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Grand Committee

Tuesday, 12 March 2013.

3.30 pm

The Deputy Chairman of Committees: (Baroness Harris of Richmond): My Lords, if there is a Division in the House, the Committee will adjourn for 10 minutes.

Representation of the People (Election Expenses Exclusion) Order 2013

Representation of the People (Election Expenses Exclusion) Order 2013 19th Report from the Joint Committee on Statutory Instruments

Considered in Grand Committee

3.30 pm

Moved By Lord Wallace of Saltaire

That the Grand Committee do report to the House that it has considered the Representation of the People (Election Expenses Exclusion) Order 2013.

Relevant documents: 19th Report from the Joint Committee on Statutory Instruments

Lord Wallace of Saltaire: My Lords, the Representation of the People Act 1983 lists a number of exclusions from election expenses, which this order seeks to amend. The order adds a further exclusion whereby payments made to disabled candidates from the Access to Elected Office for Disabled People Fund are also exempted. This means that recipients of the new fund will not be penalised for accepting grants that are intended to increase their electoral participation. Fund payments will not therefore be considered for the purposes of candidates’ spending limits.

There are more than 11 million people with a limiting long-term illness, impairment or disability in Great Britain, and they are substantially underrepresented in Parliament and other elected bodies. The Government strongly believe that elected bodies should be more representative of the people they serve.

To address this, the Access to Elected Office Strategy was launched in July last year to provide disabled people with training, paid parliamentary internships and grants through the Access to Elected Office for Disabled People Fund. The fund was established because one of the principal reasons disabled people are underrepresented in elected bodies is the fact that they face additional costs when standing for elected office—for instance, extra transport costs or the hire of sign language interpreters. These additional costs create an extra barrier to elected office for disabled people—one that other, non-disabled, candidates do not face. The fund therefore seeks to help disabled candidates to overcome these financial hurdles by covering the cost of their disability-related items or services, whatever they may be.

The fund provides grants to all disabled candidates, whether they are independent or represent political parties, provided that they are standing at UK parliamentary, English local authority, Greater London Authority, English mayoral or police and crime commissioner elections or by-elections. By offering

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specific disability-related financial assistance, the fund will place disabled candidates on an equal footing with the other candidates.

Unfortunately, under current electoral rules, grant payments awarded by the fund will count towards candidates’ election spending limits. This is not an issue for parliamentary, Greater London Authority or police and crime commissioner elections, where disability-related costs are likely to be treated as personal expenses and are therefore exempt under Section 76(5) of the Representation of the People Act 1983—a provision that I am sure Members of the Committee know off by heart—but for local authority and English mayoral elections, the rules place disabled candidates who are awarded funding from the Government in the extraordinary position of being penalised for accepting it. Of course, in local authority elections, the overall limit for spending is much lower and there is therefore potentially a much higher barrier. This is because any fund spending will reduce the amount that disabled candidates can spend on the usual election expenses, while unfunded candidates will have the entire election expenses limit at their disposal.

The situation is further affected by the fact that there are a number of high-cost needs for which many disabled candidates will seek funding, such as British sign language interpreters who can cost as much as £350 a day. In some circumstances, the fund could entirely consume a disabled candidate’s election expenses limit, which is on average just £1,000 for local authority elections. This order therefore seeks to remove these unintended effects of the fund by excluding grants provided by the Access to Elected Office for Disabled People Fund from candidate spending limits. Using an existing order-making power contained within Schedule 4A to the Representation of the People Act 1983 to amend the Act itself, a new tightly drawn exception to the definition of election expenses is thus being created. This exception will provide that any item or service financed by the fund would not amount to an election expense, and would not therefore count towards a candidate’s spending limit.

A three-part test must be met in order for the exemption the order provides to apply. First, a candidate must have incurred spending specifically in order to remove or mitigate barriers to seeking elected office—barriers which must be associated with his or her disability. Secondly, that spending must also have been incurred through the means of a grant awarded under the fund’s terms and conditions. Lastly, the spending must then be defrayed or reimbursed by the fund. The fund is intended to cover all the additional costs that disabled candidates face as a result of their disability. That can therefore include extra costs that arise from campaigning activity. For example, campaigning leaflets would not normally be considered for funding, but where a blind candidate might require Braille leaflets for proof-reading purposes, the extra cost of producing those leaflets in Braille will be met by the fund.

The order is also drafted with a sunset clause so that it exactly aligns with the short and temporary operating period of the fund. The fund has been set up as a pilot exercise only until June 2014, so its effectiveness can be assessed before the Government take a view on

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whether to introduce it on a permanent basis. If the resolution is passed, the Representation of the People (Election Expenses Exclusion) Order will be made to ensure that it comes into force by 26 March, the start of the regulated period for the next local authority elections. I hope noble Lords agree that the fund provides essential support to disabled people seeking to participate in elections and democratic processes, and that this order helps very considerably to enable that. I beg to move.

Lord Low of Dalston: My Lords, as we have heard, the additional costs faced by disabled people in contesting elections—for example, the cost of sign language interpreters—can make running for elected office prohibitively expensive for them. Therefore, the Government’s decision to implement the recommendations of the Speaker’s Conference on parliamentary representation through the setting up of the access to elected office fund is very welcome and much to be commended. This will go a long way to removing the financial barriers and ensuring that aspiring disabled candidates who have higher costs are not penalised, and should improve access to elected office for disabled people. Avoiding spending limits deterring disabled people applying for support from the fund would, as we have heard, require a change in the law to establish an exemption as to how the candidate’s expenses related to disability are treated. Therefore, I support the draft order which seeks to amend current election limit rules which pose problems for the operation of the fund.

It is important that we pass this order before the start of the regulated period for the forthcoming local elections in May this year. Given the breadth of the extra costs which could be faced by prospective disabled candidates, the fund does not provide an exhaustive list of expenses that would be covered and provides only an indication of the most common expenses that are likely to occur and would be eligible for funding. In fact, it would not be possible to provide an exhaustive list.

The Electoral Commission has, however, voiced concerns that the exemption which the order creates to the current limits on candidates’ spending is not sufficiently clearly defined. Following further discussion with the Government and the fund, it proposes the following actions to make the risks associated with this order manageable for the 2013 local elections. First, it proposes that the fund should ensure that all candidates accessing funding are referred to the Electoral Commission for individual advice on how their funding will be treated under the spending rules; and secondly, it proposes that the fund and the Government should set out a clear policy to clarify the operation and scope of the fund to reduce the uncertainty around interpretation of the order.

Scope, which has done a lot of work on the accessibility of elections for disabled people, believes that the exemption needs to be broad enough to allow for any potential expense that occurs because of an individual’s disability. It takes the view that the proposed drafting, which states that in order to benefit from an exemption, the expenditure must be designed to remove or mitigate

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barriers to seeking elected office, should be sufficiently mindful of this to achieve the desired purpose. In view of the high level of scrutiny that takes place around election expenses, the proposed exemption would need to be applied carefully and transparently to militate against the prospect of a subsequent legal challenge; for example, if another candidate made an allegation of overspending. Such allegations would be extremely detrimental to the future of the fund and would risk undermining the progress being made in improving access to elected office for disabled people. Accordingly, Scope has recognised that mechanisms need to be put in place to ensure transparency about how the exemption is operated in order to maintain trust that the fund is not being misused for political gain. It therefore supports the Electoral Commission’s suggestion of providing advice to disabled people to disclose expenses paid for by the fund on a voluntary basis on their spending return.

With these safeguards, which have been suggested by the Electoral Commission, I think that the risks can be sufficiently managed for the local elections that are to take place in a couple of months’ time. Work will continue after those elections to make sure that the exemption is working satisfactorily, and there is a sunset clause, as the Minister explained. With those safeguards, I support the order and urge the Committee to agree to it.

3.45 pm

Baroness Brinton: My Lords, together with some noble Lords present in Grand Committee today, I was present at the launch of this fund last year. Those of us who were there celebrating the work of the coalition Government, the Speaker’s Conference and, especially, my noble friend Lynne Featherstone MP, who led the work up to the launch of the fund, were horrified to discover that there might be a loophole whereby other candidates might be able to challenge any grant made by this fund as part of election expenses. That was certainly never intended, not least because the representation of disabled people is very low in elected office, whether at Westminster, on councils, in devolved Administrations or any other elected office—although I was glad to hear my noble friend saying that it did not apply for individual elections, such as those for police commissioners and, I presume, elected mayors.

I shall not repeat the points that the noble Lord, Lord Low, made, but my real anxiety is about the Electoral Commission’s concern about the phrase,

“barriers to seeking elected office”,

being wide and novel wording. It has to be, given how wide and novel varying disabilities are. We cannot legislate at this stage for every dot and comma of what is necessary. The point has already been made about Braille leaflets for checking before an ordinary leaflet is printed; about the need for British Sign Language interpreters; about having a palantypist at a conference where someone who may or may not be reliant on BSL but may be reliant on lip reading cannot keep turning around to see contributions from the back of a conference room. One young candidate whom I talked to a couple of weeks ago said that he had had to get a very expensive modification to his wheelchair. The first time when he stood for Parliament, he was invisible

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because his head was always too low; now he can come right up to shoulder height and have conversations with people. Suddenly, he has become visible. I am not suggesting that he would have made an application to the fund, but the fund needs to be able to think as flexibly as possible to overcome the barriers, and in this young man’s case a very physical barrier to having a dialogue with his electorate.

The other reason for the fund is that because candidates are not employed there is no other recourse to public funds for any costs associated with their disability. Just as an aside—this does not relate to this order—there is a problem for Members of the House of Lords with disabilities, because they, too, are not employed and there is no access to public funds for them if they need adaptations in their workplace here.

I end by saying that the Liberal Democrats have taken the issue of the under-representation of disabled candidates very seriously. We have launched a leadership programme for candidates from a range of under-represented groups, with 10% of places on the scheme reserved for those with disabilities. In the first 40 recruited, five have disabilities, some visible and some invisible. We hope that by the time we get to the other side of the general election, we will have some more disabled MPs in place to represent the wider country. In particular, I am looking forward to the first BSL first language MP, or, frankly, even Peer, to be able to work alongside us in creating legislation. It is a real disappointment that there has not been one to date.

I have two questions for the Minister. Given the Electoral Commission’s concerns about challenge and that some grants have already been awarded, will the order be retrospective? Secondly, Scope has raised an issue about the expenses repayment; the 35-day deadline may be very tight in some circumstances, particularly in relation to the short campaign of a general election, where deadlines are actually very important, and they may suddenly find that they have it. Is there any scope—I am sorry to use that word—to make it slightly more lenient or generous?

Finally, I hope that on the sunset clause of June 2014 the Government will ensure that there is no gap if they decide to move ahead. At that point, most candidates in key seats will have been selected and will be fighting the long campaign for election in the general election of 2015. It would be absolutely appalling if there were a gap in their ability to apply for grants.

Baroness Hayter of Kentish Town: My Lords, in responding to points from the noble Lord, Lord Low, and the noble Baroness, Lady Brinton, we hope that they are very successful in selecting their candidates. Noble Lords will not be surprised, however, if I do not necessarily wish them success in being elected. But it is a challenge to my party to make sure that we can similarly find some candidates. It will also come as no surprise to the Committee that we broadly and warmly welcome this draft order which, as the Minister says, will enable disabled candidates to apply for and use the fund specifically created to encourage them to be candidates by excluding those moneys from the schedule of election expenses. It is clearly a shame that it was

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not thought of when the fund was established, but we are pleased, as the noble Lord, Lord Low, said, that it will be done by 26 March, in time for this year’s election. Unsurprisingly, the charities representing people with disabilities, most notably Scope, are also supportive of the thrust of the measure.

The Minister will have read the discussions of the House of Commons committee on this. Perhaps it is a bit late to regret, along with it, that the fund does not cover parish council elections. Indeed, for many people, that is their first attempt at the ballot box, and it might have encouraged more disabled people to make that same first attempt. However, this is a pilot, and we hope that if it is successful it will be rolled out in a comprehensive way.

My questions, therefore, are not about what might have been but about this specific order, which allows the fund expenditure to be excluded. Will the Minister confirm that anything that the fund agrees to finance will then automatically be covered by the exclusion? In other words, there will be no additional formality to be gone through? We do not want the fund saying that it is covered and then being told afterwards that it is not. There needs to be just one lot of decision-takers, and I assume that it will be the fund decision-takers. It would be useful to have that confirmed.

