from Afghanistan by the end of 2014. Between now and then we will be able to reduce our numbers. This process has already begun. However, there cannot be some sort of cliff edge in 2014 when all remaining troops come out at once. The rate at which troops can be reduced will depend on transition to Afghan control in the different parts of Afghanistan. Although we will maintain a presence for some time after 2014, we would expect the frequency of deployment to reduce.

Armed Forces pay is frozen, as is the case for all public sector workers, with the exception of those earning £21,000 or less, to whom we have given £250 in each of the last two years of the pay freeze. Pay has also increased incrementally each year for those who are not at the top of their pay scale-some 75 per cent of personnel-a protection introduced for the Armed Forces to ensure that they were not disadvantaged by their lack of contractual entitlement. This is in accordance with the principles of the Armed Forces covenant and has meant that most service personnel will have received an increase in pay during the freeze period.

Increase in pay for the next two years will be limited to an average of 1 per cent each year. The pay review body has already begun its programme of visits to service personnel in the United Kingdom and overseas to gauge their views on pay and related issues. We always welcome the advice of the pay review body and, as we did this year, we will give due consideration to its recommendations.

The noble Baroness, Lady Warwick, mentioned pensions-in particular, the publication of the final report of the Independent Public Service Pensions Commission of the noble Lord, Lord Hutton, on 10 March last year, which resulted in a number of recommendations that were accepted as a basis for discussion on the design of new public service pension schemes to be introduced from April 2015. My department has now commenced its consultation process with service personnel and is conducting briefings throughout the service community. The consultation period ends on 20 June. However-I address the question raised by the noble Baroness, Lady Warwick-personnel have now been assured that any changes to the scheme will not affect the value of pension benefits that they earn up to 1 April 2015, and that those aged 45 or over on

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1 April this year will see no change to the amount of pension that they will receive or the time at which it can be drawn.

My noble friend Lord Palmer mentioned accommodation, a subject in which I know my noble friend and all other noble Lords who have spoken take a close interest and which we discussed in the House on 1 March. We continue to examine accommodation provision but, in terms of making improvements, the Chancellor has made an additional £100 million available for service accommodation from the financial year 2013-14. It will be used by the MoD for repairing and refurbishing 650 family homes and buying a further 25.

While it is necessary to increase the daily charge in respect of accommodation, these increases range from a modest 2p per day through to 76p for accommodation in the highest standard. Increases are in line with the rental component of the retail prices index and are broadly comparable with the costs faced by civilians, but with a discount that reflects the disadvantages of living in service accommodation. This means that, for a typical three-bedroom property in the highest standard for occupation, occupants of other ranks pay some £306 per month.

The very basis of the covenant is to tackle disadvantage incurred as a result of service and to consider special treatment where appropriate. The covenant and the pay review body are not related. However, we ensure that the pay review body is kept informed of our commitments and changes.

In the two minutes left, I will very briefly address questions. The noble Baroness, Lady Dean, asked about troops coming back from Germany. The Defence Infrastructure Organisation is currently considering the likely housing requirements of those returning from overseas, including Germany.

My noble friend Lord Palmer asked about the three-year pause in the accommodation improvement programme from April 2013. As part of the MoD's work to reduce the funding gap and balance defence priorities, from April 2013 there will be a three-year pause in the programme to upgrade lower-quality SFA homes. While this is regrettable, 96 per cent of

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service family accommodation properties and 42 per cent of single living accommodation bed spaces are now in the top two condition standards.

My noble friend also asked about medals. We worked constructively with the noble and gallant Lord, Lord Craig, on the issue of the PJM, and I congratulate the noble and gallant Lord on the resolute line that he took on that issue. The coalition Government have agreed to a fresh review of medals, and I hope that further details will be announced soon.

The noble Lord, Lord Ramsbotham, mentioned that my department was late in providing evidence to the pay review body. I was not aware of this, and I give him an undertaking that I shall look into it. I will write to him and copy in all other noble Lords who have spoken today.

The noble Lord also mentioned the timing of the Secretary of State's report to Parliament. The covenant report will be produced each year and will consider the comments made by the PRB. I will pass on the noble Lord's recommendation about the timing.

My noble friend Lord Lyell asked me to write on the issue of service families' accommodation, particularly in Colchester. I will look into the issue and write to him and send copies to other noble Lords.

The noble Lord, Lord Rosser, asked me to give an assurance that the financial situation of Armed Forces personnel would be looked at when the financial position improves. That is, of course, the case; it will be looked at.

I hope that I have answered most questions but, if I have not, I undertake to write to all noble Lords with answers to questions that I have not answered. This has been an interesting debate and I am grateful for noble Lords' contributions. The Committee can be assured that we will continue to listen very carefully to the pay review body, and we greatly value its work in support of service personnel and their families.

The Deputy Chairman of Committees (Baroness Fookes): My Lords, that completes the business before the Grand Committee today. The Committee stands adjourned.

Committee adjourned at 7.37 pm.


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