I cannot help mentioning land registration, as I have a particular interest as chairman of the professional group in the Royal Institution of Chartered Surveyors that deals with title, land registration and things like that. I regard the consolidation as potentially beneficial, but I am concerned that the driving force behind maintaining the asset that is represented by the local register may be lost once the particular synergy with the normal activity of local authorities is removed and there is no longer any financial benefit to them in trying to assist in that maintenance. I wonder whether this will be replicated in the hands of the Land Registry. Otherwise, having a single registry seems to make a lot of sense.
On the subject of the electronic nature of registries, I ask that the Government pay special attention to the apparent ability that exists to generate fraudulent transfer documents, which are available on the web, and the
abuse that can be made of the system thereby. This is absolutely not a criticism of HM Land Registry; it is a criticism, if criticism it be, of the lax protocols that surround electronic transfer, registration and certification, particularly when one does not have somebody one actually knows at the other end of the phone or a letter in hard copy—it is all electronically generated and it can all be falsified. It is a reflection, as far as HMLR is concerned, of the information that it is obliged to use in the land registration process.
On fracking, I will only say this as a Sussex resident: the typical yield decline in the output from a fracking well is phenomenally steep. For all the theoretical reserves that exist, typically about 10% or less may be recoverable—maybe that will improve. I do not believe that aquifers are an issue; they operate much nearer the surface than the shale gas and shale oil reserves. However, at the surface one gets roads, tanks, pipes, vehicle tracks and the vehicles themselves that are all associated with this, even after the initial well drillers have all packed up and gone home. These may be acceptable, but I think we need a better understanding of cost-benefit, and some of that goes for much of the rest of the Bill.
6.07 pm
Lord Hunt of Chesterton (Lab): My Lords, like others on this side, I give a half-hearted welcome to the Bill. The opening by the noble Lord, Lord Adonis, put it in the right context. I am surprised that nobody else has mentioned the less than flattering view of Britain’s infrastructure by China’s Prime Minister when he was visiting here and gave us a rather low score. Perhaps, being an outsider, his view was rather more objective than the rose-tinted view from certain Benches here in the House of Lords.
All, I think, agree—road enthusiasts or otherwise—that strategic highways play an enormous role in the economic development of the country. I personally saw the extraordinary development in north Devon once the highway was produced under a previous Tory Government. It was remarkable how that led to economic development. There is no question but that road building is of vital importance. In our crowded island, however, other factors also are extremely important, particularly air pollution. Air pollution, as we now know, is much worse in big cities where a lot of traffic is present. It is particularly bad where motorways intersect. Therefore the planning and design of motorways should be of considerable concern in terms of air pollution.
Most importantly, the UK has benefited from the fact that we do not have massive motorways through the middle of our towns; in particular, not through the middle of London. Some noble Lords will recall going to protest meetings in the 1960s when there was a real possibility that we would have enormous highways right through London; fortunately, we did not. However, there is a threat for this in other big cities. I believe that that is one of the strategic areas.
The other point, made by the noble Baroness, Lady Miller of Chilthorne Domer, is on the question of carbon emissions, which is important in the case of major motorways and part of our impact on the climate. The other effect of motorways is that they can
help or hinder water movement. In Malaysia, the motorway that goes into the centre of Kuala Lumpur is generally a road but can also be an enormous drain when there is enormous rainfall. Similarly, we could have road tunnels and cuttings to use our roadways as part of our water infrastructure.
The other point to emphasise, when you go to Germany, is that you should moderate your speed because of the noise. The Germans do not generally moderate their speed, but they do when suburbs tell them about the noise. We have extremely noisy roads, such as the North Circular Road, and those are aspects.
I want to come back to that in a moment, and the role of the private sector. I am surprised about the confidence in this Bill about the private company solution. Who will own the company? Will it be owned by five different banks all around the world? There was an article in one of the Sunday newspapers recently. Thames Water has been owned by many banks, finally ending up with the Macquarie bank in Australia. English people are being told all sorts of undesirable things on water to maintain the very high profit levels of this multiple bank ownership. How are we going to be sure to avoid this kind of thing?
Well run companies, such as we see in France with their motorways, not only run the motorways well but also give extremely good advice to road users. They tell them not to go too fast because it is dangerous and it is adding to carbon emissions. Here, under our Department for Transport control of the motorways, road users are told to go faster—they say, “In 70 minutes you will reach Bristol going at 70 miles an hour”. That is not the right message. The private sector with proper guidance could help, but the transparency that we need of private sector involvement needs to be a great improvement on what we have seen with the massive water companies.
The other feature of roads and road strategy is the question of whether they will continue to be the same. Are we going to have automatically controlled cars and cars and vehicles that are electrically driven? The big question is whether the investment and financial case being put forward for roads is based on current technology. I look forward to hearing the Minister’s view on that, and on who will be responsible for making the strategic technological decisions.
It is very important that there should be an overall strategic view on highways as regards the transport, economic and environmental aspects. That issue was of course reviewed in the Armitt infrastructure report, which put all those things together—things which we are not seeing at all in the Bill as drafted. In his report, which he produced with a number of important advisers, including my noble friend Lord Adonis, it was suggested that roads need to be considered in a broad context, obtaining maximum value. That requires an integrated approach by government. I have mentioned some features, but other important ones include other aspects of transport, such as rail. Surely, many railway journeys to the south-west tip of Cornwall would be much more comfortable for everybody if the car was put on a train and the train went to Penzance—the sort of thing that used to happen and which still happens in
France. Everybody charging down these roads to that tiny peninsula at the end of Britain is a very strange thing to do.
Finally, there is shipping, which is a very important aspect of transportation around the coast of the UK. This was discussed in considerable detail when we had our coastal Bill in 2009-10, and should again be considered in a strategic way.
On other aspects of the Bill, I welcome the speeding up and clarification on land assets and conveyancing. Purchasing and conveyancing in the UK is nothing like as fast as it is in some other countries, and I hope that the efficiencies there will bring benefits. We should take on board the comments made about the possibility of fraud, when you have a highly computerised system. With people not understanding the process, there are dangers.
In Part 4 there is the discussion of indigenous oil and gas, as the Minister rightly emphasised. Will this be a possible source of energy for the UK via fracking? It is important to consider all the environmental costs. It is unknown by many in Britain, as we have been told here by visiting American politicians, that in the energy Bill proposed by President Bush he explicitly said that the costs of water and water clean-up would not be ascribed to the energy. It is therefore really important that all the environmental costs should be ascribed to the energy benefits or costs of fracking. It would be useful to have that point clearly made. The assumption in all the discussions is that you put a pipe down in the ground and oil or gas will come up out of the pipe. But the point about the experience of America is that, once you start really forcing the structure of the ground well below, you can get a release of gas coming up through other cracks, and some of these—as you can see when you look at the photographs from North Dakota—are very serious indeed. You can see flames popping up in between the nodding donkey gas extractors. There are still significant features of the chemistry of shale that need to be understood, when the shale is there in the presence of water. I visited a chemistry lab at the University of Leicester where they are studying this, and they pointed out that there were still important research questions to be assessed.
Another feature of Part 4 is the encouragement to build more energy-saving houses, as the Minister explained, with technology solutions that should of course include not only new sorts of emission but also ventilation and insulation, which are serious problems. Noble Lords might be interested to know that there is a nice book in the Library, which I edited, called London’s Environment, published in 2005, in which we described in great detail the excitement of the House of Lords committees at that time about what was happening in some of the new housing developments, in BedZED and Woking, some of which were looked at by many other countries. The Minister was right to imply that much of this technology is known, but the question is now to push this out and to ensure that it is available to social houses. I am afraid to say that some social housing is particularly bad with regard to insulation and ventilation, and this causes ill health, so housing for the whole community must be at an appropriate level.
Clause 26 in Part 4 has this very important development, which has been quite widespread in other European countries, in involving community investment in renewable energy. In Denmark, it had a great impact on involving people in their local wind farm installations. As the Bill describes it at the moment, it is a question of the community investing in the generation; there is no discussion that I have seen about generating local electrical networks. Woking was a borough run with no overall control, and some people say that that is why the Woking experiment or development worked so well—but that is a political point. It was at any rate extremely innovative, and Mayor Livingstone said that he wanted to make London look like Woking. That did not quite happen, but it was an ambition. One important point that was made was that the people in Woking could use a local electrical network and then the price of electricity that they paid for was much reduced. I suspect that the scheme being envisaged here is that community people might benefit to some extent from the income to the generators, but will they get cheap electricity out of their electrical plug to their kettle? I am not so sure about that. It is very important to have this done in an integrated way.
Finally, it is very important that if communities are to be involved in fracking, as has been suggested—I think that the Minister suggested that—they must also contribute to the costs. As others have emphasised, these costs include roadways and destruction of the local bio-environment, as well as the costs of the water supply and clean-up and recycling. So it is not just a free lunch. There will be quite considerable investment in all of that—but I believe that if the community is involved the right answer might be obtained.
6.20 pm
Lord Purvis of Tweed (LD): My Lords, the briefing notes accompanying the Bill say that its purpose is to:
“Bolster investment in infrastructure by allowing stable long-term funding, deliver better value for money and relieve unnecessary administrative pressures. The Bill would increase transparency of information provision and improve planning processes, allowing us to get Britain building for our future and compete in the global race”.
I do not think that any noble Lords who have taken part in this debate could disagree with those motives. Indeed, we have had an interesting debate on whether or not the Bill will deliver what this country desperately needs—a modern, efficient infrastructure to allow the economy to continue to grow.
When I served in the Scottish Parliament, my constituency had the unenviable record of being the largest area in Europe not served by a railway line. That is being corrected as the Borders Railway is finally being restored following its closure in 1969. I was intimately involved in that process during my time in the Scottish Parliament. I had the unenviable record of serving on the Scottish parliamentary committee that approved the Edinburgh tram scheme, which I confess I did not readily admit to Edinburgh taxi drivers when I was a passenger in their cabs. Therefore, I am fully aware of the complexity involved in bringing to fruition the infrastructure that we need.
The Borders Railway was a difficult project which the Scottish Government had wanted to fund—I think erroneously—through what they claimed was an innovative funding route, but which I was concerned was an untested and unsure funding route. However, the Government ultimately changed their position on that and are now using the regulated asset base for United Kingdom funding. I am pleased to note that the Scottish National Party is using United Kingdom infrastructure funding support to deliver a Scottish infrastructure project. The tram scheme, which the Scottish Parliament approved but was not subsequently built in full, is costing £125 million a mile. Some people refer to gold-plated infrastructure projects, but, as regards that scheme, the track itself could be said to be gold-plated. Our national objective is to ensure that the private and public sectors have the necessary professional capacity in this regard as well as proper planning and legislative frameworks. One thing that has not emerged in the debate so far is the factor which can make an infrastructure project—whether it involves transport, housing or energy—successful or a source of difficulty, as with the trams, and that is the professional capacity of the teams that put these projects together. If this Bill is to be successful, the projects which it seeks to deliver in a more efficient way will be delivered only if there is that professional capacity.
