10 Mar 2015 : Column GC173

Grand Committee

Tuesday, 10 March 2015.

Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015

Motion to Consider

3.30 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

Baroness Williams of Trafford (Con): My Lords, since it was created just over a year ago, the National Crime Agency has been operational across the UK, but its work in Northern Ireland has been greatly restricted because the Northern Ireland Assembly did not agree that NCA officers could use police powers and operate on matters that are devolved.

This means that our response to a national security threat—serious and organised crime—has been weakened. The specialist resources that the National Crime Agency has developed on child sexual exploitation, cybercrime and economic crime have not been available in Northern Ireland. The numbers of civil recovery cases are down and the National Crime Agency has been doing far less than SOCA did before it. The Police Service of Northern Ireland has had to stretch further to fill the gap.

Serious and organised crime groups do not operate in isolated pockets in each region. They do not respect borders or force boundaries. The Police Service of Northern Ireland estimates that there are between 140 and 160 organised crime groups active in Northern Ireland—an estimated 800 active criminals. Nearly a third of these groups are assessed as having international links. Another third are linked to crime elsewhere in the UK or in the Republic of Ireland.

The order that we are debating today changes matters. It enables the National Crime Agency to operate with full powers in Northern Ireland, including under the Proceeds of Crime Act 2002. The NCA will be able to work with the Police Service of Northern Ireland, providing expertise, denying criminals assets and ensuring that the people of the United Kingdom are all afforded the same protection by the National Crime Agency.

The order ensures that the National Crime Agency will operate in Northern Ireland with the clear, transparent and significant accountability that the Northern Ireland political parties have sought. It is worth setting some of this out in detail here. The order will ensure the primacy of the Police Service of Northern Ireland. A National Crime Agency officer will not be able to use constable powers without the prior agreement of the

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chief constable of the PSNI. This process will ensure that NCA officers must have regard to community impact assessments.

The use of covert techniques will also require the prior agreement of the chief constable of the Police Service of Northern Ireland. The director-general will be answerable to the Northern Ireland Policing Board and will be required to attend meetings of the board and provide it with information. The board will monitor the exercise of NCA functions in Northern Ireland.

Reflecting the arrangements already in place for the Police Service of Northern Ireland, the Police Ombudsman will have a role in overseeing the activities of NCA officers in Northern Ireland and investigating complaints against them.

The director-general will also be responsible for ensuing that all NCA officers working in Northern Ireland have read and understand the Police Service of Northern Ireland code of ethics. Wherever practicable, the code will be reflected in the disciplinary procedures applicable to NCA officers in relation to their exercise of functions in Northern Ireland.

The order will also allow the NCA the ability to recover criminal assets in relation to offences that are devolved, together with the ability to request the recovery of assets held overseas in civil recovery cases.

This is a comprehensive package of measures which enables the NCA to operate effectively in Northern Ireland, while meeting concerns about accountability, by putting the agency on a very similar footing to the PSNI. I commend the order to the Committee.

Lord Rosser (Lab): Let me say, first, that we agree that the extension of the NCA’s power to Northern Ireland is a big step forward. I have one or two questions on the Explanatory Memorandum, but I raise them in the context of our agreement that we should be going down the road that is provided for in the order. I suspect that at least some, if not all, my questions will be because I have not fully understood the impact or significance—or lack of significance—of some things contained within the order.

My first question comes under that category of how significant or otherwise the order is. Paragraph 4.6 of the Explanatory Memorandum—I refer to the sentence starting with the last word on the second page—states:

“The effect of the extension of section 48(7) of the 2013 Act, and article 8(8) of the Order, is that these changes are deemed to always have had effect and so are retrospective”.

I am afraid that I have not been able to form a view in my own mind on what, in practical terms, is the effect of a change apparently being made retrospectively. Does that in reality have any impact on anybody or anything? How significant or otherwise is the reference to its being retrospective?

In paragraph 4.7 of the Explanatory Memorandum, the last sentence refers to the fact that,

“These provisions are not yet in force in Great Britain, and the effect of the extension of the provisions to Northern Ireland is that the provisions will be commenced by way of commencement order under the 2013 Act at a later date”.

If I have understood that correctly, the obvious question is: when is the later date? Are we talking about some time ahead or not?

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Paragraph 7.1 is on the policy background to the issues that arose when we were discussing the 2013 Act, because the Northern Ireland Assembly would not pass a legislative consent Motion in respect of the provisions relating to the operation of the NCA in Northern Ireland. I just ask for confirmation—I think that this is what all the information in front of me implies anyway—that there are now no problems with any of the parties in Northern Ireland on that issue. Are they all at one with the road that we are going down as far as this order is concerned?

Paragraph 7.3 in the Explanatory Memorandum—once again, I am afraid that this comes into the category of my not understanding how significant or otherwise this is, and whether it means anything or does not really mean anything at all—refers to the fact that:

“The Order also makes modifications to the way ‘relevant NCA provisions’ will be exercised in Northern Ireland”.

I simply ask again: what are those modifications in practical terms? Do they mean anything of any substance, or are we talking about minor details?

Paragraph 7.4 then sets out some of the requirements. The first is:

“The requirement for the Secretary of State to consult strategic partners in Northern Ireland before setting strategic priorities for the NCA in Northern Ireland”.

Is it considered likely that those strategic priorities will be very similar for the NCA in the United Kingdom as a whole, or is it envisaged that there will almost definitely be strategic priorities that are very much related to Northern Ireland and not to anywhere else—and, if so, what kind of strategic priorities might they be if they are going to be significantly different from elsewhere in the United Kingdom?

Paragraph 7.4 of the Explanatory Memorandum refers to,

“The requirement for the Director General of the NCA to consult strategic partners in Northern Ireland when preparing an annual plan … including the Department of Justice in Northern Ireland … and obtain the consent of the Department of Justice in Northern Ireland before issuing any annual plan”.

So we have a scenario where, in setting the strategic priorities, it is for the Secretary of State to consult strategic partners, but the actual issuing of any plan seems to need the consent of the Department of Justice in Northern Ireland. Why is it that the strategic priorities and the preparation of the annual plan require consultation, but the issuing of any plan—which, presumably, is about implementing the strategic priorities—requires the consent of the Department of Justice in Northern Ireland? Is it potentially a blockage if, apparently, you cannot issue the plan unless you have the consent of the Department of Justice in Northern Ireland? Why is one part of it consultation, and why when it comes to the issuing of the plan is consent required? What is the significance of that?

Paragraph 7.5 states that the provisions are to include:

“A duty on a member of the PSNI or any other person operating in Northern Ireland charged with the duty of investigating organised crime or serious crime to co-operate with NCA officers in the discharge of NCA functions”.

Will there be any facility for the NCA to be able to second PSNI officers to assist them with their work in Northern Ireland, or will it always be done on the basis of co-operation rather than secondment?

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My next question again probably comes under the category of not understanding the order fully. In paragraph 7.5, the fifth bullet point states:

“Those powers can only be exercised where a Northern Ireland general authorisation is in place and the powers are exercised in accordance with that authorisation”.

Is this order the general authorisation, or is the general authorisation something else that somebody has to give? If so, who is the person who has to give it? As I say, my question probably arises from not having fully understood what the order is saying.

Paragraph 7.5 goes on to say that the powers can be exercised also where,

“a general authorisation and an operational authorisation are in place and the powers are exercised in accordance with the operational authorisation”.

What can a National Crime Agency officer with powers and privileges of a constable not do in Northern Ireland that they could do in Great Britain with similar powers? Is there any distinction, or is the order simply giving them the same powers in Northern Ireland as they would have in the rest of Great Britain?

Paragraph 7.9—it is a fairly long paragraph, but I am referring to the seventh bullet point onwards, which is over the page—states:

“Paragraph 9 provides that the Director General must attend a meeting of the Northern Ireland Policing Board if given a reasonable period of notice … Paragraph 11 provides for inspections by the Chief Inspector of Criminal Justice in Northern Ireland. Those inspections must relate to NCA officers exercising NCA functions in Northern Ireland … Paragraph 14 provides that the Secretary of State must consult the Department of Justice in Northern Ireland before asking HMIC to carry out an inspection that relates specifically to NCA activity in Northern Ireland”.

Have I read that correctly? Can two inspectors, the Chief Inspector of Criminal Justice in Northern Ireland and HMIC, both carry out inspections of NCA activity and functions in Northern Ireland and, if so, why? If I have read it correctly—and I may have misunderstood it—why do we need both of them capable of carrying out inspections? If that is the case, is it not a bit of overkill?

Finally, under the heading “Impact”, paragraph 10.2 states:

“NCA officers in Northern Ireland are currently engaged in activity that does not require them to exercise the powers and privileges of a Northern Ireland constable”.

How many NCA officers are already engaged in activity in Northern Ireland and how many is it anticipated there will be once the powers in the order come into force?

3.45 pm

Baroness Williams of Trafford: I thank the noble Lord, Lord Rosser, for his questions on the order. I will try to take them in the order in which they were asked.

The noble Lord asked first about the retrospective nature of the order and what the effect of that is. The retrospective effect is to reverse the effect of the Perry case in the Supreme Court, which prevented the pursuing of assets outside the UK belonging to those living outside the UK. The provision took effect in Great Britain when the Crime and Courts Act 2013 came

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into effect and is not new to, or specific to, Northern Ireland. It allows the NCA to pursue assets outside Northern Ireland, even in relation to ongoing existing investigations.

