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Grand Committee

Monday, 28 July 2014.

Arrangement of Business


3.30 pm

The Deputy Chairman of Committees (Lord Bichard) (CB): My Lords, welcome to the Grand Committee. If there is a Division in the House, the Committee will adjourn for 10 minutes.

National Minimum Wage (Amendment) (No. 2) Regulations 2014

Motion to Consider

3.30 pm

Moved by Lord Popat

That the Grand Committee do consider the National Minimum Wage (Amendment) (No. 2) Regulations 2014.

Relevant document: 5th Report from the Joint Committee on Statutory Instruments

Lord Popat (Con): My Lords, in moving the first Motion standing in the name of my noble friend Lady Neville-Rolfe on the Order Paper, I will speak to both Motions. The purpose of these regulations is twofold. The first set of regulations uprates the national minimum wage rates for all workers and increases the maximum amount for living accommodation that counts towards minimum wage pay in line with recommendations from the Low Pay Commission. The second set extends the apprentice rate to cover apprentices on trailblazer apprenticeship programmes—pilots trialling the Government’s apprenticeship reforms—so that apprentices on these pilot programmes are treated in the same way as apprentices on other government apprenticeship programmes.

First, I turn to the national minimum wage rates. The national minimum wage is designed to protect low-income workers and provide an incentive to work by ensuring that all workers receive at least the hourly minimum rates set. The minimum wage also helps businesses by ensuring that competition is based on the quality of goods and services provided and not on low prices based on low rates of pay.

Following advice from the Low Pay Commission, the Government are uprating the minimum wage from 1 October 2014 so that the adult rate will be £6.50 per hour. For young people aged between 18 and 20 years-old, it will be £5.13, and those between 16 and 17 years-old will have a minimum wage rate of £3.79 per hour. Finally, the rate for apprentices will be £2.73 per hour. This is an increase of 3% for the adult rate and 2% for the other rates. This 3% rise in the adult rate will mean that low-paid workers will enjoy the biggest cash increases in their pay packets since 2008. These rate increases

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will benefit more than 1 million low-paid workers on the national minimum wage and will mean full-time workers on the adult rate receive an additional £355 a year in their pay packet.

The Low Pay Commission has said that the rise—the first real-terms cash increase since 2008—is manageable for employers and will support full employment. Since its introduction, the national minimum wage has increased faster than average wages and inflation without an adverse effect on employment. It has continued to rise each year despite the worst recession in living memory. The Low Pay Commission has proved that a rising minimum wage can go hand in hand with rising employment.

Every year, the Government set the remit for the Low Pay Commission. Last year, we asked the commission to monitor, evaluate and review the national minimum wage and its impact and to review the levels of each of the different minimum wage rates. As part of its remit, the Government also asked the independent body to review the contribution that the national minimum wage could make to the employment prospects of young people.

The Low Pay Commission has consulted with academics, businesses and workers’ representatives, and undertakes extensive research and analysis to respond to this remit. The Low Pay Commission consists of three commissioners from employer backgrounds, three from employee representative backgrounds and three independents. Its recommendations reflect the objectives of both employers and unions, and are unanimous. The aim is that the rate should be affordable for business and that as many workers as possible should benefit from as generous an NMW as possible. The Government believe that the rates set out in the SI meet this objective.

I now turn to the inclusion of trailblazer apprentice programmes under the apprentice national minimum wage. Apprenticeships in England already offer great opportunities for business and young people. Some 96% of employers who take on an apprentice think that their business has benefited. We want to make all apprenticeships world class, so that the programme is rigorous and responsive and meets the changing needs of employers and the future economy. We want the new norm to be two equally prestigious routes to a great career—university or an apprenticeship.

Our reforms of apprenticeships will put employers in the driving seat, enabling them to lead on the design of apprenticeships to make them easy to access and understand. Long complex frameworks will be replaced by short, simple standards describing the skills and knowledge that an individual needs to be fully competent in an occupation. The reforms will increase quality through higher expectations of English and maths with more end-point assessment to ensure that the apprentice is fully competent. We will also raise aspiration for apprentices by introducing grading.

These are significant reforms so we are testing them with trailblazers. Trailblazers, led by small and large employers and professional bodies, are designing apprenticeships for occupations within their sector to make them world class. Trailblazer activity will help to create a sustainable employer model for future

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apprenticeship development. The first trailblazers were announced in October 2013 with a second phase in March this year.

The first trailblazers were in eight sectors: aerospace, automotive, digital industries, electrotechnical, energy and utilities, financial services, food and drink manufacturing, and life and industrial sciences. They have successfully produced the first apprenticeship standards and most are planning for apprentices to start on them in the next academic year. We want apprentices on these trailblazer apprenticeships to be treated in the same way for minimum wage purposes as other apprentices on government apprenticeship programmes. These regulations therefore add trailblazer apprenticeships to the list of government apprenticeship programmes covered by the apprentice rate.

I remind the Committee of the key benefits of the regulations. First, they uprate the national minimum wage rates in line with recommendations from the Low Pay Commission and, secondly, they add trailblazer apprenticeships to the list of government apprenticeship programmes covered by the apprentice minimum wage rate. I commend the regulations to the Committee.

Baroness Donaghy (Lab): My Lords, I declare an interest as one of the members of the Low Pay Commission when it was first established in 1999. We established the first minimum wage and apprentice rate so I have kept a working knowledge of this subject throughout. The Minister said that the national minimum wage has not only kept up with average earnings but has surpassed them, and I acknowledge that. However, we have to accept that it is still a very low rate and all parties acknowledge that when the economy can afford it these figures should be substantially increased. I also acknowledge that the Government have done their best by accepting the recommendations of the Low Pay Commission. I hope that that will be the case with all future Governments and that the independent Low Pay Commission will continue and all parties will honour its recommendations.

My first point is on the impact of the minimum wage and there is an excellent sentence in the Explanatory Note, which says:

“The Commission’s recommendations are shared judgements rather than the mechanistic products of an economic model. They are strongly based in evidence and involve careful assessments of, among other things the NMW relative to median earnings and the number of jobs covered by the minimum wage”.

I emphasise this because I want to ask the Minister what further steps are being taken so that this impact is fully implemented by making sure that the minimum wage is honoured by employers. What resources are available to check up on the minimum wage implementation? Are we satisfied that we have sufficient staff to carry out the inspections and the check-in? That would be my first question, because, obviously, there will not be any real impact if employers think that they can get away without paying the minimum wage or can fiddle the hours so that there are some on the books and some off the books. We witnessed that in many employment situations, where all the books looked perfect but the workers themselves informed us that

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they did an extra six hours off the books for a lower rate, which took it below the minimum wage. What steps are the Government taking to make sure that that is fully followed up?

My other point concerns the Low Pay Commission itself, which said that the new Government website was insufficient to give information to people who were seeking information on low pay and the statutory national minimum wage. As we have all acknowledged, this is an independent body that we all respect. If it is saying that the revised website is insufficient and inadequate, are the Government taking steps to consult the Low Pay Commission to see whether that information can be improved, to maximise the impact of the minimum wage?

Lord Young of Norwood Green (Lab): My Lords, I thank the Minister for introducing the regulations. We welcome the fact that the Government are accepting the recommendations of the Low Pay Commission. Over the years since 1999, despite the predictions of some of the party opposite that the national minimum wage would result in massive job losses, that has proved to be far from the truth. It has become an accepted way of partially protecting lower-paid workers from even lower wage rates. We cannot rest on our laurels, because we know that, as my noble friend Lady Donaghy said, it is still a low rate; hence the emergence in various parts of the country of a living wage, which is something that we would support. I would welcome knowing what progress the Government think should be made towards the introduction of a living wage. Although they have increased above average earnings, over a period of time there has been some decrease for workers receiving the minimum wage. If we form the next Government, we have said that we will try to ensure that the minimum wage rises faster in the next five years than it has in the recent past, as part of a national mission to tackle low pay and build a new economy with more highly skilled and highly paid jobs. Of course, as a balancing act, which we recognise, we do not want there to be a detrimental effect on jobs. Nevertheless, we think that progress can and should be made.

I have a couple of questions for the Minister, one of which reflects on the point made by my noble friend Lady Donaghy. Can the Minister update the Committee on the levels of national minimum wage enforcements by HMRC? Is the employee rights helpline receiving a greater number of complaints on the minimum wage or not? I would welcome knowing the latest figures.

I was interested in the statistic that 96% of employers think that apprenticeships are beneficial. That is the good news; the bad news is that only about 8% of employers employ apprentices. We still have a long way to go to ensure that we get more and more young people out of unemployment or, indeed, as NEETS, doing no activity at all. So there is still a long way to go. Of course, we recognise the progress made by trailblazers and their necessary inclusion as a part of national minimum wage protection. With those reservations, we support these statutory instruments, and I look forward to the Minister’s response.

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3.45 pm

Lord Popat: I thank noble Lords for their contributions and commend the work of the noble Baroness, Lady Donaghy, on the Low Pay Commission. She raised a couple of issues about whether companies could afford to pay more. We are committed to improving the living standards of low-paid employees. We support businesses that voluntarily choose to pay a living wage or more than the minimum wage, as long as this is affordable and does not cost people their jobs.

The only way to achieve a sustainable increase in wages is to have better economic growth so that companies can afford to pay higher wages, as the noble Lord, Lord Young, mentioned. One of the problems for this country is that while all the figures look interesting and good—manufacturing is up, growth is up and exports are up—our productivity is still static and has not returned to the peak achieved in 2007. Companies need to achieve higher productivity to be able to afford to pay higher wages.

The noble Lord, Lord Young, talked about the enforcement of the national minimum wage. HMRC investigates employers who are not paying the national minimum wage. Those employers will have to pay back arrears owed to workers or face a financial penalty and be publicly named and shamed under the national minimum wage naming scheme. Since HMRC began to enforce the national minimum wage in April 1999, it has identified more than £54 million in pay arrears, affecting more than 229,000 workers, and has carried out more than 65,000 employer interventions.

The noble Baroness, Lady Donaghy, asked what steps had been taken to ensure that the national minimum wage is enforced. I have just responded to the question asked by the noble Lord, Lord Young, on that. We are committed to increasing compliance by making sure that HMRC investigates every complaint that it receives. As I said, since 1999, the pay of some 229,000 workers has been looked into where companies have not complied with the regulations. We are committed to providing effective guidance. We will consider the Low Pay Commission’s views carefully and consult it further to ensure that our website provides better information to people who want to make a complaint about low pay.

These regulations increase the national minimum wage from 1 October. They also allow trailblazer apprentices to be treated in the same way for minimum wage purposes as other apprentices on government apprenticeship programmes. A number of specific points have been raised. I shall look at Hansard and will be happy to write to noble Lords if I have not covered all the points that were raised.

As I said, the Government are committed to the minimum wage because of the protection it provides to lower-paid workers and the incentives to work it provides. It is crucial that people at the lower end of the market are paid more. It is important that they are paid a living wage to enable them and their families to survive. This Government have also introduced fiscal measures, such as increasing the personal allowance. Although the relevant rate has gone up by between 2% and 3% over the last four years, pay net of tax has gone up due to the higher personal allowance. That allowance will go up to £10,500 from April 2015.

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The regulations we have been discussing today support the Government’s commitment to delivering fairness, supporting business and delivering world-class apprenticeships. I believe that they are fair and appropriate. The increase in the adult rate will maintain the relative position of the lowest paid while also being one that business will be able to afford.

Lord Young of Norwood Green: I just want to make sure that the noble Lord is going to answer in writing—if he does not have the figures here—whether the number of complaints made to the employee rights helpline has increased and how many relate to the national minimum wage. I am trying to read the body language of the civil servants. If those figures are not available, then by all means he can write to me.

Lord Popat: My Lords, I do not have the figures in my brief but I am very happy to write to the noble Lord. I commend the two sets of regulations to the Committee.

Motion agreed.

National Minimum Wage (Amendment) (No. 3) Regulations 2014

Motion to Consider

3.50 pm

Moved by Lord Popat

That the Grand Committee do consider the National Minimum Wage (Amendment) (No. 3) Regulations 2014.

Relevant document: 6th Report from the Joint Committee on Statutory Instruments

Motion agreed.

Video Recordings Act 1984 (Exempted Video Works) Regulations 2014

Motion to Consider

3.51 pm

Moved by Lord Bates

That the Grand Committee do consider the Video Recordings Act 1984 (Exempted Video Works) Regulations 2014.

Relevant document: 5th Report from the Joint Committee on Statutory Instruments

Lord Bates (Con): My Lords, protecting children from inappropriate content is vital. We must ensure that consumers have the information they need about the age suitability of video products. For 30 years the Video Recordings Act 1984, which I shall call “the Act”, has helped address these important issues.

Under the Act, certain video material supplied to the public as physical products—for example, DVDs or Blu-ray discs—must be classified by the British

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Board of Film Classification and appropriately labelled. The public are accustomed to seeing the familiar BBFC age ratings on these products; and retailers are used to ensuring that they do not sell or rent products with BBFC “12”, “15”, “18” or “R18” classifications to anyone younger than the age on the label. It would be an offence for them to do so.

There is now a significant gap in these protections, which the Government aim to address with the regulations. Currently the Act allows for exemptions for video works that are primarily about music, sport or religion, or are designed to inform, educate or instruct. Unless they contain specific types of strong material, such videos do not have to be submitted to the BBFC, do not require any age labels on their packaging and can legally be supplied to any age groups. These exemptions have been in place since the Act was first introduced, when legislators could not have envisaged the wide variety of video works that we see today. A large proportion of video works released in these genres are still family friendly. However, in 2014 we see, for example, sports DVDs containing strong violence, and music DVDs featuring highly sexualised performances and lyrics. This means that children are at risk of exposure to harmful content.

This was picked up by, for example, Reg Bailey in the government review, Letting Children be Children. Responses to a public consultation on the issue overwhelmingly supported changing the exemptions so that in future products in the exempt genres must by law be classified by the BBFC if they are unsuitable for children. By that, we mean children under the age of 12.

These regulations set the exemption threshold at a lower point than at present, so that music, sports, religion and education-themed works in future must be classified if they contain any material that would be classified as BBFC “12” or higher. Video works in these genres that are suitable for young children will remain exempt.