I wish to devote the rest of my remarks to an issue that was referred to in the gracious Speech and in the Minister’s introduction to this debate—offshore oil and gas. However, that issue is not included in the Bill. I will not draw the conclusion drawn by the noble Lord, Lord Adonis—namely, that we will have to legislate for that aspect on the hoof. The Wood review reported to my right honourable friend Edward Davey on 24 February this year. That review is a substantive piece of work with significant consequences for the whole of the United Kingdom oil and gas sector. Given the timeframe within which the Wood review reported to the Government, it is understandable that amendments to the Bill on that issue will have to be tabled during its passage through Parliament. Agreement will have to be reached with the industry to ensure that the legislation is as robust as possible. The clear commitment that was given by the Government in accepting Sir Ian Wood’s conclusions and recommendations in full has been welcomed by the industry. Similarly, the statement in the gracious Speech that this year’s legislative programme will contain measures to allow for “maximising North Sea resources” is also welcome.
Lord Hunt of Chesterton: The noble Lord seems to be proposing a new constitutional principle, whereby the Government say that they have an idea but they are not sure what it is, so they say, “Here is a Bill. When we have done some more thinking on it, we will introduce it”. This could be applied across the board. That is not how Parliament works. Is this a new procedure being advocated by the noble Lord’s Benches, in which case could he give us his own little background constitutional paper as to how Parliament should work on this basis?
Lord Purvis of Tweed: The noble Lord obviously has more experience in this House than I have. I am a mere new Member. However, as a mere new Member, I
have been an observer of parliamentary procedure for long enough to realise that it is perfectly common for a Government to table amendments, which on occasion have been substantive. Indeed, over many years the party opposite has tabled amendments on substantive points. My point, which the noble Lord unfortunately did not take on board but which I hope others will and will be more charitable in understanding it, is that when legislation is being brought forward which will make a significant contribution to the success of the British economy, it is best done after proper and due participation and consultation with the sector which it will legislate. That is why the Government have indicated that they will bring forward measures before Committee, as the Minister said in her opening speech, to which the noble Lord no doubt listened.
In the debate on the gracious Speech in another place, the Prime Minister gave a strong indication to my honourable friend Sir Robert Smith, the Member for West Aberdeenshire and Kincardine, in relation to the oil and gas industry:
“My hon. Friend speaks very powerfully for his constituency and for that absolutely vital industry which, as he says, is vital not just for Scotland, but for the whole of the United Kingdom. We are going to make sure that the recommendations of the Wood review are included in our infrastructure Bill, which is a key Bill at the heart of this Queen’s Speech”.—[Official Report, Commons, 4/6/14; col. 27.]
The Prime Minister was right: this is a vital sector. Therefore, I hope that during the passage of this Bill we will give due consideration to the impact which that sector makes to the whole United Kingdom economy. It is 50 years since the first licences were issued. Some 42 billion barrels of oil have already been produced and up to 20 billion more could still be produced. The United Kingdom continental shelf production meets 60% of UK oil demand and 50% of UK gas demand and directly and indirectly supports 450,000 jobs across the UK. It paid 9% of all UK corporate taxes in the last financial year, which is 2% of all United Kingdom tax receipts. Decommissioning relief introduced by this Government represents around 1% of our GDP.
The Government intend to include measures in the Bill to take forward the recommendations of the Wood review. The Bill provides us with an excellent opportunity to ensure that the UK continental shelf is able to face the very complex and difficult challenges which lie ahead. Although more than £14 billion was invested in the continental shelf in 2013—a record amount—production has fallen by 37% between 2010 and 2013, and production efficiency has fallen from 80% in 2004 to 60% in 2012. Rising exploration costs and falling success rates have led to fewer wells being drilled. This was the background to Sir Ian Wood being asked by my right honourable friend Edward Davey to carry out a review into how the UK continental shelf can maximise economic recovery for the whole of the United Kingdom.
Sir Ian Wood’s four recommendations are significant. Two of them in particular require legislative change in this Parliament; and both will, I hope, be the source of proper scrutiny when the Bill passes through Parliament. One is to create a new arm’s-length regulatory body to ensure that there is collaboration in exploration, development and production across the industry. Although
it will be arm’s-length from the Government, they will be a partner. My right honourable friend Danny Alexander, the Chief Secretary, only last week indicated at the Oil and Gas UK conference that the Government accept this recommendation in full. He also announced that the authority should be called the “Oil and Gas Authority” and be based in Aberdeen. As regards the other recommendation of Sir Ian Wood, my honourable friend said that it will ensure that protocols and processes will be in place for dispute resolution and for ensuring that there is better co-ordination and collaboration among the industry, and that the licensing regime will be rationalised. All these measures will require proper and full scrutiny by Parliament. That is why the signal in the Queen’s Speech and the Minister’s announcement are significant.
Another area that has been touched on is taxation and revenue. The Government have stated that the new oil and gas authority will carry out a wholesale review of the ring-fenced tax regime for the oil and gas industry. This has the potential to be a hugely significant piece of work, which will have repercussions not only for the Scottish economy, where the oil and gas sector represents nearly one-third of the entire GDP, but for the United Kingdom as a whole.
Finally, I seek further clarification from the Minister. It was welcome that she indicated that it is the Government’s intention to bring forward amendments before Committee, but is it the Government’s intention that those amendments will cover all the recommendations of the Wood review on the relationship with industry, how clear they will be on the funding of the authority, and how that authority will take forward its work on the fiscal review? Sir Ian Wood gave a clear steer that he wanted the new authority and regulator, and his recommendations, to be taken on board so that the industry can look forward with confidence to a strong and clear regulatory regime and licensing for the future of the sector. It is the Government’s intention; I hope that it is Parliament’s will and that no further constitutional theory needs to be put forward to ensure that the future of the oil and gas sector is as strong as it can be, so that we can rely on it well into the future.
6.33 pm
Lord Judd (Lab): My Lords, I want to tackle rather a different dimension to the Bill but, at the outset, I remind the House that my home is in a national park and that I am a vice-president of the Campaign for National Parks and a patron of Friends of the Lake District. I am also a strong supporter of the CPRE.
There is a great deal to be said in favour of an infrastructure Bill. Infrastructure is of course fundamental to a strong economy and an effectively functioning society. However, the economy and the supporting infrastructure are never ends in themselves but are part of the means by which we achieve a society worth living in. That brings us straight into the realm of qualitative considerations.
Surely we all agree that the countryside, including as it does the national parks, areas of outstanding natural beauty and the green belts, not to mention biodiversity, is a priceless asset. It enriches the soul,
provides indispensible opportunities for the physical and challenging activity so vital for a healthy nation, and is in many ways the lung system of the United Kingdom. The countryside provides the contrast that is psychologically vital amid the pressures, stresses and demands of our otherwise high-octane life. Access for everybody to the experience it provides should at all times be a key priority in public policy. My formative years were during the war and immediately afterwards. I was deeply impressed as a youngster by the way that great post-war Government never forgot that reality, amid all the other challenges of recovery.
It is in that context that I raise certain points for clarification. I hope that the Minister will be able to clear them up at Second Reading or, if not tonight, by letter, which would, presumably, be placed in the Library. Why really is the Highways Agency to be turned into strategic highways companies? Is it genuinely and primarily about delivering a higher-quality and more effective service for the implementation of public policy? Or is it really, when everything else has been stripped away, another Treasury-inspired, ideological determination to reduce the size of the state?
Value for money is of course critical. Could not maximum economic efficiency and cost savings, however, be achieved by better management within the present system, rather than by this questionable legislation? The Transport Committee in the House of Commons is not convinced. Bodies such as the CPRE are deeply anxious and—like, I suspect, many others in this House—I share the doubts of both. The story of the railways and other public utilities is hardly altogether universally reassuring. What matters most is the effectiveness and quality of service provided, not simply the profitability of the undertaking. Undeniably, profitability can be one indicator—although, all too often crude and deceptive—of efficiency.
We still need far more detailed information, and I have been interested to hear other noble Lords stressing this point. We are going into legislation once again in the absence of all the detailed information that should be available. Can the Government clarify whether the terms of reference for the proposed roads watchdog will include a requirement to consider the needs of local communities and the enhanced protection of the natural environment, and not just the interests of road users? If not, why not? Similarly, what about co-operation between the new company, local authorities and other transport bodies? What are the implications for present requirements under the Localism Act 2011 and the network management duty in the Traffic Management Act 2004? Will not the role of the roads monitor need to be expanded to include adjudication when there are policy differences between the highways company and, for example, city regions? After the first road investment strategy, is parliamentary responsibility to be abandoned? Where is the provision for parliamentary oversight of future road investment strategy? Why does the schedule provide only for consultation for varying an RIS but not, as I understand it, the setting of new ones in the first place for each five-year period?
Are the Government establishing—again, if not, why not—new arrangements for environmental regulation covering carbon emissions from the strategic road
network and its total land take, licensing conditions to reduce the environmental impacts of existing roads, and the management of demand, rather than settling just for reducing the harm caused by new roads? Why is the opportunity not being taken to support a wider range of highly necessary environmental and social objectives by, for example, a commitment to increase funding for walking and cycling? Where is the statutory commitment to enhancing the well-being of biodiversity and landscape—one of the UK’s finest and most important public goods? Why is it not firmly there in the Bill?
If a principal purpose of the RIS is intended to be greater long-term certainty for the future funding of major roads, will the Government guarantee that this will not be at the expense of reducing funding for local road maintenance, road safety and alternatives to road building such as public transport and, of course, walking and cycling? As things stand, there is no certainty that the local sustainable transport fund will be available beyond 2016. Since its inception in 2011, it has supported improved public transport provision in a number of national parks, but there is still much more that could be done.
It is proposed that the Secretary of State should have discretion to allow non-material changes to be made to nationally significant infrastructure projects without developers having to resort to the process of seeking development consent. That is a very broad power. It may make a lot of sense in some circumstances, but will the Government provide more detail about how the power would be exercised in practice, and about what the checks and balances would be?
The Bill would allow certain types of planning conditions to be automatically discharged if a local authority fails to make a decision in a prescribed time. Is that always acceptable? In the real world, planning departments are already under great pressure, accentuated by recent cuts, in getting local plans into place. The right to appeal against the planning condition already exists. Why is this additional power required? Again, how will it work in practice, and what would be the checks and balances?