The noble Lord also asked about paragraph 4.7 and the later date regarding the timing of the provisions being in force in Great Britain. We are commencing the remaining provisions in the Crime and Courts Act 2013, which amends the Proceeds of Crime Act 2002, for Great Britain on 1 June 2015; for Northern Ireland we expect commencement in late 2015 and no date has yet been agreed.

The noble Lord also asked about the Northern Ireland Assembly’s consent. Consent to this order was given on 3 February, as was required by the Crime and Courts Act, with Sinn Fein voting against the action to give consent.

The noble Lord asked whether the strategic priorities would be different in Northern Ireland and about the annual plan, which obviously needs consent. The strategic priorities are the same across the UK and are kept under review; the annual plan is specific to Northern Ireland and contains much more detail. It will have an impact on the PSNI and therefore needs agreement.

The noble Lord also asked about Criminal Justice Inspection Northern Ireland and the HMIC seemingly having the same role. In fact, they have different functions. HMIC considers policing; the Chief Inspector of Criminal Justice will consider other aspects of activity.

The noble Lord also asked about PSNI co-operation and general authorisation. The PSNI works closely with the NCA and may second officers if appropriate; this is an operational decision. The general authorisation is agreed with the Northern Ireland Department of Justice and sets out any specific agreements that are necessary.

I may not have answered all the noble Lord’s questions. I am just about to answer another one. What can an NCA officer not do in Northern Ireland that he can do in the rest of Great Britain? He may only exercise the powers and privileges of a constable in Northern Ireland if the prior agreement of the chief constable is obtained. The requirements set out in Schedule 1 to the order need to be met. If they are met, then an NCA officer’s exercise of powers will be the same as in the rest of the UK.

I hope that answers most, if not all, the noble Lord’s questions.

Lord Rosser: I think that the Minister has effectively answered all of them, apart from the one on how many NCA officers there are currently engaged and how many it is anticipated there will be when the provisions of the order come in. Apart from that, I think that the noble Baroness has answered all my questions.

Baroness Williams of Trafford: I am very pleased to hear it. I have not got the exact figures; I am not sure we know the exact figures at this stage. I will certainly write to the noble Lord on that.

Motion agreed.

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Restraint Orders (Legal Aid Exception and Relevant Legal Aid Payments) Regulations 2015

Motion to Consider

3.50 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Restraint Orders (Legal Aid Exception and Relevant Legal Aid Payments) Regulations 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

Baroness Williams of Trafford (Con): My Lords, it is a fundamental principle of our justice system that any person prosecuted by the Crown has the right to a properly conducted defence. The criminal legal aid scheme provides that legal aid will be granted to those who cannot afford to pay. This may include apparently wealthy individuals who have been prevented by the provisions of the Proceeds of Crime Act 2002 from making use of their assets to pay for a legal defence.

Prior to the enactment of POCA, many defendants who were likely to have their assets confiscated if convicted would recklessly dissipate assets through lavish spending on their defence in an attempt to secure an acquittal at any cost and reduce the amount available for confiscation if convicted. POCA introduced provisions to prevent this occurring by prohibiting the use of assets “restrained” or frozen to pay for defence costs because they may be needed to satisfy a future confiscation order. As a consequence, some apparently wealthy individuals, including some individuals suspected of involvement in serious and organised crime such as drug smuggling and large scale fraud, rely on legal aid to pay for their defence.

In recent years, a system of means testing for legal aid has been introduced for all Crown Court defendants. Those who can afford to pay some or all of their legal aid costs are required to do so. While anyone charged with a criminal offence and facing imprisonment or loss of livelihood is entitled to legal aid, I think that most noble Lords would agree that, if the defendant can pay some or all of their legal bill, they should.

The effect of the POCA provisions that prevent defendants from using restrained assets to pay their defence costs means that some wealthy individuals are not only granted legal aid but are also unable to pay any contribution towards it. This leads to a public perception of unfairness in respect of the legal aid scheme. Members of the public may wonder why such an individual should get a taxpayer-funded defence without making any contribution when less well-off defendants still have to contribute to the cost of their defence. After all, as we are asking people on modest incomes to pay something towards their defence costs, it seems only fair and reasonable that we ask millionaires to do so as well.

These regulations, and related regulations to be laid in a negative resolution instrument by the Ministry of Justice, introduce a new system that will help ensure that individuals who are required to make a contribution

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to the cost of their defence are made to do so. This will be accomplished by keeping such a defendant’s assets under restraint until they have either paid off their outstanding legal aid payments in full or the court discharges the restraint order.

To ensure that the new policy does not have a negative impact on either victims or the rest of the criminal justice system, the Legal Aid Agency will seek to recover legal aid payments from capital assets that remain after the confiscation process has been completed. This instrument allows for the extension of a restraint order beyond the payment of a confiscation order when a capital contribution order is issued before the end of the confiscation process. The person subject to the order will then be required to pay legal aid contributions from the remaining restrained capital after the confiscation order has been paid in full.

Not every restrained assets case will fall within the new regime. The defendant may have no assets remaining after any compensation owed to the victims and moneys owing under the confiscation order have been paid in full. The Government’s view is, however, that where a defendant has assets left after their ill-gotten gains have been confiscated and their victims compensated, it is right that such assets be used to repay the costs of their criminal defence. These regulations will help to ensure that that happens.

The regulations allow for the payment of legal aid contributions from restrained assets, but it may not always be considered necessary to continue with restraint in order to get a capital contribution order satisfied, in which case the court will be asked to lift the restraint order after the confiscation process has been completed. The capital contribution order will be issued against the remaining unrestrained assets. This is something that will be considered on a case-by-case basis after discussions between the prosecutor and the Legal Aid Agency.

As a result of these changes and the associated memorandum of understanding, a closer working relationship between the prosecutors and the Legal Aid Agency will be developed, ensuring that the process for recovering legal aid costs is smoother, regardless of whether a restraint order is extended past the confiscation order.

These changes are intended to come into force on 1 June. It is anticipated that these types of cases accrue about £2 million of legal aid costs a year and these changes will help the Legal Aid Agency to recover as much of these costs from offenders as is possible. I beg to move.

Lord Rosser (Lab): I have just a couple of points. Obviously, we support the intentions behind these regulations and what they seek to achieve.

Could I just ask about paragraph 4.3 of the Explanatory Memorandum? Once again, I am not sure exactly what to make of it. It says:

“The enabling powers for the regulations (found in sections 46 and 47 of the CCA)”—

that is, the Crime and Courts Act—

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“are not yet in force. It is our intention to commence sections 46 and 47 before the regulations are made, but after they have been laid in draft and debated by both Houses of Parliament”.

Does that mean that we will end up with a situation where the relevant sections have been commenced but there are no regulations in existence, or am I misinterpreting what is indicated in paragraph 4.3? It would be helpful if the noble Baroness could clarify what exactly it means in practical terms.

I have just one other point. I think the noble Baroness said that the changes would probably be expected to recover another £2 million that is not being recovered at the moment. Is that expected to be from a significant number of people, or is the argument—and obviously the reason for these regulations—that it is a fairly limited number of people who are withholding, able to withhold or not paying quite significant sums of money? The Minister has given the figure for the money that should be and is not being clawed back at the moment, but are we talking about a relatively limited number of Mr and Mrs Bigs in this world who are withholding or able not to pay the contribution towards the legal aid, or does it cover a large number of people in that position who will make up the £2 million total that it is hoped will be retrieved under these regulations?

Baroness Williams of Trafford: My Lords, I thank the noble Lord, Lord Rosser, for his questions. On his first question on commencement, the answer is quite technical. Would he be happy for me to write to him?

Lord Rosser: I say this seriously, even though it may sound a facetious comment. Could the noble Baroness persuade whoever writes the letter to write it in language that even I might be able to understand? That would be very helpful.

Baroness Williams of Trafford: I totally support the noble Lord on his wish to receive letters in plain English. I shall put in that request.

On the number of people and the amount that I mentioned, the amount is an estimate of money accruable to legal costs after confiscation and living expenses. The numbers are not known, but the noble Lord will be pleased to hear that we do not have massive numbers of people undertaking this type of criminal activity, so I cannot imagine that the numbers are huge. I will correct that comment if I am wrong, but I would not have thought that it would constitute a significant number of people at all.

I shall write to the noble Lord on the first question, in plain English.

Motion agreed.

4 pm

Sitting suspended.

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Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) and Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) (Amendment) Regulations 2015

Motion to Consider

4.05 pm

Moved by Earl Howe

That the Grand Committee do consider the Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) and Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) (Amendment) Regulations 2015.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, these regulations mandate the provision of five health and development assessments and reviews as set out in the healthy child programme. The healthy child programme for the early life stages focuses on a universal preventive service, providing families with a programme of screening, immunisation, health and development assessments and reviews, supplemented by advice around health, well-being and parenting. The assessments and reviews are to be offered to pregnant women and children from birth to age five.

These regulations also adjust the 12-month exemption period from the community right to challenge for health visiting, the Family Nurse Partnership and other child health services for reviewing the development and promoting the health and welfare of children under five years of age.

The Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) Regulations 2013 set out steps that local authorities are obliged to take in carrying out their health improvement functions and describe what they must do in the exercise of certain of the Secretary of State’s public health functions. This instrument amends those regulations by prescribing what local authorities must do to provide or secure the provision of universal health visitor reviews, thereby ensuring that certain elements of the healthy child programme are provided by all local authorities in England.

I am pleased to report that according to the most recent management information—from January 2015—published by NHS England, the number of health visitors has increased by 3,736, which is an increase of 46% since May 2010. We will know in due course exactly when the coalition’s commitment of 4,200 has been achieved, but I can say now that an enormous amount of effort, both locally and nationally, has gone into delivering the additional numbers, and those efforts continue as we speak.

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It should also be noted that the latest indications show that the Government’s commitment to increase the number of Family Nurse Partnership places to 16,000 will be met. This is crucial, as family nurses deliver the five reviews these regulations aim to mandate to those families under the care of the FNP programme.

The policy document Healthy Lives, Healthy People: Update and Way Forward, published in 2011, sets out the Government’s intention to transfer responsibility and power to local government, allowing local public health services to be shaped to meet local needs. The document set out the progress made to date in developing that vision and identified those issues where further development was needed.

Subsequently, public health services for children and young people aged five to 19 and other mandated functions were transferred in April 2013. The transfer of public health services for children age nought to five was delayed until 2015 to provide NHS England with sufficient time to deliver the Government’s commitment to increase the number of health visitors and transform the service, allowing the transfer of a much improved public health service.

This Government are committed to improving the health outcomes of our children and young people so that those become among the best in the world. What happens in pregnancy and the early years of life impacts throughout the life-course. Therefore, a healthy start for all children is vital for individuals, families, local communities and, ultimately, the whole nation. Health visitors provide valuable advice and support to families and are trained to identify health and well-being concerns. We have supported the profession more than ever before to transform the service.

By introducing these regulations we intend to provide a degree of consistency within local government for the delivery of these services. I am confident that that sends a clear signal to health visitors, family nurses, local authorities and the public of the Government’s ongoing commitment to universal public health support for pregnant women, children and their families.

We have been clear that we need to avoid creating new unfunded burdens. I can confirm that the requirement on local government in this instance to make arrangements for the reviews will be no greater than at the point of transfer. The funding for local authorities will reflect that for services at the point of transfer. However, the regulations require local authorities to act with a view to continuous improvement in participation in the five mandated reviews.

Back in 2010, at the time of the publication of the White Paper Healthy Lives, Healthy People: Our Strategy for Public Health in England, the Government consulted on the funding and commissioning routes for public health services and proposed how the department might create a public health outcomes framework. Over 2,000 responses to the consultation were received from a wide spectrum of individuals and organisations.

Respondents were generally supportive of the proposal that local authorities should commission public health services for five to 19 year-olds. However, a number of respondents commented that having different commissioning routes for children’s public health services from pregnancy to the age of five, and five to 19, could

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lead to fragmentation. The transfer of commissioning to local authorities from 1 October 2015 and these regulations will address this, and will allow for joined-up commissioning from nought to 19 years, improving continuity for children and their families.

In the period since the formal consultation took place we have continued to work alongside our stakeholders to develop plans for the nought-to-five transfer and to draw up these regulations. We are grateful for their continued input and would like to express our gratitude in supporting us to get to where we are today.

The Government have committed to fund local authorities for their new commissioning responsibilities that will transfer to them. The exact costs of delivering the mandated reviews will vary across the country. However, the funds being transferred—£428 million for the half year from 1 October 2015—are more than sufficient to enable local authorities to deliver the mandated elements as set out in the impact analysis. However, the mandated elements are only part of the nought-to-five service transferring.

Subject to parliamentary approval, the amendments in these regulations provide that a review may be carried out of the performance of local authorities around the five mandated universal reviews. The provisions in the draft regulations confirm that these regulations will cease to have effect on 31 March 2017. However, if a future Government conclude, after considering the results of any review, that the new provisions in these regulations should continue to have effect, the regulations amended by these regulations may need to be further amended accordingly.

The second area covered by these regulations concerns the community right to challenge. The Localism Act 2011 makes provision for a community right to challenge, under which a local authority has a duty to consider expressions of interest made by voluntary and community bodies, and certain other persons, in providing or assisting in the provision of its services. In line with the original government intention to exempt health visiting and other similar child health services for children under five years for one year from the point of transfer, these regulations amend provisions in legislation for the exemption period from the community right to challenge so that it would begin from the revised date of transfer—namely, 1 October 2015—and end on 30 September 2016.

I commend these regulations to the Committee. I beg to move.

Lord Hunt of Kings Heath (Lab): My Lords, I thank the noble Earl for his very detailed explanation of these regulations. I want to ask just a couple of questions.

First, the original plan for transferring the commissioning of services to local government from the NHS was due to start on 1 April and has now been changed to 1 October. I may have missed it in the noble Earl’s introduction, but could he explain the reason for that delay?

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4.15 pm

I turn to what is an interesting relationship between the Government andlocal authorities. The EM makes clear that the full scope of the healthy child programme will not be covered by the five reviews that the noble Earl referred to. Instead, it is described in the EM as providing,

“a ‘gateway’ to identify additional needs that the HCP guidance also addresses”.

The EM goes on to say that,

“Mandating only some elements of the HCP allows LAs autonomy to determine delivery of the remainder”,

and that local authorities are,

“expected to take a reasonable approach to continuous improvement in participation in the 5 mandated reviews”.

That seems to me an eminently sensible approach. I certainly understand that, if you are transferring responsibility to local government, there is no point doing so unless you allow and respect local government autonomy.

The noble Earl also referred to the report and review that have to take place before 31 March 2017. I wonder how, in the 18-month period from the start of the new provisions two years from now, his department will monitor performance in between times. Does it have any intervention powers if it feels that a local authority is not really doing what is necessary to make sure that the programmes work effectively?

Could I also ask the noble Earl about the budget? He referred to a figure that is to be transferred. The EM states that the Government are committed to fund local authorities for these new commissioning responsibilities. What happens post 31 March 2017? At some point, a decision has to be made.

Secondly, is the money being transferred as a ring-fenced budget to local authorities, or is it going to go through the DCLG vote? I am interested to know. Behind that is the question of whether the department can guarantee that the estimate it has made of the cost to local authorities is actually going to be spent by local authorities and that they will not seek to use it for other purposes. I remind the noble Earl of the tragedy of Healthwatch. As he knows, calculations were made by his department on how much should go to local Healthwatch organisations, and local government took a very big on-cost. We know from the national Healthwatch’s work that they took about 25% in the first year. Clearly, one wants to avoid that.

On the impact assessment, I must congratulate the noble Earl’s colleague Dr Dan Poulter and officials for what is a quite remarkable piece of work. I have looked at both the summary impact assessment and policy options 1 and 2, and the only answers given in the many columns are either “No”, “Unknown” or “Nul points”. I wonder whether that stemmed from uncertainty about what local authorities are actually going to do with the money.

On the community right to challenge, can I just ask the noble Earl about the 12-month exemption period now commencing from 1 October 2015? The reason for the short exemption is clear. I just want to ask the noble Earl whether he thinks that a year is long enough for the transfer to bed down.

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Earl Howe: My Lords, I am grateful to the noble Lord for his questions and comments.

The noble Lord asked me why we decided to delay the coming into force of these regulations until October, when the original intention was that it should be in April. We decided, after discussion with partners, that stability would be best served by transferring in October rather than April—the point at which the target of 4,200 health visitors was only just due to be met. It was felt that a six-month period when local authorities could reasonably prepare was prudent.

As regards the services we are mandating, as I think the noble Lord recognises, we are mandating the five universal health visitor assessments, and we will review that after 12 months if we are re-elected. This mandation is designed to support a smooth transfer to require local authorities to provide vital services that give parents and their baby the best start in life. However, it is true that a balance had to be struck. When we consulted on this, responses ranged from suggestions that all services should be mandated in all areas to respondents suggesting that none should be. In-between, almost the full range of health improvement and health protection services were proposed for mandation. A number of respondents agreed with the department’s intention for the list of mandatory functions to be as short as possible to give local authorities the maximum possible freedom. We hope that we have got the balance right.

The noble Lord, Lord Hunt, asked me about monitoring. We will work with Public Health England to monitor how delivery has progressed. However, it is worth noting that the new service model has been tested in early implementer sites, and case-study material has been published. Those sites saw increases in the numbers of children receiving the two to two and a half year review almost double. We have launched six priorities for demonstrating success and building sustainable services, including: transition to parenthood and the early weeks; maternal mental health; breast-feeding; healthy weight, including healthy nutrition; and other measures. So there are a number of measures by which we will be able to assess the extent to which the arrangements are gaining traction in the way that we would like.

On funding, the proposed allocations for local authorities in 2015-16 are, as I mentioned, £428 million for a half year. The department is investing £36 million in a full year to pay for additional health visitors and Family Nurse Partnership places we have created, and £2 million to ensure that £15,000 per half year is available to every local authority for commissioning costs.

As with other elements of the public health grant, local authorities will be asked to report on spend in 2015. Reporting on spend will be split into two categories: spend related to mandated functions, set out in the regulations, and non-mandated spend. Local authorities are required to report spend against the sub-categories on a quarterly basis to the DCLG, which Public Health England will review on behalf of the Department of Health. That data will be used as a means of monitoring usage, and local authorities will be required to ensure that the figures are verified and in line with

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the purpose set out in the grant conditions. Local authority chief executives and the director of public health will be required to return a statement confirming that.