The regulations work by listing depictions which, if featured in a product, will mean that it must be submitted to the BBFC. These relate to, for example, the use of violence, sexual themes, self-harm and other dangerous behaviours that might be copied by children. The definitions were drafted in collaboration with the BBFC to accurately match the standards that are used in practice. Industry stakeholders indicate that they are comfortable with them. However, to guide businesses that may in future be deciding whether their music, sport, religion and education video work must be submitted for classification, the BBFC is creating an online resource that will include extracts from previously classified films to illustrate the various definitions more clearly. The Government ran a full public consultation on the policy over 2012 and 2013, and consulted industry stakeholders and other groups during the period. Many responses were received and they have informed the regulations that are before the Committee today. Officials will monitor the impact of the regulations and the Government are also committed to carrying out a formal review of the policy three years after its implementation.

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The Video Recordings Act 1984 covers only offline, hard-copy recordings. However, the Government are committed to ensuring that more online videos are also age-labelled. I welcome the increasing use of the BBFC’s voluntary classifications for online videos, and I am particularly pleased that the music industry and the BBFC are now working together on developing plans to pilot age ratings for online music videos using the same standards that are set out in the regulations.

In conclusion, these regulations will make a real difference to child protection and consumer confidence. They will ensure that hard-copy music, sport, religion and education videos coming on to the market in the future cannot be supplied directly to children. Consumers will be very clear about the nature of the material contained in these products and parents will be able to make more informed decisions about the products that they wish to allow their children to view. I commend the regulations to the Committee.

Lord Alton of Liverpool (CB): My Lords, while I was a Member of another place, I promoted an amendment to protect children from gratuitously violent video material. Happily, an alliance of Members from across the political divide came together and we persuaded the Government of the day of its merits. Ultimately it was down to your Lordships’ House to then incorporate that amendment into law, which it did. It will come as no surprise, therefore, that I warmly welcome the Bailey review recommendations for a new approach towards protecting children from adult content in music videos, and I welcome what the noble Lord, Lord Bates, has said today, especially about extending the criteria and the logic of these regulations to online as well as offline material.

I would like particularly to mention an issue that I have raised with the noble Lord, Lord Gardiner of Kimble, on previous occasions, and that is the use of suicide sites. That has led to deaths, including the death of a child at a school where just a few months ago I gave out the school prizes. The child had visited one of these sites and had taken their own life. Indeed, the headmaster of that school told me subsequently that five other students had also been visiting the same site. This is not an abstract or theoretical question.

Perhaps I may turn specifically to the regulations before the Committee. I have to say that it perplexes me that any exempt DVD, be it for music, sport, religion or education, should have been able to show any of the depictions which are listed in the criteria set out in paragraphs (a) to (n) of proposed new subsection (1ZA) of the 1984 Act. Whether we are talking about suicide or self-mutilation, the use of illegal drugs and other very inappropriate imagery, these are all either objectively present or not. If they are, the DVD in question should not have been exempt. However, the depiction listed in paragraph (o) prompts some concern, and is the paragraph to which I should like to draw the attention of the Minister and the Committee. It states that a work is not exempted if,

“(o) it includes words or images that are intended or likely (to any extent) to cause offence, whether on the grounds of race, gender, disability, religion or belief or sexual orientation, or otherwise”.

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Unlike the other depictions I have referred to, this depends on a very subjective category which is heightened by the fact that paragraph (o) makes it plain that “intent” and “extent” are completely irrelevant. At a time when there has been an increase in illiberalism and intolerance towards people of faith, it is not difficult to imagine that any religious DVD could cause offence to someone. Something that is violent or hateful and encourages such behaviour would in any event be covered by other statute. When we consider that according to the wording of paragraph (o) it does not matter whether the creators of a religious DVD intended it to cause offence and that it does not matter how minor the offence is, these regulations seem to threaten implications that the Explanatory Memorandum makes plain are simply not intended. As currently drafted, the regulations may well move us from one pole where no religious DVDs are rated to a place where as a matter of practice all religious DVDs will need to be rated.

4 pm

I dare say that the Minister will respond by saying that the BBFC has balanced ways of assessing offence and that I have no cause for concern, but in response I would say that I have no difficulty with the BBFC’s approach. My problem is this: what if someone with an agenda asks a judge to adjudicate what the law actually says rather than what is the BBFC guidance? The judge would have to make his or her assessment ultimately on the basis of the letter of the conditions set out in paragraph (o), not on the basis of the BBFC guidance or, indeed, of the Explanatory Memorandum. Page 5 of the 2014 BBFC guidelines states:

“Potentially offensive content relating to matters such as race, gender, religion, disability or sexuality may arise in a wide range of works”,

but adds that,

“the classification decision will take account of the strength or impact of their inclusion”.

That is quite different from the provision in paragraph (o) where the extent of the offence caused is irrelevant. If someone with an agenda finds a religious DVD offensive, then regardless of the fact that it was not intended to cause offence and regardless of the limited extent of the offence that has been caused, it is likely that the judge will be compelled to rule in a way that would require the BBFC to change its guidelines. The default position is that paragraph (o) would be the law.

I suspect that the Minister will revert and quote from paragraph 8.7 of the Explanatory Memorandum which states:

“Under the current legislative framework, it is not possible for the BBFC Guidelines to be referred to in the legislation”.

But surely this is the nub of the problem. Moreover, it is compounded by the fact that the provisions made in Section 2A of the Video Recordings Act 1984 mean that video games can be amended by regulation, and under subsection (6) that these regulations,

“may make provision by reference to documents produced by the designated authority”.

This clearly implies that the classification guidelines produced in the case of video games by the Games Rating Authority, an arm of the Video Standards

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Council, could be referenced for exemption criteria for video games in the legislation. Why can this legislation similarly not make provision by reference to documents produced by the BBFC? That would be consistent and logical, and it would surely allay fears.

In that context, I am looking for some urgent reassurances from the Minister. First, can he explain how and why the BBFC guidance would be pre-eminent over paragraph (o) in a court of law? Secondly, can he explain why paragraph (o) sets a different threshold from the BBFC guidance? Thirdly, can he explain why Section 2A(6) of the Act makes it plain that legislation can,

“make provision by reference to documents produced by the designated authority”,

in this case the Games Rating Authority, although the Act does not make and will not make as a result of these regulations any parallel provision in relation to the BBFC, and why he thinks this is satisfactory? Finally, can he assure me that if a church or a para- church charity hosts a conference and films all the talks, songs and music at the event and offers them for sale to conference attendees, an interested person who could not attend and sells at a small profit, which could then be used to reinvest in the church’s work, to perhaps 70 people, would not be burdened with the requirement of a rating? If they did, paragraph (o) would have a very clear, chilling effect because the costs involved would put this beyond the reach of most churches.

Your Lordships’ House has only recently amended the Public Order Act to remove the word “insulting” from Section 5 because the view was that the threshold of “threatening, abusive or insulting” was too high. It therefore seems very odd that today we should be contemplating the extraordinarily low threshold in paragraph (o).

Baroness Howe of Idlicote (CB): My Lords, like the noble Lord, Lord Alton, I have a number of issues to raise but, first, I welcome these new regulations. Like the noble Lord, I seek assurances from the Minister about some of the content.

As we know, the Video Recordings Act currently exempts, music, sports, educational and religious DVDs from having to be classified, unless they show to a significant extent certain types of material. Sadly, that approach has opened the door to abuse. Music and sports DVDs, for example, have been found containing adult content and, in that context, it is right that such videos should not be exempt and children should be protected from such content.

We debated an amendment to the Digital Economy Bill in 2010 that would have caused similar outcomes to those sought in these draft regulations. The then Government gave an assurance that they would revisit the issue. Since that time, the Bailey review also recommended legislation to close the loophole. The resulting regulations that are before us make it clear that exempted works that depict content such as suicide, self-mutilation and sexual activity that is not deemed to be mild must be rated. Depictions that result in the DVD work losing its licence are listed in the regulations in proposed new paragraphs (a) to (o) and have been explained, but I shall refer to them.

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I warmly welcome these provisions, although I have some concerns about the use of the word “mild”. Like the noble Lord, Lord Alton, I believe that there is cause for some concern. The provision states that any exempted work should lose its exemption if,

“it includes words or images that are intended or likely (to any extent) to cause offence, whether on the grounds of race, gender, disability, religion or belief or sexual orientation, or otherwise”.

Why is this cause for concern? Unlike the conditions listed in proposed new paragraphs (a) to (n), “offence” is a very subjective category with a low threshold. Moreover, that is compounded in paragraph (o) by two facts. First, the issue of whether of a work was designed to cause offence is irrelevant. Secondly, it does not matter how minor the offence is—if it causes some offence to any extent, the work loses its exemption.

It seems to me that all religious DVDs would have to be rated. Consider a DVD that includes a hymn declaring that Jesus was the son of God. That would be offensive to Muslims, who believe that Jesus was only a prophet. What about a Muslim DVD that says that Jesus was not the son of God but only a prophet? That would cause offence to some Christians.

The Government seek to reassure us in paragraph 8.6 of the Explanatory Memorandum that there is no need for concern. It states that,

“the BBFC already makes determinations about whether the content is or is not discriminatory for other video works … and it does this from an objective viewpoint and based on principles set out in its classification guidelines”.

However, there is no reference in the Video Recordings Act to the detail of classification guidelines and how they might impact on a particular film or other work. The Government are right that the BBFC guidelines already cover discrimination. Page 5 of the 2014 guidelines says:

“Potentially offensive content relating to matters such as race, gender, religion, disability or sexuality may arise in a wide range of works … the classification decision will take account of the strength or impact of their inclusion. The context in which such content may appear also has a bearing”.

None of this nuance is in the legislation.

The Minister will no doubt respond by saying that such a condition of words and images that may cause offence is already in effect for video games— Section 2A of the Video Recordings Act—and, of course, that is correct. This insertion to the law was made through Section 40 of the Digital Economy Act 2010, the debate on which I have already referred to. However, the Secretary of State can amend these criteria by regulation and under Section 2A(6) these regulations,

“may make provision by reference to documents produced by the designated authority”.

This implies that the classification guidelines produced for video games by the Games Rating Authority—an arm, of course, of the Video Standards Council—could be referenced for exemption criteria for video games in the legislation.

My difficulty is that, as the letter of the law we are asked to sign off today has a different threshold from the guidelines, there would be nothing to stop an easily offended person from going to court claiming

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that something that had caused them offence should not be exempt. In this context, the judge would have to apply the law as it is set out before us today with its extraordinarily low threshold and find in favour of the person who is easily offended. This would then force the BBFC to change its practice.

In raising this concern I want to be clear that I am not arguing that all religious DVDs should be exempt. My concern is simply that the threshold in proposed new paragraph (o) is so low that we risk moving from one extreme—where all religious DVDs are exempt—to the other where, as a matter of practice, most, if not all, would not be because of their potential to cause offence to those from a different faith tradition or radical secularist point of view.

I also want to be very clear that I am not suggesting that people have such a low tolerance of views contrary to their own that most would claim to have been offended. As the regulations before us today are defined, however, it would only take some to explain why they were offended for a judge to have to rule with the effect that most religious works would lose their exemption. I have a similar concern relating to the robustness of the use of “mild” in the regulations. Of course, I understand that the BBFC has a good definition, but a judge will have to interpret the law and these regulations make no reference to the BBFC’s guidelines.

I hope that the Minister can explain, first, the mismatch between the letter of the proposed paragraph (o) on the one hand and the BBFC’s guidelines and stated intent in the Explanatory Memorandum on the other. Secondly, can he explain the extraordinarily low threshold in (o) where the potential offence is subjective and the intent of the producer and the extent of the said material is irrelevant? Thirdly, can he explain the rationale for allowing reference to guidelines for video games in statute but not video works? Finally, perhaps as a very minimum, can he provide a reassurance that if judges apply the letter of new paragraph (o) such that most religious DVDs, including DVDs of religious services, find themselves having to be rated, the Government will then amend the legislation?

4.15 pm

Lord Clement-Jones (LD): My Lords, I thank my noble friend for his introduction to the regulations. Over the past 30 years, the Video Recordings Act 1984 has certainly attracted parliamentary debate on a number of occasions. As noble Lords will recall, the Act had to be revived by a special Act in 2010 because of the then Government failing to notify the European Commission of the classification and labelling requirements of the Act.

I welcome these regulations but want to reflect briefly on the process by which they came about. Many of us present today were assured during the passage of the Digital Economy Bill that the situation of exempted works which contained unsuitable material would be dealt with by amendments to the Act. Indeed, we withdrew amendments on the basis that that would happen. Then the coalition Government came in and I asked an Oral Question about progress in March 2011, but it was made clear that the consultation had still not begun. Lack of an evidence base was cited as the reason.

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In June 2013, my noble friend Lord Storey pursued the matter further in an Oral Question. The consultation had, it seemed, been completed and the intention to legislate had been recently announced but my noble friend Lord Gardiner said that definitions were still being formulated for violent sexual behaviour and swearing,

“so as to ensure that they identify all products that are unsuitable for younger children”.—[

Official Report

, 12/06/13; col. 1596.]

Finally, four and a half years after the passing of the Digital Economy Act, these regulations, which amend the 1984 Act, see the light of day. As I say, I warmly welcome the regulations, and the fact that they will fall within the BBFC classification regime, but how can we account for this snail’s pace of legislation when faced with such an important issue? How can we learn the lessons? Moreover, where are we with the original Digital Economy Act changes to the VRA regarding video games? Is it the case that certain sections still remain to be activated and amendments made? That certainly seems to be the case. If that is so, why?

My noble friend mentioned the online situation but, of course, that is on a voluntary basis. Will my noble friend explain the corresponding regimes that apply to videos and video games on the internet? I asked my noble friend Lord Gardiner a Question on this in March this year. Surely, is it not as important that online content is addressed, as physical product is under the VRA? Under voluntary arrangements, mobile operators are offering better protection and filtering against unsuitable content than wi-fi service providers. Is the DCMS capable of addressing this issue at any speed? How long must we wait before the Government review the situation? Can we not speed up the process and learn the lessons of the past?

Lord Stevenson of Balmacara (Lab): My Lords, this has been a very interesting and important debate, although a relatively brief one. Many important points have been made to which I am sure the Minister will respond.

I broadly welcome the direction of travel represented by these regulations but have some questions and reservations which I am afraid are slightly at variance to those we have heard already. I worry a lot about restrictions being introduced on another creative activity even though I understand the dangers that may be exposed by that, but it is important that we bear that in mind.