The statutory purposes of the national parks are to conserve and enhance natural beauty, wildlife and cultural heritage and to promote opportunities for public enjoyment and understanding of their special qualities. Section 62 of the Environment Act 1995 requires that:
“In exercising or performing any functions in relation to, or so as to affect, land in a National Park, any relevant authority shall have regard to”,
its statutory purposes. As the proposed highways company will no longer be a public body, it is not clear whether the Section 62 duty would automatically continue to apply. Will the Government give an unqualified reassurance that the duty to have regard to national park purposes will apply to the new government-owned company and tell us precisely how? Indeed, I hope any Government committed to a UK worth living in would look to all departments to ensure an enhanced and strong future for the countryside, national parks, areas of outstanding natural beauty, green belts and our biodiversity system.
Where this Bill relates to housing, I take second place to nobody in my total conviction that we desperately need a concerted drive for an adequate number of decent, affordable houses. However, I equally take second place to nobody in my conviction that these houses must never be built in such a way that they impinge on and endanger those priceless dimensions, including the UK’s biodiversity, which are there to be inherited and enjoyed by the people living in those houses. The challenge in social planning is not the countryside versus housing—that is an oversimplified and very misleading notion—but the countryside and houses. Housing must be situated in brownfield sites and numerous other places, not least used or underused government land, which should be prioritised for homes. Lack of imagination, inertia and short-sighted profiteering are too often the real enemies.
6.44 pm
Lord Skidelsky (CB): My Lords, a Bill on infrastructure that is mainly to do with the rearrangement of Whitehall agencies and minor improvements in planning application procedures invites the question of what the relationship is between its provisions and the promotion of investment in infrastructure.
My first point is that cutting public capital investment has been an integral part of the Government’s strategy for reducing the budget deficit—in fact, the only successful part. Gross public sector investment fell from £69 billion in 2009-10 to £45 billion in 2013-14 and has barely started to creep up. That is always how it happens. Cutting capital spending is much easier than cutting current spending. Private sector investment has not taken up the slack. Business investment remains 20% below its pre-crisis peak. These are permanent losses: infrastructure not built or improved in the past four years. My first question about the Bill is: to what extent does it replace or improve the assets forgone?
“'We fully support the introduction of the Road Investment Strategy which will, for the first time, set out a long term investment plan for the major road network. We believe this strategy will ease business concerns over stop/start investment and help build confidence in the supply chain about the future pipeline of work”.
I go along with that. But it is important to note that there is so far no road investment strategy. According to Schedule 1 to the Bill, the Secretary of State must provide a strategic highways company with proposals for a road investment strategy within one year. Further, there is nothing in the Bill that says the Secretary of State must co-ordinate the road investment strategy with the rail investment strategy, or with any other investment strategy affecting transport. For example, how will the road strategy mesh with the railway strategy, particularly HS2? How will it square with the Government’s energy policy? These are some of the blank pages mentioned by the noble Lord, Lord Adonis. What we need, surely, is an integrated transport strategy, covering roads, railways, air transport and shipping, with attention to energy use and environmental issues. Is any government agency charged with oversight of transport needs as a whole? I do not know. If not, I would support the Labour Party’s proposal for an independent national infrastructure commission to
identify our long-term infrastructure needs. That surely is sensible. If there is a gap, the Bill should be amended to secure this aim.
My second question is: how much will the strategic highways company be allowed to spend? According to the Roads Minister, Robert Goodwill, the Government aim to spend £10.7 billion on major road improvements in the next five years. This will presumably be the sum allowed to the highways company—or will it? Is it identical to that sum? Can the Minister confirm my understanding of that, or have I got it wrong? If it is so, it seems odd to give the company £10 billion to spend before anyone has worked out what it is to spend it on. Perhaps that is another blank page.
My third question is: how will the new independent company be financed? Four years ago I proposed a national investment bank, capitalised by the Government, that would be allowed to borrow a conservative multiple of its assets. The model was very much that of the successful European and Nordic investment banks. What I envisaged then was up to £100 billion of infrastructure investment over five years, largely financed by borrowing. Instead we got the green bank, with capital of £3 billion and no borrowing power at all. Apparently, a continuation of this rather dismal set-up is envisaged now, as revealed in an unpromising exchange in the other place on 11 December 2013. I quote from Hansard:
“Richard Burden: To ask the Secretary of State for Transport whether the proposed Government-owned company replacing the Highways Agency will be able to borrow at (a) government or (b) private industry rates”.
“The new company will be funded directly from public funds and therefore it is not expected that external borrowing is going to be a requirement for financing activities. However the Department is still working on the detailed financial arrangements”.—[Official Report, Commons, 11/12/13; col. 220W.]
And it is still working, as far as I know.
The Labour Party seems equally cagey about borrowing for investment. It proposes to spend £10 billion to build 400,000 affordable houses in one year—something that the noble Lord, Lord Judd, endorses, as I do—but how is that going to be financed? We are not given a clue. There is a promise only to “bring forward” housing investment, but of course housing is one thing that one should be able to finance by borrowing because one has a stream of income to service the debt.
I should like to end by trying to clear up a common confusion about the role of borrowing in the Government’s budget. According to current orthodoxy, all borrowing, for whatever purpose, is bad and the ideal state of affairs to which every prudent Government must strive is an annually, or at least cyclically, balanced budget. However, that has nothing to do with the theory of public finance, which has always made a distinction between current account and capital account spending and the deficits allowable on each. A pure current account expenditure is for a good or service which gives rise to no government-owned asset that will produce future value. It should therefore always be covered by taxation. On the other hand, capital account expenditure is the purchase of a durable asset. If that
purchase gives the Government command over a prospective future stream of returns whose present value is greater than or equal to the present cost of acquiring the asset, borrowing is justified because it does not give rise to a new debt.
The noble Lord, Lord Lawson, has argued that the current/capital distinction does not have the same meaning in the public as in the private sector because, in general, capital investments by the state do not produce a cash return to service debt interest. However, that is not always so—it is too sweeping. Some capital investments, such as utilities, railways and undergrounds, do produce a cash return. Others, such as roads and bridges, can be made to do so by road pricing or tolls. Even if the Government choose not to charge for the use of schools or hospitals, they can work out a shadow price in deciding whether to make the investment, setting aside revenues from tax to meet the service debt charge. Provided the expected returns, actual or imputed, equal the cost of acquiring the asset, borrowing will be justified since the additional debt will be self-liquidating.
I think that the Liberal Democrats are slowly buying into that distinction. For example, they have promised to borrow to invest in capital projects, but they would not revive Gordon Brown’s golden rule, claiming that Labour slapped the words,
“‘capital spending’ on anything and everything”.
Thus, they would not include under capital spending new schools or hospitals but only schemes which “boost economic growth”. But why should building roads and houses boost economic growth more than building schools or hospitals? Then they have a new debt rule which seems to make no sense, but at least goaded, I suspect, by the Secretary of State for Business, they are moving in the direction of making that distinction between capital and current spending which the Conservative parts of the coalition have rejected.
A House of Lords Second Reading on a limited roads Bill is not the place for a disquisition on the theory of fiscal policy and I apologise to the House for burdening it with one. However, it is important to make the point that dysfunctional public accounting conventions should not stand in the way of giving the nation the infrastructure which it needs and which only the public sector can make or underwrite.
6.54 pm
Lord Bradshaw (LD): My Lords, I have probably been the victim of more reorganisations than many of your Lordships. All of them have promised large economies and they have always promised a better future, but they have usually resulted in more expenditure and another reorganisation. So the idea that reorganising things is necessarily going to produce a revolution is wrong.
I am also concerned about the idea that this government-owned company will somehow take the influence of the ministry out of the equation. I am confirmed in that by the fact that at Reading station, where huge infrastructure work is being progressed by Network Rail, signs on the wall have just appeared saying “Department for Transport” to show that the ministry is really still in control. It is a sort of sinister
creeping of bureaucracy into that company, and I think that the same may be the case with a road company.
Another thing that I would like to touch on is the way that this company is being presented as an analogy to Network Rail. It is not really an analogy. Network Rail has responsibility for the whole of the railway infrastructure as well as safety, whereas this company will have responsibility for the busiest 2% of the road network. However, there is no commitment to deal with the other 98% of the road network.
I am in favour of necessary road building where there is a strategic and a safety case for it, as there is with the A1 north of Newcastle going up into Scotland, as I have said before. However, we have to recognise that the local road network, including a lot of trunk roads, is in a sore condition. It needs substantial structural maintenance. I am not sure how much of the money promised for the proposed new highways company will in fact find its way into capital expenditure, because we have been told that a large part of the network will be resurfaced in the next few years. Most of us think that resurfacing networks is not new building; it is probably catching up following neglect of the past rather than looking to the future.
I very much endorse the point made by the noble Lord, Lord Skidelsky, that it is important to distinguish clearly between capital and revenue. It is also quite reasonable to borrow for proper capital expenditure, which should have a rate of return.
I want to look for a moment at local authorities, whose road expenditure is discretionary. It is expenditure that gets raided whenever schools or other local authority services, such as social services, need more money. I believe that local authorities need proper guidance on how they should repair their highways, and of course they need to be brought within the consultation machinery for any investment strategy. I also believe that the utilities do enormous damage to our highways network. They push their way in, often without regard for the motorist or the lorry driver. They declare states of emergency where I believe that such emergencies do not exist. The sanctions they suffer as a result of overruns and so on are quite ineffective in bringing any discipline. I hope that the Minister will say something about how the utilities can be brought within a reasonable discipline in their access to the highway, because they cause enormous damage.
I am concerned about the justification for new road building or for any roadworks. I believe that the benefits are much wider than the present system tends to show. Millions of small but unpredictable and imperceptible time savings are one of the major inputs to the economic appraisal of our road network. A better way is necessary to probe the economic value of improvements, which might be in housing, employment or land values, rather than the funny money used to justify it now. Is any work being done to bring the present system up to date?
Is the Minister satisfied with the present system of looking at the way in which roads are destroyed by heavy lorries, to which reference has already been made? It was probably about 30 to 40 years ago that it was decided that the damage inflicted by a heavy lorry on a road surface was the fourth power of the axle
load. Cars inflict virtually no damage, which is the case with the M6 toll road, and lorries inflict huge damage, which is shown by what goes on on the M6. It is time that that also is revisited so that we are satisfied that we are apportioning the cost of roads fairly between the motorist and the heavy goods vehicle.
I was very pleased to hear the noble Viscount, Lord Hanworth, and the noble Lord, Lord Skidelsky, put in a good work for road pricing. I believe that it is the best way to ration any scarce resource. It has been maligned in the press, which gives the impression that everyone will pay more. Vast numbers of people in rural and far-flung areas will pay very much less. The busy parts of the roads cause the problems, to which a proper pricing policy should be applied. I am a veteran of driving over the bridge from Copenhagen to Malmo and Stockholm, which is financed in that way. It is a painless system which works. People who say that it does not work are wrong.
