6 July 2015 : Column 1

House of Lords

Monday, 6 July 2015.

2.30 pm

Prayers—read by the Lord Bishop of Chester.

Oaths and Affirmations

2.33 pm

Lord Williams of Oystermouth took the oath, and signed an undertaking to abide by the Code of Conduct.

European Union: Reform


2.36 pm

Asked by Lord Dykes

To ask Her Majesty’s Government when they expect to announce the results of their discussions about the European Union reform agenda with other member states.

The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns): My Lords, at the June European Council, agreement was reached to launch the renegotiation process and revert to the issue at the December European Council. The next stage will involve technical discussion in Brussels. How long the overall process takes will depend upon progress over the substance. The Government have committed to holding a referendum on EU membership before the end of 2017.

Lord Dykes (LD): I thank the Minister for that Answer. I hope I will not embarrass her if I express great commiseration and sympathy for the task ahead for her and fellow Ministers with this portfolio. As Kenneth Clarke said very recently of Eurosceptic Tory MPs:

“They want us to leave, they don’t want reform … They are all right-wing nationalists”.

What on earth will the Government do to get out of the wholly sinister trap that the Government have created?

Baroness Anelay of St Johns: My Lords, there is no trap. The trap is wide open and we are out of it as you are when you are in a race. However, this is the festina lente race, where the people with the ideas and the determination first work through the process, which has now been launched with regard to the European Council, and technicians look at the process of how change can be achieved. We also know that the Prime Minister has launched the political discussion on the substance. So we are out of the trap and negotiating for the good of Britain and the rest of Europe.

Lord Tomlinson (Lab): Could the noble Baroness give the House some clue, so that we can judge whether these negotiations are successful, as to what the main planks of the negotiating mandate are? All our partners in the European Union have shared in it, but the British people, who ultimately will have to make a judgment, have been given no idea what the demands are and therefore will not be able to judge success or failure.

Baroness Anelay of St Johns: It is the nature of parliamentary democracy that the Government outline their plans to Parliament first, and we did, not only as a result of speeches in another place but thereafter, further setting out the details. My right honourable friend the Prime Minister has made it clear, as indeed have those negotiating with him—the Chancellor of the Exchequer and the Foreign Secretary—that the four planks of our negotiation are: fairness for those both within and outside the eurozone; changes with regard to immigration so that welfare benefits do not act as an overlarge pull factor and movement is for work not for benefits; sovereignty is an issue. so we must tackle the problem of ever closer union, which may be all right for others but not for us; and competitiveness. We have led the way. We have already achieved advances on this, but for hard-working people in this country we need to improve competitiveness across Europe, including the digital single market. That is it.

Lord Howell of Guildford (Con): Are reports correct that officials have been working on possible fast-track treaty changes in case Greece leaves the euro but stays

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in the European Union? If so, would these be under the passerelle procedure set out in the 2011 Bill on the European Union? Would they be wrapped up with the general strategy for European reform, which my right honourable friend the Prime Minister has indeed outlined in very clear direction and which provides a useful basis for major reform in the future, which will involve treaty change?

Baroness Anelay of St Johns: My Lords, with regard to the timing of changes, we have clearly said that the only date that is certain is that by the end of 2017 we will have put to this country a referendum on the deal that has been achieved. With regard to treaty change, my right honourable friend the Prime Minister has made it clear that there are some circumstances in which treaty change would need to be obtained, but he has also made it clear that in advance of any referendum what is needed is a binding, irreversible agreement with all the other states that a treaty change would take place. On that basis, there would need to be an acceleration of treaty change.

Baroness Ludford (LD): My Lords, in the light of the Greek referendum result, do the Government intend to follow the advice of the Member for Uxbridge and try to secure a no vote in a referendum as apparent leverage for further negotiations?

Baroness Anelay of St Johns: My Lords, I was brought up in a family who said yes because you tended to get the right answer more frequently. I can see that I have caused amusement on the Privy Council Bench of the Conservative Party, but clearly their minds are far superior to mine. With regard to the impact of the negotiations, my right honourable friend the Prime Minister has my confidence and the confidence of the Government that he will deliver a deal that is right for this country, and we will be able to support him when it comes to putting it to the population.

Baroness Morgan of Ely (Lab): My Lords, the Business Secretary recently berated the CBI for being too pro-EU on the grounds that this weakened the Prime Minister’s negotiating position. Does the Minister believe that that was a sensible position for her colleague to take, given the vocal pro-EU position of the CBI on EU membership and the catastrophic impact that leaving the EU would have on business in the UK?

Baroness Anelay of St Johns: My Lords, the CBI has made it clear that it is in favour of reform of the European Union that delivers more competitiveness. We have the support of the majority of its members in the way we are proceeding. There will always be differences of views; that is part of the nature of a democracy.

Lord Lamont of Lerwick (Con): Does my noble friend recall that the Duke of Wellington used to state that he thought the English constitution was “incapable of improvement”? Is it not the case that the noble Lord, Lord Dykes, thinks exactly the same thing about the European Union? Does my noble friend recall how

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the noble Lord, Lord Dykes, always used to advocate joining the euro and went on singing the same tune after it was in deep, deep trouble? If so, will she take his advice with a very large pinch of salt?

Baroness Anelay of St Johns: I might need more than salt.

Lord Kinnock (Lab): Does the Minister agree that, like charity, competitiveness begins at home? Will she therefore counsel her colleagues in the Government against continuing the large cuts in net public sector investment, the 40% cuts in further education for over-19s, and other measures that are fundamentally undermining the competitiveness of our economy, as is shown by the record balance of payments deficit?

Baroness Anelay of St Johns: My Lords, this Government and the previous coalition Government made great headway in overturning some of the most dire economic situations the country had to face in 2010. It was a difficult task. We wish to continue to do that. This Wednesday, the noble Lord will have the opportunity to see the next stage in plans to resuscitate our competitiveness and the economy.

Algorithmic Trading


2.44 pm

Asked by Baroness Wheatcroft

To ask Her Majesty’s Government whether the effects of algorithmic trading are being monitored and sufficiently regulated.

The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley): My Lords, regulators continue to watch carefully and act when required in this fast-growing area of activity in financial markets. Investment firms and trading venues using algorithmic trading in the UK are already regulated and supervised by the Financial Conduct Authority and the Prudential Regulation Authority. From 2017 they will need to abide by the rules on algorithmic trading in the EU Markets in Financial Instruments Directive II.

Baroness Wheatcroft (Con): My Lords, I thank my noble friend for his reply and declare my interests as listed in the register. MiFID II will undoubtedly improve regulation, although I welcome my noble friend’s assurance that the regulators will have the resources to implement those rules. However, does he share my wider concern about algorithmic trading—that it operates to the detriment of ordinary investors and is the antithesis of the long-term investment we should be encouraging? What can he do to address this?

Lord Bridges of Headley: My noble friend speaks with a lot of experience on these matters. I would point her to the very interesting Foresight research carried out by the Government, which looked into this. As a result of that, we do not think that the long-term investment decision-making by companies is undermined by high-frequency traders, which should be differentiated from algorithmic trading in the round. That said, during the last Parliament, in response to the Kay review,

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the Government initiated a broad review of reforms to address long-standing concerns that short-termism on the part of investors has impeded the creation of sustainable value by British companies. The Government are considering what steps are appropriate to make further progress in shifting the culture of equity markets towards long-termism.

Lord Campbell-Savours (Lab): My Lords, is it not true that many of those who ended up making a small fortune through algorithmic trading started off with a large one?

Lord Bridges of Headley: As so often, the noble Lord speaks with a great amount of insight and experience, I am sure, on this matter.

Baroness Kramer (LD): I wonder if the Minister could answer the question from the noble Baroness, Lady Wheatcroft, on the impact on small investors. Would he not agree that ever higher speed high-frequency trading, together with dark pools, has in effect rigged the trade in financial instruments against small investors?

Lord Bridges of Headley: I reiterate that the PRA, and Andrew Bailey in a speech last month, drew attention to a lot of these issues. I hope the noble Baroness takes some consolation from that and from what I said about the FCA. On smaller investors, as I said, the Government are looking at this issue. I draw attention to the Foresight report which said,

“transaction costs have fallen for both retail and institutional traders”.

We therefore need to look at this in a balanced and proportionate way.

Lord McFall of Alcluith (Lab): My Lords, this House received compelling evidence from the Economic Affairs Committee that through HFT, billions of pounds of shares were being traded every day with little or no public exposure. Technology is being used not to ensure that we introduce fairness and neutrality into the market, but to receive information ahead of the rest of the market. This was described as the battle of microseconds, whereby ordinary investors and others are screwed because they do not understand the concept. The Government and the regulators are on the outside looking in; full transparency of the market is essential. Government have a public duty, and there has been laxity so far; they really should put their skates on. Then, the next time there is a “flash crash” or a liquidity value, they cannot put their hands up and say that it is nothing to do with them. Full transparency and disclosure are essential and it is time that the Government acted.

Lord Bridges of Headley: My Lords, that was a high-frequency question as far as I can see. The noble Lord raised a number of points. Investment firms that operate what are often termed dark pools are subject to code of business rules that require them to treat their customers fairly. As I mentioned in my opening answer, MiFID II will further introduce strict volume caps on the amount of equities trading that can take place under waivers from transparency. That will significantly reduce such dark trading.

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Lord Reid of Cardowan (Lab): Given the centrality of the City of London to the British economy and the intention expressed more than a decade ago by some of those associated with Islamist jihadism to “bleed Britain to bankruptcy”, can the Minister tell us what measures have been taken to protect the City of London from hacking, particularly given that a vast number of essential economic investments are now being transacted in nanoseconds?

Lord Bridges of Headley: The noble Lord speaks with a lot of experience on these matters, which are worthy of consideration. If he will forgive me, I would like to write to him on that point as it requires a detailed answer.

Lord Davies of Oldham (Lab): My Lords, I hope that the Minister is not indulging in that degree of complacency—saying, “It’s all under control”—which the senior management of significant banks indulged in, and then found themselves taken to the cleaners by the operations of relatively lowly placed staff. One thinks particularly of UBS losing £1.7 billion from someone trading in this manner. The noble Lord must know that the technology of increased speed is widening the spread between buying and selling, and therefore gives an incentive to people operating at that level to take advantage.

Lord Bridges of Headley: My Lords, I am certainly not complacent. The noble Lord raises a good point, and I reiterate that the Government take the matter of regulating financial markets in their entirety very seriously and closely follow developments in these markets. As I said, investment firms and trading venues should ensure that robust measures are in place to prevent automated trading creating a disorderly market and being used for abusive purposes. The new rules under MiFID II will ensure that such measures are in place.