Local authority allocations have been determined on the basis of “lift and shift”, supported by funding adjustments, including a minimum floor. That is, we have identified the scope of NHS England’s existing obligations under service specification 27 of the Section 7A agreement between the department and NHS England, and funding relating to that will provide the main basis for local authority allocations.

The noble Lord asked me about the possibility of a ring-fence. Yes, that money will form part of the public health ring-fence which we committed to for 2015-16, but of course decisions beyond that are for the next Government to make.

I think that has answered most of the noble Lord’s questions. If I have failed to do so, I will be happy to write to him.

Motion agreed.

Local Audit and Accountability Act 2014 (Special Trustees) Amendment Regulations 2015

Motion to Consider

4.24 pm

Moved by Earl Howe

That the Grand Committee do consider the Local Audit and Accountability Act 2014 (Special Trustees) Amendment Regulations 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

The Parliamentary Under-Secretary of State, Department of Health (Earl Howe) (Con): My Lords, these regulations are among a number of statutory instruments relating to the audit of the accounts of relevant authorities in the new regime introduced by the Local Audit and Accountability Act 2014. The Act also abolishes the Audit Commission, passing responsibility for auditor appointments to the local public bodies.

I will not take up the Committee’s valuable time by repeating the arguments put forward during the passage of the 2014 Act in this debate. There was broad support across the House during the debates on the Act for creating a more efficient audit system, giving greater responsibility to local bodies while providing greater opportunities for local people to hold those bodies to account.

These regulations introduced today make a minor but important change to the application of the Act, relating to one particular type of local public body—special trustees appointed by the Secretary of State for NHS charities. Special trustees are established by the Secretary of State to administer property or funds held on trust at particular teaching hospitals. There are currently special trustees at only three hospitals—

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Great Ormond Street Hospital, Moorfields Eye Hospital and Royal National Orthopaedic Hospital. All the special trustees were established to manage charitable funds and they represent some of the largest NHS charities.

The Local Audit and Accountability Act 2014 makes provisions for audit appointment, conduct and regulation for a range of local bodies which are defined as “relevant authorities”. The relevant authorities include local government, parish councils, NHS trusts, clinical commissioning groups and special trustees. The special trustees’ charitable accounts fall outside the account definition in the Local Audit and Accountability Act. These accounts are covered by the Charities Act 2011, which sets the audit and reporting arrangements for all English NHS charities. However, the Local Audit and Accountability Act 2014 applies generally to matters which do not relate to the accounts of trustees. For example, there is a requirement in the Act for relevant authorities, which include special trustees, to have auditor panels. The intention, however, was that the Act should apply to special trustees only if they held non-charitable funds.

These regulations therefore amend the definition of relevant authorities as far as it relates to special trustees so as to restrict its application to instances where the trustees are dealing with non-charitable funds. The amendment would also remove any overlap which exists in relation to matters which are already covered by the Charities Act 2011, and so it will restore the current position, making special trustee arrangements consistent with those for other NHS charities. This amendment will also make the application of the Local Audit and Accountability Act to special trustees clearer. The fact that the Act does not apply to special trustees’ charitable accounts is currently not directly stated. To establish this, readers have to follow two cross-references to other Acts. In preparing these regulations, we discussed the implications with the Charity Commission and the Association of NHS Charities, which agreed that the overlap between the Acts should be removed.

In conclusion, these regulations will amend the Act so that it does not apply to the charitable trust funds of special trustees and applies only where the trustees are dealing with non-charitable funds. I commend these regulations to the Committee.

Lord Hunt of Kings Heath (Lab): My Lords, I am sure that we all are grateful to the noble Earl. As he will understand, I laboured long and hard over these regulations. Rather like the previous RIA, they are quite remarkable in that there has been no consultation, guidance or impact assessment, no charities are affected apart from the charitable trustees—I do not think that the special trustees count as charities in that sense—and they do not impact on small and medium-sized enterprises. No doubt if there had been an RIA, it would have been another “Nul points” return.

I think the noble Earl said that as of today the regulations will have no impact because the three special trustees who still exist do not engage in non-

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charitable activities. I have a genuine question for the noble Earl with regard to the Government having adopted a deregulatory or better regulatory approach. I wonder whether this SI was really necessary and whether a letter from his department to the three special trustees telling them not to engage in non-charitable activities might not have been a better option. I was going to ask him which three special trustees still existed, but he very kindly gave their names. I wonder why they are still special trustees. He may not know why, but it struck me that, with the options that are now available for these trustee arrangements, other NHS trusts and foundation trusts have decided on different options.

Finally, it is worth noting that in some cases we are talking about quite considerable sums of money that, in one way or another, have been left or that special trustees operate. They can therefore have a major impact on the activities of those hospitals, particularly on research but also on contributions to patient comfort. I do not know whether the noble Earl really thinks that these funds are generally in good hands and whether there are any trends in giving at the moment; clearly the NHS finds them to be extremely useful.

4.30 pm

Earl Howe: My Lords, I am grateful to the noble Lord for his questions and comments. Essentially, these regulations are about creating legal certainty when the 2014 Act commences. The policy intention has always been that the Act should apply only where special trustees are dealing with non-charitable matters. That policy is already reflected in the Act, albeit in an indirect way, through cross-reference to other legislation in respect of the accounts of special trustees. However, the background legislation to this amendment is complex, and by not limiting the relevant authority reference to special trustees to when they deal with non-charitable matters, a number of provisions apply generally to special trustees. We considered that to be unsatisfactory and it is why the amendment we are making is necessary as a point of clarification. In other words, there is an overlap between the Local Audit and Accountability Act and the Charities Act. The noble Lord knows as well as I do that lawyers find that sort of thing extremely untidy.

Lest the noble Lord think that this is purely an academic matter, I am advised that it is perfectly possible for special trustees to hold non-charitable property. The DH guidance in 2011 says that NHS trustees have the power to accept and hold trust funds other than charitable funds and asks the NHS trustees to consult the department if they are considering accepting donations under terms not regarded as charitable. That could occur where funds are donated for the support of an independent patient, or for such a small and specific group of patients that it does not qualify as a charitable purpose under the Charities Act 2011. In other words, the special trustees would just be custodians of those funds in those circumstances.

As regards the noble Lord’s final question on whether I consider the charitable funds to be safeguarded and in good hands, I have no reason to doubt that that is

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the case. I do not have any background on the charitable funds themselves, but if I can comment on that matter, I would be happy to write to him.

Motion agreed.

4.33 pm

Sitting suspended.

Immigration and Nationality (Fees) Order 2015

Motion to Consider

4.38 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Immigration and Nationality (Fees) Order 2015.

Relevant document: 22nd Report from the Joint Committee on Statutory Instruments

Baroness Williams of Trafford (Con): My Lords, this is the first fees order made using Sections 68 and 69 of the Immigration Act 2014. The order sets out the menu of immigration and nationality functions for which fees may be set in subsequent regulations. It sets out maximum amounts for different categories of fees, limiting the amounts that may be charged in subsequent regulations. The changes made are designed to address two issues with the previous framework.

First, the Immigration Act makes clear that fees may reflect the cost of other immigration and nationality functions. This ensures that those who use and benefit most from the immigration system continue to contribute proportionately towards the cost of running the system.

Secondly, the new framework is more flexible and responsive, making it easier to amend fees without the need for a new affirmative statutory instrument. In previous years, immigration and nationality fees were set out in two statutory instruments; that is, a negative instrument for cost-recovery fees and an affirmative instrument for all other fees. Moving forward, all immigration and nationality fees will be set out in a single, negative set of regulations. The benefit is that where a change is made to the Immigration Rules requiring consequential changes to fees, these may be made within weeks rather than waiting for the next annual fees update in April. This also applies where new services are introduced to meet customer demand, or where operational or legal requirements necessitate fees changes.

We continue to ensure that sufficient checks and balances are in place to enable appropriate scrutiny of our proposals to ensure that immigration and nationality fees are set in the best interests of the UK. Fees proposals must be scrutinised and approved by a number of government departments and an impact assessment produced before they are presented to Parliament. The Government balance their policy that users should pay with consideration of the impact of

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fees on businesses, education institutions and economic growth. The new framework requires fee maximum amounts to be set out in a fees order.

This is a new requirement and means that Parliament may consider the “menu of charged services” and fees at the same time. This is an improvement on the old framework, which had been criticised because there were separate debates on the “menu” and fee levels. Individual fee levels will be set out in negative regulations. This is consistent with most other government fee arrangements. We have published a fees table that shows what we expect individual fees to be in 2015-16. I will turn to those in a moment. In practice, we expect that most fees will continue to be set following an annual review cycle, consistent with departmental budgeting arrangements. This order will last for one year.

I will now turn to the contents of the order before noble Lords. First, it separates the various chargeable applications and services into clear groupings. I believe that this categorisation is much clearer than in the past. For example, the previous fees order provided that leave to remain applications are chargeable, but gave no further detail. It is now easier to understand that fees will be charged for sponsored workers, students, settlement applications and so forth. The order also proposes maximum fee levels for groupings of similar applications and services. The maximum amount for each grouping reflects the amount we expect to charge for the highest individual fee in that grouping. These maxima are not targets. Most groupings will contain a number of individual fees, charged at different rates below the proposed maximum.