Finally, I endorse the remarks made by the noble Lord, Lord Berkeley, about level crossings. In my view, the next major railway accident will be on a level crossing. It will probably be followed by a judicial review, which will take another X number of years to come up with the recommendations that the Government already have before them. I ask them to look closely at whether the Bill can be amended in any useful way to deal with that problem.
7.04 pm
Lord McKenzie of Luton (Lab): My Lords, as others have described, this is a hotchpotch of a Bill with important chunks still missing—perhaps more than we thought—and key related consultation processes still running their course or with conclusions yet undisclosed. In infrastructure parlance, the Bill could hardly be called shovel ready. Therefore, we have an intensive job to undertake to evaluate its impact on growth, and to address how it contributes to increasing housing supply and to mitigating the housing crisis that we face in this country. I propose to focus my efforts on Part 3, which relates to planning and land.
The CBI, in its submission to us for today’s debate, identified that the Planning Act 2008 has already helped to boost investor confidence by creating a fast-track approach with clear milestones and decision-making points. That is not to say it cannot be refined and improved in the light of practical experience, which Clauses 17 to 19 purport to do as part of a wider implementation plan following the recent consultation. As my noble friend Lord Adonis said, we can support the changes relating to the appointment of an examining authority and the flexibility of two-person panels, although it remains to be seen whether the savings proposed will materialise.
We intend to probe the proposals for a new process of making development consent orders but are in accord with what the Bill is seeking to achieve. We note that a consultation is to be launched on a revised process but not until August of this year, which means that we are unlikely to have the benefit of the Government’s response by the time we conclude Committee or even all stages of the Bill. Perhaps I may ask the Minister why this cannot be expedited.
The provisions in Clause 20 are altogether more concerning. As we have heard, the clause would permit the deemed discharge of a planning condition such that a local planning authority would be unable to take enforcement action or stop development. As the Minister identified, the need to improve the approach to planning conditions was flagged in the Killian Pretty review commissioned by the previous Government and acknowledged then as needing to be addressed. We propose to examine whether the approach in Clause 20 is the best way of doing so.
Certainly, we would view with great caution anything which undermines the role of the local planning authority in the planning process. We have already seen in the Growth and Infrastructure Act opportunities for developers to bypass a designated local planning authority and, on the basis of a government consultation just concluded, for the criteria for designation to be tightened. That same consultation also covered possible changes to affordable housing contributions and the proposal to introduce a new 10-unit threshold for Section 106. Will the Minister tell us when we might expect the Government’s response to this part of the consultation because its implications for an already dire affordable housing situation could be very grim, particularly for rural communities—a point to which I think the noble Lord, Lord Cameron of Dillington, referred? Is it proposed that this Bill would cover this issue?
Perhaps the Minister might also say when we might expect the Government’s response to the allowable solutions consultation to pave the way for zero-carbon homes and details of how the small builders’ exemption is to work in a way that does not fundamentally undermine the policy. When will we see this legislation?
I acknowledge the briefing from the RTPI, which sets out the position on planning conditions with its usual clarity and focus. It recognises the concerns over the growth and breadth of planning conditions and we would agree with its view that the need for conditions attached to planning consent should be necessary and proportionate, and that they should be discharged safely and expeditiously so that development can proceed quickly.
We are reminded also of the essential role of planning conditions, which is to make an otherwise acceptable planning application acceptable; that is, to support development. We share the view that the widespread use of Clause 20 could undermine local planning authorities’ attempts to approve more marginal applications, thus having the perverse effect of holding back approvals. The extent of the conditions to which the clause could apply is also unclear and there is the fundamental matter of whether it applies to conditions laid down on behalf of statutory consultees. If so, how is it to be assured that such consultees expedite their work?
The RTPI suggests that the intention is to focus on inconsequential and burdensome information requests. Perhaps the Minister would clarify whether that is the position. Where would that leave conditions which focus, say, on the management of construction works, which can play a vital role in ensuring the health and safety of workers and the public? We would be concerned
about artificial timescales being applied to the operation of these provisions that do not fairly reflect the resource position of councils, many of which are struggling to maintain their planning departments.
We would also wish to explore the need for protections where it might be the actions or inactions of developers that are frustrating the ability of the local planning authority to respond within a given timeframe. We would prefer these matters to be taken forward by joint working between developers and local planning authorities rather than via another centralising measure.
We hear that the Government's public sector land programme is to be facilitated by enabling existing arm’s-length bodies to transfer land directly to the HCA rather than first to the parent department. We can see the intrinsic merit of this change in reducing bureaucracy and speeding up the release of land for new homes. However, we need to be reassured that with the parent department out of the loop there will be no loss of accountability and transparency in determining what land is to be released for development. The Minister will be aware—she referred to it in her opening speech—of concerns expressed about the designated sites and irreplaceable habitats and the Public Forest Estate being sold off. Similar issues arise in respect of the ability of the HCA, as well as the GLA and mayoral development corporations, to transfer land without the easements, rights and restrictions that they have suspended being revived.
Our briefing note suggests that this is doing no more than replicating the position of those currently purchasing from local authorities and other regeneration bodies. The Minister called it an oversight. Nevertheless, concerns have been raised about the extent to which these powers might interfere with the public interest and we will need to probe theboundaries of these proposals and whether specific exemptions would be appropriate. Again, the Minister may have dealt with this by referring to the fact that these impact only on private and not public interests.
Clauses 23 and 24 bring us to another area of considerable controversy. These measures involve the transfer of responsibility for local land charges from local authorities to the Chief Land Registrar, the maintenance of a fully electronic register of land charges and the extension of the powers of the CLR to provide wider property services. These changes have been the subject of a consultation conducted by the Land Registry that closed on 9March, with some 70-odd pages of government response being delivered just a couple of days ago—which was not the most helpful timing. So far as one can gather from an initial reading of the government response, it is effectively rubber-stamping the original proposals, although the 15-year cut-off for digitalising the charges register is to be removed.
However, wider concerns arise from a parallel BIS consultation—to which there has as yet been no formal government response—that promulgated the creation of a separate Land Registry service delivery company distinct from the office of the Chief Land Registrar, which would remain responsible for policy. Although the consultation sets out several possibilities for ownership and control of the service delivery company, there is a
growing suspicion that the agenda is for it to be privatised, and that, the consultation notwithstanding, the Government have already discounted the service remaining in public ownership. Will the Minister categorically confirm today that this is not the case and that it is not proposed to privatise this service?
We have seen no compelling case for the privatisation of a government agency which, as my noble friend said, routinely returns good profits to the Treasury—some £98 million last year—and references to greater flexibilities to operate around pay and recruitment have a familiar ring. The botched sale of the Royal Mail gives us no confidence that the Government will secure value for money on a privatisation.
The matter of corporate structure and ownership is not currently in the Bill, but it inevitably overhangs consideration of the proposal for a central land charges register and the transfer from local authorities, and the fear that it is being fattened up for privatisation. For those reasons, we have called for a proper independently run consultation on the central register proposition. These things are important. The Land Registry plays an essential role in the functioning of the property market. Its principal purpose is to keep a register of title to freehold and leasehold land and charges throughout England and Wales, and to record dealings in such land. Local land charges are the mechanism whereby purchasers can seek information about a property. The integrity, ease and efficiency of these arrangements are of paramount importance and it is against these requirements that propositions for change should be judged.
We are entirely supportive of a programme of continuing improvement of the service offered, including embracing digitalisation, although the Law Society points out that this is not the most pressing issue in the conveyancing world. Despite acknowledged improvements in recent times, there is more to be accomplished in terms of consistency of approach across local authorities, quicker turnaround times and more transparent charging, and we need to examine alternative approaches to achieving this as well as that proposed in the consultation.
Of course, the government proposals are not without risk. Local land charges involve inquiries of local authorities of the land that they hold. The search comes in two parts; entries on the register of local land charges and the answers to queries put to local authorities—form CON29, I think it is called. The Bill would centralise the register but the CON29 inquiries would remain directed at local authorities, so we would need to scrutinise the consequences of this fragmentation, particularly as the two sets of inquiries are invariably made together and the answers to each can be interdependent. Answers to entries on the register might comprise details of conservation areas or listed buildings. Answers on CON29 might include the planning and building control history and whether nearby roads are maintained at public expense.
It is understood that the CON29 facility is non-statutory. Have the Government given any thought to what would happen if hard-pressed local authorities terminated their services? As the LGA points out, centralisation makes it more difficult to integrate advice on planning, highways and other locally regulated
services. Moreover, there are likely to be adverse financial implications for councils, which will lose income from land charge fees but still have to deal with local queries and manage data co-ordination.
The Bill before us is incomplete and incoherent. It has some useful provisions that will help speed up infrastructure provision and facilitate the much-needed building of housing. However, it fails to deliver a long-term step-change plan to tackle our housing crisis or to provide a vision for doing so. That will have to await a change of government.
7.18 pm
Lord Davies of Oldham (Lab): My Lords, this has been a most informative and splendid debate, although perhaps a little too long for such a modest measure. I shall try to keep my remarks to the absolute minimum. My noble friend Lord McKenzie has dealt with Part 3 of the Bill. He will lead for the Opposition in Committee on those issues and he has clearly spelled out the anxieties that we have about aspects of Part 3. I reinforce the obvious point that he mentioned about the loss to local authorities of revenue from the charges that they can make, which go to the Land Registry. As there is a fairly well founded rumour that the Government are bent on eventual privatisation of the Land Registry, the Minister will not be at all surprised that the questioning on those aspects of the Bill will be fairly intense in Committee.
I turn to the last issue in the Bill—fracking—although there is not much to say about it in relation to the Bill, because there is not a great deal there. We appreciate that the consultation that the Government are carrying out on this does not conclude until August and we are quite content to wait to see the government proposals as a consequence of that consultation. However, it indicates what a rag bag of a Bill this is that government proposals about one of its more important features are scarcely before the House today.
I listened very carefully to the noble Lord, Lord Jenkin, on community electricity clauses, as I always do on energy matters. I also appreciated the contribution of the right reverend Prelate the Bishop of Derby and his optimism about what could be done on this, which we share. I understand the noble Lord, Lord Jenkin, exactly when he says that nearly everything in any Bill relating to energy seems to be dealt with by regulation. It looks, from the outline of the Bill, that what we will have to probe is the exact nature of the regulations that will give effect to what is intended. We obviously support the broad concept, and our questioning and probing in that area will be constructive.