What is being done to promote awareness of the fund? In preparation for today, I did the usual thing and tried to find out about it. I found it impossible to locate the fund through the Electoral Commission’s less-than-helpful website. Google was rather more helpful and got me on to the relevant site. Given that the Electoral Commission wants to be involved in this, I would have thought that it would do more to make knowledge of the fund better known, rather than simply being able to find out about this specific order, which is not of interest to disabled people once it is done.

Information on the fund itself was not brilliant. I could not get hold of the application form from the website although it has now been sent to me. It also was not clear how quickly a decision would be made, which I should have thought was also quite important for candidates to decide whether to go ahead. They need to know that before they start spending too much of their own money. Although we are keen for the Electoral Commission to be involved in encouraging and helping disabled people to be candidates, we hope that it will smarten up its own access via the web in time to do this.

We very much support the exclusion of fund expenditure but rather like the noble Baroness, Lady Brinton, we wonder whether this leaves a transparency gap. It would be useful to know what disclosure of such funds and their use will be made. Mention was made of a voluntary system, and I wonder whether that is sufficient or whether the fund should itself be transparent. It would be useful to know the Government’s thinking on that. Finally, can the Government assure us that if this pilot proves a success, it will be rolled out fully and with money following intent? As we know, the groups who will benefit from this are highly underrepresented at the moment. Indeed, I cannot

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believe that this Government would have so undermined the lives of so many disabled people as they have done both under the Welfare Reform Act and now the Welfare Benefits Up-rating Bill had we had more people as MPs, or indeed Peers, but especially MPs, from those particularly affected groups. We very much want this fund to be a success and we hope that its administrators, the Electoral Commission and the Government will play a very full part in helping disabled people to find out about the fund and then stand for and be elected to public office. I am sorry, but I hope that they will all be Labour if they get elected.

Lord Wallace of Saltaire: My Lords, I thank those who have spoken for their general welcome for this order. I stress that this is a pilot and an experiment in some ways. I also stress that it is absolutely an all-party initiative. We very much hope, as the noble Baroness has suggested, that all parties will want to take this up and make use of it, and that part of the way in which information will spread out is that all parties will wish to inform their local associations to look more actively for potential candidates for whom this would make the crucial difference.

In the disability world, the communications strategy is already a good deal better known than in the general outside world. I had not heard of it until a few weeks ago but I am told that the Government have a comprehensive communications strategy in place. There have been a number of news stories in the press, and in tweets, blogs and the like, targeted very much at the disability community. This will continue as the pilot rolls on.

As for the question of what happens in August 2014, this is a pilot over which we will want to consult as we go along, as well as seeing how many people come forward. Once the SI ends, we will ensure that there is a smooth transition to the new regime, if by then a decision is made that the fund is seen as worthwhile and is to be extended. So far there have been about 30 applications for the fund, and the average per application is between £4,000 and £6,000. We are not talking about enormous amounts. Noble Lords will recall that there is a £20,000 maximum per application under the fund at the moment. However, we hope that this will be shown to make a crucial difference in making it easier for people with different disabilities to put themselves forward for election.

In the pilot we decided not to include parish councils. A great many parish councils do not have elections. At my party’s spring conference, I talked to a local activist from West Yorkshire. He told me how deeply unpopular he has made himself with a number of other politicians in his ward, because he keeps insisting that there should be elections for the parish council. Others think that elections are an unnecessary expense and that co-option is much to be preferred, this being a predominantly Conservative parish council. Perhaps one of the questions that we will investigate and discuss further, and come to a different decision on as we move forwards from the pilot, is whether we include parish council elections, in which many people first cut their electoral teeth, as the noble Baroness rightly says.

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The noble Baroness, Lady Brinton, asks whether it will be retrospective. The answer is that it will not, but those who have already approached the fund for support for this coming May’s elections will be able to roll their applications in and it will not go back further than that.

Baroness Brinton: I thank the Minister for giving way. I am concerned that some people who have applied to the fund for grants have not yet stood for office but clearly intend to be candidates. I would not want them to be compromised in that position because they had had an early grant. It would be useful if some reassurance could be sought to protect them.

Lord Wallace of Saltaire: I will need to investigate exactly what the position is there and will write to the noble Baroness. I understand that those who are not yet in the election campaign for this May but who have had grants already to help them in their campaigning will come under this order once it has been passed. I will check whether that counts as a degree of retrospection and return to her.

I have already answered the question about whether the Government will ensure that there is no gap on the expiry of the pilot. My very clear understanding is that any spending covered by the fund will automatically be under scrutiny. That is the purpose of the order. Certainly, my reading of it suggests that that is absolutely one on one and that no difference is allowed in that regard. I was asked how quickly decisions will be made. They will be made as quickly as possible. Our concern in all this is to make a significant difference to the decisions that disabled people may make on whether they can manage to stand for election, and to encourage others to work with them by recognising that they have the ability to cope with all the strains of elections.

The noble Lord, Lord Low of Dalston, asked me how clear the policy was. As he will know, the fund administrator, Convey, will manage this on behalf of the Government and it will clearly set out on the fund website its policy approach to funding decisions, explaining the principles used to assess an applicant’s disability needs. This will also be reflected in the guidance document and updated, if necessary, on a quarterly basis. For fund applications over a certain limit, an advisory council will offer more expert advice. Convey has agreed drafting with the Electoral Commission and will introduce these proposed changes on the fund website before this SI comes into force.

On the question of spending returns and transparency, Convey has agreed to amend the fund’s guidance to encourage successful applicants voluntarily to disclose any fund awards on their election spending returns at all elections. A suitable form of wording to this effect has been agreed with the commission, so we are working very closely with the Electoral Commission on all this. Every effort is being made to take decisions as quickly as we can. We want to make sure, as far as possible, that this pilot is seen to be a success, that it does make a significant difference, and that after we have seen the impact on this year’s elections and the impact it may have on the selection of parliamentary candidates for

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the next set of elections, we will be able to agree that the pilot fund should be converted into a longer-term fund, perhaps with a number of tweaks and amendments, which we hope all parties and all those interested in democratic politics with diverse representation will wish to accept. I commend the order.

Motion agreed.

Public Bodies (The Office of Fair Trading Transfer of Consumer Advice Scheme Function and Modification of Enforcement Functions) Order 2013

Public Bodies (The Office of Fair Trading Transfer of Consumer Advice Scheme Function and Modification of Enforcement Functions) Order 2013 5th Report from the Joint Committee on Statutory Instruments,24th Report from the Secondary Legislation Scrutiny Committee

Considered in Grand Committee

4.03 pm

Moved By Viscount Younger of Leckie

That the Grand Committee do report to the House that it has considered the Public Bodies (The Office of Fair Trading Transfer of Consumer Advice Scheme Function and Modification of Enforcement Functions) Order 2013

Relevant documents: 15th Report from the Joint Committee on Statutory Instruments, 24th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie): My Lords, the purpose of this order is, first, to finalise the transfer of the consumer education and advice function, including Consumer Direct, from the Office of Fair Trading to the Citizens Advice service, and to transfer the relevant industry levy arrangements; and, secondly, to ensure that consumer enforcement is allocated appropriately between trading standards and the OFT by amending consumer legislation.

The Government are committed to promoting growth in the UK economy and empowering and protecting consumers is a vital element of our approach. The current landscape of bodies responsible for these tasks is confusing, duplicative and therefore inefficient, leaving consumers uncertain as to whom to turn to for help and advice when things go wrong. We recognise that there are many good things about the individual organisations but, taken together, they form a complex landscape that can be difficult for consumers to understand. For example, when someone has bought a faulty second-hand car they do not know whether to seek advice from the Office of Fair Trading, Consumer Focus, Citizens Advice or Trading Standards.

This complexity and the lack of clarity about divisions of responsibilities have led to gaps in enforcement. The National Audit Office’s 2011 report, Protecting Consumers– the Systemfor Enforcing Consumer Law, found that consumer detriment occurs at national and regional level, but the incentives for enforcement officers are weighted towards tackling issues within their local authority boundaries. Similarly, the University of East Anglia’s 2002 report, which sought to benchmark the UK’s consumer empowerment regime, identified uneven enforcement as a key weakness.

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The OFT estimated the cost to those consumers affected and the wider economy of rogue practices, such as intellectual property crime which occurs across local authority boundaries, to be at least £6.6 billion annually. Any gap in enforcement has, therefore, significant impact on members of the public and the wider economy. In response to the Government’s 2011 consultation Empowering and Protecting Consumers, there was widespread agreement that the current landscape of information and advice bodies is confusing and should be simplified.

This order will, first, confirm the premier position of the Citizens Advice services as the publicly funded bodies in England, Scotland and Wales providing information and advice to consumers. Citizens Advice will draw from consumer intelligence gathered by local bureaux and the telephone advice line to support the enforcement community as it prioritises its efforts to maximise outcomes for consumers.

At a national level, enforcement responsibility is currently split between trading standards and the Office of Fair Trading. Historically, the Government have provided support for national and cross-boundary schemes. These included projects to combat illegal money lending, enforcement against internet scams and a fighting fund for large and expensive cases which local trading standards might not otherwise have been able to take on. In light of the strong support for these proposals in the consultation, a decision was taken to create immediately the National Trading Standards Board, giving the trading standards profession greater responsibility for the funding and co-ordination of large national and cross-local authority cases. Our vision is for the majority of consumer law enforcement to be undertaken by Trading Standards with the support of the NTSB and the consumer enforcement bodies in Scotland.

Additionally, this order makes changes to the enforcement provisions of the OFT and Trading Standards, clarifying the responsibility of Trading Standards to tackle cross-boundary threats and cases of national significance. Let me be clear: this is not about adding to the powers of the enforcement agencies, but about clarifying their relative roles within the landscape so they can take up cases that more appropriately fall to them. Except in relation to unfair terms, Trading Standards will retain a duty to enforce consumer legislation while the OFT will have powers. This means that Trading Standards will take the lead, but the OFT will be able to step in to enforce, where appropriate. In relation to unfair contract terms, the OFT and, in the future, the CMA will retain primary expertise so they can take enforcement action in cases where there are structural market failures; for example, where there is evidence of market-wide problems on tie-in contracts.

Let me now turn to compliance with the Public Bodies Act. Section 8(1) of the Public Bodies Act provides that Ministers may make an order only where they consider that it serves the purpose of improving the exercise of public functions. Such orders must have regard to efficiency, effectiveness, economy and securing appropriate accountability to Ministers. I would like to address these points in some detail. The order is

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focused on improving the effectiveness and efficiency of the consumer landscape. As I explained earlier, a variety of publicly funded bodies are involved in consumer advice and representation. The proposed changes will create a simplified and easily accessible and nationally consistent advice service for consumers.

The transfer of Consumer Direct from the OFT to the Citizens Advice services in April 2012 consolidated its position as the principal source of government-funded consumer advice. Citizens Advice has implemented a more efficient delivery model, increasing capacity to provide advice within existing budgets. The industry-paid levy to fund those consumer contacts in relation to the regulated gas, electricity and postal services industries will continue and will pass to Citizens Advice through this order. Empowering Trading Standards to take on more cases of national significance will ensure that national activity is linked to local intelligence. For example, there may be several reports of a rogue online trader from consumers across the country. The NTSB will be able to link these complaints and build a strong case for enforcement, which will have a national impact. This clarification of functions and improved co-ordination of enforcement will ensure better use of limited resources through more effective leadership and integration of effort at a national level. National funding for enforcement activities will facilitate a more integrated approach to national and cross local authority boundary threats. This activity will be more effectively co-ordinated at national level by chief Trading Standards officers. This will ensure that enforcement gaps do not arise and that activity overall is targeted to achieve better outcomes for consumers.

I turn to accountability. The work of Citizens Advice and the National Trading Standards Board will be accountable to the Consumer Minister through grant arrangements set up by the Department for Business, Innovation and Skills. These grant arrangements will set out challenging performance targets, which will be closely monitored by the department. The bodies will be collectively accountable through the Consumer Protection Partnership, which will also report to the Minister for Consumer Affairs on a six-monthly basis to ensure there are no gaps or duplication in enforcement within the reformed landscape.

These reforms focus on increased efficiency and effectiveness, rather than economic benefits. For this reason, the department took the decision not to provide detailed analysis around the economy test in the explanatory document. These changes are not predicated on economic savings, but on a need to deliver increased efficiency and improved service levels in the most economic way.