First, we are exercising censorship of what may appear in front of people who wish to buy it, albeit it is obviously a restricted class, through a private company—the BBFC. I am not sure that we quite understand what the relationship between the BBFC and the Government is at the moment. It has changed a lot in the last 20 or 30 years since I was last involved in it. If the Minister has the information to hand, will he reflect on such matters as whether there is a formal memorandum between the Government and the BBFC in terms of their operations? Will the Government exercise control over the appointment of its board and other related matters? It is important to have that in context so that we understand the impact that these

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regulations may have. I have a general concern that the Government should not expropriate functions and responsibilities which should be exercised through Parliament to private corporations without providing serious reasons and explanations.

Of course, noble Lords will recollect that the 1984 Act was passed at a time of particular concern about videos. I think that the term “video nasty” was widely used. The regulations that were brought out were perhaps a reaction and, in some senses, account for why the BBFC is in its present form. However, times have moved on. As I will come to in a few minutes—and as referred to by other speakers—we have to be sure that what is being proposed now has a fitness and longevity that will be appropriate for the fast-changing nature of the technology which it is attempting to arrange.

I was glad to hear that the Government will be reviewing these regulations within three years. As the Minister said, that is a good thing, although a number of the points and questions raised by noble Lords already suggest that some of the issues are more important and might need more attention before then.

My first point, therefore, is about the status of the body that is being entrusted with the regulations that we are considering. My second point concerns the question of format. We are talking about video material in physical form. The impact, perversely, is largely on the purchasing decisions of people who are under 12, given that that, to a large extent, is the focus of the regulations. My personal view is that a very small number of citizens of this country who are 12 or under are going to be purchasing the videos we are talking about. I am interested to know whether the Minister has any figures relating to the likely impact on the market. If it is anything like what happens in my household, these children are much more adept at the virtual world and will be seeking out the information they wish and the material they want to watch in a non-physical form. We have talked about that issue; we still lack any real, credible strategy in relation to it. This particular set of regulations, although long promised and arriving at an interesting time, is in fact missing the boat in relation to where the majority of the viewing public are going to be—certainly those under 12.

My third point concerns the question that has been raised to some extent by the problem of the wording of the regulations, which seek in a curious way to specify the carve-out, not by putting down a simple principle about what would and would not be considered, but by listing in exhaustive detail the sort of things that would create a break across the various guidelines.

In its briefing for this meeting, the BBFC made it very clear that it was concerned that there was no blanket requirement that all video in physical form should be subject to BBFC review. It has a point and I would be interested to know on what basis the Minister has decided—I think I am right, but, again, I would be grateful if the Minister could confirm it—that the onus for submitting material to be classified will still lie with the producers of the material. Therefore it is possible that those who are producing material that perhaps is veering towards the boundary of the 12 certificate may take a view that the material does

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not fall within the new, enlarged carve-out. Would that constitute a defence in any court proceedings that might be brought forward as a result? The guidelines are only guidelines. The discrepancy between what the BBFC is saying and doing in practice and what is now going to be in the regulations in paragraphs (a) to (o) is going be a problem, not least because the BBFC—rightly so, although the timescale is slower than I would have liked—tries to keep in touch with the views of the public it is serving by carrying out triennial surveys and consultation with people about whether the guidelines it is currently using need to change and, if so, to what extent.

The regulations contain a set of statements, some of which, as has been said, seem to be rather loosely drafted. The noble Baroness raised the question of religion, but some of the drafting concerning sex and violence is equally culpable. Yet we will also have, by the time these regulations are in mid-flow, a new set of guidelines from the BBFC about where it thinks the boundaries of the 12 certificate are going to be. Can the Minister explain how we are going to reconcile that change?

It is perhaps not as important an issue in reducing the threshold from 18 and R18 to 12, but it is well known in the world of classification that, in Britain, we have an obsession with language, which is in stark contrast with, for example, the Nordic countries, which have a very different view of these matters. We are relatively relaxed about physical violence and a bit squeamish about explicit sexual activity, including sexual violence. It is almost the reverse situation in the Nordic countries. A lot of this will lie in education. The real remedy to this issue is making sure that parents take responsibility for what their children see and understand, and talk to them about what they do. To take examples from the list (a) to (o), how on earth are people to judge whether something includes,

“words or images intended or likely to convey a sexual message (ignoring words or images depicting any mild sexual behaviour)”—

a point picked up by the noble Baroness, Lady Howe? How are they to judge whether it affects,

“an animal that exists or has existed in real life”?

How far back do we want to go? The same goes for whether a human is being represented in proper description or in matchstick format. These can be very trivial or very difficult matters and should not take us away from the importance of making sure that children are not unreasonably exposed to images that they should not receive. On the other hand, I think that there are ways of doing it. It might have been better if the approach taken had been to try to work with what the BBFC has published as its principal guidelines without attempting to define them in a way that is bound to cause trouble.

Those were my three points, but as I said at the start of my speech, I am not against the direction of travel. I shall look forward to hearing the Minister’s response.

Lord Bates: My Lords, I am grateful for noble Lords’ comments and questions. Once again, we find an instrument that drifted through the other place

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with the mildest breeze of comment and scrutiny coming up against the deeply entrenched expertise that your Lordships’ Committee has shown today. I counted some 16 specific questions that noble Lords asked me to address. I shall do my best to do that, but I suspect that I will need to write, because a considered reflection might be useful and a fair response to the legitimate concerns that have been raised here today.

Let me go through as many of the points as I can, so that we might get at least some comments on the record. As I say, I shall write to noble Lords and expand on them. The noble Lord, Lord Stevenson, asked whether distributors would understand the definitions well enough in deciding whether to submit a product to the BBFC. The definitions are fairly detailed. Terms such as “mild” are long-standing features of the BBFC’s classification guidelines and are familiar to many video distributors and consumers. To help further understanding, the BBFC is preparing new guidelines specifically for industry, which will include clips from previously classified films to illustrate how definitions might be interpreted.

On the nature of the relationship between the Government and the BBFC, the BBFC is designated by the Secretary of State to classify video works. It is an independent body, but it is required to make an annual report to Parliament. Many noble Lords have welcomed the review after the regulations have operated for three years as being a sensible way forward, so that we might see from day-to-day experience whether fears are borne out in practice. Corrective action can be taken at that point.

Under the regulations, music, sport and education-related themed products will lose their exemption. This was the area that many noble Lords focused on. The latest guidelines issued by the British Board of Film Classification were produced after a major consultation exercise involving over 10,000 people. The listing, categorising and wording reflect what came forward from the consultation process.

4.30 pm

The noble Baroness, Lady Howe, asked about definitions and particularly the word “mild”. I appreciate that we are going into legal definitions, which will be tested in due course, but, again, there is a well established definition of what, for example, “mild sexual activity”, “mild sexual behaviour” or “mild violence” might mean in film classification. It was to be expected that that definition, which is already in place, would continue to be used as a matter of course for implementing these regulations.

I pay tribute to the noble Lord, Lord Alton of Liverpool, for his long-standing work in this area and for his expertise on suicide issues in particular. This is exactly the type of material that we need to bring within the ambit of such regulations. He asked what actions the Government are taking to tackle online material about suicide methods. The Government’s suicide prevention strategy reflects concerns about the misuse of the internet to promote suicide and suicide methods. We are committed to working with the internet industry to provide positive access to people who are contemplating suicide or visiting these sites. The industry

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has worked on positive sites in this area, such as through Google and Facebook collaborations, focusing on particularly vulnerable people.

My noble friend Lord Clement-Jones asked what we were doing about online material. The Video Recordings Act applies only to physical recordings such as DVDs, Blu-ray discs and VHS tapes. The market for hard-copy video is still significant, but we are also committed to ensuring that parents have the information that they need about video content that their children may access online. The Government are working with the industry to ensure that more online videos are age-labelled, using, for example, the BBFC’s voluntary online classification process. Indeed, we hope that that process will also reduce the costs of obtaining these classifications, which was a concern raised by the noble Lord, Lord Alton. Currently 30 online platforms, including iTunes, Netflix and Microsoft, use this.

My noble friend Lord Clement-Jones also asked about the delays. Particularly in the context of videos games, the law requires that all video games unsuitable for younger children must be classified by the relevant designated classification body, the Video Standards Council, which is also known as the Games Rating Authority. The Government brought this law into force in 2012, since when all games unsuitable for younger children must have a 12, 16 or 18 rating. It is an offence for retailers to sell a PEGI-rated game to someone who is not old enough to play it.

My noble friend also asked about internet service provider family-friendly filters. These are well advanced with BT, Sky, TalkTalk and Virgin Media, which together constitute almost 90% of the UK’s broadband market. They are now all providing family-friendly network-level filtering to new customers. The ISPs are committed to rolling out this filtering to all existing customers throughout 2014.

Lord Alton of Liverpool: Can the Minister tell us how many children comprise that 10% who are not covered by the filtering at present? What is the actual number? Also, when do the Government intend to bring forward measures to make compatible these various criteria for offline and online? How long must we wait for that to happen?

Lord Bates: The noble Lord asks a very pertinent question, but I do not necessarily have the numbers at my fingertips to be able to provide him with the pertinent answer. I will endeavour, after the Committee, to get some further information on that.

My noble friend Lord Clement-Jones asked why this took so long. This was a long process because of the consultation. I understand that we are getting some criticism from colleagues who say, “Have you actually got this right? Have you actually talked to people? How is this actually going to work in practice?”. However, we also get criticised for taking too long because we are consulting too much. This is always a difficult balance to get right, but we totally understand the point about promises that have been made in the past and need to be honoured. These measures are doing that and, we hope, doing it in a way that is actually going to work.

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The noble Baroness, Lady Howe, asked whether the condition in new paragraph (o) in the regulations is set too low. The industry, child protection organisations and other organisations supported the regulations, including the definition in new paragraph (o) as drafted. The Government will monitor how the regulations work in practice.

The noble Lord, Lord Alton, asked why we cannot refer to BBFC guidance. Section 2A(6) of the Act allows regulations to refer to guidance when it comes to conditions relating to video games. We do not have a similar power in respect of guidance for video works, which these regulations address.

Also on new paragraph (o), as with sport, music and educational products, video works primarily about religion will lose their exemption from classification only if they contain any of the material set out in the regulations. It will be for the BBFC to determine how they should then be classified. The BBFC is already experienced in making classification decisions about religious themes—for example, when they appear in films. The noble Baroness, Lady Howe, asked whether people might take offence at hymns et cetera. I accept that the question needs to be addressed, but I cannot quite see that BBC box sets of “Songs of Praise” are necessarily going to come within the ambit of the Act. However, again, we have to be careful with the wording to ensure that that does not happen, that we catch the material that we want to catch and that we do not inhibit the excellent material that we want to see more widely viewed.

The noble Lord asked whether the BBFC guidance is inconsistent with new paragraph (o). The BBFC guidance applies in respect of those works that it is to classify, while new paragraph (o) applies in deciding whether a work should be classified. If a work is caught by the condition, BBFC guidelines will then be applied to decide, on objective grounds, what classification it can be given, including, for example, U.

I have tried to respond to most of the questions that have been raised and I again thank noble Lords for sharing their expertise and their concern to ensure that these regulations work in practice as they are intended to do. I undertake to write to noble Lords with further reflections on the points that have been made. With that, I commend the regulations.

Motion agreed.

Equality Act 2010 (Equal Pay Audits) Regulations 2014

Motion to Consider

4.40 pm

Moved by Baroness Northover

That the Grand Committee do consider the Equality Act 2010 (Equal Pay Audits) Regulations 2014.

Relevant document: 7th Report from the Joint Committee on Statutory Instruments

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Baroness Northover (LD): My Lords, I am pleased to present these draft regulations to the Committee. They are intended to ensure that employment tribunals require employers who have breached equal pay law to carry out an equal pay audit.

These regulations are needed because, despite the introduction of equal pay legislation in the 1970s, there remains clear evidence of a persisting pay gap between men and women. Our concern is that a certain proportion of this disparity is due to the unlawful pay practices of some employers. Although there has been welcome progress, the Government believe that there is still more to do to help women move towards overall pay parity with their male colleagues. The key to this is continuing to build on the voluntary initiatives that we have introduced, coupled with greater transparency and backed where appropriate with tough measures to hold to account those employers who have been found to have flouted the law, whether knowingly or not.

That is why from 1 October, subject to parliamentary processes, we propose that where an employer has been found by a tribunal to have breached the equal pay or pay-related sex discrimination provisions in the Equality Act 2010, he or she will, by virtue of Regulation 2, be subject to a requirement to conduct an equal pay audit. The regulations contain certain exemptions and exceptions to this requirement, which I will explain shortly. Once undertaken, the results of an audit will enable the employer to identify any action that needs to be taken to prevent equal pay law breaches from continuing or recurring. Moreover, to ensure that this is a transparent process, under Regulation 9 the employer will also be required to publish the results of his audit. This will afford affected employees the opportunity to view the results and consider further action, where it is warranted.

The legislation providing for equal pay between men and women who do the same or equal-value work for the same employer has been in force since 1975. According to statistics published in December 2013 by the Office for National Statistics, the overall median gender pay gap still stands at 19.7%, although this is considerably lower than the figure of 25% 10 years ago. The overall figure does not tell the full story, however. For women under 40 who work full-time, the pay gap has all but been eliminated, but for older women, many of whom take career breaks in order to bring up children, the disparities in pay with their male colleagues become more marked. That is also true for part-time workers.

We are taking a wide-ranging approach to addressing this challenge. For example, we are promoting greater transparency on gender employment issues through banning pay secrecy clauses and promoting “Think, Act, Report”, a framework that encourages employers to think about gender equality on key issues such as recruitment, retention, promotion and pay—it currently covers over 2 million employees in more than 200 leading companies. We have also extended the right to request flexible working to all employees from this year and will be introducing a system of shared parental leave from 2015. Both these measures allow more women to remain at work and so avoid falling behind in pay terms. We have strongly promoted the work of the

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Women’s Business Council, we have implemented the work of the noble Lord, Lord Davies of Abersoch, on women on boards and from 2015 we will introduce tax-free childcare for working families.

The Committee will, I hope, therefore recognise that the Government are working in many ways to promote greater equality and tackle discrimination in the workplace. However, in cases where unlawful pay discrimination still persists, the regulations before the Committee represent a further important addition to our work.