I will now explain the fees proposals for April 2015 that will be set out shortly in regulations. In order to cover a larger proportion of immigration and visa costs through fee income, most immigration and nationality fees will increase. The Government’s approach, consistent with previous years, is to protect certain routes as far as possible and balance this through making targeted increases where reasonable, in particular where the benefits to applicants are greater, services are optional, where there is evidence that customers are willing to pay more, or that UK fees are priced below those by other countries. Percentage increases are then applied to other fees as appropriate.

We propose that tourist visas should rise by £2, which is around 2.5%, and that some fees should be frozen or even reduced. For example, the 10-year visit visa and shortage occupation worker fees will be frozen, while exceptional talent fees will be cut. Also, a number of fees will still be set at unit cost. The highest increases are proposed for the routes that provide the most benefits and entitlements, and for optional, premium services. For example, indefinite leave to remain and investor visas, which may provide an accelerated route to settlement, will be subject to large increases. Similarly, expedited visa services overseas and mobile biometric services in the UK will increase significantly. Most other fees will rise by between 4% and 12%. In general, lower increases are proposed for the routes that support economic growth with higher increases for the routes that provide greater entitlements or where unit costs are higher.

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We expect to lay regulations shortly to come into effect on 6 April. This fees order as an enabling provision provides us with the means to generate sufficient resources to sustain a high-quality immigration system, reduce the cost of the system for the general taxpayer and ensure that those who use and benefit from the system pay a fair price. I beg to move.

4.45 pm

Baroness Smith of Basildon (Lab): My Lords, I thank the noble Baroness for her explanation of the order and the information she provided. It is helpful to have the outline. She will be aware and will know from debates we have had previously on the Bill that we support the principle that the Home Office’s costs and visa costs should be borne by those who are using the service. I make it clear that we support the order before us today. We were clear in Committee and during the passage of the Bill. I think there is further detail to come on the levels of charging.

However, I have some questions. I have been working through the impact assessment and the consultation document trying to work things out, and if the noble Baroness can give me some clarification it will be helpful. It in no way changes our support for the principle but I think there are always three things. First, there is principle, which we have signed up to and fully support; secondly, there is the detail and how it works in practice; and thirdly, the political purpose and the impact. It is the detail and the impact that I particularly want to ask her about.

One of the things I could not quite work out from the documents I had was how the maximum costs have been calculated. What was the evidence base and how was the assessment made to come to those figures? I appreciate that the Government recognise that there is a different impact on different kinds of immigration and the different categories, but what was the basis for setting the levels? I have been looking at them to see how they were ascertained and for the impact on, for example, the tourist industry, which is singled out in the impact assessment.

The Explanatory Memorandum says that responses were,

“broadly supportive of the proposals”.

It is right that they were broadly supportive of the principles behind the proposals, but some questions were raised, particularly from the universities regarding the impact on students and from some employers regarding the impact on their businesses. It would be helpful to know what points came up in the consultation that the Government were able to respond to and make changes in the statutory instrument to address those concerns.

I have one issue. All these things have to be evidence-based, and in the language and rhetoric we use we would always want to be fair to everybody, including those concerned about the impact of immigration and immigrants themselves. However, on the issue of other key non-monetised benefits from the main affected groups, page 2 of the impact assessment says:

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“If some migrants decide to leave the UK, there may be some wider benefits in terms of improved social cohesion, reduced congestion and transport costs”.

It says that these are “expected to be negligible”, but it sounds like they were digging around to find something non-monetised as a benefit. I am not sure that its tone and lack of evidence base—“basically, if some foreigners leave there will be increased social cohesion”—is the kind of thing we should be seeing in an impact assessment in such a subjective way. Unless the Government can provide evidence to that effect I am uncomfortable with that being in the impact assessment.

We are looking at all the evidence here. I want to draw attention to page 5 of the impact assessment where the point is made that:

“Potential changes to the immigration system, and the inexactness of projection methods, mean that application forecasts are not considered to be accurate over a ten-year period. Impacts are therefore assessed over a five-year period”.

There are some questions about how robust the information is.

It was interesting to read the comments on page 6 about the impact on application volume. The Government quite rightly recognise, as it states there, that:

“The UK competes with other countries for tourists, students and workers, thus it is possible that increasing fees in the UK may encourage substitution effects in that applicants may apply to other countries or may not apply at all. The impact of raising fees stems primarily from the deterrence of potential migrants from entering the UK”.

The Minister will be aware from the number of discussions that we have had, particularly on the Immigration Bill, of how nervous the universities are that potential university students, who pay fees and contribute to the economy—and who are unfortunately included in the Government’s net migration statistics—may be deterred from coming to the UK. This is recognised in the document, which continues:

“The analysis has therefore not yet delivered estimates of the relationship between price and demand for visas that are robust enough for use in impact assessments”.

That implies that the Government do not know what impact the change of fees will have on applicants such as students. Perhaps the Minister could make some comment on that. I worry that the evidence base is weak. I hope that it is not the Government’s intention to deter through cost levels students or those with skills whom we want to employ in this country, but the impact assessment appears to state that the Government do not know.

Page 7 of the impact assessment makes the specific point that,

“the impact on an individual student to changes in the visa fee … does not describe the response of international students in aggregate ... Evidence suggests that places at UK institutions are oversubscribed by international students, and that the number of international students in higher education has continued to increase over time, suggesting that past increases in tuition costs, living expenses and visa fees haven’t significantly damaged demand”.

It goes on to say that there is no evidence that it will do. Can I press the Minister on this point? I was speaking last week to a friend who is a lecturer at a university in Tokyo who said that her students are now far more reluctant for a number of reasons to come to the UK and are applying to Australia and America. If

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we are looking at the impact of past increases, are we making any future projections? What analysis is being done? Are we looking at these issues in the round, or in isolation at what this order does? There seem to be a number of pressures on employers and students, not just those with which the order is concerned.

I want to ask the Minister about the table in the impact assessment which shows the net revenue from fee changes for those who continue to apply. Despite the increase in revenue that the Government are looking at, the table shows that the amount of projected income will go down from £75.3 million in 2015-16 to £60.8 million in 2019-20. Is the purpose to ensure that the number of immigrants is reduced, because fewer of them are coming into the country, or is just to ensure that the fee system is fair on those who do? Is this a way in which the Government are trying to deal with the net migration statistics, which, as we saw last week, are a failure by their own standards—although I am not sure that that on its own tells us very much? What are the assumptions behind the net revenue being foreseen to reduce in that way and why is it the case? The point that I am making is about the robustness of the analysis that has been undertaken. We are fully signed up to the principle that those who use the system should pay for it, but I am not clear that the evidence has been produced to show that the Government understand the impact of all the changes being made.

A significant reduction, for example, in the number of overseas students coming to the UK and paying fees may help the Government’s target, but it will not help the UK economy or our universities. It would be helpful to learn whether the Government have given any consideration to post-implementation analysis of the impact. Such an analysis might give us the opportunity to assess in the different categories of immigration the impact not just of the fees but of a range of changes being made and whether the impact is positive or negative. We support the order, but I worry about the robustness of the evidence being provided.

Baroness Williams of Trafford: I thank the noble Baroness for her questions. I will go through, hopefully, all of them in order.

The first question that the noble Baroness asked was how the costs have been calculated. We will continue to work within the strict financial limits agreed with HM Treasury. Within those limits, we set fees that reflect the cost of processing and the value of a successful application while ensuring that the UK remains an attractive destination for work, study and tourism. The fees have Treasury and cross-governmental approval. We must have agreement from HM Treasury before we introduce or amend any fee. She asked a lot of questions today about the impact assessment of fee proposals. In terms of the criteria, the fee levels are considered very carefully, taking into account a complex range of factors, which includes, as I said, the administrative cost of processing an application; the benefits and the entitlements given to an individual if their application is successful; the international pricing comparisons; economic growth; mutually beneficial

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arrangements between the UK and other Governments; and the cost of running the immigration system as a whole.

One important point that the noble Baroness raised was on the tone of the language in the impact assessment if people leave. I have to say that, from a personal point of view, I agree with the noble Baroness. That point was raised in the other House. The assessments are produced by economists and the approach and language that they use is factual rather than policy based, but I totally get where the noble Baroness is coming from.

Baroness Smith of Basildon: I am grateful to the Minister for that comment. I thank that that is helpful. It is very good to have that on the record and I appreciate it. Although the tone is a concern, my problem also is whether there is evidence to back up what was said. I could not find that anywhere in the impact assessment. It may be economists making the statement, but where in the impact assessment is the evidence that backs up that statement? That is an objective comment.

Baroness Williams of Trafford: I thank the noble Baroness for that intervention. I can come back to her in due course after today. I think that we understand each other on that point.

On the consultation, we targeted over 1,100 representatives from the education, employment, business and tourism sectors, who were sent the document and encouraged to reply. We held workshops with representatives from different sectors and immigration lawyers. The document was also available to members of the public. We consulted on the principles of charging for immigration and the nationality fees, and that included questions on the simplifying of the fee structure; fee levels; legislation; optional and premium services; Border Force services; commercial partnerships; refunds; and administration fees. The responses were generally supportive of our charging strategy; of the principle that fast-track service at the border and premium services should be expanded to provide more choice and convenience for customers; and of the suggestion that the fee structure should be simplified.