As your Lordships will know, members of the Secondary Legislation Scrutiny Committee asked for a fuller articulation of the economy considerations set out in the explanatory document which supports this order. The Consumer Minister wrote with additional details. When making its report on the order, the Secondary Legislation Scrutiny Committee noted that the Minister’s letter did not expunge the omission in the explanatory document and decided to exercise the enhanced affirmative process for consideration of the order as set out in the Public Bodies Act. The Consumer

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Minister and I took full and due regard of the committee’s decision, noting in particular that it saw no reason to dissent from the view that the draft order meets the Act’s requirement to improve the exercise of public functions. The Government also conclude that the order meets the requirements of the Act and consider that it should be made.

For the benefit of the Committee, I should like briefly to set out those economic benefits in the remaining few minutes. The enforcement proposals were estimated to have a cost of £3.2 million. The value of the benefits proved impossible to quantify, but included improved leadership and co-ordination of Trading Standards enforcement through the creation of the NTSB. There will also be better co-ordination of enforcement between Trading Standards and OFT/CMA, managed by the Consumer Protection Partnership. The transfer of consumer information, advice and education functions to Citizens Advice was assessed as delivering benefits of £6.3 million. This proposal will strengthen frontline consumer protection by forging a stronger link between the activities of Citizens Advice and provision of information, advice and education. Citizens Advice is highly regarded and respected by all, and its brand is much better known to consumers than Consumer Direct. As a result, Citizens Advice expects the volume of calls to increase over time compared to Consumer Direct. This proposal will also reduce the complexity of the consumer landscape and create opportunities for substantial synergies in data and IT infrastructure.

Let me remind the Committee of the key benefits of this order. First, it will finalise the transfer of the consumer education and advice functions to the Citizens Advice service, making the trusted brand of Citizens Advice the first port of call for consumers with a problem to solve. Secondly, it will enable a more appropriate allocation of consumer enforcement cases, enabling Trading Standards to take on more cases of national significance and ensuring that national activity is linked to local intelligence. I commend the order to the Committee and I beg to move.

4.15 pm

Lord Borrie: I thank the Minister for his very clear explanation of what is in front of us. I did not find it quite as straightforward as the suggestion that complexity is avoided because quite a number of complexities will remain. There will be not only the Trading Standards offices of local authorities but a National Trading Standards Board as well; the Office of Fair Trading will retain some powers; Citizens Advice will have—I agree with the Minister on this—a helpful addition to its services which is, as he rightly said, well appreciated; and there will be the Consumer Protection Partnership, which I do not fully understand yet. So there are lot of different people involved and a lot of different lines to be drawn as to their responsibilities.

However, I would ask the noble Viscount about one or two particular matters. My text, as it were, for this part of what I want to say is, first, the Explanatory Note on the back of the order and what is called the explanatory document—the rather longer paper concerned with public bodies.

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In the Explanatory Note on the order, the sixth paragraph—the paragraphs are not numbered—refers to Article 9. It is concerned with enforcers, who will no longer have to consult with the OFT; they will, instead, merely be required to notify the OFT. That, presumably, is in accordance with the Government’s wish to take away the responsibilities of the OFT in overall consumer protection. The Government are not arguing that they are not doing this and the OFT is losing its supervisory role.

What is most important is that in transferring enforcement, particularly to Trading Standards officers, there is to be set up—I should say it has already been set up—the National Trading Standards Board. Paragraph 7.7 of the rather large explanatory document states:

“The NTSB consists of members of Trading Standards officers”.

It means—perhaps it is a matter of semantics—a number of Trading Standards officers representing some local authorities. How they are to be chosen and so on, I do not know but, anyway, the NTSB is certainly to have a national role.

I asked at some stage of the Bill, but did not get an answer, whether that included not only Trading Standards officers—chosen I do not know how—but representative members of local authorities who, at the moment, have a role in relation to Trading Standards officers because Trading Standards officers in each local authority are accountable to councillors. So I am not sure about that.

Paragraph 4.9 of the explanatory document states:

“The Order also makes an amendment … to provide that the OFT will no longer need to consult with enforcers … Instead enforcers will simply be required to notify the OFT”.

As far as I can see, something has gone wrong with the semantics there as to what is intended. Perhaps what is intended is simply that enforcers—meaning Trading Standards officers—will simply be required to notify rather than be required to consult and listen to what the OFT has to say. If you consult, you are supposed to listen to whoever you are consulting. If you do away with consulting and have simply notification, there is no longer any need to take any notice of what you are advised. Is that what is intended? If it is, then, of course, the reduction or removal of the OFT’s supervisory role is much more deep and profound.

The only other matter I wish to mention is that in the Explanatory Note to the order. After dealing with Article 9, on which I have just been concentrating, there is a reference to Articles 10 to 13 amending the Unfair Terms in Consumer Contracts Regulations 1999. It provides that the OFT will simply have a power rather than a duty to enforce those regulations. That means, again, a considerable reduction in the OFT’s role. I am not sure whether the Government intended that because I thought they wanted the OFT to have a particular responsibility with regard to these unfair trading regulations. I may have got that wrong.

What we have today fills out the broad statements in the Bill and one needs to get the phrases right and to understand them. I will be glad if the noble Viscount will answer some of the points that I have made.

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Lord Whitty: My Lords, I thank the Minister for setting out this order in some detail. It is, of course, as he said, part of a wider strategy towards the transformation of the consumer landscape. Attached to the explanatory document is a paper which set out nearly two years ago the way in which the Government approached that matter. One or two things have changed in the interim, and there are one or two things with which I agree and one or two things with which I disagree. However, this is only part of a bigger jigsaw. As the Minister said, the order deals with the transfer of Consumer Direct to Citizens Advice and the OFT enforcement functions to the Trading Standards services of local authorities.

In principle, I strongly support the first of these. We of course referred to it in the process of the Enterprise and Regulatory Reform Bill, so there is some overlap in the discussions we have already had here and in the Chamber. Some of it—although I suspect the Minister is not allowed to say so—may come post 8 May in a new consumer Bill, which I know his department is considering either for the next Session or the Session after. So we cannot expect everything to be resolved by this order. Nevertheless, there are some issues which I think should have been, but are not yet, resolved.

Given the last encounter between myself and the noble Viscount, I should thank him for at least trying to follow the procedure under the Public Bodies Bill on this order, as distinct from the Agricultural Wages Bill. The order and the explanatory document answer a lot of questions. However, as he has recognised, the Secondary Legislation Scrutiny Committee has not been entirely impressed by the way he or his colleagues have dealt with the issue of economy and have therefore recommended the enhanced affirmative procedure. I shall come back to this aspect because it largely relates to the transfer of enforcement powers and I want to deal with the transfer of the consumer advice powers first.

As I say, I welcome the transfer to Citizens Advice, particularly given the general direction of the Government’s intent on the consumer landscape. Even without that, I would have regarded it as sensible to transfer Consumer Direct to Citizens Advice. However, I have a few questions. First, Article 2(3) states boldly that the OFT’s role in this respect is abolished, except to a limited degree in Northern Ireland, which I shall come back to. Does that mean that in this area the OFT has no oversight role? There is no quality assessment of how well Citizens Advice performs, and it will continue to be partly a directly publicly funded function and partly a function based on mandatory levies on various industries. I assume those levies are simply the levies that are currently raised for Consumer Direct purposes rather than the wider levies that go via Consumer Focus.

It seems somewhat odd that the oversight role in this area is abolished completely. My noble friend Lord Borrie was complaining that the oversight role in relation to enforcement is greatly diminished, but at least there is a role there. In this area, it seems that there is no potential intervention by a statutory body. This is important because Citizens Advice, for all its great wealth of experience and expertise and the great

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respect in which it is held in the consumer movement and more widely, is a non-statutory body, and we are giving what was previously an administrative body supported by legislative powers responsibility for activity that was previously run by a statutory body. That presents a number of problems. In real life, they are probably resolvable, but it is odd to resolve them by abolishing the body that has ultimate, fail-safe oversight and by abolishing the new body’s responsibilities in that respect so that the CMA will have no responsibility in the area of consumer advice, as I read the effects of this order.

It is also interesting that the order does not mention consumer education, which is also being transferred to Citizens Advice. The OFT conducts quite a significant amount of activity on consumer education, and that does not seem to be explicitly covered here. Can the Minister assure me that it is subsumed in this? From the wording, it does not look as though it is, although I understand that the transfer has already been made.

The lack of a residual oversight role is important, but it also leaves Citizens Advice somewhat exposed. Articles 7 and 8 of the order and paragraph 4.6 of the explanatory document refer to Citizens Advice and Citizens Advice Scotland now being subject to the Freedom of Information Act. I can see why that has happened, but it makes Citizens Advice somewhat vulnerable. If it is subject to the Freedom of Information Act, there is the question of other powers in this area that were the responsibility of Consumer Focus under the Consumers, Estate Agents and Redress Act 2006, in particular Section 24 of that Act, based on previous powers that existed for Energywatch, which provided that Consumer Focus had pretty strong statutory powers to demand information from any company providing any good or service. Previously that power applied only to energy companies and to the Royal Mail, but it was generalised in that Act. Those powers were very effective, and were rarely explicitly used because the threat of doing so usually got you the information that you wanted.

4.30 pm

I should have declared my past chairmanship of Consumer Focus, I therefore know about these things—although I have no current interest in that area. It is important that if advice is to be a primary responsibility of Citizens Advice with no back-up, it should also have access to those Section 24 powers. I presume that in general terms, such powers will be included in the next order—which Jo Swinson’s letter implies is going to be laid beyond the Summer Recess—dealing with the general transfer of Consumer Focus’s advocacy functions to Citizens Advice. However, that will not come into effect until well into 2014; whereas, in effect, the advice service has already started and will be given legal basis by the passage of this order. Citizens Advice will therefore have no ability to use or threaten to use those powers in that interim period. I would therefore like confirmation that it will ultimately get the Section 24 powers, and I should like to know what it can do in the interim period. The powers have been a powerful lever that we in Consumer Focus used to find very useful. It is more difficult to give those powers to a

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third-sector charity than to a statutory body. Nevertheless, in the course of proceedings on the Public Bodies Bill, we were assured that similar powers could be directed to third-sector bodies in this and other fields.

However, the current situation leaves Citizens Advice a little vulnerable, not only to the Freedom of Information Act as regards how it carries out its powers and deals with its new statutory responsibilities, but potentially to judicial review. That would, in many respects, be unfortunate for Citizens Advice, yet that would seem to be a logical conclusion from the transfer of statutory powers. It would be useful to know whether Citizens Advice, in the exercise of these powers, if not more widely, could be subject to judicial review.

There is an additional point in this area that relates to energy consumer advice. When Energywatch was wrapped into Consumer Focus, the individual advice service was split in two. Part of it went into Consumer Direct, which is dealt with in this order and will go to Citizens Advice with the rest of Consumer Direct services. However, complex and urgent problems were dealt with by a special unit of Consumer Focus, the Extra Help Unit, based in the offices of Consumer Focus Scotland. The unit dealt with complex issues, for example, when it was difficult to get a response from an energy company, and issues where there was an imminent threat of cut-off of gas or electricity. The unit often dealt with very vulnerable consumers. It is not clear where the unit is going to go. Will it be transferred to Citizens Advice or, because of its location, Citizens Advice Scotland? Or will it simply be subsumed in the powers? If there is a transfer, will that involve simply the powers, or is there a staff and resources transfer issue that would be covered by TUPE? An answer would be helpful.

Additionally, well over 10% of the issues that the Extra Help Unit dealt with were those of micro-businesses that were being threatened with their gas or electricity being cut off. You can imagine that that would be pretty urgent and potentially lethal for your business. I understand that Citizens Advice will not be dealing with businesses. If that is true, where does the responsibility for micro-businesses go to under the new set-up?