The Lord Bishop of Chester: My Lords, I am a bear of little brain in relation to algo-whatever-it-is trading, and I speak as a fool. However, would this not all be solved if there was a rule that if you bought shares, you had to keep them for more than a few nanoseconds—maybe a few minutes?

Lord Bridges of Headley: The right reverend Prelate makes an interesting point. I refer him to the excellent Foresight report, which says that,

“liquidity, as measured by bid-ask spreads”—

I will test him on that later—

“and other metrics, has improved”.

Care Sector: Apprenticeships


2.51 pm

Asked by Baroness Bakewell

To ask Her Majesty’s Government, in the light of the report The UK Nursing Workforce: Crisis or Opportunity published by consultants Christie + Co on 3 June, which highlighted a serious staff shortage in care homes, what proportion of new apprenticeships will be in the care sector.

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The Earl of Courtown (Con): My Lords, apprenticeships are paid jobs with quality training. Officials in BIS and the Department of Health are discussing what can be done to offer more opportunities as part of the commitment to 3 million apprenticeship starts in this Parliament. Our priority is to work with employers to increase the number of apprenticeships. We are developing a comprehensive plan for growth, including a renewed emphasis on communications and a greater role for the public sector.

Baroness Bakewell (Lab): I thank the noble Earl for that Answer. I was specifically concerned about the great shortage of nurses, who are needed in this country. The burden of the need for nurses falls particularly heavily on care homes. On Wednesday, the National Care Forum will publish a survey showing that in the care workforce, only 12% are under 25 years old and 50% are over 45 years old. Recruitment is difficult because there is no clear career pathway—it is seen as a low-wage, high-turnover job. So can the Government offer young people a lifetime career in caring, with training and promotion prospects from care assistants into nursing professionals?

The Earl of Courtown: My Lords, the noble Baroness asked a number of questions. She asked about a career pathway for young people going into the sector. If we look at the apprenticeship starts by sector, and particularly at the Trailblazer system of industry-designed apprenticeships for getting people into them, there is one for nursing, another for adult care, another for healthcare and another for early years. There have also been in excess of 250,000 new apprenticeship starts in the care sector between 2010-11 and 2013-14. Apprenticeships are one route for those who want to progress into a satisfying career within the care sector.

Baroness Brinton (LD): My Lords, the Christie report points out that 20% of nursing students drop out of their university courses, which is a waste of their careers and of public money. Can the Minister say what the Government are planning to do to reduce this dropout rate as a matter of urgency? To have a shortage is not good enough, but to waste 20% of those who enrol in university courses is a disgrace.

The Earl of Courtown: The noble Baroness is quite right about people leaving these courses after they have been accepted on them. Ministers in various departments are discussing this issue.

Baroness Pitkeathley (Lab): My noble friend’s question refers to the care sector. Does the noble Earl agree that the care sector must extend to domiciliary care—care given in people’s own home—where job satisfaction is even lower, what with 15-minute visits and so on? Improving the quality of that care is essential. Does he agree that these apprenticeships should also take domiciliary care workers into account?

The Earl of Courtown: The noble Baroness is quite right. Domiciliary care for people in their own home is so important. At the same time, the standard of care also has to increase.

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Baroness Andrews (Lab): Is the Minister aware that the RCN has estimated that more than 3,000 overseas nurses currently earn less than £35,000 and are therefore liable to be deported in 2017 as a result of the Immigration Rules? Can he tell me how many of those nurses are in the care sector? Can he also tell me why nurses are not on the shortage occupation list, which would exempt them from those regulations? Will he make it his business to see whether the Home Secretary can change that?

The Earl of Courtown: My Lords, the noble Baroness mentioned the shortage occupation list. In February, following a commission from my right honourable friend the Home Secretary to conduct a limited review into a number of occupations on the shortage occupation list, which included roles in the health sector, the Migration Advisory Council advised against putting nurses on the shortage occupation list, after taking evidence from a range of stakeholders. Controlling migration is part of our plan to build a system that is fairer to British citizens. Employers must first try to recruit from the settled workforce.

Baroness Emerton (CB): Does the noble Earl agree that the apprenticeship scheme should encourage young people, particularly those coming into nursing, but that at the same time it is important that enough supervision and basic knowledge are given to apprentices before they are allowed to practise, to prevent any mishaps or mistakes being made and ensure that the quality of care is satisfactory?

The Earl of Courtown: The noble Baroness is quite correct that the quality of care in these roles is so important, as is the fact that so many young people are coming into this area. According to the overall apprenticeship figures, covering the whole employment workforce, there are now more than 119,000 apprenticeship starts for those under the age of 19, which is an increase of 4.6%.

Lord Avebury (LD): Can the noble Earl tell us the cost of employing agency nurses in the health service in the current—

Lord Lucas (Con): My Lords—

Noble Lords: Order!

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): We have not heard from the Conservative Benches on this question.

Lord Lucas: Does my noble friend think that the care sector is perhaps a particularly suitable occupation for people over 45? When you have brought up a few children you have had the rough edges knocked off you, and are likely to be a much easier companion for an old person.

The Earl of Courtown: My noble friend is quite right. I think the noble Baroness mentioned older people leaving the profession. As I understand it, the current

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figures are flattening out and improving, and there is more retention of people approaching retirement age.

Lord Young of Norwood Green (Lab): My Lords, is the Minister confident that there really is an attractive career path for young people going into the care profession, whether in homes or in domiciliary care, and that there really is a pathway through to nursing in this vital vocational route, taking into account that demand in this area will expand significantly?

The Earl of Courtown: I think that the fact that, as I mentioned, there has been in excess of 250,000 new apprenticeship starts in the care sector in the last three to four years speaks for itself.

Voting: UK Overseas Citizens


2.59 pm

Asked by Lord Lexden

To ask Her Majesty’s Government whether they will fulfil their commitment to extend full voting rights to all United Kingdom citizens overseas before the referendum on United Kingdom membership of the European Union.

The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con): My Lords, the Government are committed to making a permanent change to remove the 15-year time limit on the parliamentary voting rights of British citizens living overseas. The Government are currently considering the timetable for doing so and will set out more detail in due course. At this stage I am afraid that I can make no commitment that it will be possible to make this permanent change in time for the referendum, the date for which is yet to be set.

Lord Lexden (Con): I have long supported the extension of voting rights to all our fellow countrymen and women living outside this realm. As it happens, I have also long supported my noble friend, whom I welcomed to the Conservative research department 23 years ago. This is my first opportunity to welcome him here. I thank him for his comments about the importance of this issue, which, as he knows, stirs very strong feelings indeed, not least among the estimated 2 million who live in other EU countries. Will he do all he can to expedite the Bill to give them votes for life, which was promised in the Conservative manifesto?

Lord Bridges of Headley: My Lords, my noble friend is quite right; he marked my work some 23 years ago. It was quite a daunting experience then, so I do not look forward to his marking of this answer. I cannot go much further than the Answer that I gave. All I will say is that I entirely share his sentiment that Britons abroad do, indeed, retain strong links with this country through family and friends. Many others remain fully up-to-date on British affairs thanks to today’s modern communications. I pay tribute to the work that my noble friend has done, along with many other noble Lords such as my noble friend Lord Norton and

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the noble Lord, Lord Tyler. The Government remain committed to fulfilling their commitment.

Lord Roberts of Llandudno (LD): My Lords, if Greece can arrange a referendum within a week, why is it going to take us two years—and even then be uncertain whether the commitment can be fulfilled?

Lord Bridges of Headley: I thank my noble friend the Minister for his advice. As he just said, we will be awaiting the dates of the referendum in due course.

Lord Tomlinson (Lab): Would the noble Lord accept that there is something particularly wrong when people serving this country overseas—particularly the many Britons who serve in European Union institutions and have developed their career there—are denied a vote? It is particularly obscene that they should be denied a vote in a referendum on our future membership of the European Union. Will he ensure that something is done as speedily as possible about that particular category?

Lord Bridges of Headley: My Lords, the franchise for the EU referendum is obviously based on the parliamentary franchise, and that is what we intend to stick to.

Lord Kennedy of Southwark (Lab): My Lords, will the commitment to extend voting rights to UK citizens living overseas also include their right to make donations to political parties in the UK? Does the noble Lord think that it is right that, when an individual has been living overseas for 20, 25, 30, maybe even more than 40 years, donations can be made from income that has neither been earned in this country nor had UK tax paid on it?

Lord Bridges of Headley: My Lords, when we publish the Bill we will make all these matters clear.

Lord Cormack (Con): My Lords, will my noble friend give further consideration to the desirability of compulsory registration? I apologise for making this point yet again, but if we are to have a referendum that gives an opportunity to all our citizens to vote, should we not place a certain obligation on them so to do?

Lord Bridges of Headley: My Lords, I believe that this is a matter that your Lordships and many others have discussed many times and will continue to do so, but, as I have said, we have set out our view on the European referendum. It will be based on the parliamentary franchise. However, I am sure that we will continue to have the debate that my noble friend wishes to have.

Lord Wallace of Saltaire (LD): My Lords, do we have any idea how many British citizens there are overseas and how many of them are dual citizens of the United Kingdom and other countries? When I was in government I tried to find out figures on this and got estimates that varied between about 4.5 million

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and 6 million. Could the Government possibly aid us all by trying to get some accurate estimates, including of where they live and how many of them are dual citizens?

Lord Bridges of Headley: My Lords, I hardly dare say that my efforts will be greater than those of the noble Lord. What I will say, reading from my brief, which I am sure the noble Lord remembers, is that there are 5.2 million British-born migrants living overseas. I do not have a breakdown but I will certainly ask. I would stress that more than 105,000 British citizens resident overseas were registered to vote in the election—more than three times the previous highest number.

Lord Reid of Cardowan (Lab): My Lords, I congratulate the Minister on his enthusiasm for ensuring that British citizens abroad get their rightful democratic part in the process. But before he gets to abroad, could he just consider at home, where 800,000 people born and bred in Scotland did not have a vote, though resident in the United Kingdom, in something that affected Scotland and the United Kingdom? Would he bear in mind, when he is looking at those abroad, that just as charity and various other things start at home, the franchise should start at home as well?

Lord Bridges of Headley: The noble Lord makes a very interesting and good point. I would draw his attention to the fact that important steps have already been taken to increase levels of voter registration. For example, over £14 million has been invested over the past two financial years to support the cost of activities aimed at increasing the levels of voter registration.

European Union (Approvals) Bill [HL]

Second Reading

3.05 pm

Moved by Lord Freud

That the Bill be now read a second time.