These regulations will ensure that employers found by an employment tribunal to have broken equal pay law undertake a systematic evaluation of their pay and reward systems to ensure that existing breaches do not continue and that future breaches do not occur. The regulations provide that an equal pay audit should identify any differences in pay, including non-contractual pay, between men and women doing the same or equal work in the organisation.

4.45 pm

Under Regulation 6, should differences in pay be discovered that cannot be explained or justified other than by reference to the gender of the employees, the equal pay audit must also include an action plan for eliminating those differences. However, we have also included safeguards in Regulation 3 to ensure that employers are required to undertake equal pay audits only when it is appropriate to their particular circumstances.

Therefore, under Regulation 3, employment tribunals must not order employers to carry out equal pay audits when any of the four exceptions set out in the regulations apply. These exceptions are, first, where an employment tribunal considers that an audit completed in the previous three years meets the requirements set out in the regulations. An example of this might be where an employer has, within three years of the tribunal’s finding of a breach, undertaken a voluntary audit that contains all the information that would be required under Regulation 6.

The second exemption is where it is clear without an equal pay audit whether any action is required to avoid equal pay breaches occurring or continuing. An example would be where all the jobs in the employer’s organisation are clearly graded and where the information about the employer’s grading and pay system is available to all employees who wish to see it.

The third exemption is where the breach gives the employment tribunal no reason to think that there may be other breaches. This could be where the employer has transparent pay systems and policies and it is clear to the tribunal that the breach is a one-off, rather than a result of systemic practice on the part of the employer.

The fourth exemption is where the disadvantages of undertaking an equal pay audit outweigh the benefits. An example of this could be where the tribunal accepts that the employer is in financial difficulty and the cost of undertaking the audit could send the employer into liquidation.

We do not want the audit to be ordered when any of these four situations apply. In particular, we want to ensure that employers who have already taken action to put in place robust and compliant pay structures

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are not forced to duplicate this work. Under Regulation 4, the requirement to carry out an equal pay audit will also not apply to employers whose business is a micro-business or a new business. We believe that it is right that new and micro-businesses should initially be shielded from a requirement to undertake equal pay audits. This 10-year exemption period recognises that a fledgling or very small business might be disproportionately affected by the costs of having to do so.

For the purposes of these regulations, a micro-business is a business with fewer than 10 employees immediately before the date on which the employment tribunal determines that the employer is in breach of equal pay laws. Businesses will be exempt from these regulations as long as they employ fewer than 10 people on the day before the equal pay judgment is made.

A new business is a business that has been trading for 12 months or fewer on the day the equal pay claim is made to an employment tribunal. This exemption will apply only when the business is 12 months old or less on the day the equal pay claim is made. I should make it clear that this does not mean a 10-year get-out for every employer not covered by the regulations at the outset. A micro-business would continue to benefit from this exemption only as long as it remains a very small enterprise, while a new business will of course lose its protection after 12 months.

While the schedule to these regulations sets out the definition of micro and new businesses in more detail, I should note for the benefit of the Committee that the Joint Committee on Statutory Instruments has reported that the regulations require further explanation of the definition of a business relating to these exemptions, in particular a situation where what might appear to be a micro-business is in fact part of a larger business consisting of linked enterprises. I thank that committee and the Secondary Legislation Scrutiny Committee for the thorough and expert consideration that they have given these regulations.

In response to the JCSI’s comments, I reassure the Committee that we believe it should be sufficiently clear to a tribunal, based on the facts of each case, as to what would constitute a separate business. I hope that it will also reassure noble Lords if I point out that, if a business thinks that it has been ordered to undertake an equal pay audit when it fact it should have been exempt because it was properly a micro-business, it can, of course, appeal the tribunal’s order. Moreover, no very small business will be at risk from these regulations if it observes the law and operates in line with equal pay requirements.

After an equal pay audit has been ordered by an employment tribunal and completed by the employer, Regulation 9 requires the employer to publish the results of the audit so that it is accessible to the staff to whom the audit relates. This must be done by publishing the audit result on the business’s website. Under Regulation 9(5)(a), the employer will also be required to provide the employment tribunal with evidence that they have complied with this requirement. Should an employer fail to comply with an order to carry out an equal pay audit, employment tribunals have the power under Regulation 11 to order employers to pay a penalty to the Secretary of State, which must not exceed £5,000.

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Regulation 11(2) also provides employment tribunals with a further power to impose subsequent financial penalties on employers that do not undertake their audits or whose audits are not signed off by the employment tribunal. These penalties can be repeated until such a time as the employer fully complies with the tribunal’s equal pay audit order.

In terms of financial implications for business, our analysis of employment tribunal figures over recent years indicates a downward trend in equal pay claims that are successful after a substantive employment tribunal hearing. Based on these figures and taking account of the exceptions and exemptions contained in the regulations, we have estimated that an average of only two or three equal pay claims a year are likely to result in the imposition of an equal pay audit order. This means that the overall upfront cost to business of these regulations is likely to be low. The average cost of conducting an audit by a medium-sized employer has been estimated at around £13,000, so if three audits were ordered in a year the appropriate cost to business would be less than £40,000. It is important to point out that this cost will fall only on those employers who have been found to be in breach of the law. Law-abiding employers will not have to bear this burden. Our assessment of costs has been validated by the Regulatory Policy Committee.

We do not intend to publish new guidance on equal pay law or on how to conduct an equal pay audit. This is because a substantial amount of information and advice is already available for employers on both these topics; we do not want to replicate what already exists. The Equality and Human Rights Commission has published a statutory code of practice on the equal pay provisions in the Equality Act 2010. It has also published guidance on how to carry out equal pay audits, including a toolkit to aid employers wishing to conduct such audits on a voluntary basis. Moreover, the EHRC has recently published two new guidance documents on gender-neutral job evaluation schemes, which will assist employers’ understanding of the essential requirements for job evaluation schemes. In conjunction with the British Chambers of Commerce, the EHRC has also produced a quick-start guide to providing equal pay.

In conclusion, achieving transparency in pay systems is crucial to ensuring that male and female employees who do the same or equal-value work for the same employer are paid the same rate for the job that they do. These regulations and the message that they send to employers are a significant means of bolstering pay equality in the workplace and providing a further impetus to the steady, long-term reduction in the gender pay gap. I commend these regulations to the Committee.

Baroness King of Bow (Lab): My Lords, today will see a coach and horses arrive in Parliament. That is not so unusual, but on this occasion I am sad to say I fear it will ride through the spirit of the law on equal pay. The Equality Act 2010 was a landmark piece of legislation that simplified, strengthened and extended protection from discrimination.

As we know, one of the most persistent areas of inequality, first addressed over 40 years ago, is the gender pay gap. The Equal Pay Act 1970 sought to

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remedy the fact that women were systematically paid less than men. However, instead of it narrowing, last year the gap actually widened slightly, by 0.1%. The figure might seem small, but not only are we riding in entirely the wrong direction, but we are witnessing significant hidden regional and sectoral variations. In London, for example, women are now paid 13% less than men, while across the UK women in full-time employment in the private sector are paid a staggering 19.9% less than their male counterparts.

Against this backdrop we need firm leadership from the Government. Given the Government’s pronouncements on equality, I was hoping they would take all the measures necessary to address what I am sure everyone here recognises is blatant discrimination in the workplace against women. After all, this gender discrimination also impacts hugely both on the children who women care for and pensioner poverty once those women retire.

Reading through the regulations we are debating today shows this clearly is not the case. In effect these regulations turn a blind eye to many breaches of equal pay. Let me set out exactly why I feel this is. Equal pay audits are an extremely important mechanism for bringing the gender pay gap to light. Essentially, where companies have broken the law and a tribunal orders an EPA, the lights get switched on and for the first time everyone can clearly see what is going on. Cloaking pay structures in darkness—which is one of the reasons this problem has dragged on for so long—does nothing to solve the problem. It just increases a company’s liability at some future employment tribunal. The best companies carry out voluntary EPAs. Most, however, do not.

The Government have set out circumstances in which an audit must not be ordered and the Minister set some of them out. According to Regulation 3(1)(d), this is where,

“the disadvantages of an audit would outweigh its benefits”.

However, this wording is so broad it gives employers a blank cheque to argue that an EPA would, on balance, in their view, be disadvantageous. There is no guidance, as far as I am aware, on how the disadvantages and benefits are to be assessed. The disadvantages put forward by an employer are likely to be cost-related and, if you look at what has happened to date in employment tribunals, employers are, unfortunately, likely to exaggerate the costs of doing an audit. Quite often we find that employers who have broken the law portray employment legislation as dastardly red tape. Where the costs of doing an audit are significant, it is likely to be because there is a high risk of equal pay breaches. This in turn is due to no transparency in pay, no clear and up-to-date job role profiles, no method for assessing where jobs are of equal value and no clear reasoning or objective systems for determining pay.

In other words, there is no proper management, no transparency and no accountability. Of course, this will make identifying differences in pay for those doing equal work—as well as the reasons behind those differences—particularly difficult to work out. This is the real world, so I would be grateful if the Minister could give us some real-world examples of the

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circumstances covered by Regulation 3(1)(d) when a company is saying that the disadvantages will outweigh the cost. The Minister gave us one example, I believe—for instance, where a company feels that the cost could push it over the edge and make it bankrupt.

However, I really must interrogate this cost issue a bit further. The Government are exempting micro-businesses and new businesses, because this is a burden, again presumably mainly on the grounds of cost. The TUC argued against any such exemption—of course, we would expect that—but its argument is extremely compelling. It argues that the right to equal pay applies regardless of the size or age of the business. Surely this must be right. Think about it if we were talking about black people. Can you seriously imagine the logic of saying, “It’s not fair to pay black people less than white people for work of the same value, therefore we won’t allow big business to get away with it, but small business can’t be burdened with equal pay legislation, so if they break the law we’ll just leave it at that”? It is absurd and simply does not hold water.

The Equality and Human Rights Commission has even produced guidance on how to do equal pay checks for small businesses. The EHRC estimates that for a business twice the size of a micro-business—that is, one with 20 people and, say, five job roles—an EPA will take half a day to carry out. For a micro-business half that size, we are looking at about two to three hours’ work. If you are talking about a business with three or four employees, it would be even less—you could be talking about one hour’s work. How hard is it to get out five pay cheques and look at them over a year along with the job descriptions? It is frankly not good enough to say that this is a burden on anyone.

5 pm

But, obviously, it is a burden on women. Over a lifetime, the pay gap burden for women in full-time work stands at £361,000. The Government’s foot-dragging might be less worrying if we were making swift progress. Last Friday’s headline in the Evening Standard was “Pay gap widens”. This has been going on since 2010. UK women are now missing out on an extra £177 a year in their pay packets because we are no longer under this Government making the same rate of progress to close the gender pay gap as we made under the last Government. On gender issues in general, the UK ranks 18th in the world behind the Philippines and Nicaragua. Within this context, I really would appreciate a bit more urgency. We need to close loopholes in the law, not widen them. That is why I say a coach and horses seem to be in sight.

The regulations mean that a micro-business—that is, a business employing fewer than 10 people—that has broken the law on equal pay will not have to do anything to remedy it and prevent it from happening in future. A large number of women in the private sector will be in such micro-businesses, and the private sector is where the largest gender pay gap remains. The regulations therefore do nothing to improve the situation where the biggest problem persists.

Regarding different sectors within the same business, the regulations also do nothing to remedy the gender pay gap. A bank is likely to have women in call centres

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on low pay, but the same bank will treat its corporate services separately, where pay is higher even for low-skill jobs. For example, it will most likely pay its security guards in Canary Wharf more than women working in its call centres. It might audit both sectors but without comparing the EPAs, so the gender pay gap remains neatly hidden. Again, this does nothing to improve things or take us in the right direction. It feels to me as if it is going against the spirit of the law which the Government say they support.

Let us look at the public sector equality duty from the same Act. The Equality and Human Rights Commission has responsibility for enforcing this and was putting together a statutory code of practice, but, as the House of Commons Business, Innovation and Skills Committee highlighted in its report Women in the Workplace, it has been prevented from doing so because the Government feel that further statutory guidance may again be too much of a burden—this time on public bodies. We are concerned with all these poor, burdened organisations—public bodies, small businesses—yet we are not really tackling the underlying issue that women in Britain today in the private sector are still paid 19.9% less than men.

I have a few more questions. The House of Commons Business Select Committee, a cross-party of group of MPs, states:

“The Government should give a clear statement of support for the EHRC in exercising these duties”.

That is the general problem that we have: there is no clear statement of support; there is no clear help to move us in the right direction. Either this SI is not written clearly or it is setting out to obfuscate matters. I am not the only one saying this. The Minister mentioned that the Joint Committee on Statutory Instruments drew the SI to the special attention of the House, saying that the regulations “require elucidation”. Yes, they really do.

I mentioned the issue around definitions of different operations and what counts as a single business and what is deemed part of a bigger business. It would be helpful if the Minister could write to me and set out what the situation is, for instance, for the financial sector business where you have low-paid women in call centres and security guards who may be earning more. How that does that play out under the regulations?

I thank the Minister for the explanation that she provided. The last few areas I want to ask the Minister about concern, first, financial penalties. The financial penalties for not carrying out an audit are frankly risible. The sum of £5,000 is very small when compared with a potential equal pay liability of a large employer that has repeatedly failed to address the discrimination in its pay systems or pay practices. We have seen that from some of the large equal pay settlements against some public sector employers in the last decade or so, which often ran into the millions. So how is £5,000 going to make a difference? Why was the maximum not set at a higher level and employment tribunals given discretion, depending on the individual circumstances, to impose a penalty that fitted the scale of both the business and the potential equal pay breach?

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Can the Minister also tell us how many orders she expects to be made each year? I was told—I am sure that this cannot be true; perhaps she can enlighten me—that it might be fewer than 10. We are really talking about a tiny number. We are talking about the equal pay claims that get through the tribunal system that win and, even at that point, when the employer has been found to be in breach of the law, we are looking for ways to get them off the hook. I implore the Minister to see whether she can give us any more assurances on this area, because as the regulations stand they will have a limited effect on reducing the gender pay gap. In fact, they may not have any effect, if all these loopholes remain in place.