The question of invasive and non-native species was raised first, I think, by the noble Lord, Lord Teverson, and several other noble Lords expressed their concern. We need legislation in this area. The Government have sought to do what they can in the past on these matters, but we are aware of the great threats that obtain. As a Minister, I was personally concerned with Japanese knotweed five years ago. I was informed by the scientific establishment, not only in the department but in government, that we had cracked it in terms of the science and that all it needed now was careful analysis of the process of implementation
and restricted experimentation in a limited area. Here we are, five years on, and neither I nor my noble friend Lord Dubs can get a meeting with a responsible Minister. That may be because the responsible Minister does not have a great deal to say about the progress on Japanese knotweed.
Japanese knotweed is important because it affects land in a very invasive way and harms households. It is a transport issue, too, because it costs Network Rail a considerable sum each year to keep the railway track free of knotweed, which can do such damage. We also know of a number of other threats to our environment, and therefore I of course welcome these provisions in the Bill very warmly indeed. The Minister will no doubt appreciate that she will be questioned about a whole range of plants and species of which she knows precious little at present, I would guess, but about which she will no doubt be primed as we make progress through the Bill.
In so far as the Bill is about infrastructure and transport, it is about roads. Even when it refers to rail, it does so in terms of rail taking some responsibility for the monitoring of roads. However, we have very real doubts about the role of the Passengers’ Council and whether it provides an adequate forum for public response. As the noble Lord, Lord Bradshaw, indicated, the rail system is very different indeed from the road system, as is the nature of the customers on it.
The House will recognise that there are severe reservations about the Bill. The Bill purports to be about infrastructure, but that idea has been demolished by several contributions, in which the noble Lord, Lord Skidelsky, played his full part by indicating that the Government are very far from having any sensible infrastructure policy at all. They are of course proud of the fact that they are continuing with HS2. They are also indicating that they may get around, eventually, to dealing with the A14, which drags on along its interminable path amid its failure to get adequate improvement. However, the idea that the Government have an infrastructure policy and that, if they have, this Bill is a central part of it is quite risible. All noble Lords who spoke in the debate expressed criticisms that show the inadequacy of the Bill in these terms.
That is why I hope the Minister will recognise that we will probe very hard on the Highways Agency and the role that it is to adopt. It is true that the chief executive of the Highways Agency is buoyant with optimism about the extent to which he will have extensive powers to pursue his clear objectives. Just where that fits in with the Government’s responsibility to Parliament, I am not quite sure. We regard the proposals in the Bill for the scrutiny of what the Highways Agency is intended to do, if it gets the role outlined in the Bill, and the processes there as wholly inadequate, and we will be pressing the Government very hard indeed on those issues.
The roads system in this country needs considerable attention but, as noble Lords have pointed out, the Bill is concerned with only 2% of roads. My fear is that the Bill will arrive at the other end with Members of Parliament not too far from a general election and facing pressing issues related to the inadequacy of the
roads in their constituencies. Trunk and long-distance roads will be of less concern to the other House than what has happened with the failure to maintain and keep up our roads, particularly following the ravages of last winter, and the problems of potholes.
We are destined to participate in some very interesting exchanges in Committee. The Committee will have a great deal to discuss, which will all be done in a constructive spirit, because we realise that the Government intend to address issues that the nation wants addressed. The problem is that this Bill is a wholly inadequate vehicle.
7.27 pm
Baroness Kramer: My Lords, this evening really has been a testament to the range of knowledge in this House. I thank all noble Lords, but give a special note of thanks to two who have not spoken in the debate, my noble friends Lady Verma and Lady Stowell, who are supporting me in taking the Bill through the House and whose support, both moral and in terms of knowledge, is frankly invaluable. I will try to respond to as many questions as I can, but there have been so many that I already know that failure is stamped upon me, and I will follow up in writing where I am unable to cover issues here on the Floor.
The noble Lord, Lord Adonis, opened the debate. I think he was grudgingly supportive of the Bill, but I have to say that some of his comments seemed to ignore the fact that he was part of a Government for 13 years who invested very little in infrastructure. To talk about lack of investment in new power generation, suddenly having found the light when the coalition Government are in place and seen the need for investment, was a little strange, I thought. I will not reiterate the very extensive investments that the coalition Government are making but, as I said earlier, there has been £100 billion for roads, railways, building affordable homes and boosting the internet, as well as a lot of private money going into areas such as power generation. I thought the noble Lords, Lord Teverson and Lord Jenkin of Roding, answered the question so well that I will just pray in aid their comments and add mine from the Queen’s Speech rather than continue with that point.
More generally, I say to the noble Lord, Lord Skidelsky, that we are taking on one of the largest infrastructure investment projects in a generation, as I have just described. The purpose of the Bill is to ensure that there are delivery mechanisms that are fit for purpose to deal with that. That is the theme that links the various parts of the Bill and by definition the range is broad.
The noble Earl, Lord Lytton, asked whether infrastructure was more than roads. My goodness, just looking at the Bill makes it very clear that it is. Of course, there are many other avenues of opportunity. We have talked extensively about our investment in rail, sustainable transport and a wide range of other necessary infrastructure.
I will say a word on procedure, if I may. It is difficult to go through this in detail without taking up too much time. We are very much looking forward to detailed scrutiny. Many noble Lords, including the noble Lord, Lord McKenzie, just a moment ago, gave
a very clear indication of wanting to go through the Bill in great detail in Committee, and we welcome that. We think that is a very important part of the role of this House.
I will provide some clarification for the noble Lord, Lord Jenkin of Roding. It is our intent, subject to the usual channels—and I say this to those who have looked at Forthcoming Business—that further time will be allocated after the Summer Recess to ensure effective debate on all the clauses of the Bill. We recognise that that is important. I reassure noble Lords that, where important decisions have not yet been finalised, the House will be given clear guidance and information about our intentions in Committee. A number of people asked why the consultation will start in June or August. Obviously, the secondary legislation documents that are to be consulted on will be very important in informing the debate in Committee and the other stages in this House.
Baroness Miller of Chilthorne Domer: Before my noble friend leaves the point of procedure, perhaps she shares my disappointment that the noble Lord, Lord Hunt of Chesterton, who brought up procedure, is not in his place to hear her remarks on the procedure of the Bill.
Baroness Kramer: I hope that my noble friend will encourage him to read my comments.
Moving on to more substantive issues, we had actually very little discussion of shale gas. My noble friend Lord Teverson spoke about geothermal extraction. I think that is rather positive. There is clearly an appetite in this House to ensure that this is a successful project. I know that many people are waiting for the detail, and that is exactly right. I would encourage anyone with an interest in this area to look at the consultation that is under way until 15 August because they may wish to participate in it as well as use it to inform themselves of what may happen, since the Government will not be making their final decisions until that consultation is complete and its implications are understood. We do not want to prejudge.
My noble friend Lord Teverson asked for more information on geothermal. I suspect that he knows this area far better than I do, but I remind him that geothermal power projects are eligible for support through the renewables obligation, and that under the contracts for difference the department has set a final strike price for geothermal power of £145 per megawatt hour until 2016-17 and £140 per megawatt hour thereafter. Indeed, there are a lot of measures to exploit geothermal, of which I think everyone recognises the potential.
In the same vein, my noble friend Lord Purvis mentioned the Wood review. We recognise that the oil and gas industry in the UK is of national importance and will be a vital part of the energy mix. While investment levels in the UK continental shelf are rising and near-term prospects are strong, there are new challenges for exploration and production. The environment is, frankly, very different from the circumstances when production peaked approximately 15 years ago. We will be responding very shortly to the Wood review. Details of how this will be carried
forward will be available in Committee—I think my noble friend might have thought it would be later but it will be in Committee.
On zero-carbon homes, my noble friend Lord Teverson constantly reminds us that as well as talking about the supply side for energy we must focus on the demand side. This part of the Bill is absolutely critical in this area, and we will see those clauses before the Summer Recess. We recognise, as I suspect all noble Lords did in their speeches, that making all homes zero-carbon “on site” is sometimes not physically feasible or cost-effective for housebuilders. There are technical limits. Of course, we will be exploring the whole issue of allowable solutions. My noble friend Lord Teverson said he was concerned that we were focusing on potential exemptions for small sites, but we must recognise that small housebuilders face a very different economic framework from that faced by the big housebuilders, lacking economies of scale. But it is an important industry throughout the UK and we rely on it heavily for housebuilding in this country, and we must always keep in mind that the industry needs to be successful.
On roads reform, there was a very wide range of questions. A number of noble Lords, including the noble Lords, Lord Whitty and Lord Adonis, and my noble friend Lord Bradshaw—and there may have been others—talked about the importance of ensuring that reforms to the Highways Agency were seen within the context of spending on local authority roads, particularly the maintenance of those roads. It is obviously a very important point. Your Lordships will know that the Government are investing more than £6 billion in this Parliament—£12 billion in the next—on highways maintenance for strategic and local roads, enough to resurface 80% of the national road network and fill 19 million potholes a year on local roads. I also want to make it clear that there are benefits from that integration between the strategic highways network and local roads that come from our proposals for changes to the Highways Agency. The licence agreement for the reformed Highways Agency will include a duty to co-operate that will foster and improve partnership working with local authorities.
The new company will be a traffic authority and have the same legal responsibilities to ensure that traffic runs smoothly on its own network and the local network. These changes will strengthen the interplay between local authorities and the Highways Agency.
Lord Adonis: The Minister just referred to the “new company”. Many noble Lords in the debate asked whether we are talking about a company or companies because the Bill says “companies”. Do I take it from what the Minister just said that it is the Government’s intention to set up just one highways company?
Baroness Kramer: Yes, it is the Government’s intention to set up just one company. It is standard template language in legislation, I understand, to create the option of further entities. It has no sinister meaning at all behind it. The intention is for a single company, but of course the lawyers always think about what-ifs in the most extraordinary way. I guess we did not really kick back against that but, yes, it is one company.
A number of your Lordships seemed to think that we might be looking at privatisation. Indeed, I was not sure whether or not the noble Lord, Lord Adonis, was proposing that, but we are certainly not proposing it on this side. This will be a company with a single shareholder, the Secretary of State. Any change to that would require primary legislation, so there is no backdoor mechanism.
Lord Adonis: For the record, my Lords, I was not.
Baroness Kramer: A number of other noble Lords asked whether the body would go out and seek private finance. It could do so only with the authority and approval of the Secretary of State, so it is no different from the current situation of the Highways Agency. The Government do not anticipate that that is what it will do. Quite frankly, borrowing through government costs significantly less, and this is an on-books entity. That is not something that this is meant to facilitate, if that is helpful.
Lord Skidelsky: Does the Minister expect that the Government will in fact borrow for their trunk road programme?
Baroness Kramer: I am expecting that the Government will borrow to fund the SHC—I hesitate to use the words “in exactly the same way”, but they will have a commitment, if you like, to the funding stream as a result of the roads investment strategy. They will fund the SHC in the same way as they would in effect have funded the Highways Agency. It is not a change. I understand that the noble Lord, Lord Skidelsky, would like to see the entity going out directly to the bond markets itself, but that is not anticipated; it could do so, but only with the approval of the Secretary of State.