The Minister of State, Department for Work and Pensions (Lord Freud) (Con): My Lords, the purpose of the Bill is to approve two draft decisions of the Council of the European Union. Both rely on Article 352 of the Treaty on the Functioning of the European Union, which allows the Union to take action to attain one of the objectives set out in the treaties, but for which there is no specific power given, provided it has the unanimous support of all member states.

For the UK to agree these draft decisions at Council, Parliament must first give its approval. Section 8 of the European Union Act 2011 provides that a Minister may vote in favour of an Article 352 decision only where the draft decision is approved by an Act of Parliament. I am pleased that Members of both Houses will have the opportunity to decide whether to approve such measures.

The first decision will enable the Former Yugoslav Republic of Macedonia to be granted observer status in the European Union’s Fundamental Rights Agency.

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This proposal has been around since 2010, clearing the UK parliamentary scrutiny processes then in place. In April last year the decision re-emerged, with the Greek presidency having lifted its block on the decision. At that point, all other member states were ready to vote in favour of the decision. However, the requirements of the EU Act meant the UK had to enter a scrutiny reserve for the decision pending approval by an Act of Parliament. The Former Yugoslav Republic of Macedonia has been an EU candidate country since 2005, but in recent years we have seen serious backsliding on reforms. A political crisis has been unfolding in the country over the past year, which has raised serious concerns about the rule of law and adherence to democratic principles. The Foreign Secretary recently discussed the crisis with EU partners at the Foreign Affairs Council on 22 June.

The Government consider that a decision enabling the Former Yugoslav Republic of Macedonia to become an observer to the agency would assist the country in tackling the reform challenges it faces and provide advice and help on human rights issues. A recent European Commission report set out a series of recommendations needed to return the country to the path to EU accession. This included reforms related to freedom of expression and the rule of law. Observer status at the agency could allow the country access to advice and assistance on fundamental rights issues to help take forward these reforms.

The second measure is a decision of the Council enabling the EU tripartite social summit to continue to operate. The summit is a regular forum for meetings of representatives of the European social partner organisations, the European Commission and the Council to enable high-level discussion between the three parties on employment and social aspects of the European agenda for growth and jobs. It was established by a Council decision in 2003 and usually meets on the eve of the European Council in spring and autumn. A new decision to re-establish the legal basis for the TSS became necessary because the article of the EU treaty it had relied on, Article 202, was repealed when the EU treaties were reformed under the treaty of Lisbon, agreed in 2007.

At the same time as renewing the decision under a new legal base, the draft decision seeks to take account of changes within the EU in the intervening decade so that it is fully aligned to wider strategies and reflects any technical changes. These changes are that, first, the Lisbon treaty gave the European Council a formal institutional role and its own President. To reflect this, the draft decision gives the Council President a joint-chair role at the summit. Secondly, the draft decision also brings recognition, in Article 152 of the Treaty on the Functioning of the European Union, of the value and role of the TSS as part of EU social dialogue arrangements. Thirdly, in 2010 the Europe 2020 strategy replaced the Lisbon agenda for employment and growth which the TSS originally served. Europe 2020 is the European Union’s 10-year jobs and growth strategy. It was launched in 2010 to create the conditions for smart, sustainable and inclusive growth. Finally, the decision had to recognise that some of the employer organisation members have changed their names.

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Dialogue at European level is the purpose of the summit. The Government are able to support the continuation of the summit, the proceedings of which can lend support to building consensus for labour market reforms needed in other member states. The Council published the final agreed text of the tripartite social summit measure and it has received consent from the European Parliament. It is therefore ready for adoption, subject to UK agreement, as all other member states have given their approval.

There are no financial implications for the UK for either decision. There would be negligible or no financial impact to businesses, charities or the voluntary sector in the UK. Over the intervening decade, no apparent risks for the UK have emerged during the existence of the TSS. I confirm that I do not consider that any of the Bill’s provisions engage the rights set out in the European Convention on Human Rights, so no issues arise as to the compatibility of the Bill with those rights. It is also the intention for the Bill to come into force on the day of Royal Assent. For the reasons I have outlined, I commend the Bill to your Lordships. I beg to move.

3.13 pm

Baroness Ludford (LD): My Lords, I thank the Minister for introducing this Bill, the substance of which need not detain us terribly long. It is obviously useful if Macedonia becomes an observer in the work of the Fundamental Rights Agency. Is any progress being made on the name of Macedonia? I have not heard anything recently on that. FYROM is clearly not a name that will inspire a sense of identity. We have been on that issue for a very long time. Where are we in trying to make the Former Yugoslav Republic of Macedonia simply Macedonia?

Regarding the tripartite social summit, I believe that the European Commission has decided not to take this opportunity for any fundamental changes in its remit or design, so this is just some tweaking in the light of the Lisbon treaty. Clearly, there is no reason to oppose or resist this in any way.

On process, can the Minister say whether this is required to be primary legislation under Section 8(3) of the European Union Act 2011? I did not have the pleasure of taking part in the debate on that legislation when it was going through, as I was a Member of the European Parliament at that point and was disqualified from sitting or voting in this House. Was it anticipated that this kind of issue would require primary legislation? Clearly, there were some meaty issues within the scope of the EU Act 2011, not least the one about a referendum if there were any significant transfers of powers to the EU. However, we now find that we are required to legislate under primary legislation for two matters such as these which have either cleared scrutiny beforehand in 2014 or would perhaps not even have required scrutiny. In fact, I am not clear whether they would even have required secondary legislation or just notification to the scrutiny committee. How necessary is it to have primary legislation now on these measures, and how many other such instruments might we expect in a year, for instance, to have to legislate on as opposed to clearing through scrutiny or even having secondary legislation? This almost makes a mockery of EU affairs and of the EU Act 2011.

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I would be grateful for answers to those few questions about process. On the substance of the matter, there is no objection from these Benches.

3.18 pm

Baroness Sherlock (Lab): My Lords, I thank the Minister for explaining the measures in some depth and with the kind of enthusiasm which they frankly merit. I thank the noble Baroness, Lady Ludford, for raising the question of process.

I read the Bill and the Explanatory Notes and, indeed, the report of the House of Commons scrutiny committee quite carefully, and that is half an hour of my life that I am not getting back. By the end of it, I was still not much clearer as to what it was that was of such import in these measures that primary legislation should be required—a point made by the noble Baroness, Lady Ludford. Can the Minister enlighten the House? I fully accept that this is not my area of expertise—I do work and pensions. Are there any far-reaching consequences flowing from the draft decision on the participation of the Former Yugoslav Republic of Macedonia as an observer in the work of the EU Agency for Fundamental Rights? Does that in any way have an impact on any possible timeline for an application from Macedonia for future membership of the EU? Are there any other consequences which are not immediately apparent from the documentation?

I wonder if I can help the noble Baroness, Lady Ludford, on the draft decision in relation to the tripartite social summit. Initially, the former Minister of State for Employment, Esther McVey, seemed to take a similar view. She initially questioned the legal basis on which this was brought forward. The House of Commons European Scrutiny Committee reported the Minister as saying that the Government would,

“ask the Commission more fully to substantiate its reasons”,

for proposing Article 352 of the Treaty on the Functioning of the European Union as the legal basis for the draft decision. Further, because an Article 352 measure is subject to the requirements of Section 8 of the European Union Act 2011, a further assessment would then be needed by the Government to determine whether one or more of the exempt purposes set out in Section 8(6) of the 2011 Act would apply, as the Minister knows.

The committee asked the Minister to explain her reservations and whether she considered that there was any other legal basis on which this could have been brought forward. The committee said that it could not see that any of the statutory exemptions would apply in this case and asked the Minister to let it know what the basis was for her reservations. The Minister came back and confirmed, basically, that the Commission had taken the view that it had to bring it forward under Article 352 because there was no other suitable legal basis. She then explained the Commission’s reasoning for it. So we never really got to find out the Minister’s reservations in the first place. Could the Minister perhaps tell us whether there was any alternative to doing this? If not, the question from the noble Baroness, Lady Ludford, is a good one. Are we going to see a succession of minor measures coming through, all of which will require primary legislation?

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I feel rather strongly about this matter, as I work in pensions often with the noble Lord, Lord Freud, and I have stood in the Moses Room scrutinising repeatedly the entire detail of universal credit, which is a reform of all working-age benefits, done in secondary legislation that this House cannot amend and on which scrutiny is limited. The Childcare Bill is going through this House at the moment, and most of the detail will be in secondary legislation. Yet we are assembled in all our grandeur here to look at the detail of what seems on the face of it, to my inexpert eyes, to be rather minor measures. I am quite sure that I have misunderstood it, and I very much look forward to the Minister’s explanation.

3.21 pm

Lord Freud: My Lords, I am grateful for the contributions to the debate, albeit they are of a different nature to the contributions that I am used to on some of the more substantial things that we have discussed. I accept the distinction that the noble Baroness, Lady Sherlock, made in that regard.

Before I come on to the specific questions, I shall go through the two areas again. The point of the Bill is so that we can approve two draft Council decisions. On the question of how many such decisions there have been under Article 352, asked by the noble Baroness, Lady Ludford, we have had two this year and two last year—so it is not the beginning of the flood that Noah suffered. Under the Bill, we discussed the participation of the Former Yugoslav Republic of Macedonia as an observer in the work of the European Union Agency for Fundamental Rights. It is the objective of that country to become a member of the European Union, but it needs to set out key reform priorities, which have been set out by the European Commission. The Government want to encourage the Former Yugoslav Republic of Macedonia—I have to choose my words carefully—on the reform path. Granting observer status is consistent with that approach.

At this point, it might be worth picking up another point from the noble Baroness, Lady Ludford, on the name issue—because I have already used quite a lot of my time repeating four or five words very carefully. The UK has supported efforts which have been made under UN auspices to find a mutually acceptable solution to the name issue. Regrettably, I have to report that no solution has been found so far. There have been some confidence-building measures agreed between Greece and Macedonia and we hope that that will start to lead to a solution to the problem.

On that specific issue, the competency of the agency will not be extended by doing this. It means that the Former Yugoslav Republic of Macedonia should be supported to increase its human rights awareness and the promotion of fundamental rights within the country. The FRA could provide Macedonia with advice on the promotion of human rights and principles. It will collect and analyse data on the human rights situation in the country and assist with reforms. The noble Baroness, Lady Ludford, asked about the impact on accession. This process could possibly contribute in terms of its path towards the EU.