Can the Minister also remind us where we are on implementing Section 78 of the Equality Act—that may well have been done; I am not saying that sarcastically —or on removing the need to retain the power in Section 124(3)(b) of the Equality Act, which would enable employment tribunals to make wider recommendations? It is all about trying to take more action to get a better result in the context that Britain is slipping backwards on this issue.

In conclusion, if the Minister is really committed to ending pay discrimination against women—and I am certain that she is—can she tell us what earthly justification there is for a 10-year exemption period for micro and new businesses? Can she review that decision? Let us remember that the EPAs are good for business: they mitigate future liability and increase retention rates. In micro-businesses they can take as little as one hour to complete. Let us remember, too, the most fundamental point of all. Every employer in Britain is required to pay equal pay. No employer, large or small, should be breaking the law simply because a woman does the job. I hope that the Minister will be able to reassure us that this is not a retrograde measure to exempt smaller businesses from equality law, because if it were—and that seems to be where the regulations are heading—that really would be a backward step.

Baroness Donaghy (Lab): My Lords, I think it was 10 years ago that I sat on a Government working party chaired by Bob Mason to see how we could make the Equal Pay Act more effective. Central to the recommendations that we made were equal pay audits and the importance of having a transparent pay system. We estimated at the time that it would take about 50 years to obtain equal pay. I looked carefully at the Explanatory Notes for this particular regulation and I thank the Minister for pointing out that the gaps still are very serious. In the build-up the Explanatory Notes accept that the issue of equal pay has an impact on economic growth. It goes on to say that the Government intend to do something about it in these regulations, so I got terribly excited. But then I looked at the impact assessment, which estimates that an average of two equal pay claims will be brought each year. The Minister was so embarrassed by that that she said “two or three” would be brought. As I say, it is estimated that an average of two or three equal pay claims a year may result in the imposition of an equal pay audit order—that is out of 23,638 equal pay cases that were brought in 2012-13. That really is a nut to crack a hammer, is it not?

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It is important that the Government realise what message they are giving out about topping and tailing the issue of equal pay for women. We have the noble Baroness the Leader of the House who does not yet enjoy equal pay and we are now to have small businesses and new businesses possibly not being followed up through the law. That sends the wrong signal about equal pay. Will new businesses include those that start up again after bankruptcy, and will there be any qualifications around that? Some companies seem to make quite a habit of that. They start up anew when it suits them. It is important to know what the impact will be on so-called new businesses which are really only starting up again under a different name. Further, does the Minister really think that these regulations will do anything to narrow the pay gap? I have my doubts when the estimate is an average of two cases per year.

Baroness Northover: Well, my script says that I am very grateful to all noble Lords who have contributed to this debate, which has been so constructive and considered. However, I can then go on to say that we have been clear, as have all those who participated, that paying women less than men for doing the same, similar or equal value work is totally unacceptable and therefore must be tackled head on. If women are ever to realise their full potential in their chosen career, they must be paid the same as their male counterparts. We believe that these regulations are an important step in the right direction. They will ensure that employers who have been found to have breached equal pay requirements have transparent pay systems where hitherto they have not.

I shall turn to the various questions which have been put to me by noble Lords to see if I can answer some of them. I will follow up my remarks in writing if I do not cover them all. I start by addressing the contribution of the noble Baroness, Lady King. She quoted the figures that were used by the noble Baroness, Lady Thornton, in an Oral Question on 25 June. We had a little discussion back and forth. The previous Government, like this Government, rely on a particular set of figures from the Office for National Statistics published in the Annual Survey of Hours and Earnings. The previous Government and this Government share the view that these are the most robust figures. On the basis of those figures, there is not the falling-off that the noble Baroness, Lady King, mentioned.

There are problems with the set of figures that the noble Baroness, Lady Thornton, and now the noble Baroness, Lady King, have used in the sense that they are not as comprehensive and they are self-reported, whereas the other figures are derived from PAYE and HMRC information. There are very good reasons why the previous Government and this Government both use the ONS figures. However, if one uses the figures referred to by the noble Baroness—I have asked my noble friend Lady Jolly to print out for me what I was given before—one of the things I find quite striking is that the noble Baroness mentioned that pay for women working full time fell by 0.1% for the quarter. These quarterly figures fluctuate considerably, so that the previous quarter saw a 0.4% rise. I do not claim that that is a true representation of the situation because

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I do not claim that the 0.1% fall is a true representation of the situation any more than would the previous Government, under which the noble Baroness was the Minister. They, too, would not have decided to use this particular set of figures. I know that her colleagues in the other place quoted them, but I suggest to her that she looks again at the Office for National Statistics figures and works out the ones that she should rely on.

5.15 pm

Baroness King of Bow: I thank the noble Baroness for raising the subject of statistics. For the sake of clarity, I should say that the figure that I gave of 0.1% was for last year, 2013, and not the last quarter. However, I will go away and verify that, although I got it from two different sources. In general, could the noble Baroness tell us whether she feels that we are moving in the right direction in terms of the gender pay gap?

Baroness Northover: The figure that the noble Baroness gave was actually for the last quarter, as she will probably find out when she investigates.

One thing that I find striking and encouraging is that the gender pay gap between men and women under the age of 40 who are working full time has narrowed considerably. The difference in the gender pay gap is for those above that age and those working part time. One reason why there is a major difference in part-time work is the type of work that men and women are in. We know that equal numbers of kids are going through school and that often girls come out better qualified. More are going to university, but they are grouping in different subjects. Some of those subjects lead to better-paid careers, which is something that we, like them, seek to address—I am referring to the STEM subjects.

The most important thing is the caring responsibilities that women often have, which is why you start to see this difference as you go through life. That is why in some ways it is quite encouraging to see that the gender pay gap has narrowed so much for those up to the age of 40, although we need to do much more to make sure that that carries on through.

Baroness Donaghy: I apologise to the noble Baroness, but I just wanted to query the impact on workers under 40. It might sound like good news, but it might be because men are being paid less in this low-wage economy. Does the noble Baroness have any more information to reassure us on this point?

Baroness Northover: I think that the noble Baroness would be reassured by the progress being made in this regard. I will probably need to write to her with the details but, again, I looked at this and I did not see the negative trends that she may be hinting are there. I will write to her and clarify that.

I am glad that the noble Baroness, Lady King, welcomes the audit. Obviously, that follows on after cases have been lost by employers. She is quite right, as is the noble Baroness, Lady Donaghy, to emphasise that it is in the interests of the companies and for the

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health of the companies to make sure that their employees are paid fairly between the genders. If they are not, there will not be a happy and effective workforce. I think that forward-looking companies recognise that now; indeed, they should recognise that it is in their own interests to make sure that this moves forward. If they lose such cases, they need to take action to put it right.

The kind of pay audits that we are talking about help to shine the spotlight that the noble Baroness mentioned on this. She mentioned the exceptions and seemed to imply that a company could say to the tribunal, “We can’t afford to do this”. I hope that she will be reassured by the fact that the tribunal, not the company, decides whether there are reasons for exemptions. I hope that I illustrated, in listing the four cases where there might be an exemption, how tightly drawn that is. I gave an example in each case of the kind of thing that we are thinking about there. Clearly, if they persist—suppose that they said they were about to go bankrupt and the tribunal thinks that that is the case, but then another case is brought and it turns out they had misled them—they are obviously in a much weaker position.

I reassure the noble Baroness, Lady King, that new businesses only have that exemption for the first year, not for 10 years. She grouped them together, but the committee asked for further elucidation about micro-businesses, which I hope that we have provided.

Baroness King of Bow: Before the noble Baroness moves on, as I understand it, micro-businesses and new businesses will be exempt for 10 years.

Baroness Northover: No, I will clarify that. As I understand it—I am sure I will be corrected if this is not the case—new businesses are protected for one year only. Micro-businesses are protected, potentially, for 10 years, but providing that they remain micro-businesses. I hope that clarifies the position. I take it the noble Baroness would rather that is not the case, but that is the settlement we have reached on this to try to ensure that micro-businesses do not have disproportionate burdens placed on them. However, they are obviously still subject to the law, and their employees are protected by the law. We are talking here about whether the audit would follow the loss of such a case.

The noble Baroness thought that the penalty of £5,000 should be much higher. The penalty is specified in primary legislation, so we cannot impose a greater penalty in the regulations which follow on from that. It derives from the Equality Act 2010, which she no doubt played a part in, as did the noble Baroness, Lady Thornton. When the Enterprise and Regulatory Reform Act inserted this penalty into that Act, the party opposite did not oppose it.

Baroness King of Bow: Would the noble Baroness then agree that we have all got it wrong? Surely it does not make sense for the penalty to be less than the cost of continuing the breach.

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Baroness Northover: We will all, no doubt, be monitoring this to see what the effect is. One of the things which happens to a greater extent these days is that people put information about the place they work on social media. This is not the kind of thing which any company wishing to attract talent wants to have flagged among potential employees. Nobody will want to head down the route of losing equal pay cases, and they will certainly not want to have an audit thereafter which shows further challenges within the company. I am sure that we will all monitor this to make sure that it is heading in the right direction.

Similarly, not having a pay audit may make micro-businesses that have lost cases more vulnerable to further claims. Again, I am sure that those businesses will not want that to happen.

Baroness King of Bow: I thank the noble Baroness for her indulgence on this, but are these regulations not setting up a scenario where the same employer can breach the same law again and again, and never be forced to take any action? There is no sanction, even if they are ordered to take an equal pay audit and choose not to.

Baroness Northover: I am suddenly inspired to say that the regulations allow the tribunal to apply a £5,000 penalty repeatedly if the employer remains in breach. Therefore, it could have quite an effect cumulatively. I hope the noble Baroness will be somewhat reassured that there is a possibility of that follow-up if they are not taking action. I think that I have addressed most of her questions.

I now come to the main points raised by the noble Baroness, Lady Donaghy. I agree absolutely with her support of the notion that unequal pay does not help the business or the economy. That has to be a major incentive for companies to ensure that this moves forward. I do not think I have an answer to what happens if a company goes into bankruptcy and then resurfaces; maybe I have and I have buried it somewhere.

Baroness Donaghy: Perhaps the noble Baroness would write to me about that.

Baroness Northover: That is extremely kind of the noble Baroness. She asked me quite a bit about narrowing the pay gap. I hope that I have helped to address some of those. This is obviously a lever to help in these cases. It is very important that the law is there, that we ensure it is implemented and that companies are heading in the right direction. However, we all know that there are much wider reasons why this is difficult to shift. We are in line with what is happening in northern European companies—many more women are working than in the eastern European and southern European countries where, curiously enough, there is a narrower pay gap. That is because many women are not working. We share that particular challenge with our northern European neighbours, but we all need to ensure that we take forward the kind of support and legal changes that help to underpin women’s ability to participate in

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the labour force as equal to men’s. We also need to ensure that we tackle instances where there is genuine discrimination.

Baroness King of Bow: May I ask the noble Baroness what I hope is one last question? How many cases do the Government envisage being brought in circumstances where businesses will be asked to carry out an equal pay audit?

5.30 pm

Baroness Northover: Indeed, the noble Baroness, Lady Donaghy, picked up on what I said in my speech; it is anticipated that it might be two to three a year. If, in due course, we see that this regime is not tight enough, I am sure that we or any other Government would keep that under review. However, these kinds of examples often have a beneficial effect on other companies. The last thing they want to do is have that spotlight on them, either through having lost a case or having their pay audited. This has to be about greater transparency, which can be demanded by a number of women, right up through companies, rather than being grouped at the bottom. I would not be at all surprised if employees in different companies will expect that kind of transparency of modern employers. I do not know whether there is anything else that I need to answer in that regard, but I hear what has been said.

I have tried to answer most of the points that the noble Baronesses have raised. I hope they will accept that it is extremely important to send the message to employers that it is in their interests and everybody else’s to have gender equality in pay in their workplace and that they have to think very seriously about that so that they are not in breach of equal pay law and avoid equal pay claims and, ultimately, the requirements of these regulations. In some ways, it would be good if these regulations did not need to be implemented at all and we just saw a transformation—that would be the best result. However, failing that, I commend the regulations to the Committee and hope that it will approve them.

Motion agreed.

Children and Young Persons Act 2008 (Relevant Care Functions) (England) Regulations 2014

Motion to Consider

5.32 pm

Moved by Lord Nash

That the Grand Committee do consider the Children and Young Persons Act 2008 (Relevant Care Functions) (England) Regulations 2014.

Relevant documents: 5th Report from the Joint Committee on Statutory Instruments, 5th Report from the Secondary Legislation Scrutiny Committee

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The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My Lords, these regulations are permissive in intent. They would enable local authorities in England to delegate to third-party providers a range of social care functions, so far as those functions relate to children. This would modify the current position set out in Section 1(2) of the CYPA 2008, which already allows local authorities to delegate functions relating to looked-after children and care leavers. These regulations would enable local authorities to decide to delegate other functions, including those relating to early intervention and child protection to providers operating on a not-for-profit basis.

At present, there are few options open to local authorities that wish to consider alternative ways of managing their social care functions. Apart from the limited powers of delegation already in existence relating to looked-after children, the only circumstances in which alternative delivery plans are currently possible are those where an authority is failing and subject to intervention by the Secretary of State under Section 50 of the Children Act 2004. It cannot be logical that only where a local authority fails are such flexibilities available.

I should also make it clear that several local authorities are now waiting eagerly for the passing of these regulations; they are gearing up to innovate and are anxious to make progress with their plans. These forward-looking local authorities are ambitious to improve their services and their ways of working, and these regulations would enable them to fulfil these aspirations. I anticipate that, over time, others will begin to consider how the new freedoms might support their own improvement strategy. As noble Lords will recognise, in too many local authorities improvement is all too urgently needed. The Government are having to intervene in one in seven authorities.

During the consultation on the draft regulations, it was asserted that only the public sector should carry out functions such as child protection. I simply do not believe that this is the case—not with the potential of the voluntary and charitable sector, and the proven success of public service mutuals or the number of public sector failures so clearly before us. I am by no means saying, “Public sector bad, private sector good”. What I am saying is that there should be a willingness and an openness to look at different approaches and options. That is the possibility opened up by these regulations.

Noble Lords will be aware that the consultation elicited widespread and ardent comment. That is entirely appropriate for such an important measure. The number of responses was very high, at 1,315, and there were several petitions and an e-campaign, which resulted in some 58,000 e-mails. By far the most responses to the consultation related to the question of privatisation and profit-making, which was the sole focus of the petitions and the e-campaign. The Government have responded both swiftly and decisively to these concerns by making a significant modification to their original proposals and amending the draft regulations to rule out the possibility of profit-making. This change has been widely welcomed.