Those are complicated questions on which I would welcome clarification either today or in writing. However, I am in favour of the general terms of the transfer and in favour of the OFT retaining some supervisory function within that area. As to enforcement, the OFT retains some thin responsibility but most of the powers are to be devolved to the Trading Standards departments of local authorities. The explanatory document sets out the four main areas of regulation to which my noble friend Lord Borrie referred. It is not entirely clear as each has different terminology in relation to each of the current regulations where the role, previously with the OFT and now transferred to the CMA, will necessarily now lie. The CMA will retain the ability to be an enforcer in these and other areas. In other words, the noble Viscount referred to the fact that nobody knew whether to go to the OFT, trading standards or the various other bodies. That responsibility will still be split in relation to these and wider regulations. What is the relationship between the individual trading

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standards, which will have the lead responsibility now, and what will be the CMA’s residual power as an enforcer? Is the distinction in relation to size, geographical spread, across local authority boundaries, or does it depend on the kind of issue?

I appreciate that some of this is not yet sorted out, and some of it may be sorted out by discussions on the National Trading Standards Board, the trading standards partnership or, in Scotland, the consumer protection net. However, these are all somewhat shadowy bodies with no statutory existence. Yet, they will have considerable responsibility deciding where priorities lie and what the allocation of resources will be, but they will not be responsible to Parliament in any way, except for the reporting functions to which my noble friend Lord Borrie referred, and they do not appear to be responsible to the CMA. Non-statutory bodies seem to be carrying out what were previously statutory responsibilities.

The National Trading Standards Board is a co-ordinating body for encouraging leadership, and it may decide priorities, but does it have a quality control oversight of trading standards within individual local authorities? In proceedings on the Enterprise and Regulatory Reform Bill, I opposed the deletion from the role of the CMA what had been the OFT’s general responsibility for consumer protection. Those powers will disappear entirely in the new set up unless yet another order is to come which will compensate for the removal of those general powers, or will that all now rest with Trading Standards and the co-ordinating bodies we are about to set up?

I declare an interest as an honorary vice-president of the Trading Standards Institute; I have great respect for Trading Standards. However, if they are to take on and improve the effectiveness of enforcement, as described by the Minister, in all of those areas that were previously at national level, and improve their activity and effectiveness at local level, they need to have the resources to carry that out. In recent years, under both Administrations, trading standards have been squeezed. They are a discretionary activity of local authorities to a large extent and they are certainly not ring-fenced in budgetary terms. Yet the need for consumers to have protection and for business to know what its responsibilities are has not diminished. The information that I have received—I mentioned this in the ERR Bill proceedings—is that because of the squeeze on Trading Standards resources, England, Scotland and Wales have lost about 13% of their funding in the past two years, but it started before that. They have also lost some 15% of staffing and as a result they are forced to focus on perhaps the larger and higher risk issues. It means that in total there has been a 20% fall in programmed scheduled visits and a 24% fall in total visits across England and Wales. The net result of this has been a 29% fall in prosecutions. That is not because the problem is disappearing and resources are being better deployed. It is because the total amount of resources has diminished. Now that Trading Standards are to get additional responsibilities handed down from previous OFT responsibilities there is not much indication of how many additional resources, relative to OFT spend, are going to go to trading standards. Some of them will be funnelled via the TSI into the

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new co-ordinating set-up but that does not amount to the total additional resources that are going to be needed within Trading Standards.

Perhaps this goes back to the criticism, to which the Delegated Legislation Committee drew attention, over the inadequacy of the explanatory document about the economics of this. There may be an improvement in effectiveness. To some extent that will happen but this part of the order is rated in the letter to which the Minister referred, from his colleague Jo Swinson, as having a net present value of £3.2 million. There is also a rather amorphous reference to improved leadership and so forth. I accept that some of this may occur but at best it is difficult to see how that will amount to a net present value of £3.2 million to the economy as a whole. Even if it gets near that, the benefit in net present value terms is somewhat thin.

There are uncertainties and lack of clarity about the role of the CMA as it will be in relation to Trading Standards. Some of the OFT functions, such as on scams and voluntary codes of practice, are not quantified or directed in this legislative instrument, and this itself will require resources. Most consumer organisations and the OFT wanted to give more resources. Given this resourcing uncertainty, I query whether the effectiveness and economic value of the transfer of these functions down the line to Trading Standards and the shadowy bodies to which I refer is going to deliver a better service.

I still have serious doubts about that part of the order. I hope that the Minister may be in correspondence when we consider this in the Chamber and will be able to reassure me. I have no principled opposition to this. I just think that the total picture does not add up, and does not help consumers and businesses enough to be clear about where responsibility lies. It is not clear about how enforcement will be targeted and be more effective than the previous set-up. With those comments, I would be interested the Minister’s response.

Viscount Younger of Leckie: My Lords, I thank noble Lords for their valuable, if somewhat caveated, comments during this debate. I will do my best to answer the lengthy questions that were raised by the noble Lords, Lord Borrie and Lord Whitty. There is some crossover in the questions. Generally, most of them focused on further clarification of the responsibilities and roles of the different bodies. I will do my best to answer the questions today rather than having to write.

This order focuses on the better delivery of consumer advice and education and will lead to enhanced levels of protection through better enforcement. As I said earlier, it is not about cuts. It is about working more efficiently and effectively for the taxpayer. The order will finalise the transfer of the consumer education and advice functions to Citizens Advice, making that trusted brand the first port of call for consumers with a problem to solve. The noble Lord, Lord Whitty, expressed concerns about the Freedom of Information Act being applied to Citizens Advice. That extension will be limited to provisions relating to the function that is transferred under the order. Citizens Advice has, under the terms of the Public Bodies Act, given its consent to the inclusion of the FOI Act.

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The noble Lord also raised concerns about the interim period and whether information-gathering powers will be transferred. I can reassure him that it is the ultimate intention to transfer the information-gathering powers to Citizens Advice. In the interim, Citizens Advice will work closely with Consumer Focus to ensure that consumer welfare is preserved.

4.45 pm

The noble Lord asked if help for vulnerable consumers will be retained. I can reassure him that we expect the work of the Extra Help Unit to transfer to Citizens Advice. The exact mechanism of the transfer is being developed but will feature in the second public bodies order. In addition, it will enable more appropriate allocation of consumer enforcement cases between Trading Standards and the OFT, empowering and supporting Trading Standards to take on more cases of national significance, ensuring that national activity is linked to local intelligence. The noble Lord, Lord Borrie, raised the issue of the OFT losing its co-ordinating role, but I can reassure him that the OFT will retain that role as it will continue to be notified where enforcement orders are to be obtained under the Enterprise Act. This is in accordance with EU provisions. In practice, only the OFT receives notifications of such enforcement.

I turn to compliance with the Public Bodies Act. Section 8(1) provides that Ministers may make an order only when they consider that it serves the purpose of improving the exercise of public functions. I have set out how the order has regard to efficiency, effectiveness, economy and securing appropriate accountability to Ministers.

The noble Lord, Lord Borrie, mentioned that he is unfamiliar with the Consumer Protection Partnership, and I want to provide some more information for his reference and interest. We have established the CPP, which was formerly, as he will know, the Strategic Intelligence, Prevention and Enforcement Partnership, or SIPEP, for short, involving the Competition and Markets Authority, the National Trading Standards Board, the Trading Standards Institute, the Financial Conduct Authority, the Regulated Industries Unit, Citizens Advice and consumer bodies from Scotland and Northern Ireland, to share intelligence, inform the activities of each of the partners and provide accountability for the national consumer protection system. Since June 2012, the CPP has formed working groups to address how to identify consumer detriment and mass marketing scams and offer solutions to potential sources of detriment arising from the Green Deal.

The noble Lord, Lord Borrie, in talking about the CPP, asked about its role. I reassure him that it is much more than a talking shop. We believe that the CPP comprises the right partner organisations, which I mentioned earlier, and that all partners have an important role to play. It will ensure that important issues do not fall between any gaps. Its primary purpose is to identify and prioritise areas where there is the greatest detriment to consumers. Partners will then agree and co-ordinate collective action to tackle such detriment, using all available tools at their disposal.

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The noble Lord, Lord Borrie, raised the National Trading Standards Board. It supports local authority trading standards services to work together to enforce consumer law against national and regional threats to fair trading. Local authority trading standards services will continue to address local threats and issues under local political control. The board deploys national funding from government and will provide leadership on cross-boundary enforcement through heads of trading standards services acting together across England and Wales. Trading standards bodies in Scotland have similar arrangements in place, and they work together to advise on UK-wide enforcement issues and the co-ordination of business education.

The noble Lord, Lord Borrie, would like clarification of who trading standards officers are and who would have political oversight of the local levels. While Government have directly funded cross-regional enforcement programmes, the NTSB’s professionals will be able to use their expertise to harness intelligence in order to prioritise resources. This will provide a direct link with local trading standards services enabling greater impact for consumers and better value for scarce public funds. The board will consist of one representative from each of the English regional and Welsh trading standards groups. These representatives are mandated to take decisions at the board on behalf of their regional group. The board will be led by an independent chair and representatives from BIS, Scotland, Northern Ireland and professional trading standards groups will act in a non-executive capacity. In addition, there is a political oversight group to ensure synergy with local political governance.

The noble Lord, Lord Borrie, asked whether the Government will retain any consumer enforcement power within the CMA. Yes, the CMA will have the power to tackle competition problems and practices—

Lord Borrie: The Minister is leaving the NTSB, but I still have not had an answer to the question about whether local councillors, members of the authority elected to it, will have any role in the NTSB.

Viscount Younger of Leckie: I hope I can answer the noble Lord’s question. Trading standards play a critical role in protecting consumers and business in their local authority areas, in particular from rogue traders, but the responsibility was split between local authority trading standards services and the OFT creating an enforcement gap. While BIS provided some support for regional and national enforcement schemes, the NTSB has been formed specifically to tackle cross-boundary and national threats.

The noble Lord, Lord Borrie, asked whether members of the local authority are members of the NTSB, which goes a little further in answering his original question. The answer is no. Heads of local authority trading standards comprise the NTSB. There is a political oversight group made up of representatives of local government and the LGA which connects local decision-making with national enforcement.

The noble Lord, Lord Borrie, was concerned that the OFT will not oversee enforcement supervision. In this case, the OFT, Trading Standards and other enforcers

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will share a power to enforce. This will ensure that while the OFT will be able to continue to use its expertise in this area, other enforcers, including Trading Standards, will take up cases that more appropriately fall to them. Trading Standards will act as the lead enforcers of this legislation and will retain a duty to enforce the regulations, except in the case of the Unfair Terms in Consumer Contracts Regulations 1999. That is complex, but I hope it explains that slightly more clearly.

The noble Lord, Lord Whitty, asked how Citizens Advice will be accountable for Consumer Direct and consumer education. The work of the Citizens Advice service on Consumer Direct will be accountable to the Consumer Minister through grant arrangements set up by the Department for Business, Innovation and Skills. These grant arrangements will set out challenging performance targets which will be closely monitored by the department. I can reassure the noble Lord, Lord Whitty, that Citizens Advice will take on the role of consumer education.

The noble Lord, Lord Whitty, also asked whether Citizens Advice could be subject to a judicial review. There is a low risk that Citizens Advice may be subject to a judicial review in relation to the function transferred. However, it is more likely that other legal claims will be brought, such as negligence. The Citizens Advice services have taken their own advice on this risk and have given their consent to the transfer of the consumer advice functions on that basis.

The noble Lord, Lord Whitty, wanted to clarify who SMEs will receive advice from. Most business-facing advice and education will transfer from the OFT to the Trading Standards Institute from 1 April 2014, but businesses seeking advice as consumers will be able to access Consumer Direct as before.

The noble Lord, Lord Whitty, also asked for clarification on whether the NTSB will quality control Trading Standards. The NTSB itself, and the teams that it sponsors, are subject to tight funding terms and conditions to ensure that they deliver against business priorities. Local trading standards are subject to local government procedures. The noble Lord also raised concerns about cuts to local trading standards services. The provision of local trading standards services is a matter for individual local authorities, and even in the current climate, they will continue to take local and pan-local cases.

The intention is that there will be specific funding for enforcement against national threats separate from the budget for local issues. There are plenty of examples of cases where local officers have dealt with complex cases successfully. The NTSB will ensure that resources are allocated to large cases as and when appropriate. In addition, local officers often have a culture of working with business to resolve problems. I believe that trading standards services have already demonstrated their ability and professionalism over many years, and I hope that the noble Lord would agree with that.

Lord Whitty:Can the Minister say how much of what had been the OFT budget for dealing with these national, cross-boundary and complex issues will be fed down to the NTSB and trading standards services?

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Viscount Younger of Leckie: I have that information somewhere, but I will certainly revert to the noble Lord with a particular reply.