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The UK does not take part in the tripartite social summit. However, the dialogue at this European-level forum is welcomed in support of building consensus for the labour-market reforms needed in other member states. The summit has met for some years now and this draft decision effectively seeks to re-establish its legal basis. Both noble Baronesses asked whether we should be spending our primary time doing this. Essentially, Article 352 is a protection to make sure that things that do not fall within specific areas of EU competence cannot be agreed without this House and another place agreeing to it. That is the purpose of the article. These issues happen to fall within that position. The former Minister for Employment, Esther McVey, explained that the Government and the Commission’s understanding of the legal basis was the same and there was no alternative than to use Article 352. However, we can hope that we do not spend too much time in this House on matters such as this. As I said, there are not too many more due, certainly not this year.

I think that I have covered all the points raised by noble Lords. I commend the Bill to your Lordships and ask you to give it a Second Reading.

Bill read a second time.

Childcare Bill [HL]

Committee (2nd Day)

3.29 pm

Relevant documents: 2nd Report from the Delegated Powers Committee, 3rd Report from the Constitution Committee

Clause 1: Duty to secure 30 hours free childcare available for working parents

Amendment 20 not moved.

Amendment 21

Moved by Baroness Pinnock

21: Clause 1, page 2, line 23, at end insert—

“( ) Regulations as described in subsection (5)(c) must ensure that the times available provide sufficient flexibility—

(a) to parents who work outside the hours of 9 am to 5 pm, Monday to Friday; and

(b) to ensure that childcare is available during school holidays within the local authority area of the relevant childcare provider.”

Baroness Pinnock (LD): My Lords, we are recommencing our discussions on this very important and much welcomed Bill to extend free childcare by 15 hours per week. The purpose of this amendment is to require more explicit flexibility in the provision as outlined. I welcome the Minister’s assurances that there will be flexibility within the provision, but, sadly, that is not entirely clear in the Bill.

What do we mean by flexibility and why is it so important that we have put down an amendment? The Bill would be much improved if it stated that the Government intend to provide 1,140 hours of free childcare per year rather than, as stated in the Bill, 15 hours for each of the 38 weeks of the school year. It would encourage providers to think about the needs of

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families and their young children. Many parents have non-standard hours of work, often in low-paid work such as cleaning, hotel work or caring for older people, and some parents work shifts, particularly in the nursing profession. All those people would benefit from greater flexibility in the provision. In our view, this will not happen unless there is encouragement and incentive from the Government to do so.

In addition to trying to meet the working hours of parents, there is the additional challenge of providing free childcare during the school holidays: the 14 weeks of the year in which schools are not working. That is a not insignificant problem for many families. In those 14 weeks, they have to try to juggle grandparents, neighbours and other people who willingly give up time to help them manage their working lives and the need to provide childcare—or they have to pay for additional childcare, often, as we discussed earlier in Committee, at a very much increased hourly rate, sometimes as much as twice the rate that is paid by the Government for the so-called free hours. That is a huge challenge for many families. Flexibility during holiday times and enabling families to get out to work in times other than the traditional nine to five, which is the basic provision in the Bill, would be greatly welcomed by many families, particularly those on low pay, on whom I hope this Bill is particularly focused. I beg to move.

Lord Touhig (Lab): My Lords, I shall speak to Amendments 23 and 24. They would place in the Bill the current permitted staff to child ratios for childminders and nurseries. One of the central themes running through the Second Reading debate was concern about the capacity of the early years sector to provide the extra free hours. For example, the right reverend Prelate the Bishop of Durham spoke of the strains on providers not in purpose-built faculties who cannot extend their opening hours. My noble friend Lord Sawyer and the noble Earl, Lord Listowel, talked of low pay and staff shortages. Many noble Lords spoke of the underfunding crisis in the sector and the limitations of cross-subsidy options. As we know, this point will be part of the Government’s review of the finances of the extension.

The Minister and this side have a difference of view about the health of the sector and its capacity to expand and take on new duties. I sincerely hope that we are proved wrong, but in the mean time, there is concern that the Government will look again at increasing the staff to child ratio as a quick fix to deal with the capacity issues. We believe that these amendments are necessary because of this Government’s public statements and attempts in the past to increase the ratios.

This would be all too easy in the future as the current ratios are in regulations which can be changed by the Secretary of State. We are therefore keen to provide the necessary reassurance and guarantees to parents and professionals alike that the current ratios are safeguarded. Noble Lords will recall that there was a massive outcry across the sector when it was proposed to change the ratios. It was felt that this move would compromise quality and put children’s lives at risk and, as a result, the Government had second thoughts and backed down.

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However, there is real concern that with the drive to increase the supply of early years places the Government might revisit the original plan. We believe that the current ratios have stood the test of time in balancing the quality of provision with the cost to providers and therefore parents. Professor Nutbrown, who has advised the Government on early years provision, has made it clear that she would oppose any change in the ratio. She quite rightly makes it clear that good-quality provision is directly related to the qualifications and training of the staff involved, as well as their capacity to relate to the children on an individual basis. This is crucial to the well-being and development of young children.

Our proposals would ensure that a single childminder can care for up to six children under the age of eight, including a maximum of one baby under 12 months and another two children under five. By anyone’s imagination it would be quite a workload and a challenge to provide appropriate care across the age group. I looked after one of my granddaughters, aged 22 months, for part of the weekend and can certainly testify that it was challenging indeed.

There must be one member of staff at a nursery for every four children aged two and three and one for every eight children over the age of three. We would also set out the minimum qualifications for these staff members in regulations. Again, the ratios as they stand sound fairly challenging. But they are necessary not just to support the crucial period of early years development but to provide safeguarding and protection for vulnerable children. Nursery staff already work under considerable pressure and we should not be tempted to add to it. So we believe that it is necessary to protect the current ratios and putting them in the Bill would guarantee that if any changes are proposed in the future they would have to come to Parliament and be subject to extensive parliamentary scrutiny and debate. We believe that that would be the right way forward.

Lord Northbourne (CB): My Lords, might I ask in the context of this debate what the Government mean and we mean by quality in childcare? Is it the quality of childcare only or the quality of childcare and the relationship between the adult and the child? I respectfully submit that one of the most important factors in childcare is the relationship that develops between the child and the carer.

The Government have adopted the early years formula and put a lot of money into it. I think that they are absolutely right to do so, but I suggest that to some extent this Bill in mechanising, as it were, the management of the care of children runs the risk of losing the relationship by which a very young child learns to love, care and interrelate with other human beings. I wonder if the fact that so often we are losing that relationship in the early years is not the cause of some of our troubles in family life later on as the young people get older.

Lord True (Con): My Lords, I have a good deal of sympathy for some of things said by the noble Lord, Lord Northbourne, although I would not follow him the entire way. However, while I understand why noble

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Lords have tried to provoke a debate on regulations—we do need one at some point—at this stage of policy development it is quite difficult because we still have not resolved the underlying issue of the nature of what we are about.

I understand the logic of it, but I am concerned by the amendment in the name of the noble Baroness, Lady Pinnock. We already have before us a proposal for the state to provide universal childcare for 1,140 hours a year—although the state will not provide it: the poor old providers in the schools and all the other people will have do that. As we found at Second Reading, that is more than we ask for sixth-formers studying for A-level courses or for pupils studying for their GCSEs. However, we are saying to those three and four year-olds, “Come here and stay for 1,140 hours”. That cannot in any sense all be about education—it certainly is not entirely about the effective relationships that the noble Lord, Lord Northbourne, was talking about. Now, on top of that, to say in Amendment 21 that the settings must provide even more than 1,140 hours a year is, if you will forgive the classical allusion, to pile Pelion on Ossa. It is simply not conceivable that under regulation, which applies to everybody who works in this sector—you cannot have some people obeying the regulation, while others do not—these extra hours should be piled on also.

We hear a lot of talk about flexibility, and of course I support that, but again I urge the Committee to recognise that a lot of the women who provide this care and education—and they are mostly women; I keep saying that, but it is true—want their flexibility too. A lot of them are young mothers or grandmothers, and they cannot sit around in these settings at the behest of the state for hour after hour. That is simply not the way things work in the real world. Therefore if we are to have a debate about flexibility, can we please bear in mind the flexibility of the good people who have to provide that service and who have the vocational wish to provide education? I would be very wary about adding to the burden, as this amendment would, and I think my noble friend will be cautious about it.

On the regulation amendments, this may be premature, and I fully understand where the noble Lord, Lord Touhig, is coming from, but there are inherent disparities in the existing regulations. Maintained schools have to provide a lower ratio than private and voluntary providers. I do not quite understand the overall logic for that, but that is what it is. When plans to change the ratios were put forward recently, which I thought deserved a hearing, there was a bit of—what was the word used?—an outcry. However, the reality is that we cannot at once argue that a ratio of 1:13 is fine if you are in a maintained sector, but if you are in a non-maintained sector it has to be 1:8 or less. Clearly, there is room for some discussion about where to fit the right level.

Again, I will be nervous until we see the colour of the Government’s money—or, rather, the way in which this system will work. It is premature in the debate to say that the existing regulations and hours are necessarily the right ones, as they may well not be affordable. There is a trade-off. You cannot have an immensely expensive policy of employment subsidy by providing places for children to be placed while their parents go

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off and do other things and necessarily do everything at the level you want to. Therefore we have to think about that. Again, however, I underline what I have tried to make my main theme in this Committee; if we are talking about quality, there is a lot out there that is to do with education, such as good learning and advancement of children’s development. In trying to create a single universal policy by regulation, we must not lose sight of the diversity and richness of the educational element of early years care, which certainly cannot take place over a longer period than sixth-formers and GCSE students are asked to support. That is simply not on. I would be nervous about settling on particular regulations just at this moment, but I hope that we will have a chance to have this debate. My noble friend has offered the road to that in later proceedings on the Bill.

3.45 pm

Baroness Evans of Bowes Park (Con): My Lords, I would like to speak to Amendments 21, 23 and 24 on the flexibility of the extended entitlement to childcare for working parents. I thank the noble Baronesses, Lady Pinnock, Lady Tyler and Lady Jones, and the noble Lord, Lord Touhig, for highlighting this important issue. I hope that the noble Lord has fully recovered from his daughter’s wedding last week.

Enabling greater freedoms and flexibility for providers to meet the needs of parents has been an important part of the steps that we have already taken to help delivery of the existing funded entitlement. The regulatory framework for the early years was thoroughly reviewed in 2012 and unnecessary red tape and burdens were stripped away. Steps have already been taken to ensure that parents can more easily access a place with a willing provider of their choice if that provider meets the quality standards set by Ofsted.