5 pm

The noble Baroness stopped for quite a while on students. There has been a 4% growth in the route increase and there is no evidence that the fees affect demand. I understand that she is talking about future projections, but we do not think that there will be a direct relationship between the visa fee and the volume demand at these price levels.

The price of a Tier 4 visa represents less than 0.5% of the total cost of coming to study in the UK for three years and the fees are insignificant compared with other costs. I do not decry that the other costs are not quite huge, but as a proportion the fees are quite small. Research by Universities UK on the 2013-14 academic year indicates that the mid-range for an undergraduate student’s tuition fee was £11,400 per year for a classroom-based degree and £29,200 for a clinical medical degree. Research by the NUS for the

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2012-13 academic year shows that the average cost of living inside London was £13,388 and just over £12,000 outside London. Some of the analysis will be retrospective, so we will see what effect it has had in a year’s time, but as a percentage of the general cost of non-EEA students coming here, it is quite a small proportion.

The UK is still attractive for students. We have seen strong growth in the number of study visas granted to key emerging markets: for example, 3% growth from China, 12% from Saudi Arabia and 7% from Malaysia. Estimates on future projections of student numbers are developed by the Home Office and are shared with other departments each year. For the reasons I have just outlined, the impact of fees is believed to be zero or negligible. The impact of the policy is different for further education and for higher education. We have seen some further education student numbers decline, but we have tackled some of the bogus colleges that have abused the further education route.

I hope that I have answered most of the noble Baroness’s questions, but I will come back to the point that the economists made on the benefits of people leaving. There was one final point on how robust the methodology used in the impact assessment was and how accurate we believe the estimates to be. We think that the methodology used is as robust as it can be, given the limitations in available data. We have taken further care to demonstrate this uncertainty by introducing a range of estimates, thus providing high and low case impacts for the effect on demand.

With that, and if the noble Baroness is satisfied—

Baroness Smith of Basildon: I have just one further point. I am grateful to the Minister. I think that most of the points I have raised have been addressed. I think she is right that they are as robust as they can be, but the impact assessment says how non-robust they are. I have one final point: I asked her about some kind of post-implementation review to try to understand the impact. I would appreciate it if she could comment on that.

Baroness Williams of Trafford: My Lords, I am pretty sure that there would be a review of any policy decision that we made. I will write to the noble Baroness if that is not the case. I am sure that that will be the case in due course.

Motion agreed.

Immigration (Health Charge) Order 2015

Motion to Consider

5.05 pm

Moved by Baroness Williams of Trafford

That the Grand Committee do consider the Immigration (Health Charge) Order 2015.

Relevant documents: 22nd Report from the Joint Committee on Statutory Instruments, 27th Report from the Secondary Legislation Scrutiny Committee

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Baroness Williams of Trafford (Con): My Lords, the NHS is one of our greatest assets and we are committed to keeping it free at the point of delivery. However, the current entitlement rules are overly generous and unfair to the UK taxpayer. Currently, all non-EEA nationals granted stay for more than six months may qualify for free access to the NHS from the day they arrive.

Use of the NHS by overseas visitors and migrants in England alone is estimated to cost up to £2 billion a year. Of this, the NHS spends nearly £1 billion a year on non-EEA temporary migrants from whom no cost is currently recovered. This facility is not generally reciprocated when our own nationals go to work or study overseas. The Government do not believe that the NHS should sustain this largesse. That is why we took action in the Immigration Act 2014 to change the legal framework in this area. This leads us to the purpose of today’s debate.

The Immigration (Health Charge) Order requires that non-EEA temporary migrants who make an immigration application to come to the UK for more than six months, or who apply to extend their stay in the UK, make a direct contribution to the NHS via payment of an immigration health charge. The Home Office will collect the charge as part of the immigration application process and payment of it will be mandatory. Temporary migrants will pay, upfront, an amount that covers the entire period of their permission to stay in the UK. Where an application is refused, rejected or withdrawn, the charge will be refunded.

In setting the amount of the charge, we have considered the range of NHS services available to migrants, the valuable contribution migrants make, and the need to ensure that the UK remains an attractive destination for global talent. Taking these factors into account, we have set the charge at £200 per annum, per migrant. This represents around 25% of the average per capita cost to the NHS of treating them. Those who pay the charge will be able to use the NHS in the same way as permanent residents.

During the passage of the Immigration Act, there was much debate in this House on the implications of this charge for international students. The Government remain committed to attracting and enabling the brightest and best overseas students to study at our world-class universities. In 2013-14, the number of full-time new entrant students from outside the EEA at our universities rose by 6%. However, we cannot overlook that international students make extensive use of the NHS, at a cost of around £430 million a year. The Government believe it is right that students should make a proportionate financial contribution.

International students and their dependants will benefit from a discounted charge rate of £150 per person, per year. This amounts to just 1% of the total cost of studying in the UK. It is also well below the price they would pay under mandatory private health insurance requirements operated in competitor countries.

In the debates in this House on the Immigration Act, a number of concerns were also raised about the potential impact on vulnerable groups. My noble friend Lord Taylor of Holbeach, in his previous capacity as Home Office Minister, sought to address these concerns. He explained that the Immigration Act provides the

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power to exempt certain categories from the requirement to pay the immigration health charge. He also explained the difference between the charge and the separate NHS overseas visitor charging regulations for secondary care treatment for which the noble Earl, Lord Howe, and the devolved Administrations are responsible.

Let me take this opportunity to reiterate the important safeguards in this area. Those who pay the charge will receive free NHS treatment for the duration of the lawful stay that they have been granted. The order provides various exemptions from the requirement to pay the charge. These include exemptions that reflect our obligations under EU law and other international agreements and exemptions for vulnerable groups. Visitors will be exempt from the health charge but will remain subject to the separate system of overseas visitor charges under NHS regulations in the four UK nations and must pay for their treatment. The NHS regulations contain a number of charging exemptions for vulnerable groups and particular treatments for infectious conditions in the interests of protecting public health. It is also a key principle that medical treatment which is urgent or immediately necessary in the judgment of a clinician is never withheld from anyone, irrespective of their chargeable status.

The proceeds of the charge will go directly from the Home Office to the health departments in England, Scotland, Wales and Northern Ireland. The Government estimate that the charge could raise as much as £1.7 billion additional funding for the NHS over 10 years. With that, I commend the order to the Committee.

Earl Attlee (Con): My Lords, I am grateful to my noble friend the Minister for introducing the order for consideration by the Grand Committee today. As pointed out by my noble friend, the Committee will recall that the House looked at this matter in great detail when we approved the principle during the passage of the Immigration Act last year. Our task today is to ensure that the Minister is properly and appropriately implementing the legislation. I am sure that the noble Baroness, Lady Smith of Basildon, will be as forensic as she usually is.

I recall last year enjoying privately teasing some noble Lords who were involved in the higher education sector by asking them to promise me that they would not use these provisions as a selling point in their organisation’s prospectus. The plain fact is that we are capping health charges for overseas students at £150 per annum. If you tell someone that something is free, they will probably not believe you. If you tell an overseas student that their healthcare is capped at £150 per annum, they will think that it is a bargain. I think that it would help the Committee if the Minister, when she replies to the debate, would tell us how leading academic institutions in the United States of America treat healthcare costs.

A constant refrain last year was the suggestion that the Government wanted to reduce the number of overseas students by a variety of means. When I was in the Government, we were very keen on reducing the number of bogus students, but I never saw any evidence suggesting that we wanted to do anything other than encourage genuine students. Ironically, soft power is being debated in the Chamber this afternoon and

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overseas students are a very important component of our soft power portfolio. The Minister has already told the Committee that the number of full time, non-EEA students rose by 6%. That does not suggest that the Government’s action is deterring overseas students from coming here and, of course, they are very welcome.

Baroness Smith of Basildon (Lab): My Lords, I thank the noble Baroness for her explanation. It is helpful to have a bit more detail than there is in the order. Again, I struggled trying to tie up the information in the impact assessment, because there seems to be a range of figures. I think that the noble Earl was being complimentary when he referred to me as forensic, although I am not sure he is always trying to be complimentary when he says that. I struggled when I tried to understand some of the figures in the impact assessment, especially when I compared them with the figures in the impact assessment of the previous order that we have just debated.

First, I should like to put on record that we do not oppose the principle of the health charge, which the noble Baroness will recall from the many long debates we had on the Bill. We understand that those who use the system should contribute to it and that remains our position; it has not changed at all. However, the noble Earl said that we should ensure that the charge is properly and appropriately implemented and that the evidence on which decisions are based is robust. The Minister will have seen the report from the Secondary Legislation Scrutiny Committee which questioned whether the order created perverse incentives and questioned the level of the charge.

5.15 pm

I have a few questions for the Minister to enable me to understand how the order will work in practice and to ascertain some of the figures. First, on the level of fees, the legislation and the order do not talk about an absolute figure, but say what it is likely to be in the region of. Does she have any certainty about the level of fees? Are they likely to be significantly higher than those that have been discussed previously? Are there any projections of when those may be reviewed? What consideration and consultation will take place?