The final question I have here, although there may be others on which I shall write to the noble Lords, Lord Whitty and Lord Borrie, was raised by the noble Lord, Lord Whitty, about the resources to support the transition of functions. We believe that Trading Standards will be better resourced to take on this new, enhanced role. Increased central government funding for national leadership and co-ordination of enforcement activity is being provided to the National Trading Standards Board, which has responsibility for co-ordinating the delivery of significant national and geographic region cases that cut across local authority boundaries. For example, the so-called scam buster teams already work across local authority boundaries to target the worst rogue and misleading trading practices and fraudulent activities that may be beyond the capacity of individual local authorities.

The Consumer Minister and I have given due regard to the Secondary Legislation Scrutiny Committee’s decision and comments, and the Government conclude that the order meets the requirement of the Act. I commend the order to the Committee.

Motion agreed.

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013

Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013 20th Report from the Joint Committee on Statutory Instruments

Considered in Grand Committee

4.58 pm

Moved By Baroness Randerson

That the Grand Committee do report to the House that it has considered the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013

Relevant documents: 20th Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Wales Office (Baroness Randerson): My Lords, this order will allow local authorities in Wales to make arrangements for an external provider to undertake some of the new administrative functions created by the introduction of council tax reduction schemes from 1 April when council tax benefit is abolished. These changes are part of the Government’s wider policy of decentralisation.

I will provide a little more detail on the contracting out order. It will amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996. Currently under the 1996 order, local authorities in Wales can contract out functions connected with the administration and collection of council tax—for example, the calculation of an individual’s council tax liability or the serving of demand notices. Local authorities in Wales can also currently

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contract out the operation of the council tax benefit system under the Contracting Out (Functions of Local Authorities: Income-Related Benefits Order) 2002 if they choose to do so—arrangements that will cease once council tax benefit is abolished.

While some of the new administrative functions related to the introduction of council tax reduction schemes are already covered by the 1996 contracting out order, such as the processing of applications, some are not. To ensure that local authorities in Wales have the freedom to contract out all the new administrative functions, this order amends the 1996 contracting out order for Wales to add the following new administrative functions: first, the issuing of council tax reduction decision letters; secondly, the payment of a reduction amount under certain circumstances where the billing authority is of the opinion that it would be appropriate; thirdly, the serving of a penalty notice in connection with an offence committed with a reduction; and, fourthly, the repayment of amount paid in connection with a penalty under a local scheme—a penalty that has been subsequently quashed.

Because the abolition of council tax benefit also means that local authorities in Wales will no longer be able to rely on their current investigatory and enforcement powers for social security benefits, Welsh Ministers are making regulations to provide local authorities with replacement powers to tackle fraud in relation to council tax reduction schemes. These regulations will introduce new penalties, the collection of which has also been included as a function that could be contracted out under the 2013 order. Local authorities that choose to contract out functions will be expected to monitor the services delivered by their contractors. We expect the decisions taken by the contractor to be of the same standard as that of a local authority officer and subject to the same levels of confidentiality and data protection.

Local taxpayers’ rights will not be affected by this legislation. The same rights of appeal to the local authority and to the Valuation Tribunal for Wales will remain. While this order does not expand on the current provisions for the administration of council tax reduction schemes, it will carry out an essential function by enabling local authorities in Wales to choose how to deliver their local schemes, whether by using internal resources, external providers or a mixture of both. It is important that we provide local authorities with the tools they need to deliver a cost-effective council tax system. I commend this order to the Committee.

Lord Wigley: Perhaps I may ask for clarification on a couple of points by the noble Baroness. First, am I right in saying that the interpretation of this order is the provision of greater powers of privatisation for local authorities if they choose to use them? Is that the implication—services that would otherwise be in-house in local authorities can be undertaken by private companies on their behalf?

Secondly, I refer to Article 2 on,

“Amendment of the Local Authorities (Contracting Out of Tax, Billing, Collection and Enforcement Functions) Order 1996”.

In subsection (2), there is reference to,

“the Detection of Fraud Regulations”.

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Are these regulations that have already been made? Are they made by the Assembly or here? Is there already a statutory instrument in effect on that, or are we awaiting something to be confirmed?

Lord Rowlands: I wish to ask two questions. First, how much contracting out has been carried out since the 1996 order was introduced? What percentage of local authorities have already contracted out in this field? The Minister referred to my next point. One should perhaps be concerned that we are handing over information on the personal financial matters of individuals and families to a variety of different organisations which might have potential conflicts of interest as opposed to a local authority, which will not, because it is a statutory body. The Minister talked about safeguards and data protection but if you diversify and decentralise in the manner in which this order hopes and expects, how will the individual be safe in the knowledge that his or her finances cannot be abused in any way? At least when the local authority has this information, it is a statutory body and therefore is obviously accountable in every sense of the word. How will that accountability be enforced across a range of other organisations or companies that will be delivering these services?

Baroness Gale: My Lords, I thank the Minister for placing this order before us today. As she has outlined, its purpose is to amend the Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) Order 1996. From April 2013, council tax benefit will be abolished and council tax reduction schemes will be introduced in Wales under the Local Government Finance Act 2012. In future, instead of receiving council tax benefit, low-income families will receive a reduction in their council tax. Currently, local authorities can contract out of administering the collection of council tax. The order we are debating is required to ensure that the new administrative functions are part of the council tax reduction scheme and can also be contracted out if local councils wish to do so. Those functions include such things as sending out decision letters and serving penalty notices. The noble Lord, Lord Wigley, and my noble friend Lord Rowlands asked some very interesting questions on those issues and I look forward to the Minister’s reply to them.

The drafting of the order is relatively uncontroversial but it is unfortunate that we have it at all. It comes about as a result of the Government’s decision to abolish council tax benefit. They are scrapping the national benefit and passing responsibility for it to local authorities in England and to the Welsh and Scottish Governments, and cutting funding by 10%. We accept that the Welsh Government have responsibility for the details of any schemes and are fully involved in setting up these details. The principle of getting rid of council tax benefit dismays us very much. In England, we see people on low incomes being asked to pay sums of money that they simply cannot afford. Most councils have had no option but to pass on some of the cuts. As a result, many low-income households currently exempt from council tax will have to pay it for the first time. Typically, they will have to pay between £96 and £225 a year. In Wales, a 10% cut would amount to an

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annual cut of some £74 per council tax benefit claimant. I wonder whether the Government fully understand the impact this will have on low-income families. Government Ministers have praised the freeze on council tax, which may, indeed, be welcomed by those on modest and high incomes. However, the removal of council tax benefit from those on the lowest incomes means an increase in what they will have to pay.

The Government say that pensioners must be protected from the cuts, which means that others face larger cuts, depending on the number of pensioners in a local authority. If councils also try to protect other vulnerable groups, such as disabled people or carers, the cuts enforced on working families will be even more severe. Because of the number of pensioners the average reduction across local authorities will work out at some 16%. In January the Welsh Minister for Social Justice and Local Government, Carl Sergeant, announced a £22 million support package to continue offering the full council tax discounts in Wales, and under prudent financial management the Welsh Government have been able to fund their proposals out of their reserves.

It has been a difficult time for the Welsh Government. They have had to balance an enormous number of cuts and manage them while facing a difficult budgetary situation. Towards the end of the winter they were able to see the effects on households of other welfare benefit cuts. They knew that they were perhaps not going to have so many payments for such things as severe winter weather. They were in a position to use that money for council tax discount. However, that prompts the question as to whether it can continue to be used in the future. It will certainly not be easy and councils are aware of the pressures on them.

Given that the Government are going ahead with the change, the Welsh Government and Welsh local authorities need the regulations in place as soon as possible. We will not oppose these regulations tonight.

Baroness Randerson: My Lords, I thank noble Lords for their questions and remarks this afternoon. In principle this order does not change the way that councils deal with council tax. To deal with the first point of the noble Lord, Lord Wigley, it has always been possible for councils to contract out billing, collection and enforcement. Councils have been able to appoint an external provider to undertake some administrative functions. This order simply enables this to continue under the new arrangements from 1 April when council tax benefit will no longer exist.

As always I will try my best to answer the questions that noble Lords have asked. The noble Lord, Lord Wigley, asked whether this would mean greater privatisation. This order does not extend the powers that the local authorities already have to contract out their administrative functions in relation to council tax. As I have said, it allows them to apply them to the new council tax reduction schemes that are no longer part of the social security benefit system.

Lord Wigley: The Explanatory Note says that the order provides additional functions by way of authorising contractors. In other words, it goes beyond what was there before. Otherwise, presumably, we would not need it.

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Baroness Randerson: I could attempt to look at the Explanatory Notes as I stand here but I think that it is better if I write to the noble Lord on that point. It is not practical for me to read the Explanatory Notes at the same time as trying to answer.

The noble Lord, Lord Wigley, has also asked about the detection of fraud regulations. These are the responsibility of the Assembly and that might be to what the noble Lord is referring in his question. Those regulations have been debated today in the Assembly, and Welsh Ministers will have made those regulations. We could not here, in the House of Lords, deal with this order until the detection of fraud regulations had been dealt with in the Welsh Assembly. I hope that that makes the responsibilities clear.

5.15 pm

Lord Wigley: I do not want to go on unduly about this but, as I understand it, the legislation that we are dealing with today, here, was not scrutinised in the Assembly because it did not fall within the Assembly’s powers. If I understand correctly what the noble Baroness is saying, part of it—the part dealing with the fraud—does fall within the Assembly’s powers. The only point that I would make is that this underlines the need to simplify all this; matters are either devolved or they are not. That would make life very much simpler for everybody.

Baroness Randerson: The noble Lord makes an interesting point. It is something that we have come across on a fairly regular basis, that responsibilities are split in a way that is sometimes not obvious and sometimes surprising.

I move on now to the points made by the noble Lord, Lord Rowlands, who asked if there is more contracting-out now. I simply point out that this has always happened—for example, currently only three of the 22 local authorities in Wales have in-house bailiffs. Contracting-out on billing and bailiff services is very common. But a great deal of work has been done by the Welsh Government and by individual local authorities to have codes of conduct and best practice examples to ensure that bailiff services are run by improving standards over the years. A great deal of progress has been made on those issues.

Lord Rowlands: I apologise for interrupting the Minister again. I can understand the situation with bailiffs, but my feeling would be that a bailiff would not receive detailed personal information of the individual’s financial circumstances in the same way as some of the other services that are contracted out. That would give the external provider direct access to people’s personal finances, in a way that a bailiff probably would not have.

Baroness Randerson: I believe that external services will have no more access than they have had in the past, but they will continue to have an obligation to treat that material as confidential and deal with it in a responsible manner. Local authorities will continue to have—this is not new—a responsibility to ensure that any organisation or individual whom they appoint as

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a contractor to work on their behalf operates to the highest standards, and maintains confidentiality of personal data. To address here the remarks of the noble Baroness, Lady Gale, as a very keen advocate of local authorities and someone who believes fervently in local government—and I am very proud of our local government system throughout Britain—I believe that councils are raising council tax, which is the tax that funds a lot of their spending. It is right that they have responsibility for the whole of the functions associated with the raising of that tax. It is important that we have confidence to delegate power to local authorities throughout Britain in order to enable them to raise tax and spend it as efficiently and practically as possible.

Finally, I turn to the remarks made by the noble Baroness, Lady Gale.

Lord Rowlands: If some of these services are contracted out to an external provider and an individual feels that he or she has a grievance at the way that services are being administered, to whom does the individual appeal? If the local authority were doing it, it would be the Local Government Ombudsman. If, for example, an external provider committed a potential act of maladministration, could the individual go to the local ombudsman for redress of the grievance against the external provider?

Baroness Randerson: They will continue to appeal in the normal manner, the way in which they have been appealing since the establishment of council tax. The appeal will be to the valuation tribunal in the normal manner.

The noble Baroness, Lady Gale, expressed concern about the ending of council tax benefit. I do not believe it is an issue of concern in principle that council tax reductions will be done by councils rather than through the benefits system. I think it is very sensible to unite the reductions in council tax for those of limited means with the organisation that levies the tax in the first place. It is part of the Government’s policies of decentralisation and trusting local authorities. In this case, the Welsh Government have made a central scheme, and there are certain limited exceptions that local authorities can make decisions upon, but there is a largely standard scheme throughout Wales.