We have enabled and encouraged all parts of the market to grow, because we believe, as my noble friend Lord True pointed out, that diversity in this sector is extremely important. This is being done through, for example, the creation of childminder agencies and enabling childminders to deliver childcare on non-domestic premises, and measures to help school nurseries expand or work in collaboration with private, voluntary and independent providers. As the noble Baroness, Lady Pinnock, set out in Amendment 21, it is important that the 30 hours of free childcare for working parents of three and four year-olds is made available at times that provide sufficient flexibility to parents working outside the hours of 9 am to 5 pm and during holiday periods. I would like to provide reassurance that there is already flexibility in the system to accommodate both of these. Providers are not constrained to providing the existing funded hours over 38 weeks of the year or during standard working hours. They can instead make a “stretched offer” available. Working-tax credits, universal credit and, later, tax-free childcare will also enable parents to budget and pay for childcare throughout the year.

Under an existing duty, local authorities have to ensure, as far as is practicable, sufficient childcare for working parents who require it. In carrying out that duty, local authorities should take account of the different patterns of demand in the area, which will include childcare out of hours and during the holidays. Local authorities

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should encourage existing providers to expand their provision and encourage new providers into the market to help parents to find suitable provision. A similar approach is needed for early years provision during the school holidays. It can be less of an issue for parents of children who have not yet reached compulsory school age, but we will continue to work with schools to encourage and support them to extend their nursery offers and hours outside term time.

I turn to Amendments 23 and 24 about adult child ratios for childminders and non-domestic group providers such as day nurseries. All early years childminders and group providers registered on the early years register must meet the early years foundation stage framework requirements around child development and welfare and well-being, including ratio and qualification requirements. The existing ratios give the flexibility to deliver the 30-hour entitlement in a safe, secure and welcoming way that contributes to child welfare and child development. We will not tolerate any provision that is detrimental to this, and provision will be regulated.

As noble Lords will be well aware, the English childcare system has some of the highest adult-child ratio requirements in the world. The current ratios and qualifications for early years childminders, group providers and the additional requirements referred to in the amendments are already set out in the early years foundation stage statutory framework. Ofsted is already able to determine that a provider must observe a higher staff-child ratio if needed to ensure the safety and welfare of children. These ratios provide significant flexibility for registered providers. For example, for children aged three and over in provision where a person with a suitable level 6 qualification is working with children, a 1:13 ratio can already be used.

With support from government, the National Day Nurseries Association produced case studies to help practitioners make use of the flexibility already available to them. The amendment seeks to enshrine ratios in primary legislation for the extended free childcare entitlement. As I have said, ratios for all providers are currently set out in secondary legislation, and this allows the flexibility to respond quickly if changes are needed to ensure that children are kept safe and well cared for. As we set out in the preceding Committee session, next year we shall consult on draft regulations and draft guidance for the proposed new duty.

The noble Lord, Lord Northbourne, raised the important issue of what we mean by quality. The EYFS statutory framework recognises that together good parenting and high-quality early learning provide the foundation that children need to make the most of their abilities and talents as they grow up. Of course continuity of care is important, but I hope that we can take strong reassurance that Ofsted inspectors take account of the need for the well-established key person system that helps children to form secure attachments and promotes their well-being and independence.

In conclusion, I reiterate that delivering flexibility for parents is a vital principle of the Bill. I hope that noble Lords and noble Baronesses will have been reassured by my response to their amendments, and I ask that the amendment be withdrawn.

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Baroness Pinnock: I beg to withdraw the amendment standing in my name.

Amendment 21 withdrawn.

Amendments 22 to 26 not moved.

Clause 1, as amended, agreed.

Clause 2: Supplementary provision about regulations under section 1

Amendment 27 not moved.

Amendment 28

Moved by Lord True

28: Clause 2, page 3, line 21, at end insert—

“( ) Nothing in any regulations under this Act may impose any obligation on any private or voluntary childcare setting or school that does not wish, or is unable, to—

(a) participate in a scheme, or any part of a scheme;

(b) provide such information to the Secretary of State, a public body or local authority as may be required under this Act of participants in a scheme,

under this Act to provide 30 hours of free childcare.”

Lord True: My Lords, I can be relatively brief, since some of this follows earlier discussions. I have yet to be persuaded that the ranks of providers and settings that we are told are required will spring into being. I was interested in what my noble friend said in response to the previous amendment: new settings will emerge that will enable flexibility. When I think of the struggles that I have as a local authority leader to find settings for primary schools, let alone nursery schools, I do not think it will necessarily be quite as easy as that. Furthermore, I urge that, when we read through this debate, the point that I made about flexibility as it applies to part-time workers and the people providing the service is understood. We ask a lot of our nursery teachers at the moment and many of them have busy family lives.

My main point with regard to this amendment is that, at the moment, the voluntary, private, independent sector is relatively small. However, the Bill envisages an economy in which we move to an expectation that any setting that is participating in this scheme will actually provide 30 hours of care for 38 weeks a year. As I tried to illustrate on an earlier amendment, there are a very large number of settings in rented premises such as church halls and parish halls, or providers whose teachers want to follow the school term because they themselves have children at school; it suits many such employees to have school holidays. For various reasons, many providers will simply not be able to provide the 30 hours for 38 weeks on any method. Some will not be willing to do so because they place greater emphasis on educational purpose than on occupying the crease. There is a dashing element to education and there is a Geoff Boycott mode of being there for 1,140 hours to fulfil the commitment. I do not expect a formal answer from my noble friend. All I am asking on this amendment is to consider those

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extremely valuable settings in villages and small places where the parish hall may be required for other purposes. Socially, they are extremely important and they should not be hyper-regulated to whatever extent the Treasury says we have to regulate this new sector to protect public money—so that for the 30 hours and 38 weeks we have to comply with 65 pages of new regulations to ensure that the state’s money is protected.

All I am asking is that it is understood, just as we understand with independent education, academies and free schools, that there may be some variety. There may be places where good-quality education is provided where it is not necessary to conform to every regulation that the state puts forward for this 30-hour, 38-week scheme. This is a plea to my noble friend as he reflects on this. This informal sector should not to be snuffed out by being crowded out by state-supported provision and commercial ventures that are allowed to borrow against the certain stream of the 30-hour, 38-week commitment from the taxpayer. If it is to be nurtured, can we give those settings the same degree of latitude with regulations, while obviously making the same demands about inspection, that we give to the excellent educators in academies, free schools and the independent sector in maintained education, where we do not necessarily expect everything to be the same? That is the thought behind Amendment 28. It is not necessarily a perfect amendment, but just a thought that I place.

Amendment 38 is simply a rider to that. Ofsted does important work, and every setting needs a “good” or “outstanding” Ofsted finding to succeed. When Ofsted is assessing educational quality—not just Geoff Boycott occupying the crease—can we be sure that in no circumstances will it include in any report that the setting is not open for 1,140 hours and is therefore not conforming to the standards that are expected? It is very easy to slip into that sort of position.

I am not expecting an answer now because Report and later stages of the Bill will follow, but I fear that the independent informal sector may grow simply because it physically cannot conform to the requirements of 30 hours and 38 weeks. We should not resent that or compete with it. We should nurture it and that should be understood in the policy approach to regulation and inspection. I beg to move.

Baroness Pinnock: I want to comment on two aspects of what the noble Lord, Lord True, has proposed. He raised the issue of capacity, which we raised on the first day in Committee. We received assurances from the Minister that capacity would be much less of an issue than some of us feared. I trust that the Minister believes that to be the case. If so, perhaps the noble Lord, Lord True, is overstating the issues that he has raised today.

The second matter is more important and concerns the continuity of care provided if we go for this 30 hours a week. Almost inevitably, as we said on the first day in Committee, many children will take part in different settings, so 15 hours may be in a school nursery setting and the other 15 in a private nursery, with a childminder or a combination of all three—childminder, private sector day nursery and state nursery. We should think very carefully about that. I hope that

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the Minister will be able to come back with some thoughts about this. Very young children may be moving between those three different settings during the course of a day. How does that benefit them? How can we overcome some of those changes that the noble Lord, Lord True, has raised in the discussion around his amendment this afternoon?

Lord Northbourne: My Lords, I make a very brief intervention and I have to declare an interest. Is there not some scope for grandparents in this pattern? Will it be possible, for example, for some of those hours to be taken up formally by grandparents or other relations of the child?

4 pm

The Parliamentary Under-Secretary of State, Department for Education (Lord Nash) (Con): My Lords, I shall speak to Amendments 28 and 38. I also thank the noble Lord, Lord True, for raising this issue and I hope I can satisfy him that we are keen to stimulate new provision and not crowd it out by regulations. As someone who has fielded against Boycott, I can assure him that his approach is deceptive. He does actually hit the ball extremely hard.

As I explained in Committee last week, no provider is required to offer places under the existing entitlement. It is of course very pleasing that so many choose to do so. I do not expect that providers will be required to provide places for these additional hours should they choose not to do so. If they do not, they will not be prevented from providing places under the existing entitlement of 15 hours. We have no plans to make the regime more burdensome. If a provider is providing the existing 15 hours, he will have a service-level agreement with a local authority and if that is how he decides to provide the extra 15 hours, he will have a service-level agreement for that provision. However, if a provider decides not to deliver this, there will be no plans for extra regulation.

The noble Lord asked whether failure to provide places will be reflected in Ofsted assessments. A rigorous inspection regime is important to ensuring the effective use of government funding and improving the quality of provision that children receive, regardless of whether they accept children under the free entitlement or not. However, I reassure the noble Lord that whether or not a provider offers free places will not be a factor in Ofsted inspection judgments. Of course, the quality of provision provided to such children will continue to be inspected. I reassure the noble Lord, Lord Northbourne, that, as I said last week, if grandparents are working they can therefore qualify for the provision. I will reflect on the points made by the noble Lord, Lord True, and the noble Baroness, Lady Pinnock, and I am happy to discuss those with them privately. I hope I have reassured the noble Lord others who have spoken about their concerns. I therefore urge the noble Lord to withdraw his amendment.

Lord True: My Lords, I am very grateful, as ever, to my noble friend for listening carefully; I found what he said very reassuring. I will obviously want to look closely at Hansard, but what is important above allis his clear commitment to continuing the dialogue with

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providers and to understand the mixed nature of the sector. Having heard what he said, particularly his assurance regarding Ofsted—and in no way resisting the comments about quality, which is vital—I beg leave to withdraw the amendment.

Amendment 28 withdrawn.

Clause 2 agreed.

Amendments 29 to 33 not moved.

Amendment 34

Moved by Baroness Pinnock

34: Before Clause 3, insert the following new Clause—

“Duty to report: child poverty target

(1) The Secretary of State must, in each financial year, starting with the date 12 months after the commencement of this Act, report on the impact of the free entitlement to childcare on meeting child poverty targets.

(2) For the purposes of this section, “child poverty targets” means the targets set out in sections 3 to 6 of the Child Poverty Act 2010.”