It was not the Government’s original plan to include such a restriction, nor was it our intention to see widespread delegation of children’s social care to profit-making companies. The local authorities that are currently

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exploring their plans in detail are not looking to set up facilities that entail profit-making, so this amendment will not hamper their plans. Of course, this policy never concerned privatisation. This is a permissive agenda, not a centralising regime.

Noble Lords will know that the Secondary Legislation Scrutiny Committee has drawn these regulations to the special attention of the House and raised particular concerns about the consultation arrangements. First, the SLSC said that the consultation proposals were not clear. The volume and sharp focus of the responses show that they were. One might argue that the responses to the consultation were overwhelmingly about an issue that was not the focus of the Government’s plan. Nevertheless, under the original proposals profit-making would have been possible, so those commenting were making an entirely valid point. We have listened to those responses and made changes accordingly.

Secondly, the timescale for responses was deemed to be too short. It may be that a longer consultation would have been preferable, yet in the light of the number of responses and the degree of public scrutiny that the proposals received, my view is that the timescale for responses did not hamper proper scrutiny. Our desire to open up opportunities as soon as possible to local authorities that are seeking them drove the timescale and, on balance, I think that we have been able to bring forward valuable proposals in good time, while allowing significant and influential representations to be made.

On a much less prominent question than that of profit, some during and since the consultation have questioned the evidence base for this change. It is of course true that the direct evidence base for something that has to date not been possible is limited. Noble Lords may be aware that under the Children and Young Persons Act 2008 the previous Government enabled a small number of pilot social work practices to be set up. These were small, practitioner-led practices taking responsibility for specific cohorts of children on behalf of the local authority. The evaluation of the first few social work practices identified evidence of positive change for looked-after children and care leavers. It is true that the evaluation found variation across the pilot sites, but it none the less showed that the practices operated at least as well as, if not better than, the control authorities.

In addition, the Government’s wider mutuals programme has seen the benefits to services, both to the staff working in those services—through reduced absenteeism and staff turnover—and in savings and efficiencies linked to significant improvements of user outcomes. There are now 100 public service mutuals already delivering more than £1.5 billion-worth of public services in sectors such as health and youth services. Local authorities will be able to apply to the Children’s Social Care Innovation Programme for support to make use of the new freedoms that the regulations would allow, and the impact of activities funded through the programme will be robustly evaluated.

These regulations will enable a positive change in the delivery of children’s social care services. They will establish a framework in which local authorities can make their own innovative decisions on how best to

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manage their children’s social care functions. The experienced and well respected charity, Action for Children, said:

“The freedom to outsource children’s services will allow local authorities to innovate and improve support provided to families”.

That is exactly what we are aiming to achieve and I commend the regulations to the House.

Lord True (Con): My Lords, I declare an interest as leader of Richmond Council which, along with the Royal Borough of Kingston, has been one of the authorities using the freedoms extended by the previous Government under the 2008 Act. We have established jointly a community interest company, a social enterprise, called Achieving for Children, to deliver these services across the two authorities. When I say “we”, I am referring to a Conservative and a Liberal Democrat authority working together and seeing the opportunity—as we saw it—to improve services. Therefore, I greatly welcome the Minister’s announcement that this is to be extended. It will certainly be welcomed by the professionals in our authorities working on behalf of young people.

It is right that the Minister put beyond doubt the fears raised about privatisation. For my own part, I do not think that the private sector or private carers are incapable of providing professional, high-quality care, but given the response to the consultation, I think my noble friend has acted wisely, as always, in that regard. I hope that that having been done, everybody from all sides will be prepared to put wind behind this and to give support to the professionals involved. This is not about privatisation; certainly it was never about privatisation in the case of my authority or Liberal Democrat Kingston. It is certainly not about moving away from a public service ethos. That is fundamental and held dear by all those who work in the community interest company. Nor is it about a move away from democratic accountability. The local authorities remain statutorily responsible. Our outstanding director of children’s services, Mr Nick Whitfield, who is the chief executive of Achieving for Children, remains statutorily responsible. As I see it, it is freeing up professionals to think differently and to innovate without the constraints that local authority procedures can sometimes cause. It provides freedoms to allow them to maximise the value of the contributions they make, to create new partnerships and fundamentally it puts the professionals who know better than anybody in the driving seat of how to achieve the best outcome for those involved. Local authorities remain ultimately accountable—indeed, the next business contains a whole range of requirements that remain on local authorities.

The regulations will allow the completion of movement of staff into the community interest company. That is an important signal and it is very practical that all staff can be managed in one way and are not having to be transferred under TUPE back from one activity to another when the range of activities ought to be part of supporting young people and part of a seamless whole. I hope that if it agrees to these regulations the Committee will put it beyond doubt that this approach is sanctioned as an appropriate way to provide children’s care.

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The launch of Achieving for Children was attended by people from all political parties. I think everyone there was inspired by the professional vision and dedication of those involved and indeed by the speeches made by the young people who saw hope in what was being brought to them and hope in this future. Let us not be afraid to be creative. Let us not be afraid to experiment in improving care while retaining the basic public service needs and statutory responsibilities that continue. I hope that we will support the regulations and I thank my noble friend for bringing them forward.

5.45 pm

The Earl of Listowel (CB): My Lords, I want to raise concerns about these regulations but also to welcome certain aspects of what the Government are doing. It is good to hear from the noble Lord, Lord True, about what seems to be a very positive initiative in Richmond and the other local authority he mentioned. Certainly, the principle of allowing professionals to use their own judgment is a very important and powerful one. We have seen it across the board in terms of children’s services, and I welcome the intent. The Government are frustrated that outcomes for children are not improving as they should and they are not going to leave any stone unturned in order to change that. I commend that intention.

The former Secretary of State, Michael Gove MP, really pushed the use of voluntary adoption agencies in terms of the adoption system. That made a good and positive improvement in terms of the numbers of children being placed for adoption more swiftly. I welcome, too, the Social Care Innovation Fund, which seems to be a very good initiative to improve and make sure that we make best use of the resources available to us.

However, I have a number of concerns. I regret that if I am not fully reassured at this point, I may come back and seek to debate the regulations in the Chamber. I recognise the Minister’s frustration at not being able to improve outcomes as swiftly as we need to for young people. I would underline a couple of issues in that context. The fundamental one is the question of professional capacity in the workforce. I commend what this Government and the previous one did about raising the status of child and family social workers. I remember speaking to a former Secretary of State for Education a few years ago. When I told her that it was not necessary to have a degree to be in child and family social work, she did not believe me. Of course, it has only been a requirement in the last three or four years for child and family social workers to have a degree. A lot of good work has gone forward in this area, but we still have a long way to go. Many social workers in practice still will not have a degree qualification. If we look at residential care and staff in children’s homes, we only require those staff to have an A- level qualification equivalent. I was told by an expert recently that most managers still will not have a degree qualification. We must bear it in mind that we need to address the professional capacity within the workforce if we are to see improved outcomes, and that will take some time. As impatient as we are to see change, we may have to be patient for those changes to feed through. My concern is that, in being really frustrated

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with the system as it stands, we need to be thoughtful in the way that we change it, in case we bring in changes that are unhelpful. That is why this particular regulation needs very careful scrutiny.

I had an e-mail a couple of weeks ago from an academic who has followed the educational outcomes for looked-after children for many years and first raised the concerns about the disparity between educational outcomes for looked-after children and the other population of children. She highlighted concerns that there was not enough support for foster carers. There was no expectation that foster carers would have a good education. She looked across to the continent and saw that where foster carers and staff in children’s homes were recruited from a background in which they had a higher level of education, there were better educational outcomes. She is about to publish a book, in which she highlights that better outcomes on the continent are very strongly associated, in her experience, with the fact that they expect better qualified people to work directly with their vulnerable young people.

As I see it, the risks are, first, fragmentation of services. I was speaking with an academic last week. He is developing an innovative programme in his local authority for looked-after children. He is developing a multidisciplinary team and a one-stop shop so that a child can see the mental health professional, teacher and social worker all in one place. He was regretting the fact that this was how it used to be in local authorities, but that, over time, somehow it had been lost. I was speaking with a children’s home manager several years ago in Camden. He said that the particular advantage of that home in Camden, being in the local authority, was that he could easily and quickly draw on all the necessary resources to get the best outcomes for the children. I think that he had had experience of working in the private sector, but my sense has been that the risk with private sector children’s homes is that they can be more separated from all the services on offer. They may have to develop their own personal services, so that they cannot necessarily draw all the services together, particularly those in mental health, to get the best outcomes for children.

I worry that, if we are going to move towards a system which requires greater reliance on good contracts to make it work, contracts will look at rather short-term outcomes, which are not necessarily the sort of measurements that one would want to use. The key thing with children in care and care leavers is to ensure that they learn how to make relationships, to trust people, and to bear and tolerate intimate relationships. That can be quite a hard thing to measure in the short term. I am a little worried. The Government’s efforts to improve educational attainment and qualifications for looked-after children and care leavers are commendable, but you cannot ignore the ultimate need for those young people to make and keep relationships. You can get them to do well in exams but, if they cannot make relationships with other people, they will have very unsatisfactory lives. Specifications within the contracts will therefore concern me.

Concerns have been raised about whether the bodies concerned will need to be registered and therefore need to follow minimum standards, but I am sure that others will raise those points.

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There are concerns about consultation with children in the process. I admired the great pains to which Timothy Loughton MP, when he was Children’s Minister, and Edward Timpson MP have gone to listen to the voices of young people and of care leavers. These measures are likely to affect young people significantly. It was good to hear how positively young people in Richmond spoke about the experience, but to present to young people what is being done and to have their thoughts presented back would be very helpful. Those were my concerns. I look forward to the Minister’s reply.

Baroness Hughes of Stretford (Lab): My Lords, I welcome the regulations in so far as they will allow, as the Minister has intimated, the potential for local authorities to innovate and to improve services for young people. I also welcome the change to the draft regulations that the Government made in response to the consultation. I am not opposed in principle to the enabling power in the regulations. As the noble Lord, Lord True, has illustrated, used in the context of the right values, these possibilities can open up new ways of delivering better services and, more importantly, better outcomes for children and young people.

However, I have some concerns, not about the principle but about the lack of clarity in the regulations on some important issues. Some of these issues were touched on in the consultation; the responses were not concerned exclusively with the principle of privatisation. I want to raise three issues: accountability, inspection and the not-for-profit status of new providers that the Minister has alluded to. If the Minister could flesh out the Government’s thinking on these issues, it would be really helpful, not least to the Commons when they come to consider the regulations, as they will be looking for answers on some of these issues.

The Government have said that, if children’s services are outsourced either in large part or in whole, the local authority will retain overall accountability for those services. However, we need to understand what that means in practice. Does overall accountability mean that the local authority alone will be responsible for individual children’s outcomes, or will the service provider have any accountability? When I was Minister for Children, I knew a number of directors of children’s services who made a point every month of selecting at random six, seven, eight or 10 case files from their department and reading them to get a measure—a dipstick measure, but none the less a measure—of the quality of his or her social workers’ work. Will directors of children’s services similarly be able to collect a random sample of case files from the service provider and look at what is going on? What direct access will a director of children’s services have to the evidence of the work being done with individual children in an ongoing way, not just with outcomes at the end of the year? That question concerns how the local authority will be expected to put in place continuing quality assurance mechanisms so that it can see what is being done with individual children in a continuing, real-time way.

Given that parents and carers will have an indirect relationship with the local authority through this outsourcing, what would happen if a parent or carer

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wanted to make a complaint relating to the outcomes for their children or to the way the service was being provided? To whom would that complaint be made and how would it be handled? Under the overarching statement I think that the local authority will remain accountable. There are a number of very detailed questions about how that accountability will be exercised, particularly on how quality assurance, which the local authority must surely seek, will be done on the way in which services are provided.

A related issue is inspection and what appears to be a lack of direct regulatory oversight, in the detail of the Government’s proposals, of the service provider to whom the responsibility for a service is outsourced. As I understand it—I hope the Minister will correct me if I am wrong—the Government propose that external providers of children’s services will not be inspected in their own right by Ofsted, nor registered as inspectable providers, like children’s homes and adoption societies currently are. As I understand it, the local authority will be inspected and a judgment will be made of it, but that is a very indirect look by Ofsted at what is going on. Surely to goodness the service providers have to be inspected. Would it not be important for that provider also to be given a public judgment by Ofsted?

This would be particularly important—unlike in the example of a community interest company conjured up for us by the noble Lord, Lord True—if we were talking about a rather big, profit-making company that set up a not-for-profit subsidiary, which was undertaking service provision for a number of different local authorities in some respect. Would it not be important to have an overview of what that company was doing across the board in different geographical areas, not just an atomised view of each individual local authority, indirect as that would be? Will Ofsted directly examine the case files that the service provider keeps and the quality of the social work and care provided by the agency? Will Ofsted speak directly to children and families? Why will the Government not allow Ofsted to rate the agency as well as the local authority? It is the agency that actually provides the services.

6 pm

Finally, I welcome what the Government have done on the issue of not-for-profit status, but I want to check whether it is as strong as the Minister maintains. He said that this rules out the possibility of profit-making, and the noble Lord, Lord True, said that the Minister had put the question beyond doubt. But has he? Again, we are not talking about the community interest example but the possibility of big companies such as Serco or Capita bidding for these services. In those situations, first, that company could set up a not-for-profit company to sit alongside its profit-making company but could still indirectly make a profit from its activities in providing children’s services in the same way that some of the big educational companies, when they set up a trust to deliver an academy, sell their educational services to those schools and make a profit from them. That is allowed, and I would imagine that the same thing could happen here.

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Secondly, is there a potential for conflict of interest if, say, a profit-making company that is providing children’s homes set up a not-for-profit arm to deliver social care? When it comes to the decisions on whether residential care is the best solution for individual children, do we not want to put it beyond doubt whether profit was in anyone’s mind, given the relationship that exists between the company providing residential care for profit and its non-profit subsidiary that is delivering social care? Can the Minister put beyond doubt the possibility of profit-making and the possibility that there might be in certain, maybe limited or special, circumstances the potential for conflicts of interest that could influence the decision-making around individual children?