The concern that the noble Baroness expressed related to people who she believes will not receive the council tax reduction in future. I assure her that throughout Wales, if you are entitled to council tax benefit now, you will be entitled to a council tax reduction in future because the Welsh Government chose to supplement the funding being provided.

I hope that I have addressed all the points that noble Lords have raised. I am now in a position to answer the question asked by the noble Lord, Lord Wigley, about the Explanatory Memorandum. This order adds new administrative functions to the 1996 order which relate to council tax reduction schemes, but under the Contracting Out (Functions of Local Authorities: Income-Related Benefits) Order 2002 local authorities could in the past have carried out those functions for council tax benefit.

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It may be useful if I review the record and check that I have answered all questions fully. I will pay particular attention to the point raised by the noble Lord, Lord Wigley, about additional functions. I commend the order to the Committee.

Motion agreed.

Criminal Justice Act 2003 (Conditional Cautions: Code of Practice) Order 2013

Criminal Justice Act 2003 (Conditional Cautions: Code of Practice) Order 201316th Report from the Joint Committee on Statutory Instruments

Considered in Grand Committee

5.25 pm

Moved By Lord McNally

That the Grand Committee do report to the House that it has considered the Criminal Justice Act 2003 (Conditional Cautions: Code of Practice) Order 2013

Relevant documents: 16th Report from the Joint Committee on Statutory Instruments

The Minister of State, Ministry of Justice (Lord McNally): My Lords, the order implements the revised Code of Practice on Adult Conditional Cautions, which provides the framework in which conditional cautions operate and will come into force the day after the order comes into force.

Conditional cautioning for adults currently operates under a code of practice approved by Parliament in 2009. Amendments have been made to the Criminal Justice Act 2003, which requires the code to be updated by this order. Part 3 of the Criminal Justice Act 2003 as amended allows an authorised person, usually a police officer, or a relevant prosecutor, usually the Crown Prosecution Service, to offer a conditional caution to an adult offender aged 18 or over. Before the conditional caution can be offered to an offender, he or she must admit to committing the offence and agree to accept the conditional caution and the conditions attached. The police or prosecutor must be satisfied that there is sufficient evidence to prosecute and that it is in the public interest to offer a conditional caution. If, once the conditional caution has been administered, the offender fails to comply with the conditions, he or she may be prosecuted for the original offence. Conditional cautions cannot be imposed on an offender, and the code of practice makes this clear. In every case, the offender must agree to accept the conditional caution and the conditions that are proposed. He or she may, for any reason, choose to decline the offer of a conditional caution and opt instead to be prosecuted.

The Legal Aid, Sentencing and Punishment of Offenders Act 2012 made two amendments to the conditional caution framework as set out in the Criminal Justice Act 2003. First, it enabled the police to offer a conditional caution and to set and vary conditions by removing the requirement for a prosecutor to authorise such decisions. Secondly, the 2012 Act introduced two new conditions that can be attached to a conditional caution and offered to relevant foreign offenders—that is, those offenders who do not have permission to be in the UK. These new conditions have the objectives of

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bringing about the departure of foreign offenders from the United Kingdom and ensuring that they do not return to the UK for a period of time.

Alongside these amendments to the code of practice arising from the legislative changes, we took the opportunity to look at the existing guidance within the code and made further amendments to clarify and strengthen it. We have, for example, strengthened what is said on selecting appropriate conditions and on offering a conditional caution to offenders with mental health issues and making sure that they understand the implications of accepting it.

The Criminal Justice Act 2003 sets out the procedure for revising the code of practice. First, the Justice Secretary must agree a draft for publication with the Attorney-General. The Justice Secretary is then required to publish that draft code of practice and consider any representations made by respondents. A public consultation took place on the draft code from 4 October 2012 to 1 November 2012. The consultation was sent to criminal justice practitioners, such as police and prosecutors, as well as to stakeholder groups, such as the Magistrates’ Association and the Law Society, and third-sector groups, such as Mencap. In total, 37 responses were received—on the whole positive responses which welcomed the guidance—which we considered, and some further revisions to the draft code were then made. The revised code has been approved by the Attorney-General and the Justice Secretary and a copy of it and the Government’s response to the consultation were placed in the Library of this House as well as on the Ministry of Justice website. The draft order and the code of practice were laid before Parliament in January this year.

In addition to the code of practice, the Director of Public Prosecutions issues operational guidance on the approach for police and prosecutors to take when considering whether a conditional caution may be an appropriate response to an individual offence. The DPP is revising his guidance following the legislative changes and the changes made to this code of practice. This order brings into force the code of practice which will provide the framework in which police and prosecutors make decisions on whether a conditional caution is an appropriate response to a criminal offence. It will allow conditional cautions to be used to provide the opportunity for offenders to make swift reparation to victims and communities and for offenders to be directed into rehabilitative services to tackle the causes of their offending behaviour. Conditional cautions will also allow the removal from the UK at the earliest opportunity of those foreign offenders with no permission to be here who have committed a crime. We believe that this is a useful tool and are working with the UK Border Agency to ensure that the conditions are implemented and enforced robustly to ensure that public protection is maintained.

If the order implementing the revised code of practice is approved by Parliament, it will be implemented across England and Wales from 8 April 2013 alongside the commencement of the amendments to the Criminal Justice Act 2003 made by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. I commend the draft order to the Committee, and I beg to move.

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Lord Beecham: My Lords, yesterday in this Committee we debated a report from the noble Lord, Lord Goodlad, in relation to the Government’s procedures for consultation. Considerable concern was expressed by the committee that he chairs, shared by those of us who spoke in the debate, who were either members of the committee or, as in my case and that of the noble Earl, Lord Lytton, not members of the committee, that the period for consultation had been arbitrarily changed by the Government last year. Quite apart from the merits of today’s statutory instrument, today’s business confirms the criticisms that were made about the consultation period. As the Minister has pointed out, consultation on these changes took place in only a four-week period, beginning towards the end of October, before the newly elected police commissioners, for example, were even elected. So all 43 of them have had no opportunity of commenting on these changes in an area in which it might be thought that they have a significant interest. It clearly crossed nobody’s mind—and I am not blaming the Minister for this—

The Deputy Chairman of Committees (Lord Geddes): My Lords, there is a Division in the Chamber. The Grand Committee stands adjourned for 10 minutes to recommence at 5.44 pm.

5.34 pm

Sitting suspended for a Division in the House.

5.44 pm

The Deputy Chairman of Committees:It is now 17.44. His Lordship was in full flow, and perhaps he would like to continue.

Lord Beecham: My Lords, I will. I was making the point that this case exemplified the arguments that are being made about the Government’s defective consultation procedure, but that is a preliminary point and does not go to the substance of the matter, and I do not expect the Minister to accept any responsibility for what seems a flawed process. I suspect that it is not a matter to which he would have given any material consideration.

On the other hand, the Minister will be aware that there is considerable concern about the number of cautions now being offered in lieu of possible prosecution and a feeling that this is to some extent being used by some police forces as a device to, shall we say, depress the level of recorded crime. There is at least that concern. Whether it is justified is another matter, and I would not for a moment suggest that all police forces are succumbing to that temptation, but there is a feeling that there is an issue, and one has to bear that in mind as we look at extending the system in the way that these proposals do. A cynic might indeed wonder whether this might be another way of reducing the criminal legal aid bill, about which the Minister and his colleagues are so exercised, but heaven forfend that I should be susceptible to such a cynical standpoint.

However, there are a number of points to be raised about these proposals. In terms of conditional cautions, they shift the responsibility entirely on to police officers, at least if they chose to exercise the power given to

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them. Will the Minister indicate what follow up there will be in terms of consultation about the way the new system is working? Now that we have elected police commissioners—which is not something that I or my party have ever favoured—presumably they will be involved in any consultations, as chief constables would be. Will the Minister indicate whether it is intended to set up a process to monitor the way the new powers are being used and how frequently those consultations will be carried out?

There is also a question about the guidance which the Director of Public Prosecutions is to issue. Once again, we have secondary legislation without the accompanying guidance on how matters are to be used. That is a most unfortunate defect in the procedure. The potential problem is that this new system will be carried out in different ways in different areas. Surely there ought to be a degree of consistency, which, no doubt, the guidance would seek to promote, between what happens in different police authority areas. Again, the question arises of what steps the Government will take to ensure as far as possible that there is a degree of consistency.

On foreign defendants—of course, they will not be defendants because there will not be a prosecution, so let us call them foreign offenders for the purposes of the debate—I invite the Minister to respond to the possible doubt that this may be a convenient way of dealing with foreign offenders without the expense of a trial, but possibly at the expense of visible justice so far as victims are concerned. Will the guidance indicate the level of offence that it would not be deemed appropriate to be the subject of a conditional caution, with the condition of deportation attached to it? Deportation may well be desirable, but it may also be desirable for an offence to be dealt with through the courts in the normal way.

We do not oppose the principle of the order. It is certainly worth pursuing the option of conditional cautions but, as the Minister recognised, we have some reservations about how the system might work in practice. It is new, and I hope that we can have an assurance that there will be a proper review of progress, perhaps in a year or two, to see how the system is working in practice and, in particular—I repeat—whether there is consistency in practice across the country which one would think would be desirable, if only to retain public confidence in the new process. I reiterate the request that in future guidance that will be crucial to the operation should be available for consideration before the secondary legislation goes through your Lordships’ House and the other place.

Lord McNally: My Lords, I am grateful to the noble Lord, Lord Beecham. As usual, he is constructive in his questioning and I will try to be equally constructive in my responses. I am informed by my noble friend Lord Wallace that there was indeed a good and robust debate about consultation in this Room yesterday. Where I cannot follow the noble Lord, Lord Beecham, is in his description of consultation in this case as being either defective or flawed. It was short but effective. We were working against a pretty tight timetable to deliver the LASPO reforms in place and on time.

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I take the point that there was not perfect synergy between the coming into office of the new police commissioners and our consultation, but it was interesting that more than half the responses to the consultation came from police forces or ACPO. As I indicated, the overwhelming response to the consultation was favourable to what we are trying to do. The noble Lord, Lord Beecham, was right to raise the question of consistency in the application of these proposals. That is part of a broader approach that we are undertaking at the MoJ to try to make sure that statistics about policing and courts are more widely known so that we can see the effectiveness of any such measures and any variety in their implementation.

We are supporting the Association of Chief Police Officers in its work to develop local scrutiny arrangements for out-of-court disposals. These will consist of a retrospective look by a range of criminal justice professionals at how an area uses these disposals, and it will look at individual cases to see whether they raise any training needs. We are working with the senior judiciary to establish how we harness the unique knowledge and experience of magistrates in these arrangements.

The noble Lord, Lord Beecham, also asked whether there was a kind of inflation in the use of out-of-court disposals. It is true that there was a significant increase after 2007, but that was not at the expense of convictions, the figures for which have remained broadly stable. Part of the reason for the increase was targets imposed by the previous Government that created an incentive for criminal justice agencies to criminalise low-level offending by administering cautions where otherwise they may have taken no further action. After those targets were replaced, the number of out-of-court disposals since 2007 has declined by about 43%.

The noble Lord asked for which offences conditions for foreign offenders will be available. The foreign offender conditions will be available for the same offences as the other types of conditions. However, it is right to make these conditions available for more serious offenders—for example, where the likely sentence, if prosecuted, would be a period of imprisonment. We believe that for foreign offenders who have no right to remain in the UK and admit to committing certain offences, the public interest is better served by administering a caution and promptly removing the offenders from the UK, rather than prosecuting and potentially imprisoning them at the taxpayer’s expense, only to remove them from the country once the sentence is completed. Where the public interest requires it, serious offences committed by foreign nationals will, of course, continue to be prosecuted.

The noble Lord raised the question of the DPP guidance. This will set out the circumstances when the police can offer a conditional caution and when they should refer the matter to the CPS. The police will be able to offer a conditional caution for a summary-only or triable-either-way offence but the decision in an indictable-only offence should be authorised by a prosecutor. In a case of whatever seriousness, the police can seek advice from the CPS on the appropriate disposal decision. This brings conditional cautions into line with the current situation on simple cautions.

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On the question of the timing of the DPP guidance, I agree with the noble Lord. It is unsatisfactory. If I was in his place, I would grumble. Parliament is right when it says that it has not been given the whole picture on these things. I am asked to assure him that one of the advantages of delaying is that we will be able to take this debate into account as we put the guidance forward. I can already see how convinced the noble Lord, Lord Beecham, is by that bit of sophistry; I sense waves of a feeling of treachery from behind me. As a parliamentary practitioner, I think that it is far better when Parliament gets the whole picture when making a decision. I also appreciate the pressure that we are putting our officials under.