Baroness Pinnock: My Lords, this is a timely amendment, given the Government’s Statement of last week. When we were considering the Bill’s impact, it seemed to us that it would be a progressive move to relate the benefits of the additional free hours of childcare to improvement or otherwise in measures of child poverty, hence the amendment tabled in my name.

When considering the impact of the Bill, we became concerned that the financial benefits claimed by the Government could be completely undermined by changes they are going to make elsewhere. We were right to be concerned, given their announcement last week that they aim to abolish the measures of child poverty that were instituted in the Child Poverty Act 2010. In particular, we are concerned that the combination of those changes and the changes to working families’ benefits will have an adverse impact on child poverty.

There was cross-party support for the Government’s attempt in the 2010 Act to set out targets to reduce child poverty. Therefore, I am disappointed—to put it mildly—that the Government are now intent on removing the income-related figures for child poverty and replacing them with measures of worklessness and educational attainment. If you are a child living in a family on low income or benefits, it matters little whether that is the consequence of your parents’ worklessness or educational attainment, and there is little you can do about it. It is really important that we get to grips with this and use the Childcare Bill to lift more children out of poverty. I am sure there is a commitment to doing that across this House; it is the way we do it that will be a matter of debate.

The Government will want to use the undoubted benefits of the Bill to achieve that by agreeing to amendments that would extend the definition of working parents to those seeking to improve their education and skills. That would marry very neatly with what the Government said in the other place last week about educational attainment being a measure of poverty. If that is to be one of their measures, using the Bill to help parents who are seeking to improve their skills by

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going into education or training would combine the wishes of the Government with the Childcare Bill. That is something we could perhaps all agree to.

When I raised this issue last week, the Minister said that there were other ways for young parents who were in education to access some form of childcare, and he is right. But, having asked people over the weekend how this works, I can assure him that it is not that easy for young parents going into college, university or training to access really good free childcare. Aligning the Bill with the requirements of people going into education and training would be an enormously progressive move towards helping low-income families and therefore tackling child poverty.

If there is something we can do to lift more children out of poverty—which would have long-term benefits not just for them but for the country as a whole—and if we can do it fairly simply by linking parents’ educational needs with the Bill, we should all try to do it. I would be very pleased indeed if the Minister rethought the answer he gave me last week, in the light of the Government’s announcement, and I urge him to do so. I beg to move.

The Earl of Listowel (CB): I am grateful to the noble Baroness for moving this amendment. The Child Poverty Action Group has told us that it welcomes this legislation because of the positive impact that it is likely to have on child poverty. I hope that it may be helpful to remind the House of concerns about other current factors in play which might impact on child poverty.

I am grateful to the Minister for agreeing to a meeting on the issue of homeless families. I am reminded of a couple of times recently where, due to a combination of policy factors, many poor families have had to move out of London because they can no longer afford to live here. That is causing concern to employers, as their workforce is leaving London, and one must be concerned that those families are going to areas where they will have difficulty finding employment. While I know that this is an extremely difficult issue, it is helpful when we are talking about policies which will raise children out of poverty to keep in mind other things that might be pushing children into poverty and to think carefully about what we can do to hit that on the head as well.

Baroness Jones of Whitchurch (Lab): My Lords, I add my support to the amendment and to the comments of the noble Baroness and the noble Earl. What the Government are proposing in terms of redefining child poverty is an absolute disgrace. What we need is not a change to the definition of poverty but a plan to deal with poverty. The truth is that, after child poverty fell under the previous Government, last week’s Households Below Average Income DWP statistics show that more than 4 million children have plunged into absolute poverty under this Government. The Government seem to be determined to disguise the fact that they are on course to miss the target of abolishing child poverty by 2020 by changing the statistical goalposts. So what assessment have the Government made of the DWP statistics? Do they accept that the number of children in absolute poverty is increasing?

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Following on from the Oral Question on the Family and Childcare Trust report, Access Denied, how will the provisions of the Bill contribute to meeting the child poverty target when children in disadvantaged areas are expected to miss out disproportionately on the early years provision? Does the Minister accept that families on low incomes frequently work on unstable contracts both in terms of the hours they are offered each week and the length of contract? These are the points that we rehearsed in the debates last week. So how can we be assured that low-income families will benefit from these proposals rather than being penalised —or even possibly criminalised—by their uncertain working patterns, where, for example, shifts are cancelled at short notice and the eight-hours criterion is not always met? This is a real challenge for us. How are we going to measure the progress that we are making on these issues? How can we be assured that disadvantaged children are not going to miss out disproportionately once again through these proposals? I look forward to the noble Lord’s response.

Baroness Evans of Bowes Park (Con): My Lords, I will speak to Amendment 34, moved by the noble Baroness, Lady Pinnock. I recognise that, following recent announcements, noble Lords will be seeking to debate the wider issue of child poverty in the fullest way and I have no doubt that there will be further opportunities in the future. As the Secretary of State for Work and Pensions confirmed in the other place last Wednesday, the Government will be bringing forward legislation to remove the existing measures and targets in the Child Poverty Act, as well as the other duties and provisions. When this legislation is brought forward, there will of course be further opportunities to debate the many specific details. However, the legislation will at the same time introduce a statutory duty to report on measures of worklessness and educational attainment. We do not underestimate the importance of income and its impact on children’s life chances, but we are clear that the current low-income measures do not drive the right action to tackle the root causes of child poverty, which are what we really need to focus on. That is why we have set out our proposals for new measures.

4.15 pm

We have long talked about the importance of work as a way for families to stay out of poverty. The Government have a proud record on this and we want to do even more. The provisions in the Bill will enable parents to take up work or increase their hours at work so that they can support their families. We know that work is the best route out of poverty. Around three-quarters of children from low-income families move out of income poverty when a parent moves into work or from part-time to full-time work. Compared to 2010, there are 390,000 fewer children living in workless households, which is a record low. That is why this measure is important and why we are focusing on helping families increase their hours of work, if they so choose.

I hope that noble Lords will recognise that the debate today, and the focus of this Committee, is on the provisions in the Bill. With this in mind, I will respond to the amendment and not seek to address wider questions at this stage. During Committee, we debated

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how this extended free childcare entitlement will impact on children from disadvantaged homes. The investment that the Government have made in extending the offer of 15 hours’ free early education to two year-olds from the 40% most disadvantaged homes and the early years pupil premium are extremely important. I hope that the noble Baroness, Lady Pinnock, is as proud as we are that these two programmes were implemented in the last Parliament.

As the noble Earl, Lord Listowel, said, the Government were pleased that the Child Poverty Action Group welcomed the additional free childcare as,

“an extremely positive move overall”.

Ahead of Committee, the Government published their assessment of the impact of this legislation on child poverty. The assessment found that implementing this policy could result in fewer workless families, higher earnings from employment for those who increase their hours and a higher disposable income for those who already pay for additional hours of childcare to purchase other goods. I reassure noble Lords that the Government want to see this policy impact positively on the lives of all working families. We want the availability of more free childcare for three and four year-olds to reduce the childcare bill of hard-working families. We want flexible and affordable quality childcare to enable parents to increase their earnings to better support their families.

The effect of this amendment, as with a number of others debated during Committee, would be to require the Secretary of State to evaluate the impact of this entitlement in order to report on it annually. The Government understand the calls from noble Lords to increase our evidence and understanding of the impact of childcare and early education. As my noble friend Lord Nash and I referenced in the debate last week, the new longitudinal study of early education and development commissioned by the Department for Education is a significant commitment by the Government to evaluating the effectiveness of the current early education model in England and the impact of providing funded early years education—particularly, as the noble Baroness said, with regard to two year-olds from lower income families. I hope that noble Lords will be reassured that the intention of this amendment is understood and that the Government value the evidence base about the early years and the impact of significant investment such as this extension of free entitlement. On this basis, I therefore ask the noble Baroness, Lady Pinnock, to withdraw her amendment.

The Earl of Listowel: Before the noble Baroness withdraws her amendment, I thank the Minister for her comments and her elucidation of the Government’s plans on child poverty. I recognise that she does not want to give any details now but it was helpful to have that information. I omitted to say that I was at a meeting with the Local Government Association a little while ago, which was chaired by her colleague the noble Baroness, Lady Eaton. The association is asking for greater flexibility in borrowing for housing, for instance. The Government might choose to take certain measures which would help it to increase the supply of housing. I will leave that with the Minister for her to think about.

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Baroness Pinnock: I beg leave to withdraw Amendment 34 in my name.

Amendment 34 withdrawn.

Clause 3: Publication of Information

Amendment 35

Moved by Lord True

35: Clause 3, page 3, leave out lines 26 to 28

Lord True: My Lords, having just spoken from a point of view sympathetic to providers, I now come forward as a paid-up member of the trade union of local authority leaders. I suppose that that is a switch from Dr Jekyll to Mr Hyde, since local authorities have not always been the flavour of the month in my noble friend’s department. However, they do try honourably every day to assist in the provision of high-quality education, and I hope that that will be recognised as work on this legislation goes forward. Local authorities are not the enemy: they are often part of the solution.

This is a probing amendment—that is very clear. We are told that further regulations are to be produced requiring each English local authority to provide all sorts of as yet unspecified information. Governments have a terrible habit of requiring information from people, and I am afraid that local authorities sometimes do as well—I plead guilty to that, although I have tried to eradicate it. Every piece of information asked for that is not germane is a burden on business and a burden on the setting. It should be avoided unless it is of overwhelming social benefit. Filling in forms, answering emails and getting involved in chit-chat about whether information is expressed in the right way all take time away from administering, teaching and other important jobs. I hope that providing this unspecified information, whatever it is to be, will not add administrative burdens and costs to local authorities above the minimum level and certainly that it will not prove a burden on the providers and small settings.

The policy statement so helpfully circulated by my noble friend refers to the fact that, under existing legislation, local authorities currently provide a certain amount of useful information: the hours of the setting, where there is one; costs, if people wish to declare them; and other similar items. You can go on your local authority website and find out about nursery settings in your area. The policy statement goes on to say that although the new regulations will require more information, it will not be very different from what is already provided under the existing system. If that is the case, why have this regulatory power? How is it going to be used? Once we have given it away to the Government, or whoever, is there not a risk of regulatory creep as one Government succeeds another? I do not think it is necessarily enough to pass a law that everything should stay the same. I ask for an assurance that over the course of the Bill we can have a dialogue about the burden that providing information imposes both on local authorities and on providers.