Page 6 of the impact assessment refers to a Department of Health publication on those migrants using the NHS who did not pay for the services they received, and those who received healthcare for which they may not have qualified. Part B, entitled “Rationale”, on page 6 states:

“Underlining these concerns, the Department of Health published, in 2013, the findings of a comprehensive study into migrant use of the NHS. The study estimated the total cost of EEA and non-EEA visitors”—

both are included in the study—

“and temporary migrants accessing NHS services in England alone to be between £1.9 billion and £2 billion per year”.

I think the figure for non-EEA persons is around £950 million.

The table on page 4 of the impact assessment indicates that the Government estimate the total income from surcharges to be around £195 million. However,

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the summary of the benefits on page 2 of the impact assessment seems to provide a different figure altogether, but perhaps I am misunderstanding something—I have struggled to understand the different figures provided. Page 2 refers to the key monetised benefits of the main affected groups. I am particularly interested in the evidence behind these figures. Income to government from an immigration health surcharge is estimated at around £1.7 billion. Reduction to public service and welfare provision is put at around £172 million. Increased employment opportunities for UK residents is put at around £29 million and reduction in Home Office processing costs is put at around £4 million. So there must be built into the figures an assumption that a number of people will not pay the health surcharge and therefore will not receive visas—otherwise, how could there be increased employment opportunities for UK residents and a reduction to public service and welfare provision? Therefore, that must be built into the assumptions that are made, but I am not sure on what evidence those assumptions are based. Indeed, the Secondary Legislation Scrutiny Committee talks about a perverse incentive. Is there a perverse incentive given that those who are unlikely to want medical treatment may feel that they have to pay a lot of money whereas those who think they are likely to need medical treatment may think that they are getting a better deal? That is a strange situation and it is difficult to ascertain the correct figures.

Coming back to the point about evidence, table 8 on page 18 of the impact assessment refers to the average cost per year per migrant of public sector spending, including education and social services, and gives figures for tiers 1, 2, 4 and 5 and for families and others. However, the figures in table 14, on page 27 of the previous impact assessment for the fees order seem very different from the figures in this impact assessment. I appreciate that they are two different orders and two different impact assessments. The source of one table is national population projections based on the statistical bulletin for the Office for National Statistics and the other one is a Home Office analysis. I think that it would be helpful to have one consistent approach to providing information on what the costs of individual migrants are or are likely to be. I found it quite difficult to have two tables looking at the same kinds of issues but giving completely different figures in different ways—one from the Home Office and one from the Office for National Statistics.

The impact assessment talks about the costs. A lot of migrants paying the health charge will of course be working and paying tax. Is that factored in? Are those tax payments and national insurance payments factored in to any of the calculations, for example, on employment? If we look at the assessment of the amounts, we see that the increased employment opportunities for UK residents will be worth around £29 million. Does that take into account any tax or national insurance no longer being paid by migrants?

We support this order and did not oppose the principle of the policy when it came before your Lordships’ House in the Bill. However, we need to be clear that we are making assumptions; I appreciate that they are assumptions, but there should be robust

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evidence behind them. If we are looking at enormous sums of money going to the NHS, which are then going to be distributed around the country according to the Barnett formula, we have to ensure that we have the correct figures and that the evidence is robust.

Baroness Williams of Trafford: I thank my noble friend Lord Attlee and the noble Baroness, Lady Smith, for their questions. I will take them in reverse order. My noble friend makes the comparison between fees for students in this country as opposed to some leading universities in America. I can inform the Committee that, in Harvard, it costs £600 a year and could cost up to an extra £1,500 per annum if you are a student there. The difference is quite significant between what we are able to charge in this country and what a student attending Harvard might be expected to pay. He also made a good point about the increase in the number of students, which I think he referred to in our previous debate.

The noble Baroness, Lady Smith, talked about a perverse incentive. In fact, that was the very question that I asked myself. If there were a perverse incentive, it exists at the moment because healthcare is absolutely free. In setting the amount of the charge, the Government have considered several things: namely, the cost to the NHS of treating temporary non-EEA migrants and the range of health services available without charge to migrants; the valuable contributions that migrants make to the UK; and the need to ensure that the UK remains an attractive destination for global talent. Taking those factors into account, the charge has been set at £200 a year with a discounted rate of £150 a year for students. We think that this represents a proportionate contribution to the NHS, rather than a full cost recovery. The charge has been set at a rate that is designed to strike the balance between providing a better deal for the UK taxpayer and ensuring that the UK is maintained as a destination of choice for global talent. There is a balance to be struck.

The noble Baroness, Lady Smith, also asked about review upon implementation. The operation of the health charge will be reviewed six months after implementation. I think that that will provide an opportunity to look at whether the charge is set at an appropriate level. She also asked why taxpaying migrants must pay the charge. We believe that those subject—

Baroness Smith of Basildon: That was not my question at all. I asked whether any tax paid by migrants for working was taken into account in any assessments that were made as part of the impact assessment. I was not querying whether they paid the charge, just whether it was calculated under the impact assessment.

Baroness Williams of Trafford: Yes, my Lords, it is, so I will not pursue the point that I was making before.

As regards how we arrived at the figures—the noble Baroness talked about the surcharge raising £195 million —that excludes the cost of administering the scheme, which is why the figures probably seem a little anomalous to her. All temporary migrants subject to the surcharge

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will have to pay it or they will not be granted a visa or permission to stay. Basically, there will not be evasion of the charge.

The noble Baroness also talked about the fact that in the impact assessment there is a mention of increased employment opportunities for UK nationals. That reflects a situation where the introduction of the health charge results in a modest decrease in the number of foreign nationals coming here.

I hope that I have answered all the noble Baroness’s questions. I thank my noble friend—

Baroness Smith of Basildon: There was the question I asked at the beginning about whether the charge is likely to be any higher, given that the figure in the legislation is not an absolute one.

Baroness Williams of Trafford: My Lords, I am making an assumption that because the impact of the charge will be reviewed after six months, that will be the point at which a decision such as that would be made. However, if it is any different, I will write to the noble Baroness.

Motion agreed.

Broadcasting Act 1996 (Renewal of Local Radio Multiplex Licences) Regulations 2015

Motion to Consider

5.27 pm

Moved by Lord Bourne of Aberystwyth

That the Grand Committee do consider the Broadcasting Act 1996 (Renewal of Local Radio Multiplex Licences) Regulations 2015.

Relevant document: 23rd Report from the Joint Committee on Statutory Instruments

Lord Bourne of Aberystwyth (Con): My Lords, the Government have a long-term objective to support a listener-led migration from analogue to digital radio. These regulations support the expansion of local digital audio broadcasting—DAB—network coverage, which has been identified as a key barrier to the uptake of digital radio. These regulations will allow the holders of a local radio multiplex licence to apply for a further renewal of their licence until 2030. They are an important step in supporting the Government’s commitment to expanding the coverage and reach of digital radio in the United Kingdom.

Digital radio continues to grow steadily: it accounted for 24.8% of all radio listening in the third quarter of 2010, but by the same quarter last year that had risen to 37.8%. The number of households with DAB radios has increased from 32% in 2009 to almost 50% now. More than 61% of new cars sold each year now have digital radio fitted as standard; figures for the fourth quarter of 2014 from the Society of Motor Manufacturers and Traders show it up from just 4% in 2010. The strides made are due to the efforts government has

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made to support the radio sector through this transition, and by the radio industry itself and its growing partnership with the United Kingdom’s motor industry.

In July 2010, DCMS launched the Digital Radio Action Plan. While recognising that the future of radio was digital, we sought to tackle the key barriers facing the industry in support of a future decision on a timetable for switchover, when the 50% of radio listening was to digital and when DAB coverage had been built out to match FM coverage. I stress that 50% is a trigger to consider a possible switchover; it would not be an automatic trigger for switchover.

5.30 pm

A key barrier for digital radio identified in the action plan is the level of DAB coverage. This has been a major frustration for listeners. Funding was set aside in the last licence fee settlement to improve the coverage of the BBC’s national digital radio network. The BBC is around two-thirds of the way through its programme to extend the service to 162 additional transmitter sites, helping to increase its national coverage from 94% of UK households to more than 97% by the end of this year. There are also improvements in the coverage of the national commercial digital radio network, with investment by Arqiva, the transmission network operator for terrestrial television and radio, to extend its coverage from around 89% to more than 91% of UK homes, also by the end of 2015.

The real barrier on coverage has been the local DAB network. It consists of 55 licensed multiplexes around the UK and is the primary broadcasting network for local commercial radio services and the BBC’s local stations in England. It is also the network for the BBC’s nations’ services in Scotland, such as BBC Radio Scotland; in Wales, such as BBC Radio Wales and BBC Radio Cymru; and in Northern Ireland, such as BBC Radio Ulster. The rollout of this network has lagged far behind the expansion of the two national United Kingdom DAB networks and it has been much more challenging.

Between 2007 and 2012, the network’s coverage remained stuck at 65% of UK homes with little prospect of it being built out further, in part because the licence holders of 13 licensed local multiplexes across the country considered it unviable to launch them as there would be little or no take-up from broadcasters. The deadlock was broken through intervention by DCMS and an agreement was reached with the industry in 2012. This has resulted in the launch of 12 such local multiplexes, with the first in Oxfordshire in December 2012 and the most recent in north Yorkshire in December 2014. This has improved local DAB coverage from around 65% of homes to almost 75%.