Returning to the matter of foreign offenders, we will, of course, also take into account the views of victims. However, I think there is a general feeling that a sensible way of dealing with these offenders will be to get them out of the country and not put the taxpayer through the cost of prosecuting and possibly incarcerating them. We will keep these matters under review. The aim is to provide a consistent system, based on a clear framework of guidance, while giving flexibility to the police to make common-sense decisions. I hope that we will have an opportunity to gather together the results of the ACPO research, to which I referred, and perhaps at some stage publish it to promote further discussion. As the consultations indicated, there has been a broadly favourable approach to it. The points about ensuring consistency and proportionality, raised by the noble Lord, Lord Beecham, are well taken, but I still have no hesitation in recommending the order to the Committee.

Lord Beecham:Will the Minister confirm that the review will provide information not only on the number of orders made but on the number in respect of which breaches have occurred? In fact, it might be helpful to have a picture of what is happening in terms of breaches of the existing conditional order system, not, obviously, immediately but as part of that review process. Will he agree to ensure that that takes place?

Lord McNally: Yes, I readily agree to that. As I said before, one of the things that are very central to MoJ policy is the gathering of relevant statistics. The noble Lord talked about breaches. That is a very relevant statistic in terms of seeing how effective this measure is. We want to make use of the ACPO research and the information that the MoJ is gathering to analyse the measure’s effectiveness. As I say, I readily agree to that.

Motion agreed.

Amendments to Schedule 6 to the Tribunals, Courts and Enforcement Act 2007 Order 2013

Amendments to Schedule 6 to the Tribunals, Courts and Enforcement Act 2007 Order 201320th Report from the Joint Committee on Statutory Instruments

Considered in Grand Committee

6 pm

Moved By Lord McNally

That the Grand Committee do report to the House that it has considered the Amendments to Schedule 6 to the Tribunals, Courts and Enforcement Act 2007 Order 2013.

12 Mar 2013 : Column GC84

Relevant documents: 20th Report from the Joint Committee on Statutory Instruments

The Minister of State, Ministry of Justice (Lord McNally): My Lords, the Committee is considering the two draft orders: the Amendments to Schedule 6 to the Tribunals, Courts and Enforcement Act Order 2013, which I will refer to as the amendments order, and the Transfer of Tribunal Functions Order 2013, which I will refer to as the transfer order.

The orders before us today are part of a series that facilitate the transfer of the functions of a range of tribunals into the First-tier and Upper Tribunals. These orders will enable us to establish a new chamber in the First-tier Tribunal, which will be known as the Property Chamber and will transfer the functions of a range of tribunals into the unified tribunal structure. The Property Chamber will deal with land registration, residential and leasehold property, rent and housing matters and in relation to park—that is, mobile—homes. Subject to parliamentary approval, it will be launched on 1 July 2013.

The purpose of the draft amendments order is to add the rent assessment committees and the agricultural land tribunals to the relevant parts of Schedule 6 to the Tribunals, Courts and Enforcement Act 2007. That schedule lists the tribunals that can be transferred into the unified tribunal structure; in this instance, into the First-tier Tribunal and the Upper Tribunal. It is the addition of these tribunals into the appropriate parts of the schedule that activates the powers of the Lord Chancellor to transfer their functions into the tribunals.

Transferring the functions is the purpose of the second draft order, the transfer order. It will transfer to the Property Chamber of the First-tier Tribunal the functions of residential property tribunals, leasehold valuation tribunals, rent tribunals and rent assessment committees—which are composed from the members of rent assessment panels—in England; the agricultural land tribunal in England; and the Adjudicator to Her Majesty’s Land Registry in England and Wales.

It might be worth me going into some detail about why the Government are taking this action and why it is necessary. I think it would be helpful to give some background to tribunals in general and the Property Chamber in particular. Over the past few decades, a number of tribunals have been created to bring together specialist knowledge and expertise to resolve disputes, but they were first recognised as part of the justice system of the United Kingdom in the Franks report of 1957. From then until the turn of this century, a network of tribunals evolved, each with different rules of procedure, with varying powers and different sponsoring government departments.

It was apparent that this haphazard approach to creating tribunals was neither efficient nor economical. In 2004, the Government, through the Lord Chancellor, invited Sir Andrew Leggatt, a former Lord Justice of Appeal,

“to review the delivery of justice through Tribunals”

in England and Wales. The Leggatt report was the result of the review. The report recommended extensive reforms and set out a programme for developing a

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unified tribunals system. Following the report, the Tribunals, Courts and Enforcement Act 2007 was passed to implement its recommendations. This Act established a two-tier tribunal system, independent from decision-making government bodies, with a First-tier Tribunal and an Upper Tribunal. The Act also provided a number of powers to effect the transfer of existing tribunals or direct new appeal rights into this system.

A system of chambers was established within the two-tier structure, which enabled specialist tribunals with related jurisdictions to be brought together. This arrangement brings a number of benefits by providing cohesion and consistency within the system and allows judges and panel members to be deployed across jurisdictions as appropriate. From November 2008, the Upper Tribunal and the First-tier Tribunal took over the jurisdictions of a number of existing tribunals. Since then, further tribunals have been brought into the new system.

We are now at the stage where a unified tribunals system is almost completed. There are now are six chambers in the First-tier Tribunal and four chambers in the Upper Tribunal. In 2011-12, almost 740,000 applications or claims were received by tribunals. In the same year, more than 730,000 cases were disposed of. The matters dealt with by tribunals are wide-ranging, and cases range from those that can be determined on paper to those that are complex and involved and take a number of days to hear the issues.

When the Property Chamber is launched in July it will be the seventh chamber in the First–tier Tribunal and will bring together jurisdictions concerned with property and lands. These are residential property tribunals, leasehold valuation tribunals, rent tribunals and rent assessment committees—all which are composed from the members of rent assessment panels—the agricultural land tribunals and the Adjudicator to HM Land Registry.

What will happen to these three tribunals when the Property Chamber is launched? In short, they will cease to have any functions in England, although they will continue as before in Wales. Their jurisdictions will be transferred into the new tribunal. All the judicial office holders and panel members in post at the point of the transfer will become a transferred-in judge or member of the new tribunal. These jurisdictions deal with a wide and diverse range of issues, some of which are technical and complex. They include cases concerning residential property, including rent, park homes and leasehold disputes, issues over agricultural land and disputes about registered land in England and Wales, most of which will be referred to it by the Land Registry.

Why is the Property Chamber being created? Currently, the three jurisdictions that will transfer into the chamber operate independently of each other. They have their own sets of procedural rules, different terms and conditions for office holders and administrative staff, various locations and diverse practices. The benefits of creating the chamber are clear: it will be the centre of expertise for matters relating to land, property and housing; it will bring greater consistency in decision-making and effective case management, with one set

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of rules for all the jurisdictions; there will be administrative efficiency leading to a reduction in costs; it will enable good practice to be spread across the jurisdictions, also leading to greater efficiency; it will allow more flexible and efficient judicial deployment; and it will deliver administrative efficiency, leading to a reduction in costs.

There is no doubt that the creation of the Property Chamber in the First-tier Tribunal and the transfer of the jurisdictions into the chamber will mark a significant milestone in the achievement of the long-held vision of a unified Tribunals Service. It will signify a further step in delivering the chamber structure within the First-tier Tribunal, as envisaged by the Tribunals, Courts and Enforcement Act 2007. I therefore commend these draft orders to the Committee, and I beg to move.

Baroness Gardner of Parkes: My Lords, I wish to speak on this because I feel that the statements that are being put forward are not necessarily as good as they sound. My interest in property is in the register, but I state again that I have a personal interest. However, my interest is much wider than that; it is also about other people. I have asked the noble Lord, Lord McNally, Questions on the Leasehold Valuation Tribunal in particular. He replied by letter and it was very interesting. I was concerned because at the moment the applicant cannot be asked to pay more than £500. Under the new proposals, the amount will vary from £65 to considerably more—over £500—but no one quite knows where they will come in that scale. If there is a hearing, you might be asked to pay another £190 for it. That is the minutiae of the answer, which I think is worth putting on record. Over the years, the amount has never varied. Although when we established the Leasehold Valuation Tribunal in 1996, we had hoped that the amount would never vary, we cannot expect prices to remain static for ever. That is an incidental point.

I am concerned about the whole structure of the Leasehold Valuation Tribunal going into the Property Chamber. I was particularly concerned when I read the Explanatory Memorandum supplied with the order. At paragraph 3.1 it refers to Paragraph 22 of Schedule 1 to the Tribunals, Courts and Enforcement Act 2007 which,

“alters the type of power used for prescribing one particular fee … and inserts a negative resolution procedure”.

That is considerably weaker than the affirmative procedure but, nevertheless, I am just pointing out that that is what is proposed.

I am more concerned by paragraph 3.3 of the document, which states:

“The Upper Tribunal already hears unlimited onward appeals from residential property tribunals”.

That was always envisaged. It was always envisaged that the first stage would be within the means of ordinary people. There is a separate argument here which I shall bring up on the Enterprise and Regulatory Reform Bill, on which I propose to table amendments on a number of issues. I am sorry to say that on some issues I have been told that the difficulty is to get the Ministry of Justice to co-operate sufficiently to get important changes through on housing issues. That is not good enough. I draw that to the Minister’s attention.

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Those amendments will be coming up at Third Reading on 20 March, and I hope that the Ministry of Justice will have looked at things a bit thoroughly by that time and got things going because it is important to realise that this is a very dramatic change.

The suggestion in the Explanatory Notes that they will all be expert people is quite frightening because a separate matter in the housing issue that we have been talking about is that the management, who are not supposed to be putting up big legal people in round one, which was for the ordinary person to bring their case, are now bringing in very expensive legal people and, what is worse, the cost of that, win or lose, is charged back to the people who brought the application for £500 because it is claimed to be a legitimate management expense to provide the most expensive lawyers. Going back to 1996, when this Act went through, it was always acknowledged that when it came to the upper-level tribunal major experts and huge fees would be involved and everyone realised that at that point the large property owner or the person or company who had multimillions of pounds would be at a huge advantage because they could afford to employ such people, but the lower level was always meant to help the ordinary person and give them a fair go. I am concerned about whether that is going to continue. I am being quite tough about this because it is not often that I get the opportunity to have this word in the ear of the people who come from the Ministry of Justice, whereas poor old housing suffers from me all the time.

Then we get to the residential property tribunals and the three that will be changed over. I have no views on the agricultural side because I know nothing about that and I would not attempt to mention it. However, the leasehold valuations, the rent tribunals and the rent assessment committees are all property issues. Another major issue with property, which again is a justice situation, is why do we not have one decent housing Act? Is it not time to consolidate housing? When I tabled a Question on this issue, I was told by the former Lord Chancellor, the noble and learned Lord, Lord Mackay, exactly what wording to put in so that the justice department would answer it. Instead, it was answered by the communities department again. The Ministry of Justice did not answer it at all. I thought that was rather a tragedy because the noble and learned Lord had told me that with that wording it could not be replied to by anyone other than the Ministry of Justice. There is something wrong with the system if things are not getting through. It could be that we are not getting any response because the justice department is not even aware of what we are asking.

6.15 pm

It is worrying that there is an attempt to make everything 100% uniform in all these tribunals. It may work; it may be splendid, but it may not. The Explanatory Memorandum says that it will be assessed further. Paragraph 12.1 states:

“The impact of these Orders and other Orders that transfer tribunals will be monitored and reviewed as part of the annual report of Her Majesty’s Courts and Tribunals Service … which measures performances against key indicators”.

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When will we know about the key indicators? I should like an answer on that. How often will we see these reports and will they single out the different tribunals, instead of lumping them all together in one answer?

The difficulties all date back to the Landlord and Tenant Act 1985, which has been replaced or added to by primary legislation again and again. This has happened so often when what we really need is a decent, consolidated housing Act. The Government would be making a move that would have a good effect. At the moment, people who want to take a case to the leasehold tribunal have to consult Act after Act to see where they are. Even people who work full time as solicitors or legal experts in the property world find it difficult to see which Act has corrected which previous Act, and all the changes.