I conclude with one point that goes back to the position of the provider—particularly those providers that may be on the fringes of staying in the scheme. The more you press them for information, the more they become unwilling to give it, the more careless they

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get about filling in what they are doing and the more coercive systems can become. None of that is intended, but with accretive creep it could happen. If we are to have regulation then let us be absolutely clear about the boundaries, let us not take it too far and let us never consider that quality is necessarily assured by regulation. Regulation may be part of it, but quality is assured by good service and is tested and assessed in this sector by Ofsted. If this policy is as successful as my noble friend hopes, and anybody in this country is enabled to choose the care they want, then quality will also be provided—perish the thought—by the market, because no one will be constrained from making the childcare choices they want, and logically the good settings will succeed and the bad settings will not. So, please: let us have restraint on regulation. As we go forward I would be grateful for an assurance that my noble friend will talk to local authorities and providers about finding the right balance in the regulations required, lest we get into a merry-go-round of demand, counterdemand and otiose administration. I beg to move.

Lord Touhig: My Lords, in responding to the debate on the first group of amendments the noble Baroness asked whether I had recovered from my daughter’s wedding, which took place last Thursday. We ended it yesterday with a family lunch. As the noble Lord, Lord Nash, and I agreed last week, in Wales a wedding can last a number of days. In my daughter’s case that was certainly true.

My noble friend Lady Massey of Darwen cannot be with us this afternoon, so I shall speak to her Amendment 37. It is a straightforward amendment, which would place a duty on each local council to share information directly with partner agencies in the area, including children’s centres. In my experience, something as simple as this is all too often overlooked when we consider a measure such as the Bill. To digress for a moment, I know from personal experience of the National Health Service in the past couple of years that structures are often in place that actively work against information sharing, to the detriment of a patient.

With this amendment we have the chance to ensure that this does not happen with the Childcare Bill. Information about childcare services is crucial and can be complex. Sources of information vary from the formal, through local authority networks, to the informal, by word of mouth. We welcome the Government’s intention to ensure that parents can access information about childcare and other services through a range of sources in a local authority area. The amendment suggests that the requirement on local authorities to publish this information could go further to ensure that those who would benefit most from childcare support are made aware of good-quality care. Children’s centres can and do work hard to reach parents. Action for Children’s parent champions for childcare, based in children’s centres, can give personal support and advice, which is often much needed.

There is much merit in the amendment. I hope that the Minister, if she cannot accept it today, will at the very least reflect on it and come back to us on Report.

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Baroness Evans of Bowes Park: My Lords, I shall speak to Amendments 35 and 37 to Clause 3. I welcome the noble Lords’ interest in this clause, which will help parents and prospective parents to access information on childcare and other services in their area by allowing regulations to require local authorities in England to publish prescribed information at prescribed intervals in a prescribed manner.

Parents and prospective parents currently face an information deficit on childcare. A recent report that the Department for Education commissioned found that parents are unsure where to find information and often are unaware of the range of childcare provision in their area. This is particularly important for parents returning to work, so that they can make decisions based on all available information.

Under Section 12 of the Childcare Act 2006, local authorities are required to establish and maintain a service—commonly known as a family information service—to provide information, advice and assistance to parents, and information for the benefit of children and young people. In operating their service, local authorities receive and collect certain information about childcare providers and other services and facilities in their area. This includes details of the overall picture of childcare offered and details of wraparound care on offer.

Where local authorities establish and maintain a good service and make information available it is extremely valuable for parents and prospective parents. However, local authorities are not required to publish this information. By putting local authorities under a specific duty in the Bill, we intend to change that. Therefore, we will set out in regulations the information that local authorities will have to publish. We are considering the information that we will prescribe for this purpose and I can reassure my noble friend Lord True that we do not currently envisage that this will be very different from the information collated under existing regulations. Of course, we are very happy to have further conversations with him outside the Chamber to further reassure him of this.

Of course, not only parents have an interest in accessing this information. Agencies and other organisations that provide information, advice and guidance to parents all need up-to-date and reliable information to share with service users. All, including partner agencies of the local authority and children’s centres, will be able to access and benefit from the publication of information and data that local authorities are already collecting. We will set out in regulations when and how local authorities will be required to publish information.

I also reassure my noble friend Lord True that it is not our intention to enable or require local authorities to interfere in the normal day-to-day business of childcare providers, including nursery schools. Our focus is clearly on the publication of information that will help parents with their childcare choices. We entirely understand the importance of getting these details right and draft regulations will therefore be subject to public consultation in 2016.

I hope that noble Lords agree that this clause is a necessary and important step forward to help parents have access to the information they need to make the right childcare decisions for their families. On that basis, I urge the noble Lord to withdraw his amendment.

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4.30 pm

The Earl of Listowel (CB): May I ask the Minister about a point of detail? At a recent meeting of the All Party Parliamentary Group dealing with children’s centres, one of the practitioners said that, while in the past Ofsted has examined centres to see how they were engaging with fathers, it had been decided that it should no longer do that. For instance, when providing information to parents, a centre might say, “Dear Mum and Dad” or “Dear Mother and Father”, rather than saying “Dear Parents”, in order to reach out to and engage fathers. They do a lot of work to try to reach fathers. That should be recognised. It may not be the case—it was only one practitioner’s experience—but I would be grateful if the Minister could write to me to confirm whether Ofsted is checking this, acknowledging the good work in this area.

Lord True: My Lords, I apologise to my noble friend. She looked around to see whether I was still in my place. I share the concern of noble Lords who are coming in about the trauma being inflicted on the people of Greece by the euro project, and I have moved along to allow other people to come in and make a point. I have to leave after this stage.

I am very grateful to my noble friend for what she said. It is important always to remember, before every piece of legislation that comes before this House, that the need for one local government officer at a relatively low grade across the 32 boroughs of London alone costs £1 million. That is besides the rest of the country and is a minimum sum, so noble Lords will understand why I am concerned that no regulatory demand should place pressure on local authorities to employ even more.

I am very grateful for the undertaking that we can have discussions on this and I am very grateful for the spirit with which my noble friend responded to the amendment. I beg leave to withdraw the amendment.

Amendment 35 withdrawn.

Amendments 36 to 38A not moved.

Clause 3 agreed.

Amendment 39

Moved by Baroness Pinnock

39: After Clause 3, insert the following new Clause—

“Impact of childcare entitlement on low income working parents

(1) Within 24 months of the commencement of section 1 of this Act, the Secretary of State must publish a report on the benefits of free childcare provided under section 1 for low income working parents.

(2) A report under subsection (1) must include an assessment of—

(a) the monetary value of the free childcare entitlement to low income working parents;

(b) the educational value of the free childcare entitlement for children of low income working parents;

(c) the number of low income working parents taking up provision of the free childcare entitlement.

(3) An assessment under subsection (2)(a) must include an assessment of the extent to which any monetary benefit to low income working parents from the free childcare entitlement is offset by any changes to—

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(a) working tax credits;

(b) child tax credits;

(c) universal credit;

(d) child benefit,

that have occurred since the coming into force of this Act.

(4) An assessment under subsection (2)(c) must include an assessment of the impact on the number of working parents of any changes to working tax credits that have occurred since the coming into force of this Act.

(5) For the purpose of this section “free childcare entitlement” means any childcare provided free of charge under the duty set out in section 1 of this Act.”

Baroness Pinnock: My Lords, Amendment 39 is in my name and that of my noble friend Lord German and the noble Baroness, Lady Jones of Whitchurch. The amendment is an extension of our discussion on Amendment 34 on the links between this Bill and child poverty. As we know, the Government have a way of encouraging people out of poverty by encouraging them into work, and to make work pay. One of the ways of making work pay is by providing additional free childcare. Those who have relatives with young families will know the huge cost of paying for childcare in order to go out to work. We know that some working parents currently pass over most of their income to childcare costs, so this Bill is to be greatly welcomed.

However, I would like to explore through this amendment the link between the Bill and the incomes that families will have, and the changes to those incomes that we know are on the cards later this week in an announcement from the Chancellor of the Exchequer. The Government have claimed, no doubt accurately, that the provisions in the Bill will see an additional benefit to families of around £2,500 a year. That would be a huge and significant saving to parents. However, the simple fact is that for those on low incomes and who most need the benefits of free childcare, all that good work could be wiped out by government cuts to tax credits of various kinds and perhaps to housing benefit.

I know that the Minister will be unable to tell us exactly what cuts to tax credits we are set to see in the Budget next week. Indeed, the Government have been singularly unwilling to spell out where their £12 billion of welfare savings will come from, but I think all sides of the House can agree that these cuts are likely to come at the expense of lower-income working families. The Prime Minister has already trailed that we will see cuts in tax credits, with some people suggesting that there might be up to £5 billion of projected savings. If that is the case, it would result in families with two children losing up to £1,700 a year, seriously diminishing the very welcome impact of the free additional childcare.

Despite what the Prime Minister suggested about companies paying more to workers to offset the impact of any cuts to tax credits, without real action on the minimum and living wage that is frankly rather more hope than expectation. We cannot assume that employers will be either able or willing to pick up the slack by paying a living wage to make up for the loss, for instance, of working tax credits. The decision about tax credits will make a huge difference to people, whether in employment or not. Cuts will mean that it is no longer financially possible for someone with high childcare

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costs to go out to work. That means that they will lose not only their tax credits but potentially the entitlement of free childcare, a double whammy that will do what none of us wants and punish the children of those families.

However, as much of this detail is still to be discussed and we may not know the Government’s intentions until Wednesday, we propose in this amendment to have a review two years hence of the financial impact on lower-income working families of the combination of the free childcare offer and any reductions in working tax credits, child tax credits and housing benefit. I made the case earlier today about the important link between this Bill, child poverty and the impact on low-income families. If the Government want to be progressive—I am sure they do—they will see that link and try to make work pay by ensuring that childcare is of benefit to low-income families. Ultimately, that is the purpose of this amendment: to consider the link between the two. I beg to move.

The Earl of Listowel: My Lords, the noble Baroness referred to the national living wage. I believe that two former advisers to the Prime Minister recently endorsed a move towards the living wage. Clearly, this Bill would be that much more effective and there would be much more incentive for people to take what is offered in it if we moved to a national living wage. What current position do the Government take towards the gradual introduction of a national living wage?

Lord Nash: In Amendment 39, the noble Baroness, Lady Pinnock, seeks assurance that the Government will monitor and report on the impact of the entitlement. She spoke with passion about the importance of supporting low-income working families with the cost of childcare, which is the subject of today’s debate, and I will confine my remarks to the subject of today’s discussion. I agree that it is extremely important and must be kept in mind at all stages of policy development in the early years.