Those are my concerns. This is not about the principle but about making sure that we have just as robust an inspection and accountability regime for the outsourcing model as we have at the moment in relation to direct provision by local authorities.

Lord Nash: I am grateful for noble Lords’ contributions and to my noble friend Lord True for his points, which, given his experience, carry particular weight. I very much welcome the innovation behind Achieving for Children, whose launch I was privileged to go to. As my noble friend said, the presentations made at that launch, particularly by young people, were powerful.

The noble Earl, Lord Listowel, made a number of comments. I am grateful for his welcome for the intent behind the proposals and that he is taking some comfort from the changes made to the adoption regime by the previous Secretary of State for Education. The noble Earl made a good point about the capacity and quality of the workforce in social care. We are determined to raise the status of social work and to attract highly qualified people into it. We have a wide programme of reform of social work under way. Sir Martin Narey reported recently on improving social work training, the chief social worker is bringing strong leadership to the system and we have new training programmes in Frontline and Step Up to Social Work to attract the best to the profession.

The noble Earl mentioned the possibility of fragmentation of services. There is no intention for this to happen. Indeed, we have seen examples, such as Achieving for Children, where we may, in fact, see consolidation of services into single structures. He made a very good point on the importance of the contract. It will be for local authorities to give extremely careful thought to the structure of the contracts to make sure that they lead to quality care and that the KPIs are well thought out and not too short term. His points about engaging with young people are well made. The consultation process received comments not directly from young people but from organisations representing them, including Barnardo’s, Kids Company, Children England and many others.

I am grateful to the noble Baroness, Lady Hughes, for her support. She is of course vastly more experienced than I am on this subject, as it was part of her brief as a Minister while it is not directly part of mine. Local authorities will retain overall accountability for provision and they will be able to gain access to random sampling under the contracts they put in place with

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their providers. They will also have their own complaints procedures in place, which will be there for parents to go through.

Ofsted’s common inspection framework makes provision for taking a sample of looked-after children’s cases where functions have been delegated. It considers the experience of these children as it would any others in the care system when making judgments on an authority’s effectiveness. Ofsted will speak directly to children and families. It is important to be clear that where functions are delegated, the authority remains the corporate parent and is responsible for the children in its care through its management of the contract with the provider of social services. There is a single inspection framework that looks at the effectiveness of services for children in need of help and protection, looked-after children and care leavers. In addition, there are separate inspection frameworks to ensure high standards for those providing residential placements of various kinds. The same inspection arrangements apply regardless of whether functions are delegated.

Neither we nor Ofsted believe that registration adds particular value to the system. The registration process can be only relatively light-touch and may imply a more robust validation or assurance process than is intended. There is also potential duplication of effort as many of the key checks are those that would automatically be carried out by local authorities as part of their contractual arrangements with the provider. There is no relationship between registration and Ofsted inspection. Ofsted will inspect third party provision as part of its normal inspection arrangements.

I admire the noble Baroness’s suspicion about putting the not-for-profit element beyond doubt. Someone from my background of course believes passionately that the profit motive is always, in every case, a very good discipline. However, as noble Lords can see from the consultation, we have bowed to the responses on this. There is no intention to allow for any back-door profit-making in this. In the academies programme we have in place very clear regulations to ensure that anyone in any kind of governance arrangement with an academy cannot make a profit. Of course it will be possible for a large organisation to set up a not-for-profit subsidiary, but I find it hard to believe, given the risks involved in the provision of services of this kind, that it would be worth doing that on a not-for-profit basis. We will make sure that this is not any kind of back-door arrangement to make a profit on the sly.

I hope that I have dealt with all the points made by noble Lords, but if I have missed anything I will be delighted to write to them. We do not expect an immediate flood of delegated arrangements as a result of these regulations. I have indicated that a few local authorities are waiting in the wings, and we think that others will develop their thinking over time. The regulations will allow the freedom and flexibility for new arrangements to come into place over time and have the real potential to improve services for vulnerable children. That is the framework we are putting in place, underpinned by both an unchanged system of local authority accountability and a robust Ofsted inspection framework. I hope that noble Lords will support the regulations.

Motion agreed.

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Special Educational Needs and Disability Code of Practice: 0 to 25 years

Motion to Consider

6.10 pm

Moved by Lord Nash

That the Grand Committee do consider the Special Educational Needs and Disability Code of Practice: 0 to 25 years.

Relevant documents: 6th Report from the Joint Committee on Statutory Instruments (special attention drawn to the instrument), 3rd Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State for Schools (Lord Nash) (Con): My Lords, the draft code of practice gives guidance on Part 3 of the Children and Families Act 2014. The code has been approved by the other place and I welcome the opportunity to introduce the debate in Committee today. First, I want to acknowledge the extensive time that many noble Lords have given to discussion of the Act and the emerging code. Together we created an excellent Act, one that will transform the way in which support is provided for children and young people and their families. The code of practice will bring added impetus to achieving that aim.

Our vision for children with special educational needs and disabilities is the same as for all children and young people—that they achieve well in their early years, at school and in college, and lead happy and fulfilled lives. The new code will play a vital role in underpinning our special educational needs and disability reforms. The reforms will bring a new approach, one that places the views of children, young people and parents at the heart of the system and joins up education, health and care services for children and young people. These important principles run right through the code. For children and young people this means that their experience will be of a less confrontational and more efficient system. Their needs will be identified early with support put in place quickly, and parents will know what services they can reasonably expect. Children and young people and their parents or carers will be fully involved in decisions about their support and what they want to achieve, with an increased focus on life outcomes, including employment and greater independence.

The Department for Education and the Department of Health have worked to ensure that local authorities and local health partners work together to plan and commission services for these children and young people. The code is the result of more than a year of extensive consultation, and we took great care to listen to those who must have regard to the code to make it truly accessible. Additionally, we offered stakeholders the opportunity to comment on revisions of the code before running a final consultation in Spring 2014. I am grateful to the Joint Committee on Statutory Instruments and the Secondary Legislation Scrutiny Committee for their consideration of the draft code. Each raised one particular, and different, issue.

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The Joint Committee on Statutory Instruments reported a concern in relation to local authority decisions on personal budgets. I wrote to the noble Baroness, Lady Hughes of Stretford, on the same issue following our debate on the personal budgets regulations. I can now confirm, in response to the Joint Committee on Statutory Instruments’ report, that we will be amending the regulations to give greater clarity to the decision-making process, meeting the point raised by the Committee. The Secondary Legislation Scrutiny Committee expressed concern that the code may be too long and complex to be of use to families. I should point out that parents are not the code’s key audience. The chief audience is the range of bodies with statutory duties to fulfil and which must have regard to it. The changes that we have made to the code, including ones that have added to its length, respond to specific feedback on promoting clarity from those who need to have regard to it. The code covers most of the statutory provisions of the current system as well as significant new duties. It replaces three separate sets of guidance and contains a stronger emphasis on and links to the Equality Act 2010. It was absolutely clear that interested parties did not see shortening as a priority. Having a code that gave a clear explanation of the law and guidance that would speak to the wide range of statutory audiences was what mattered.

However, supporting parents in understanding the new system is of course key. The legislation ensures access to information, advice and support. We have provided £30 million over two years to recruit and train independent supporters, and we are co-producing with parents’ organisations a separate guide to the code specifically for parents, and separate materials for young people, both for publication as the reforms come into force.

6.15 pm

The reforms have been tested in a number of local pathfinders since 2012 and local authorities have been preparing to put them into practice from September this year. Support is being provided to local authorities, including advice from regional champions and a range of delivery partners with specialist expertise. Some £45.2 million is being provided to local authorities in 2014-15 to help meet the additional costs of implementing the reforms, with a further £32 million indicative funding in 2015-16. This is in addition to the £70 million SEN reform grant in 2014-15 to help local authorities plan for the reforms. Surveys of local authority readiness and visits show that local areas are prepared to put the reforms into practice from September. We have been clear that we expect the change from the current to the new system to take place gradually and have been consulting on transitional arrangements to achieve this.

From September this year, all requests for assessments of special educational needs for those who do not have a statement or an LDA will be considered under the new education, health and care assessment arrangements. We intend that by 1 September 2016 young people in further education who currently receive support as the result of an LDA will transfer to an EHC plan where one is needed. Children and young people with statements will be transferred by 1 April 2018. All local authorities will be required to ensure that certain groups of children are transferred to the new system by particular points

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during the transition period. This will ensure an ordered transition and maintain protections for children and young people. Draft guidance was recently made available to local authorities.

I am confident that the new code will play a key role in helping to put our reforms into practice, equipping those who work with children and young people to help secure the better outcomes they deserve. The provisions in the Children and Families Act on support for those in youth custody do not come into force until April 2015. Regulations will be made setting out the detail. Noble Lords will be heartened to know that Katy Weeks, a key member of the Bill team for this legislation, has been seconded to the Council for Disabled Children, which is working with the Department for Education and the Ministry of Justice on this. We intend to issue draft regulations for consultation later this year. We will then revise the guidance in the code to reflect the final regulations and place it before Parliament for approval under the negative procedure early in the New Year.

More generally, we will be keeping the guidance in the code of practice under review, allowing proper time for the reforms to bed down, particularly as they are being implemented gradually from September. Noble Lords will recall that we made provision in the Children and Families Act for subsequent versions of the code to be approved under the negative procedure to enable the code to be kept up to date more easily. Now is the time to move forward. As there is such broad support for the reforms and a high state of local authority readiness, I urge noble Lords to support the code of practice.

Baroness Uddin (Non-Afl): My Lords, I welcome the noble Lord’s detailing of his and the Government’s commitment to a more integrated service. Before I address the inconsistencies and ellipses in the draft code of practice, I wish to make the general point that one cannot elaborate and clarify enough when it comes to ensuring the rights of disabled people. Families facing a constant battle navigating the bureaucratic minefield to access the support of institutions need all the assistance that we as legislators can provide to arm them for their discussions with education providers and local authorities.

In this country we have made huge strides on disabled rights. Despite that I have been told of innumerable sufferings of parents who continue to experience significant struggles in safeguarding equitable educational provision for their children—specifically in accessing mainstream education. The current draft lacks principles to guide education providers and commissioners in delivering inclusive education that gives disabled learners access to mainstream courses. I will focus on two particular aspects of the draft special educational needs code of practice that warrant clarification: first, the consistency with which the inclusive education principle is explicitly applied and promoted; and, secondly, the specific provisions in relation to those aged over 16.

Turning to the first, more general, point, it is essential that the code of practice achieves the purpose of the Act to expand inclusive education, but the present

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draft lacks guiding principles and a clear set of activities that local authorities and education providers should carry out to achieve this. The code of practice needs to, and must, offer guidance about the inclusion of disabled learners in all activities, including access to the mainstream curriculum, and make explicit the strategic role of local authorities and education providers in supporting the practice, as well as how they should carry out this function. Only then can we ensure that disabled learners’ aspirations are not lowered, de facto, through early segregation where it does not suit learners—for instance, by having courses in a mainstream institution but in a secluded unit. Many who are familiar with providing special educational needs will be very familiar with these sorts of units.

Secondly, the current draft contains conflicting advice about disabled learners’ access to FE courses. The guidance states that colleges should make their courses inclusive in all subject areas at all levels, but the SEN code of practice also states that disabled students should enrol in discrete preparation for employment and educational courses. An interpretation by education providers that placed more weight on the latter would risk unfairly denying aspiration and access to the disabled. Can the Department for Education clarify the inclusion principle in the code of practice to ensure that post-16 providers fulfil their obligation to support the inclusion of disabled learners in all activities, including accessing mainstream courses?

Furthermore, the code of practice should make clear that the Equality Act and Children and Families Act duties, which extend inclusive educational practice, are applied across all age groups—including early years, school and post-16. Particularly egregious is the present wording at paragraph 1.28:

“Students will need to meet the entry requirements for courses as set out by the college”.

This runs counter to the Equality Act, which does not require students to meet admission criteria before they enrol in mainstream courses. For example, a disabled learner may lack the expected English or maths GCSEs but be well suited to a particular BTEC or apprenticeship course. Post-16 institutions are under a duty to make reasonable adjustments for disabled students and this should be reflected in the SEN code of practice through the removal of the provision at paragraph 1.28. Having spoken to a number of parents and other individuals over recent months, I know that the disparities and differences in the experiences of parents across various local authorities, particularly for parents from minority communities, mean that the situation remains extremely unequal and extremely unfair. I therefore welcome the noble Lord’s comments that the code is linked to the Equality Act. I look forward to seeing its impact and what parents say about that.

Above all, the guidance must ensure that the rights of young disabled people to access mainstream education with the support they need is firmly embedded. In order to assure this, the inconsistencies that I have listed should be removed and the obligations on local authorities and education providers clarified. Only then can we help disabled learners with the aptitude to work in adulthood meet their goals and can we create conditions for people with special educational needs to reach their full potential.

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Lord Ramsbotham (CB): My Lords, there is a great deal to welcome in this document except its length; 270 pages is a vast amount. Perhaps I may point out one typographical error in paragraph 8.2 of the Explanatory Memorandum. According to that, the first consultation is not yet over because it lasts until 9 December 2014.

I have five short questions that I should like to put to the Minister. I am sure that they can all be answered fairly quickly. First, is the Minister satisfied that schools and education settings will be capable of identifying speech, language and communication needs from 1 September this year? That is only a month away and normally schools are given at least a term in order to prepare for new guidance they receive. I suppose that the answer will be that this draft, which is still a draft, has been around with some people for a long time, but it will not necessarily have been in every school. There is quite a lot of detail in this document, and I would be surprised if every school has mastered it by 1 September and able to put it into practice.

My second two questions relate to the children who are not mentioned as much here—those who are without EHC plans, about whom there was a great deal of questioning during the passage of the Children and Families Bill. First, is the Minister satisfied that appropriate support is in place for those children with speech, language and communication needs but without plans? Secondly, are the staff in schools adequately trained to provide support for those children without plans? We did not get a clear answer when the Bill was being passed and I still do not get it out of this vast document.

The document is still called a draft. I know that the Minister told us that it had been passed by the other place, but this short session here, when we do not have time to scrutinise the document, could not really be called the House of Lords “passing” the draft and approving it because we simply have not had time to go through all the detail in this 270-page document. Do the department intend to conduct a review of the code once it has been in action for a short time? When might that review be held and will it also be brought before the House so that we have an opportunity to see what the practitioners understand about it when it is being practised?