Lord Skidelsky: But it is anticipated that the Government will fund it by their own borrowing; is that right?
Baroness Kramer: The noble Lord is talking to someone who does not understand quite how the government books work, but I do not recognise government borrowing being segregated into line items. However, I will follow up on that and write to the noble Lord before I tangle us in something that I have not explored in such detail. If the noble Lord is looking for imputed returns, we can discuss all that later.
The noble Lords, Lord Whitty and Lord Judd, raised the issue of Passenger Focus as a consumer watchdog. It strikes me as a superb representative of the road user. One of your Lordships suggested that the AA or other existing bodies act as a voice for the road user, but they tend to act as a voice for a limited number of views, typically those of car drivers. There are many other road users, and it is important that a much broader sweep, including cyclists, get represented. Using Passenger Focus, with its consumer skills, strikes me as a very important mechanism.
The noble Lord, Lord Whitty, and others also asked whether the Office of Rail Regulation was an appropriate body. It will act as a monitor, not as a regulator; that is an important distinction. The logic follows these lines. The SHC does not require an economic regulator in the way that Network Rail does. It is not dealing with track access charges and the users of the system are not paying in the way that passengers do, so there is really no role for an economic regulator here. There is not a number of TOCs all in competition with each other and with a complex relationship with Network Rail. It will advise the Secretary of State, who will then be able to enforce. It will monitor the operations of the new company.
Lord Berkeley: The noble Baroness is absolutely right in what she says. On the other hand, one of the roles of the rail regulator is to regulate the efficiency and costs of Network Rail. Would it not be a good idea to have some independent monitoring of this new company’s costs in the same way?
Baroness Kramer: The monitoring will indeed be there. That is crucial because of the way in which the SHC is being constructed.
The noble Lord, Lord Adonis, asked: where on earth do you get those savings from? It is covered in detail in the impact assessment and business case published by DfT on 6 June. It is important to understand that certainty of funding, which will come out of the road investment strategy, combined with the arm’s-length relationship, gives us a structure which is similar enough to the structure which has worked effectively in the rail industry. For example, the Government have committed £24 billion to road investment until 2021. Far more detail on all of this will come out of the road investment strategy.
The road investment strategy is set up in such a way that once established, if a future Secretary of State wants to change it, he or she obviously could—we cannot bind a future Parliament—but it would have to be done transparently, publicly and with consultation. Such pressures are an inhibitor which provides enough satisfaction to the industry to understand that it can look with reasonable certainty over the long term for the funding to be available. That leads to efficiency. We expect the SHC to approach asset management in a different way because it has such clear strategy and certainty of funding. It will also be set up as a company, with the roles that companies have, with its directors and chief executive. The sole shareholder will be the Secretary of State. I think that it will achieve its purpose. One could go over the top and try to reinforce that, but the question is: is that sufficient for the purpose to be achieved? If it is, that is the point at which we should stop.
Yes, the SHC will be subject to the Freedom of Information Act, so there should be no concern on the issue. I have addressed the issue of multiple companies. My noble friend Lady Miller of Chilthorne Domer mentioned—I am told that I have only two minutes left. Is that seriously true? If I have only two minutes left, I shall do one thing which is terribly important. I switch completely to address the issue that has been
floating through the media and mentioned today: concern that land transfers could affect the Forestry Commission and the national parks. I addressed that issue briefly at the very beginning of my speech. I am looking hard to find the comments; if anyone can hand them to me I will love them for ever.
Lord Adonis: While the noble Baroness wrestles with her papers, I invite her to respond to another big concern raised in the debate, which is that there were discussions in government about privatising the Land Registry. Are there are indeed such discussions?
Baroness Kramer: I can tell the noble Lord only that there will be no such clauses in this Bill. I can provide that absolute clarity.
Lord Adonis: Are there any discussions about privatisation of the Land Registry at a later date?
Baroness Kramer: There will be a response to the consultation, but it is not the intention of the Government to provide for that in the Bill or, as far as I know, in any future legislation.
Lord McKenzie of Luton: If it is not the intention to seek privatisation by this mechanism, can the Minister confirm that it is not the Government’s intention to seek it in any other legislative arrangement?
Baroness Kramer: I certainly have no knowledge of any other intentions. As I said, there will be a proper response to the consultation. That may be helpful in clarifying any remaining questions for the noble Lord, Lord McKenzie.
I confirm that the Government are committed to England’s public forest estate and national parks remaining secure in public ownership for the people who enjoy them and the businesses that depend on them. The measure that we discussed for the HCA is about transferring surplus land from government agencies. The public forest estate and our national parks are in use; they are therefore not surplus and none will therefore be transferred to the Homes and Communities Agency. This measure does not apply to them.
Lord Judd: I am very grateful to the Minister for taking up the issue of national parks, but I point out that although she has covered one important aspect, she has not covered the aspect of the responsibility of government and government departments to respect and enhance the purposes for which the parks exist.
Baroness Kramer: I think at this stage I have to say that I will write to respond to questions. I apologise that I have used slightly more than the 20 minutes I am allowed but I very much appreciate the debate that has taken place.
Bill read a second time and committed to a Grand Committee.
Universal Credit (Transitional Provisions) Regulations 2014
Motion to Take Note
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Moved by Lord Kirkwood of Kirkhope
That this House takes note of the Universal Credit (Transitional Provisions) Regulations 2014.
Lord Kirkwood of Kirkhope (LD): My Lords, it is a pleasure to move this Motion. I should say that I have had notice from a number of colleagues about it. I know that there is concern in all parts of the House about the implications of universal credit and, because of the shortness of notice given for this debate—I was offered the opportunity for it to be this evening only 48 hours ago—many colleagues have indicated to me that they would have been here had they had more notice. In that regard, I am particularly pleased that the Minister himself has seen fit to come to answer the debate, which is typical of him and his well known interest in this important area of public policy. I hope that the debate will not stretch for too long but it is important to make the best use of the next few minutes, if we can.
I am of course founding this Take Note debate on the transitional provisions regulations and if I am founding it on any part of the documents at all, it is on paragraph 4.3 of the Explanatory Memorandum. As colleagues will know, paragraph 4.3 refers to “widening the availability” of universal credit and says that,
“as announced in Parliament on 5th December 2013, the introduction of the 2014 Regulations is part of the Department’s changing approach to how legislation relating to the rollout of UC is structured”.
I hope to be able to use that to describe some of the wider ramifications that sit alongside the content of these regulations.
I also start by referring to the always excellent work of the Secondary Legislation Scrutiny Committee. In paragraph 20 of its first report, it draws attention to the changes that the technical regulations bring and, in particular, expresses surprise that the regulations were,
“accompanied by the original cost/benefit analysis”,
of the impact assessment from 2012. That is a well founded question because things have changed so much over the past two years, so the department is not safe simply to rest its case on the impact assessment made all those months ago.
The other two points that the committee made which are salient to this evening’s discussion are, first, the fact that by now,
“Universal Credit has been made more flexible and can be ‘managed’ if problems arise in a particular area”,
and that those changes can now be “made by Commencement Orders”. Commencement orders are fine but they are not subject to parliamentary scrutiny, so I would be a bit nervous if such orders started to be used willy-nilly for claims being allowed in areas or to special cohorts of claimants without that scrutiny. Finally, the report says that the regulations,
“include provision to allow the Secretary of State discretion … to stop taking Universal Credit claims in … geographic areas”.
As the regulations suggest in paragraph 4.3 of the memorandum, that is a change to previous provision.
So the first part of my case is that on the surface these regulations are what we expected and contain no other surprises, since we always understood that the 2014 regulations would replace the 2013 regulations, and so far so good: I am perfectly comfortable about that. However, when you look at the position outside and the context in which these regulations are being introduced you discover huge and increasing uncertainty about the programme, which is no surprise to anybody who has been following the debate. Against the background of the regulations and the Secondary Legislation Scrutiny Committee’s report, I want to spend a little time on that mounting uncertainty this evening under four different headings.
First, on case load, I would have been surprised to be told in 2012, when the Minister took the primary legislation through in the Welfare Reform Act, that in 2014 the active case load would amount to 5,610 straightforward cases—I have the statistics here that were published on 11 June 2014. More than six in 10 of the 5,610 cases in that case load on 31 March 2014 were younger people under the age of 25. They are mainly single and are what is known in the trade as straightforward cases. They could not be more straightforward and it could not be a much smaller number. I remind the House that we are talking about a target case load by 2017 of 7.7 million households. At the current rate of progress, there are questions—I put it no higher than that—about how we get from where we are now to where we want to be in 2017.
I think that only three Jobcentre Plus areas are handling more than 1,000 cases each at the moment: Oldham, Wigan and Warrington. I know that the Government are rolling out the case load from time to time and there are, I think, up to 10 or more places where the new pathfinders are in operation. However, as far as it is conceivably possible, what I would like is a year-by-year estimate of the new rollout period in terms of case load because the transitional period that we are now facing in these regulations is much longer than I anticipated. Other people may have different ideas but if you had said to me in 2012, when the primary legislation was passed, that the transitional period would be as long as it looks it will be, I would have found that difficult to believe.
My second point is about how a longer transition period will impact on claimants. There is a very obvious case that the sooner people get access to the smoothing effects and the work incentive effects of universal credit, the better it will be for them. Day by day, for the people who do not have access to these provisions, making work pay and all the rest of it gets much harder. More acutely than that, in these regulations there is notification that employment and support allowance claimants, in particular, may be facing a delay even beyond 2017. I have read press reports about this. A report in the Guardian on 24 May suggested that 700,000 employment and support allowance cases could be affected. I understand why: it is because they have been transported off incapacity benefit. However,
if we are really starting to talk now about 2018 to get this job done, we are in territory that begins to call into question the programme rollout as it stands. I have even seen knowledgeable IT experts make the case that this rollout may take anything between five and 15 years—from now. These are serious people who know about major projects.
We really have to look at some of the consequences of a longer transition period. For example, the local authority costs for continuing housing benefit administration would not have been anticipated and will not be in their plans. What steps are we taking to look out for that and make proper plans? Finally, on claimants, there is the local support services framework. At an earlier stage, the Government themselves said, rightly, that the LSSF is almost as important as universal credit itself. I agree with that, but if there is a much longer transition period, what is happening to finance that? The delays in the transitional phase are causing uncertainty in local authority and local support service framework circles.