In December 2013, DCMS announced a package of measures to support the next phase in the development of digital radio. The measures included a commitment by DCMS along with the BBC and commercial operators of local DAB radio multiplexes to support building out the coverage of those multiplexes to approach current commercial FM equivalence; that is, from around 75% of UK homes to more than 90% of households by late 2016—the 90% being those that are able to get FM at the moment.

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Last month, the Minister of State for Culture and the Digital Economy announced the construction of 182 new local digital transmitters and modifications to a further 49 local DAB sites across the United Kingdom in partnership with the BBC and commercial multiplex operators, thus tackling a major barrier to better digital radio coverage in the UK.

DCMS is supporting this programme in two ways: first, by providing up to £7.75 million of capital funding to support the extension of local DAB services. The BBC is also supporting the programme financially in income terms and will meet one-third of the operating costs of additional sites for carriage of BBC local stations and BBC nations’ services. The commercial sector will meet two-thirds of the ongoing costs from 2015 to 2030.

These regulations are the second and crucial element of DCMS support for the build of better DAB coverage. The current local multiplex licences begin to expire in the early 2020s. The build of additional coverage being supported by government and the BBC will require long-term capital and service contracts to be signed between the local multiplex operator and Arqiva, which provides transmission services to the multiplex operators.

If these contracts are over a shorter period, that could push up the cost of the extension of coverage. Permitting multiplex operators to renew their licences so that they expire in 2030 will allow operators to spread the cost of that investment over a longer period, thus reducing the immediate costs to commercial broadcasters, local multiplex operators, the BBC and the Government. When completed in mid-2016, this programme will double the number of local digital transmitters and expand the level of local DAB coverage up to the same standard as FM currently. That amounts to raising coverage from around 75% of UK households currently to 91% of homes after the build-out is completed. It will mean that around 4 million more households will benefit by having access to their favourite stations on digital and a further 4,400 miles of major roads will be covered.

These regulations are crucial to supporting the investment in expanding local DAB and in giving commercial radio the security of tenure it needs to support the expansion of local DAB services. Under the changes in these regulations, local multiplex operators that have completed the programme of building all additional sites in accordance with Ofcom’s local DAB expansion plan will be able to apply to Ofcom to renew the licence to 2030. Local multiplex operators will be required to maintain the expanded coverage as a condition of their renewed licence, though Ofcom will have discretion to make changes to licence conditions—for example, if certain sites need to be replaced or if the multiplex operator wants to enhance coverage further. The DCMS has consulted both Ofcom and the multiplex licence holders on a draft of these regulations and they are supported by the radio industry and Ofcom. They will help to deliver expanded local DAB coverage at a level where a future Government would be in a position to consider a timetable for switchover, but the trigger for considering this decision will be the listener, as we have always said.

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Although we have made good progress since 2010, the Government have always said that decisions about a future radio switchover or the timetable need to be listener-led and we will not consider setting any timescales for a future switchover until the majority of all radio listening is to digital. These regulations will help us increase coverage so that as many people as possible can enjoy the benefits of digital radio. I commend these regulations to the Committee.

Lord Stevenson of Balmacara (Lab): My Lords, I am sorry we have not attracted a bigger audience for this topic. Indeed, it might have been even smaller if I had not been able to rush out of my medical appointment, which grievously overran, so I am a bit out of breath and slightly unsighted on this. Since it has effected nosebleeds, I might suddenly emerge in a haze of red; if so, I will rush out. I will apologise to the Committee if that is the case. I am slightly extending it to make the point and I do not think it will happen, but that was where I was earlier today.

I enjoyed very much the introduction given by the noble Lord, Lord Bourne. It is great to hear that progress has been made in digital audio broadcasting. There was a bit of a blizzard of statistics. I am not sure I have my coverage detached from my percentage of ownership or use, but I am looking forward to reading it in Hansardand I might come back to it if I am still confused. The two things that have struck me are that more than 60% of new cars now have DAB, which has always been the key issue. If one can get the car manufacturers to adopt this as standard then it will naturally drive people’s experience and use and therefore lead to greater confidence and greater usage—or is it coverage? I forget which. I am also very struck by the 50% of home use figure that the noble Lord mentioned and I think that that is a very good base for further development of this issue.

The noble Lord was clear that simply reaching those figures did not mandate a trigger for anything to do with the switchover, but I wonder whether, when he comes to respond, he could simply just go over this again, because it seems to me it would be helpful both to the industry and to policymakers if there was some sense from the Government of what figures they are aiming for. More than 50% seems to me to be a majority. It is usually what tends to happen in these matters and I think in that situation it is pretty close to getting there. Coverage is clearly a bigger issue and I will come on to some points about that, but I do not yet understand quite what is holding it back.

The position with television is, of course, not the same, but it certainly had a significantly different approach. In the case of the switchover for television, a clear target was given with significant time to allow manufacturers and users to plan for the eventual change. I am sure that this was in the thinking and that, once the trigger point has been reached, we will have that, but it would be helpful to get reassurance on that point from the Minister.

As I hope will be clear from what I am saying, we are very supportive of the measures in this SI and do not have any objections to the process. I suppose that, behind it, there is a slight question about where competition in this area will come in, if at all. The

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worry outlined by the noble Lord, and which drove the earlier decisions to proceed down this route of giving support, particularly to those who are operating the local multiplexes, loses a little bit of bite when you consider the timescales that we are talking about; that is, another 15 years for these people from today and, admittedly, only 10 years from the point at which their licences begin to run out. It is not a huge amount of time, but in a market like that it is certainly quite a significant support mechanism for this area. I just wonder whether any thought was given to the carrot of giving what is, effectively, a 10-year licence to operate. I was going to say something else, but I will not; it involved the word money. It is an area that we will need to come back to at some point. On the general question of the switchover, I am interested to know what the big picture looks like now and whether there was some sense in which competition was deliberately considered but then ignored. I would like some information on that.

I would like to ask a few questions. I may have missed this in the introduction, but there was a problem with the second commercial digital channel, D2 as it was called. What progress has there been on that? That was surrendered by the winner of the auction following the award of the licence. Will he give us an update on that?

What work is being done on technical measures to support radio in particular? There is quite a lot of talk in technical terms around broadcasting more generally about whether satellite, Freeview and other forms of distribution are likely to make an entry. Do we have any information about commercial radio and BBC radio in the digital field? There are ways in which that could be done. Many people now listen to radio on the internet. What exactly is the balance between those? If there is any information on that, I would be grateful to have it. The attempt to bring all licences in on a landing slot of 2030 is probably sensible, particularly if there are thoughts about technological change. It would be interesting to know something on that.

Finally, I am advised that licence rollovers have been granted in the past to analogue commercial radio stations that also broadcast in DAB, which, presumably, is a means of ensuring stability and supporting investment in digital radio coverage and content. The Digital Economy Act extended those licences only to 2017, so it is a rather narrower date than 2020, which is the date that we are talking about for the local multiplexes. Presumably, in the absence of any action by government, we will look to require those licence holders to reapply for their licences. That does seem a little bit tough. I understand that DCMS consulted on this matter with a closing date of 1 December 2014. As we are now in March, will the Minister mention where he is on that, what is likely to happen to it and what timescale is involved?

Lord Bourne of Aberystwyth: I thank the noble Lord, Lord Stevenson, very much indeed for his contribution. If he is capable of that with an impending nosebleed, goodness knows what he would be like firing on full health. We certainly wish him well.

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I thank him very much for the kind words of support. I will try to deal with the various questions that he raised. I have every sympathy with his fight with the statistics. I also have had one in this area with the acronyms, but am probably just about making my way through that.

5.45 pm

He raised the issue about the 50%, which is a trigger for looking at the position, but not necessarily a trigger for the switchover. Actually, the 50% initially came from a government White Paper in 2009, therefore under the previous Government. Since then spokespeople in the Commons on the Labour side have talked about a 70% trigger so I am not sure whether that is policy or a stray comment but, as I say, we are looking at this as being consumer-led. We do not see it as being an issue other than consulting with people when it gets to 50% as to what is the appropriate trigger. We have no set figure on that.

The point on competition that the noble Lord raised was well made. We have looked at that in the round but feel that the security of delivering the digital rollout is the important issue at this time. I should have said, and perhaps let me make the point at this stage, that community and local radios will continue to operate on the FM network, so they will be protected in so far as they are very localised and community radios such as hospitals and so on. We are looking at giving them some limited powers in relation to advertising and so on as well, which is the subject of some other regulations but not these today.

The noble Lord asked about the second commercial national D2 bidding process. He is absolutely right that two valid bids have come in and we are looking at them at the moment, and a decision is expected shortly. I think the names are in the public domain but one involves Arqiva.

I think the noble Lord was making the point about the analogue service licences commercial radio stations have until the end of 2017. That was out for consultation until the end of November. The consultation has ended. We are certainly expecting to give a decision on that. We are looking at the evidence and clearly there is an issue there before Parliament is dissolved—certainly that is the intention. That is a point well made, but we are on to that.

In relation to the other types of delivery of radio and indeed television services, I think this area is unique in that delivery can both be very local and global. The United Kingdom leads on internet hybrid radios and we are very proud of our role on that. I will write with more detail on that to the noble Lord since it is somewhat outside of these regulations. With that, I thank the noble Lord very much for the very helpful and relevant questions and commend these regulations to the Committee.

Motion agreed.

Committee adjourned at 5.47 pm.