My fourth point refers to the welcome addition in relation to children in custody. During the passage of the Criminal Justice and Courts Bill last week, I asked the Minister what exactly was happening as far as the Ministry of Justice was concerned to amplify the statement made at Third Reading in the other place by the then Prisons Minister, Jeremy Wright, who said that,

“a great deal of … thought will be given to how those needs can be met”.—[

Official Report

, Commons, 12/5/14; col. 538.]

He was referring to special educational needs. Thought is okay but the Minister in the Lords did not answer my question as to what that meant, particularly given the two months that have passed since the Third Reading in the other place. I would be grateful if the Minister here can ensure that when I ask the question again on Report in October, when the Bill comes back, there will have been a discussion between the Department for Education and the Ministry of Justice so that the

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Minister is able to answer me and all the other Members of the House who have an interest in the special educational needs of those in custody. We were referring particularly to the proposed development of the secure college in the middle of Leicestershire, which allegedly will have 320 children aged between 12 and 17, boys and girls. Among them there will certainly be a very large number with speech, language and communication needs.

The last question refers to the word “must”, which appears time and time again in bold in the report. Who is the “must”? Who is going to do the “must” and who is going to oversee that the “must” has been done because there must be oversight; otherwise, the “must” will not happen? I would be very grateful if the Minister could enlighten me on that.

6.30 pm

Baroness Howe of Idlicote (CB): My Lords, it is always a great pleasure to follow the noble Lord, Lord Ramsbotham. As usual, he has picked on an aspect—the “must”, as it were—and it will be very important to see how that is put into effect. I am grateful to the Minister for putting his case, and what has been achieved so far, albeit that there is still some way to go.

I ask the Minister to provide assurance on three important matters relating to the changes to the special educational needs framework and the code of practice. First, what progress has been made by Ofsted in its review of the need for an inspection framework to drive improvements in local SEN provision and the local offer? That was announced earlier this year by the Minister when we were considering the Children and Families Bill, which is now an Act. We were told that a report would be published this summer. Can the Minister confirm that that is still the intention and, if not, when the report is expected? A number of charities, including the National Deaf Children’s Society, question the wisdom of passing a new code of practice without taking meaningful steps to ensure that local authorities follow it. The absence of a proper accountability framework surrounding the SEN framework remains a fundamental concern to many.

Secondly, while the code refers to “0 to 25” on the cover, as we all recall, it does not apply to disabled students in higher education. When this issue was raised in our debates on the Children and Families Bill, we were told that the SEN framework did not need to apply to higher education because a separate scheme of Disabled Students’ Allowance already ensures that the necessary support is provided. However, in April, the Department for Business, Innovation and Skills announced a “rebalancing” of support from DSA to universities. Although the details are still sketchy, I understand that some support will no longer be provided by DSA and that universities will be expected to provide it instead. It remains unclear what rights a disabled student at university will have if the university fails to provide the support that would previously have been given under DSA.

I recognise that universities are required to follow the Equality Act—we have heard from the Minister that they will do so—and to make reasonable adjustments. However, should universities fail to make reasonable

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adjustments, the main means of redress here would seem to be a judicial review. Had the same disabled student aged 19 attended college instead and had an education, health and care plan, they would have the option to appeal to a SEN and disability tribunal over their support. It seems perverse that a student at a university has to take a more difficult route to securing the support they need. I would be grateful if the Minister could provide a view on whether disabled students in higher education should have the same or similar statutory rights as a student at a college with special educational needs aged 19 to 25. Will the Minister confirm whether his department will look again at the question of whether disabled students in higher education should be brought under the scope of the code and the SEN framework?

Thirdly, and finally, there is a strong focus on outcomes in the new code. This is certainly to be welcomed. Will the Minister confirm whether families or young people will have a right to appeal if the local authority fails to set stretching or appropriate outcomes for their child? The National Deaf Children’s Society and others are concerned that there is an omission here in both the code and the accompanying regulations. If so, what is the rationale for this?

I hope that the Minister will be able to provide reassurances on the above matters or indicate that these issues are being looked at elsewhere. It is important that we have the best SEN code and framework possible—I am sure that he is committed to that—and, where improvements are needed, I very much hope that the Minister will look at how those can be achieved.

Lord Addington (LD): My Lords, perhaps I may put a few more points. First, the size of the document was commented upon in another place. On going through the sections, they should of course be broken down to smaller units, for ease of use. I ask my noble friend, has he encouraged the various charitable bodies outside to print their own guides to the relevant bits for their user groups? I can see that they would be very good at making it understandable, because it is in their interests and those of their client base to ensure that it is done; and they have a better starting point from knowing exactly what language could be used. That is a general point.

Not for the first time, the noble Lord, Lord Ramsbotham, got to the nub of what I was going to say, first. That is, that we have come from a very confrontational system, as the noble Lord said, in which we knew what we had to do and where the points in the sand were that we had to get to. We knew that we had to achieve these and needed certain points to do so. It was incredibly confrontational and probably wasted huge amounts of effort. It probably was needed when it was first brought in, to get people to take the problem seriously. We should be capable of moving on from the graduated approach commenced in school action and school action plus, as the noble Lord described. However, if we had taken into account that the schools and the providers of support are also going to have to move away from a confrontational situation, what is that monitoring? What is that “must”, and how are they going to do it? Those are very valid

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questions. If there is not the will to move forward, who ultimately will make sure that they do it? That is something we should know about. It is something that we should not have to do but almost certainly will do, if only in a certain number of cases. It is just the historical weight that we carry in this situation.

I have a couple of slightly more specific points. The biggest and bravest change in this was the fact of the duty to identify within the Act—not merely as a response to those who had been presented. However, I cannot help but ask: if we are putting a great deal of effort into the SEN codes here and the SEN codes are organised, has my noble friend given any more thought to improving at least a recognition course for the more commonly occurring disabilities or educational problems? He mentions in this document those with specific learning difficulties. Apparently dyslexics are out in front, closely followed by dyscalculics and dyspractics. I am not sure about the figures, but we reckon that it is roughly 10% in the British version for dyslexics. Just over 3% have dyscalculia; I have not seen the figure for dyspraxia. Probably up to 15% of our school population is covered in that group. We must make sure that we can identify the signs, or at least the danger of people falling into those groups, the specific learning patterns those people have, the support structures they will need and, indeed, getting them through not only for educational purposes and teaching them how to cope. It would be very helpful to know how to establish all that for individuals; how to bring in their parents and tell them how to cope.

I remember the discussions we had about the SEN codes. Let us face it, none of us is coming in on this cold. I think that the term used was “whole-school strategy”: making sure that work structures are in place throughout the school. In early recognition, having lots of eyes with a degree of knowledge will be better than having an expert who gives commands, because at least that way we will know to refer on to the expert. This is something that is not too much to expect, and it certainly has to be a better way forward in the earlier stages of the educational process. What steps are being taken towards this? If we do not put mandatory steps in now, how do we ensure that the SENCOs have enough scouts, troops and boots on the ground to ensure they do their job properly?

This is a change of approach and a bold step, but the transition is going to be difficult. Almost by guarantee there are going to be problems with transition to the new culture. Unless more people are brought in and provided it is not pushed off to one side, which tended to happen in the past in the worst cases, we are going to have extra problems. I look forward to my noble friend’s answers.

Lord Low of Dalston (CB): My Lords, the SEN disability code of practice, which we are considering today, is a substantial piece of work, as has been remarked. The department is to be congratulated on it, particularly on the extent of the consultation which has taken place. It has been improved considerably in many respects since it was first issued in outline. I particularly express appreciation for the time and trouble officials have taken to meet with me and respond to the concerns I have expressed.

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Within the restrictions imposed by the debates on the Children and Families Bill, the approach to inclusion has been improved. There are references to the UN Convention on the Rights of Persons with Disabilities; there is a statement on the presumption of mainstream education; and, as has been said, there is a greater reference to the Equality Act, although the inter- relationship between that Act and education legislation could have been better spelt out and highlighted more prominently. So far as encouraging a strategic approach to the development of mainstream provision is concerned, the statement that local authorities should be proactive in seeking to improve the accessibility of mainstream provision is most important, particularly if they do that with respect to the provision in their area taken as a whole.

That said, the Government will know that members of the Special Educational Consortium are far from giving the code their unequivocal support. They are calling for an early review of the guidance once we have seen how it is working in practice. The sector exhibits a range of views about the code. Some organisations believe it should be withdrawn and relaid at a later date. A case in point is the National Deaf Children’s Society, which has already been referred to. This is not a head-banging or unreasonable organisation; it very much has its feet on the ground. That an organisation such as this should ask for the code to be withdrawn should give grounds for concern. The society makes a number of points. I will allude to them briefly, because the noble Baroness, Lady Howe, has already referred to them.

On Report, the Minister announced the Government had asked Ofsted to review the need for an inspection framework to drive improvements in local SEN provision and the local offer. The NDCS believes it should be a higher priority to ensure the support that deaf children receive from services is inspected. As the noble Baroness said, concerns have also been expressed about the wider accountability framework around SEN provision. The Minister indicated that Ofsted would publish its findings in summer 2014 but to date we have heard very little about Ofsted’s progress. Like the noble Baroness, Lady Howe, I would be very glad if the Minister could give us an update on how that work is going. We need a clear understanding of how the local authorities will be held to account for their local SEN provision.

Secondly, the code is equivocal about provision of specialist services for deaf children. Paragraph 9.144 states,

“local authorities should consider commissioning … peripatetic services”

for very young children with “hearing or vision impairment”. But elsewhere it states that where an EHC plan is being considered, deaf children must be assessed by a qualified teacher of the deaf. This cannot happen unless the service employing such teachers has been commissioned, so I would welcome the Minister’s reassurance that the necessary services for giving deaf children the support that they need will be commissioned.

6.45 pm

Thirdly, we need reassurance about the support that disabled students in higher education receive following changes to DSA recently announced without any public

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consultation whereby universities will be required to take more of the strain. What means of redress will disabled students have if universities fail to make reasonable adjustments or if the adjustments they make are inadequate? It can be argued that there is now a strong case for universities to be brought within the scope of the SEN code of practice so that disabled students have statutory rights of appeal if the support they need to achieve their potential is not provided.

As the noble Baroness, Lady Howe, said, it would be anomalous if disabled students aged 19 to 25 in other forms of education or training could exercise such rights but disabled students in higher education could not do so. Parliament may also want to consider whether the local offer should now include information about the support available from individual educational institutions.

Finally, concerns have been raised about the absence of any rights within the code that would allow parents and young people to appeal against the content of what the EHC plan says about outcomes. This means that tribunals cannot direct the local authority to amend the content of the plan as regards outcomes. This contrasts sharply with what has been the case under the previous regime, where much of the argument at tribunal has been about the content of statements—I can vouch for that personally having served on the SEN tribunal for some dozen years.

Many other SEC members believe that the code should be approved but with regret. They have a number of concerns with both the content and the timing of the code. While there is a broad recognition that the code has been significantly improved since it was consulted on earlier in the year, there equally remain concerns that the code is not as robust a document as might have been hoped. For example, a lot of concern remains around the removal of the school action and school action plus stages and their replacement with SEN support. There are worries that this new single stage will not be as discriminating as its predecessor and that it will be more difficult to respond to children’s needs in as individualised a way as before.

In general, however, the Special Educational Consortium’s members believe that the code should be approved and that the focus should be on making the most of it for the sake of a successful implementation of the reforms in September 2014. They believe that a failure to approve the code now would create more confusion than going ahead with the code currently before Parliament—I would agree with that. On timing, there is much concern that, given that implementation of the reforms is taking place in September, those who are legally required to have regard to the code are being put in a very difficult position and being given an unreasonably short time to become familiar with its provisions. There is normally an expectation that schools will receive new guidance at least a term in advance. There is a common concern across the SEC membership that the timing of the code risks jeopardising some of the many positive features of the legislation. The academic year has now finished, and educational institutions have broken up for the summer. There is a concern that this leaves no time whatever to begin to build the new culture which we will need if the reforms

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are to be implemented successfully. That being so, I am glad that the Minister devoted so much of his speech to the questions of preparation and transition, but I am not sure that they will have entirely alleviated all concerns.

Finally, although I have said that with implementation scheduled for September a failure to approve now would risk chaos, I believe that the Government should commit to an early review of the code following the academic year 2014-15, given the concerns that have been expressed. The Minister indicated that there may be an opportunity to pick up concerns raised at this stage—by which I mean now—when regulations are published later on, but a more definitive commitment to a full review after a year would be helpful and very much welcomed.

Lord Storey (LD): My Lords, I want to be very positive about this code of practice because I think that this is an historic moment for special educational needs and disability. I start by paying tribute to everyone involved because we are light years away from where we were before. Two years ago I was a teacher who had to look at colleagues who were not prepared to offer a duty of care to children with medical conditions. Now that will change, and it is to do so straightaway. Two years ago, schools did not have to have a qualified teacher as a SENCO, but now they do. I would reflect on the fact that after three years in post, those SENCOs must have the national qualification. To my mind, in terms of mainstream schools, we are light years away from where we were before. As I say, I pay tribute to all those who have been involved in putting together this code of practice. The 270-odd pages that make up the code are actually very clear and readable. I would guess that if this document was handed over to the plain English society, it would probably get a high score. Ministers, the Government and all those involved have listened and consulted, which means that changes have been made.

I have a number of particular questions, some of which have been raised already. Perhaps I may go over them. I should like to know what the process will be when changes occur. What is the procedure for adding something to this document? I have already mentioned to my noble friend the Minister that I am particularly concerned about the issue of young people sustaining concussion as a medical condition in school. At some stage we will need clear guidance on that. However, it is only one of a number of things. How, in the months and years to come, do we go about looking at those areas where we have real concerns?

I should have thought that 12 months was too short a period for a review, but an appraisal needs to be made at some stage of how this document is actually working in practice in schools. I would also be interested to know, perhaps through Ofsted visits and through general feedback, how the clear responsibilities for SENCOs in schools work in practice. A noble Lord asked who the responsible people are to be. For the first time, for mainstream schools, what SENCOs have to do and are responsible for doing is clearly set out and there is no hiding from that. They are responsible to the head teacher and the head teacher is responsible to the governing body of the school.

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