My next point is about value for money. I note with interest that it is a while since the National Audit Office report was published. The Minister will know that my spies are everywhere. Actually, some of my spies may be double agents; I think that the department has found out whom I have been talking to and turned them against me, which, if true, is a dastardly act. I am being facetious, of course. However, I make the point that if there is a continuing NAO interest in this programme rollout, it may well be gearing itself up for a second investigation. If that is the case, I think it will indicate that the NAO is uncertain about the future of the project, and nothing could underline that more clearly.
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I have also seen some costs. I do not believe everything that I read in the press because I am not that stupid, but some people are now estimating that, when all is said and done, this programme might cost not £2.5 billion but £12.5 billion by the time we are finished. I find that very difficult to believe, and if the Minister could give us an assurance on that it would be very helpful. We have certainly seen a £40 million write-off; that is dead money and we know about it. In the scheme of things, with a programme this size, the department may say, “Well, that always happens in programmes of this kind”, but £40 million is a huge amount of money. There is also a £90 million investment that has only a five-year life left in it now because of the changes to the IT system, so that is £40 million and £90 million that has been expended for not as much value as we would have liked, and that is an ongoing concern.
I want to talk about the obvious underlying core uncertainty concerning the ICT provision. The NAO and Major Projects Authority reports have, prima facie, some very frightening figures. More than anything else, I would really like, if the Minister is able to explain it this evening, to understand why we have abandoned agile computing. This whole programme was sold to us by the department on the basis that it would be done differently. This is not the first time that I have heard that about an ICT programme; I remember it being said about the Child Support Agency
as well, but you live and learn—or maybe you do not—and life moves on. I do not understand why the clever and interesting project work that was done by the Warrington team on agile computing has now been changed to what is known in the trade as end-state systems, which I think means web-based applications. That is technically a complete change of direction in ICT provision, as far as I understand it. I also understand that we have spent some money on keeping agile computing going so that there is a twin-track approach. This is all very reminiscent of the CSA, where two systems ran in tandem. I now subscribe to
Computer Weekly
because that magazine definitely has a serious mole in the department. My jaw drops when I read some of the stories that it brings forward. I do not know how many of them are absolutely accurate but the magazine certainly knows enough to be concerned, and its stories are contributing to the uncertainty of which I speak.
The Major Projects Authority has reset the risk assessment for universal credit. I do not know what “reset” means. When I was a provincial solicitor about 40 years ago in Jedburgh sheriff court, I used to defend people for “theft and reset”. I do not know what it means in terms of risk analysis but it is certainly not red, amber or green. Will the Minister enlighten us about exactly what the consequences of “reset” are? The head of the MPA, John Manzoni, when he was asked why he had reset the risk, was clear that this was a ministerial decision and nothing to do with him, which increases my worries. It would be helpful if we could get some departmental explanation from the Minister officially on the record in this debate. Obviously we are waiting with interest to see what the Government’s response is to the Select Committee report that was published in April, because the committee did some extremely sensible work and raised sensible questions that further increased the uncertainty, certainly in my mind.
I acknowledge the efforts that the Minister personally has put into all this, and I acknowledge the value of some of the briefings that the department arranges for Members of this House on all sides; they are extremely valuable. I hope he agrees with me, though, that they are no substitute for making clear and public exactly what the Government are trying to do and what is true and what is not, in order to try to contain the uncertainty in the best way that we can. As he knows, I have always been in favour of this programme and I continue to be, but I say to him honestly that the idea of continuing prudently and cautiously and getting it right gets a bit stretched if we start looking beyond 2017. If we are not careful, confidence in the whole programme could be dissipated if we do not deal with this honestly and openly.
The Minister should go back to the Secretary of State and point out how successful the Transport Secretary has been over HS2. The Transport Secretary was on the record right from the beginning acknowledging the difficulties, and I think that he has had a better hearing, and dealt with the issue better, than if he had dissembled, looked for excuses and said that everything would be all right on the night. I think the House deserves the unvarnished truth.
Maybe it is a slight abuse of procedure to seek an explanation of this kind from the Minister today, as statutory instruments of this kind do not really admit of general debate. However, if the Minister can find some way of reassuring the House that in the coming months if not years, as these programme rollout problems unfold, he will ensure that he comes to the House and explains what is going on, what it is necessary to put right and what the Government are doing about it, he will find himself getting more support from the House than he otherwise would. I hope he will think about that carefully, and I hope I have not spoilt his evening too much by getting him here at such short notice. This is an important subject and I am looking forward to hearing what he and other colleagues have to say in the rest of the debate. I beg to move.
Baroness Sherlock (Lab): My Lords, I thank the noble Lord, Lord Kirkwood, for that speech and indeed for this opportunity to question the Government on the progress of universal credit. I do not think that he need worry too much about whether he strayed from the regulations. The points that he made were precisely the areas that I too had zoned in on from the regulations, so it is certainly my view that his questions are within the spirit, and clearly the content, of tonight’s business.
Before I turn to the content, I want to ask the Minister a process question. Could he explain to the House what the rush was for the consideration of this Motion? I saw these regulations appear on the green sheet certainly no more than two or three sitting days ago, and it was only yesterday that it was confirmed that this debate would take place tonight. There may have been other noble Lords with an interest in this subject—there were certainly plenty of us during the passage of the Welfare Reform Act—who wanted to participate in the debate.
Lord Kirkwood of Kirkhope: I have to leap to the defence of the Minister. This is my fault: I tabled the debate and was offered a slot, and the Government were very generous in giving me a slot on the Floor so I took it early. That is entirely my fault and was nothing to do with the Government or the Chief Whip.
Baroness Sherlock: I thank the noble Lord for that intervention and for leaping to defend the honour of the Minister. The only point that I make is that it may not be widely understood outside the House that no one consults, for example, the Opposition to see whether a spokesperson is available. This gave me 24 hours to get these regulations out, read them and understand what they were about in order to be able to hold the Minister to account. The process should allow for that. I was not suggesting any conspiracy on the Minister’s part—I know that these matters are far above his pay grade and mine by some considerable distance—but I simply place that point on the record. I think that we would get better debates if we all had a bit more notice when things of this complexity were coming forward. It is not as though universal credit is in a rush. It is not about to be rolled out across the country next week or next month.
The noble Lord, Lord Kirkwood, raised the question of the speed of transition. I think he was rather generous to the Secretary of State. On 1 November 2011 Iain Duncan Smith promised that 1 million people would be claiming universal credit by April 2014. So how does it look now? The noble Lord pointed out that the case load now, far from being 1 million, is 5,610, and the signs are not promising. In January this year, 1,010 people started claiming universal credit, in February it was 630 people and in March it was 560 people. Only 6,550 people have claimed anything at all since the scheme began. That is an enormous difference.
The Secretary of State has insisted repeatedly that universal credit would meet its deadlines of first national rollout from October 2013 and final replacement of housing benefit, child and working tax credits, income support and non-contributory JSA and ESA by 2017. I am with the noble Lord, Lord Kirkwood, on this; I would not bet the DWP pension pot on that deadline being met at the moment.
The noble Lord asked a question about what “reset” means. He is right not to believe everything he reads in the papers, but the papers were pretty much of the same view that the reason the project had to be reset was that it had previously had an amber/red rating from the Major Projects Authority and was probably about to get a red rating, so in order not to get a red rating it was reset so that it did not get any rating at all. I very much hope that that is scurrilous suspicion on the part of the media and that the Minister can correct it and explain the process to us.
However, it is not the first time. Whenever criticisms are made of the project, the department comes back and Ministers say that those criticisms are not fair because they do not take account of changes that have recently been made. There comes a stage when, if problems keep arising and changes are made, it is legitimate to say: how can you persuade people outside, never mind the House, that the department has learnt enough from previous mistakes to have any confidence in the next level of management development that has been put forward? I hope the Minister will be able to give us some reassurance on that front.
Recently, there have been even more worrying reports about problems in the pilot universal credit areas with claims that administrative errors and computer glitches had led to increases in personal debt, rent arrears and evictions.
The noble Lord, Lord Kirkwood, raised the question of value for money. In four years, more than £600 million has been spent and, as he pointed out, the Government admit that £40 million has been totally wasted and a further £90 million “written down” because the IT bought was not fit for purpose. That is a lot of money for 5,610 people to be claiming universal credit. That context means that the Minister will understand why there is nervousness about the fact that these regulations seem to give the Government considerable discretion in deciding how the rollout should take place in future.
First, as the noble Lord pointed out, unlike the 2013 transitional regulations, these regulations give that discretion to the Government. They no longer
contain proposals for categories of people to be brought on to universal credit. Rather, “gateway conditions” for universal credit claimants will in future be spelt out in commencement orders which, as the Joint Committee on Statutory Instruments points out, are not subject to parliamentary scrutiny. Secondly, the regulations permit the Secretary of State to stop taking universal credit claims altogether either for certain categories of people or in certain parts of the country. That is a really significant shift in powers from Parliament scrutinising or passing regulations to the Secretary of State. Will the Minister give us some indication of whether there is any limitation to those powers? Could he, for example, decide not to include several benefits? Could he decide not to do Wales? Could he decide not to do the north of England? Is there any limitation to that discretion? If so, what does that mean for our understanding of what the transition timetable will be, a point pressed very effectively by the noble Lord, Lord Kirkwood?
The questions I would like to ask the Minister are these. First, why are these changes necessary? What was wrong with things that were done previously when regulation was used? What is necessary? What is it about the process and, more importantly, what do the Government think the process is going to look like in future that means they need these powers?
Secondly, how will Parliament be enabled to scrutinise the decisions taken by the Secretary of State to control who is entitled to universal credit? The noble Lord, Lord Kirkwood, flagged up one of the points made in defence of universal credit, which is that it will give various benefits to categories of claimant. If that is the case—certainly the Government have used that defence in explaining why they had to cut existing benefits—that is a considerable power. How can Parliament hold Ministers to account for deciding who is and is not entitled to access a system created by Parliament with an expectation that it would by now have been experienced by 1 million people and would be entirely rolled out by 2017? That is a very serious constitutional question.
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Thirdly, I ask the Minister for a timetable, certainly for the rollout of universal credit, as pressed by the noble Lord, Lord Kirkwood. More immediately, could he give us a timetable for when we will get the outstanding details we are waiting for on universal credit? For example, when will we get more information about exactly how universal credit will apply to the self-employed? There are many similar outstanding points.
Finally will the Minister commit today to increasing transparency around the universal credit process? As the noble Lord, Lord Kirkwood, signalled, the Joint Committee on Statutory Instruments said:
“The Committee was surprised to see this instrument accompanied by the original cost/benefit analysis from 2012, despite the well-publicised changes to the programme”.
I have to confess that I was less surprised. There has been a pattern of secrecy throughout the universal credit process, with Ministers insisting everything was fine when everybody knew it was not fine, and not just the moles who are clearly well supported by the noble Lord, Lord Kirkwood. Even now the Government are
still resisting the release of key documents about the implementation of universal credit, despite rulings from the information tribunal that there was a “strong public interest” in their publication.