I sat as a member of the industrial tribunal when Ted Heath first introduced it—I think it was in about 1970. At that time, the trade unions were unwilling to join in. When it started, it was informal; people were just appointed. As a dentist, I was appointed: I would never have been appointed in employment law, but they were so short of people that they appointed a number of dentists. When, a few years later, the unions decided that they would join in and that the system was good in principle and was reformed, you either had to be appointed by the CBI or a trade union. To my surprise, the CBI appointed me because it was pretty short of women, but none of the male dentists were renewed; they were all out. I was fortunate to carry on and I served on it until 1997. I cannot be absolutely sure of the date but I had reached an age when I had to stop, which is why I gave up. It was extremely valuable to sit on a tribunal and see the difference between how a tribunal works as opposed to a court.

This is what concerns me. We do not want this Property Chamber. I am concerned when it is said that it will be of benefit to everyone because it will have the same procedures, and everything. It all sounds to me as if a great legal wealth will build up on this procedure again, because it will all take on a much more serious legal role than it has at the moment. At the moment, people are suffering from it, but at least they are having a go.

I have given noble Lords more than enough of my comments, but I mention in passing that I have an amendment for next week, which brings up something about housing in general. At the moment, this issue has to go to the Leasehold Valuation Tribunal, but it need not go there at all if my amendment is accepted. It is a very simple amendment. There has just been a court decision in which the judge ruled that for any expenditure over £250 per flat in a year there will have to be a consultation with all tenants, all the time. This means that if you were going to spend an extra £1 per flat over that amount, you would have to go to consultation. Everyone is concerned that this will add huge costs for the managing agents and all the tenants in all these places. It will really not be a good thing at all. In terms of justice, something could be done about that.

I have an amendment, although it has not been tabled yet because we are only at the final stage of

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Report. It will cover the point if there are certain categories such as fire emergency, some other genuine emergency, or the security to your front door. Say that you are just over the £250 and suddenly some baddie comes along and breaks your front door lock, the whole block is vulnerable because people could come in and attack the place. Yet you would have to go to the tribunal, with all the time and costs that that would take, to be able to get permission to do it. I understand that there is an alternative system whereby you can go ahead and do it and then apply for a dispensation subsequently. However, if you have to do that, you still have to go through the tribunal to apply for the dispensation. Then they will whitewash you, or I do not know what happens if they do not.

I have said more than enough on this matter, but I wanted to place it on record. This is a marvellous opportunity while there is such a wonderful team of people here from the Ministry of Justice. I am hoping that they may have listened at least to something that I have said and agreed perhaps with one or two words. I will not say anything more, but I will wait to see the reports after these measures come into action. I hope that the results will be good.

Lord Beecham: My Lords, I am sure that the Minister would join me in congratulating the noble Baroness on using her professional expertise to fill the gap in the Tribunals Service for so long, consistent with her other cavity filling over the years. She raised an interesting topic—that of costs. Given that we now have a range of tribunals being brought together, could the Minister indicate whether there will be a uniform charge or whether it will be differentiated between the different categories with which the new property tribunal would deal? As she implies, that could potentially be quite a significant issue. It also raises in my mind a question about legal aid, which of course is now not available for First-tier Tribunals. Could the Minister give an assurance that nothing in these orders will diminish access to legal aid or advice over and above that which, as we know, would affect other categories of case, which we have discussed at some length and may do so again in some not so distant future, around aspects of welfare law?

In that context, I ask about one passage in the Explanatory Memorandum to which the noble Baroness referred, at paragraph 3.3.5. It says:

“Section 11 of the 2007 Act imposes a requirement of permission to appeal from the First-tier Tribunal to the Upper Tribunal”.

Of course at the time that that Act was passed legal aid would have been available. I understand that it will no longer be available for the purpose of obtaining that permission. I regret that position, which we have already debated at some length in the Chamber. The paragraph goes on:

“Amendments provide for this requirement to apply to the entire breadth of the onward appeal, even where the right of appeal from the First-tier Tribunal decision goes wider than a point of law”.

I am not sure what is implied by that paragraph, either in relation to its substance or to the availability of legal advice and assistance for those who might be otherwise financially entitled to it.

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Another question that I have is whether valuation tribunals—that is, ordinary valuation tribunals—as opposed to leasehold valuation tribunals are to be brought within the scope of the property tribunal. For example, if by some remarkable parliamentary arithmetic the Minister’s party’s policy and my party’s policy on a mansion tax were to be carried tonight presumably there would be some sort of valuation system required. Even without that there may at some point be a valuation of domestic properties in particular.

There is a system for dealing with commercial properties and business rates with a cumbersome appeal mechanism. Is it envisaged that the property tribunal will take those issues into account? I hope that it might. The current procedure, particularly on the commercial property side, is leading to inordinate delays going back nearly a decade for determination. If it were to be brought within the scope of this new tribunal, I hope that it is a matter that could be dealt with, and a better service could be offered to the potential taxpayer and those organisations, notably local authorities, that clearly will have an increased interest in the local business rates yield of those properties. Perhaps the Minister could indicate, if not now then subsequently, whether this is to be brought within the scope of the new tribunal, either now, or possibly in the future.

With that said we do not object in principle to the proposal. It makes sense to bring things together. I hope that, subject to the observations made by me and the noble Baroness, we can approve these orders and look to a more efficient system applying, drawing as it will on a range of expertise. It is important that that range is reflected adequately in the appointments made to the new tribunal; and that should assist materially in the delivery of a better service to those who seek its decisions.

Lord McNally: My Lords, I thank the noble Baroness, Lady Gardner, and the noble Lord, Lord Beecham, for their interventions. As I mentioned in my opening remarks these orders almost complete the work set out by the Leggatt report. In spite of the points raised by the noble Baroness most people agree that the creation of a Property Chamber is a positive step that will bring benefits to users and consistency in this area of the law. Nevertheless, the questions raised are pertinent. As the noble Baroness, Lady Gardner, has acknowledged, I have a wonderful team behind me, which I hope has been taking note of her comments. She is probably right that at some stage there will be a strong case for a consolidated housing Act. When that will find its way into the parliamentary timetable, I do not know. However, the points that she raised illustrate the fact that we are talking about an area that cuts across a number of departments and pieces of legislation. Nevertheless, I hope these measures illustrate that we have made progress in terms of consistency and efficiency.

6.30 pm

The noble Baroness referred to costs and has tabled Parliamentary Questions about the costs which a party to proceedings may be ordered to pay. As she rightly says, these cannot exceed £500. These fees have never

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been increased, even to reflect inflation, since 2003. When the transfer order 2013 comes into effect, it will remove the £500 cap on costs, which the noble Baroness mentioned. However, there are concerns that removing the cap on costs could prevent a party bringing a case to tribunal. It is rare for costs to be awarded in the Property Chamber. The decision to award costs is a judicial matter, made by the tribunal. Usually, parties will pay their own costs. Tribunal procedure committees have replaced the current test of frivolously, vexatiously and so forth with the wider test of behaving “unreasonably”. Only where the tribunal considers a party has behaved unreasonably could it make a costs order award against them. The noble Baroness is right that the cap will be removed but the protection is still there in that people will be responsible for their own costs.

On leasehold valuation, some leases permit the recovery of the landlord’s legal costs via the service charge but the tribunal does have powers to prevent this. Section 20C of the Landlord and Tenant Act 1985 enables a leaseholder to apply to the tribunal for an order that all or any costs incurred by the landlord in coming before the LVT are not to be included in determining the service charge payable by the leaseholder. There may be other circumstances where landlords may recover legal and other costs from lessees, depending on the terms of their lease. The Leasehold Advisory Service, the non-government public body funded by DCLG, is considering whether there is any further clarification it can provide on costs in its guidance to users, which is available on the Justice website.

I was asked whether the Government would take action to amend the law in light of the recent county court judgment whereby a leaseholder living in Plantation Wharf was in danger of forfeiting his flat as a result of legal costs incurred by the landlord at a leasehold valuation tribunal. I cannot comment on a particular case but where a freeholder is able to recover costs in connection with proceedings from a leaseholder, this will be a contractual matter between them and will be set out in the lease. The Government are aware, however, that leaseholders are increasingly concerned about recovery of such costs as administration charges. Residential leasehold law is a matter for the Department for Communities and Local Government, but I can say that my honourable friend the Housing Minister, Mark Prisk, is looking into this issue and giving it detailed consideration.

The noble Baroness, Lady Gardner, also asked me when the public will know about the amount of fees to be charged. The fees order will be made in the period between approval of the transfer order and the chamber implementation date of 1 July 2013. Changes to fees will be made in line with inflation and will not therefore require public consultation. A fee remission scheme will continue to operate for applicants who are in receipt of benefits. As I explained, when the chamber is launched and the cap on fees is removed, there will be no statutory limit to fees charged for cases going through the Property Chamber. However, the MoJ will not increase the fees more than the rate of inflation without public consultation and without agreement from the Treasury. In cases involving a hearing and the highest fee for a leasehold case, the aggregate fee

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would be £630—£440 plus £190 hearing fee. The current fees are £350 for an application and £150 for a hearing fee, hence the £500. The highest application fee will be £515.

On the point about Third Reading, I am sure that the MoJ is not aware of problems between the departments on this matter. Careful note has been taken of what the noble Baroness, Lady Gardner, said. If there are blockages in communications we will endeavour to unblock them by 20 March. The noble Baroness has given us due warning that that should be the case. She mentioned the expertise of the new tribunals. The composition of the panels that hear cases becomes the responsibility of the judiciary. The senior president of tribunals, in his policy regarding composition, is required to have regard to the previous arrangements on the composition of panels. The current qualifications order will be amended in due course to include, as well as judicial members, other members who have substantial relevant experience in land drainage, farm management or ownership of agricultural land, and in matters relating to valuation of residential property, housing or housing conditions and landlord and tenant relationships in residential property.

On the question of the assessment of the impact of these changes, as I indicated, this will be carried out in the annual report of HM Courts and Tribunals Service. We will publish our key indicators online in time for people to assess what we are looking at and what judgments we are making. The noble Lord, Lord Beecham, knows that legal aid is retained in housing matters where there is a threat of the loss of a home. Appeals will be on a point of law but the person will have to persuade the tribunal that an appeal is arguable on whatever point is being channelled. That has nothing to do with legal aid.

Lord Beecham: On that point, the Explanatory Memorandum talks about the right of appeal going wider than a point of law. I appreciate that it may apply to a point of law, but what if the matter goes wider than that? On the face of it, the right of appeal does not appear to be available. I am not asking for a reply now.

Lord McNally: I had better not guess. I would assume that it is not available but I will write to clarify. On the specific issue of legal aid, we do not consider that changes to legal aid will increase inequality in this area. One of the fundamental principles of the legal aid reform has been to discourage unnecessary and adversarial litigation at public expense. Tribunals are designed to be simple to enable parties to make or respond to a claim without the need for representation or access to legal aid advice. While we recognise that clients find advice in preparation for a case useful, we do not consider that this is a matter for the group of clients who are generally likely to be vulnerable.

I appreciate the interventions of the two noble Lords who I know have long experience in this area. I know that my colleagues will have valued their interventions, and we will consider carefully the points that they have made. I return to my concluding remarks when moving and speaking to the orders; in putting

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these final pieces of the Leggatt reforms into place, we have a better and more efficient Tribunals Service that will be to the benefit of citizens.

Lord Beecham: Before the Minister concludes, while it may not be for this evening, I specifically mentioned the point about valuation tribunals. I leave aside the mansion tax element for the moment.

Lord McNally: I apologise. Transferring the Valuation Tribunal for England and the Valuation Tribunal Service into Her Majesty’s Courts and Tribunals Service remains part of our administrative justice and tribunals works programme. There is considerable support from the Senior President of Tribunals and the wider judiciary for this transfer. MoJ officials will continue to negotiate with colleagues in DCLG and the Cabinet Office to

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identify how best to transfer VTE in the most cost-effective way. The short answer to the noble Lord is: that is work in progress.

Motion agreed.

Transfer of Tribunal Functions Order 2013

Transfer of Tribunal Functions Order 201320th Report from the Joint Committee on Statutory Instruments

Considered in Grand Committee

6.42 pm

Moved By Lord McNally

That the Grand Committee do report to the House that it has considered the Transfer of Tribunal Functions Order 2013

Relevant documents: 20th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Committee adjourned at 6.43 pm.