As well as being wrong in principle, this is a serious tactical error. The noble Lord, Lord Kirkwood, indicated that there was support across the House for the principles of universal credit when the then Welfare Reform Bill was going through it, but there must be a serious risk that that good will has been eaten away and is being eroded. If Ministers want universal credit to succeed, especially given the increasingly lengthy timetable, they should be adopting a policy of bipartisanship—perhaps tripartisanship—and transparency. After all, millions of our poorest citizens need to know the system that they are going to depend on to help feed their kids, support them in their disability or enable them to work is safe and secure. There could be at least one, if not two, changes of Parliament before this is finally rolled out. I know the Minister to be very committed to this programme and to the changes he wants to see it create in the lives of those citizens who are dependent on benefits, but if the Government as a whole are invested in its long-term success, surely the most sensible thing to do is to try to engage with other parties to put information out there and to recognise that one of the reasons there is so much speculation in the media is that there is an information vacuum.
Finally, when the Bill was going through the Minister very kindly gave seminars for Members of the House from different sides explaining what was happening and helping us to understand the detail about implementation, or planned implementation, as well as the policy that would be considered by the House. Given that so much has changed, will he consider offering some updates to those Members of the House who are interested, particularly since they could not be here tonight, so that we can keep in touch with what is going on? That might lead to less rather than more speculation.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud) (Con): My Lords, I feel a bit castigated by the two speakers, who clearly feel that more communication is in order. I know that in the past I committed to keep noble Lords in touch. I take the point on that. I will look at the best way of communicating in the next period. Often I invite people along and nobody comes. I will try to find a time and an enthusiasm for noble Lords to come, because colleagues in this House have been very supportive of universal credit, which I acknowledge and appreciate. The atmosphere in this House when we discuss this programme is markedly different from that in the other place. I appreciate that for obvious reasons.
Let me talk about the timetable as it stands at the moment. Although the noble Baroness, Lady Sherlock, said that it was not about to be rolled out across the country any time soon, I can tell her that we are about to roll out expansion right across the north-west pretty soon. As noble Lords know, “soon” is a technical expression in our discussions. That represents 90 jobcentres: one in eight of the jobcentres in Britain will come in as we roll it out. That will be followed by couples, going out this summer, which in turn will be
followed by families later in the year. New claims in those areas will go automatically, subject to their passing the gateway rules. There should be no great complexity. There is a slightly ugly expression that we have used before: the “lobster pot”. In practice, when people go into universal credit, they will stay in universal credit even if their circumstances change and it becomes more complicated. We now have a full apparat—a full structure—for running universal credit and we can do that.
We then have universal credit rolling out across the country during 2016. In that period, all new benefit claims will be for universal credit. Our plan is for the majority of existing claimants to move on to universal credit in 2016-17. My noble friend Lord Kirkwood was quite right when he drew attention to the 700,000 ESA claimants who have just had a transition from IB to ESA. We do not feel that there is necessarily a huge hurry for them. However, I can tell the noble Lord that some of his wilder, 12-year plans are certainly not in our plans. Clearly, we will be able to give more information as we develop and look at our enhanced IT programme.
By definition, there has been a series of quite aggressive questions that I am happy to answer. Before I go into detail, however, I will make the point that we are safely and steadily getting this new benefit out to the country. We are doing so in 10 jobcentres now and are about to expand the scheme quite a lot. We have 99% of employers on the real-time information system, so we are getting those flows and making that connection. There is one category of people of whom 90% make their claims online. We have now taken one element of the universal credit infrastructure, the claimant commitment, and deployed it right through the country. That is a big thing: it implies training more than 23,000 of our staff. It means that 600,000 people have signed it. We have been putting in computers and wi-fi along with the infrastructure to bring about this substantial change.
It seems to be working. Noble Lords will remember some initial figures showing that people felt that the financial incentive was better under universal credit. They looked for work for longer and applied for more jobs. Of this group, which we are watching carefully, the majority—three-quarters—were comfortable with the monthly payments, which I know has been of great concern to this House. We watch that, not least because whenever this House tell us to watch something, we do so.
The nature of the regulations represents a slight change to the way in which the commencement orders work, and it is important for me to explain this precisely. Previously, we had only the gateway conditions in the regulations. When we rolled out geographically, we did so by commencement orders. However, we are now mixing in new types of people at different times. Imagine the process: we are taking a new group, which must be small in size for safety, and testing it carefully. We take out that small group and take it through the gateway while doing a geographical expansion. You have to take those two decisions in tandem. That allows us to do this safely and steadily. That is the only reason that we are doing it.
To pick up the point of the noble Baroness, Lady Sherlock, because we are doing it in that way we can
deal with unexpected circumstances. For instance, when we open up four jobcentres to a new type of claimant and find that we have a problem—there are lots of things you find out and sort out as you go through—we can slow down if we have to and sort it out before we have done a massive amount.
I have given a commitment to the Social Security Advisory Committee—SSAC—that whenever we make an order that changes the gateway conditions for claiming universal credit, we will write to the committee explaining the changes that we are making. There is a process going on there for just the reasons about which noble Lords are concerned. Making arbitrary changes is absolutely not the purpose.
My noble friend Lord Kirkwood picked up on one of the points mentioned in the Secondary Legislation Scrutiny Committee about impact assessments. Clearly, impact assessments are done when there is major legislation or very significant changes. There have been some changes to universal credit over the years. We have been pretty open about their individual effects; they have been on the record. However, there is nothing that justifies the major exercise of an impact assessment.
On transparency with the committee, we have invited committee members to our nearest live site, which is in Hammersmith. They have accepted, and we are looking for a date for that. We are trying to be as open as possible.
As my noble friend Lord Kirkwood said, I view the local support service framework as being as important as universal credit; indeed, this House is responsible for the local support service framework. That is because it was impressed upon me very vigorously that the concern with universal credit was what we are going to do for the vulnerable. That was the genesis of something which, as all noble Lords know, was not in our minds when we started. We have built quite an intensive process, starting with local authorities but with lots of other partners such as housing associations in particular and other third-sector bodies, to build a delivery model.
We have one in our four initial sites, which have a local support service framework, and we will test to get a definitive version of that. That will be published in the autumn next year, and we are planning to do another series of very specific pilots. There is a lot of enthusiasm around the country to take part in that—I am sure that my noble friend Lord Kirkwood’s moles are telling him all about that process. I suspect that that is one of the reasons his moles have become much more enthusiastic about the process they are engaged in, because we are gripping this.
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One can forget this—I am being pretty dry in this response—but one of the things we are trying to do is to change people’s lives with universal credit. The present system has effectively parked people and has not wanted to do much with them to get them to be able to function more effectively. As I was preparing for this debate—I did not have much more time than the noble Baroness, Lady Sherlock; I might have felt a little like her about the timing, but I could not possibly say that—I thought it was worth trying to get some
colour and was struck by a quote from one of our own universal credit work coaches, Nicola Rous in Hammersmith. She talked about how she got a vulnerable client in—a claimant called Robert, who needed help managing his finances—and what she did about his situation. Let me quote her.
“Handling a monthly budget can be daunting for someone who’s never had to take direct responsibility for their personal budgeting before. When a lump sum of money lands in your bank account it can be tempting to go out and spend it all at once. But I’ve worked closely with Robert to help him plan his spending and make sure his money lasts the month, that his bills get paid and that he has enough left over to spend on groceries … One of the big changes for Robert has been paying his rent directly to his landlord. I was able to help him set up a direct debit to make sure he keeps on top of this and keeps a roof over his head … We also offer all our claimants group or one-to-one sessions run by the Citizens Advice Bureau on money management which really helps give them budgeting confidence”.
That is a transformation of the relationship and the level of support. She concludes:
“I couldn’t imagine going back to my old adviser role. Some of the changes we’ve made are only small but they make the world of difference. Aside from the career development opportunity that being Work Coach offers, I can genuinely say I also get a huge amount of satisfaction from my job”.
That is the kind of change this can have, and it shows the change in approach. Noble Lords can imagine, with each person we move into independence, the benefit for the country socially, economically and even, I suspect, on the happiness index.
The point on certainty of spend made by my noble friend is clearly of great importance, and we are spending a lot of attention on our relationship with local authorities. We have already notified them of their 2014-15 housing benefit allocation and we aim to inform local authorities of their 2015-16 allocation in plenty of time so that the planning is sorted.
We have had the discussion on the programme and the spend. That was slightly more mature in this House. We all know that, when you have a £2.5 billion programme with a high IT content, there are elements that you write that you do not need. In the private sector that can be a third of a programme. Clearly, any write-off is always deeply regrettable, but one has to put those things into a context. We remain within our budget of £2.5 billion—not £12 billion—and we are looking at an overall net benefit of £35 billion from this programme. The NAO has said that it is taking a regular interest in the programme; we will continue and will see more reports on it from the NAO.
However, as regards the way in which we are doing it, it is somewhat misleading to think of this as a twin-track system, because we have a single plan for universal credit. We are finding what works through the rollout we have; it may be small, but you do not need huge numbers to find out what works. It is important that we do this testing. At the heart of the programme is what we call the “test and learn” process, in which we take what is happening and assess and measure it against other things, aiming to find out how it works. That informs what we call the end-state build, which is thoroughly under way and is agile. The first Warrington programme was trying to be agile, which I think is the best way; this end-state solution—the fully digital one, the interactive digital one—is being done on an agile basis.
What does reset mean? What happened, as noble Lords will remember, is that Ministers, the Secretary of State in particular, took a decision that the programme was not going properly and took a view to stop it and reorganise it—reset it. It is not a new category; it is a description of a process. If one is in charge of a programme, rather than blundering on with it regardless, I would hope noble Lords would agree that it is the job of the Ministers in charge to take that kind of decision, work out how to rebase it—reset it—and make sure it is done safely and securely, which is what we are aiming to do. That is everything that we are doing.
I hope we are as transparent as we can be. It is a huge programme. It has very many ramifications. It is changing all the time every day that you are working on it. We aim to communicate in good time and at the appropriate time. We have very significant scrutiny. We have the NAO, the PAC and the Select Committee—I
certainly do not feel underexamined on this programme. We aim to release information regularly, including statistics. I pick up the concern in this House and I will just have a look at having a programme for this House, just to get everyone back up to speed so that they know exactly what it is. Noble Lords spend a lot of energy on the primary legislation and then it all kind of goes quiet and one just wants to know what is happening with the key issues. I absolutely hear that and will do something about it.
Meanwhile, I thank my noble friend for giving me the chance at short notice, which the two Front-Benchers here feel very bitter about—but there we are; that is the legislative process. I thank the noble Lord very much.