The Government have ably and amply demonstrated their commitment to supporting low-income working families with the cost of childcare and to improving the educational outcomes of all children, particularly those from disadvantaged backgrounds. As my noble friend and I have set out in this debate and in previous discussions, the Government have committed to increasing childcare support within universal credit by around £350 million to provide 85% of childcare costs from 2016 where the lone parent or both parents in a couple are in work. The Government have introduced an entitlement to free early education for the most disadvantaged two year-olds, while the early years pupil premium will provide more support to improve outcomes for disadvantaged three and four year-olds.

The Government have demonstrated their commitment to understanding the impact of the provision of free childcare through previous projects such as the Effective Pre-School, Primary and Secondary Education project and the new longitudinal study of early education and development, as my noble friend and I mentioned previously. The Government also collect a range of data on the take-up of the existing entitlements, including the number of children taking up a place. The most

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recent data were published on 25 June. They reflect the position in January of this year and are extremely encouraging. As detail of the new entitlement is developed further, we will consider what further data should be collected to enable effective monitoring of the new entitlement.

The Government recognise the benefits and importance of evaluating the impact of significant policies such as this but do not believe that it is necessary or appropriate to legislate for the production of a report or to define the timeline and content of such a report. I therefore urge the noble Baroness, Lady Pinnock, to withdraw her amendment.

Baroness Pinnock: Given that detailed answer, I beg leave to withdraw the amendment.

Amendment 39 withdrawn.

Clause 4 agreed.

Clause 5: Commencement

Amendments 40 to 42 not moved.

Clause 5 agreed.

Clause 6 agreed.

House resumed.

Bill reported with amendments.



4.43 pm

Lord O'Neill of Gatley (Con):My Lords, with the leave of the House, I will now repeat a Statement made in another place by my right honourable friend the Chancellor of the Exchequer. The Statement is as follows:

“Mr Speaker, I last updated the House on the situation in Greece a week ago. Since then, the Greek Government have failed to make the IMF payments that were due. And the Greek people have expressed a decisive view in yesterday’s referendum, and rejected the creditors’ terms.

Greece is a proud nation and a very long-standing ally of the UK and we respect the decision of its people. But there is considerable uncertainty about what happens next. We need to be realistic—the prospects of a happy resolution of this crisis are sadly diminishing.

Over the last 24 hours the Prime Minister and I have spoken to some of our counterparts, and I have spoken to the head of the IMF and, just a few minutes ago, the chair of the eurogroup. We are urging all sides to have a final go at trying to reach an agreement that defuses the crisis. The next steps are the ECB discussion taking place right now, tonight’s Franco-German summit, and tomorrow’s gathering of eurozone leaders. If there is no signal from these meetings that Greece and the eurozone are ready to get around the table again, we can expect the financial situation in Greece to deteriorate rapidly. For now, the British Government’s position remains the same. We will do whatever is necessary to protect the UK’s economic security at this time.

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This morning, the Prime Minister chaired a meeting, attended by the Governor of the Bank of England, myself and others to review our response to the ongoing crisis. So far, the financial market reaction has been relatively contained. Private sector exposures are far less than three years ago, and the eurozone authorities have said that they stand ready to do whatever is necessary to ensure the financial stability of the euro area. But the risks are growing, so it is right that we remain vigilant and monitor the situation carefully. I am in close contact with the governor.

We are also acting to protect British residents and holidaymakers in Greece. Last week I told the House that the Department for Work and Pensions and public service pension administrators had started contacting Greek residents that draw a British state or public sector pension from a Greek bank account. I can now confirm that the DWP has spoken to 2,000 people, advising them on how to switch payments to non-Greek bank accounts if they wish, and the DWP has enabled people in Greece who receive a UK state pension to set up a UK bank account if they do not already have one. International payments into Greece are still exempt from the restrictions that the Greek authorities have placed on the banking system, so I can confirm today that UK Government payments, including state pension and public service pension payments, will continue to be made in the usual way.

We are doing more to keep holidaymakers and residents informed about the developing situation. We are in regular contact with the travel industry to understand the impact on British nationals, and we have increased the number of Foreign Office staff in our embassy in Athens, to be prepared for whatever happens. On the islands of Crete, Corfu, Rhodes and Zakynthos, where many British tourists are, and where we already have a vice-consular presence, we have deployed more consular staff to support the teams there. But it is unrealistic to think that we can provide a consular presence on all the Greek islands, and that is why we urge everyone travelling to Greece to look at the travel advice before they go.

It is clear British holidaymakers should take sufficient euros in cash to cover the duration of their stay, emergencies, unforeseen circumstances and any unexpected delays. Travellers should be careful and take sensible precautions against theft. As the economic crisis in Greece persists, there are greater risks of shortages. In recent days, the media have reported a shortage of medical supplies in Greece. Therefore, I want to reiterate the Foreign Office’s advice that UK travellers take sufficient supplies, including prescription medicines, for the duration of their trip. Going forward, we will continue to ensure that travel advice is regularly updated with the latest information and Her Majesty’s ambassador in Athens will provide regular updates there on the UK response in Greece.

Finally, we have put in place measures to support British businesses. HMRC’s “Time to Pay” scheme is now open to help businesses that are experiencing cash-flow problems as a result of the banking controls in Greece. The Department for Business, Innovation and Skills has published detailed guidance to help business, which can be found on the Government’s

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website. Businesses experiencing problems with their Greek contracts can call the Business Support Helpline, which will direct them to commercial lawyers with experience in the Greek market, or they can contact their Member of Parliament, and we will provide direct advice.

The Trade Minister met major UK companies and business groups last week to discuss the situation, and he will have further meetings this week. This is a critical moment in the economic crisis in Greece; no one should be under any illusions. The situation risks going from bad to worse. Britain will be affected the longer the Greek crisis lasts, and the worse it gets. There is no easy way out. But even at the 11th hour, we urge the eurozone leaders and Greece to find a sustainable solution. Meanwhile, here in Britain, we must redouble our efforts to put our house in order, and in the Budget in two days’ time, I will set out exactly how we will do that”.

My Lords, that concludes the Statement.

4.50 pm

Lord Davies of Oldham (Lab): My Lords, I thank the Minister for repeating the Statement made by the Chancellor of the Exchequer in the other place.

Yesterday’s referendum in Greece presents the European Union with the most fundamental test that it has faced for a generation. The Greek people have given their backing to their Government, but clearly this does not overrule the position of other elected eurozone Governments who are now faced with a tremendous problem. It is imperative that the Greek Government and their creditors sit down and plan a pragmatic way forward, and avoid creating any chaos by impulsive or precipitate steps.

What are the Chancellor and the Prime Minister doing to press both sides to find a new timetable? Greece’s position in the euro and the EU affects us all. Will the Prime Minister and the Chancellor actively engage with both sides of this impasse and do what they can to help reach a necessary agreement? Does the Minister agree that there is more scope for proactive diplomacy here? What conversations has the Chancellor had with the Greek and other eurozone Ministers since last week’s Statement? It is crucial that the Chancellor plays a full part. What is he saying to the International Monetary Fund, on which we have direct influence, about emerging options for restructuring Greek debt? Last week the IMF signalled that alternative analysis was needed. Can the Minister clarify what course the British Government are advising the IMF now to take?

I turn to some of the immediate issues for the UK and for British citizens. What can be done to help British firms selling goods or services into Greece, which may be awaiting payment because of the suspension of Greek banks that is due to continue? What changes are being made to the advice and assistance given at this time by UK Trade & Investment? Businesses will expect the department to keep them apprised of developments. Can the Minister provide reassurance that the Government are working closely with tour operators and airlines so that travel arrangements are not adversely affected by disruptions to the currency

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in Greece? Can he assure us that the embassy in Athens and our consular network stand ready to help with the volume of inquiries from British citizens that are now likely? It is not possible to overestimate the pressures that may exist.

Can the Minister reassure the House that Britain’s financial system is properly insulated from risks emanating from a possible Greek exit from the euro? Last night the President of the European Parliament called on EU member states to prepare in the coming weeks for a possible humanitarian intervention, given that children, the sick and the vulnerable in Greece may feel the strain of any volatility in the basic operations of a normal economy. It is clear that in some parts of Greece the issue of essential medicines is becoming an acute problem. How are the British Government responding to this?

Finally, does the Minister agree that both sides of this stand-off still have much work to do? Eurozone countries need to do their best to offer to Greece the opportunity of a return to negotiations. The Greek Government need to face up to their responsibilities for stronger governance and economic reform. These are serious times for Greece, Europe and the United Kingdom. The UK needs to do all that it can to prevent disorder occurring, but to be fully prepared in case disruption does come to pass.

Baroness Ludford (LD): My Lords, I, too, thank the Minister for repeating the Chancellor’s Statement. I find the Statement curiously semi-detached, and I would have hoped—to repeat a word which the noble Lord, Lord Davies, used—for something a little more proactive. The Statement says that we will do whatever is necessary to protect the UK’s economic security, but then it just talks about remaining vigilant and monitoring the situation. Can the Minister be rather more precise about what action is being taken to protect the UK’s economic security? Is the UK as protected as it can be from whatever might happen after tomorrow, whether that is a Grexit or other financial difficulties? Is it the Government’s view that a Grexit has been priced into the markets? What can we expect in that respect?

What about British people who have money in Greek banks? If I recollect correctly, it was said last week that four of the banks are represented in this country, three of which have branches and one of which has a subsidiary. If there is a haircut of deposits, which there has been speculation about, what will happen to British deposit holders? Over the weekend it was remarked that the Government intend to reduce the cap on deposit guarantees from £85,000 to £75,000 because of the drop in the value of the euro. That seems rather bad timing in view of the potential difficulty with bank deposits.

What will be the advice to British tourists if it is clear after tomorrow that Grexit will happen? We all hope that there is not social upheaval, but we have to anticipate that the difficulties in getting cash, medicines and so on will only get worse. What is the Government’s contingency plan? I find what is mentioned in the Statement a little abstract. I do not see clear plans for those who, for instance, might need pharmaceutical supplies during their visit. Will the Government advise people with medical needs not to go to Greece? I would

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regret that, but is it possible that it will happen? Can the Minister be more specific about what the Government plan to protect our economy and our citizens?

Lord O'Neill of Gatley: My Lords, the noble Lord, Lord Davies, and the noble Baroness, Lady Ludford, asked many questions, so I shall try to be as brief as possible.

A number of these matters were touched on in my right honourable friend the Chancellor of the Exchequer’s Statement, but, to repeat, the Prime Minister and the Chancellor have had discussions with a number of key participants in trying to bring this crisis to an end, including—for the Chancellor—the head of the IMF, today, and a number of members of the eurozone finance group. I believe that we are as up to date as possible in the thinking of all the key participants ahead of the key meetings tonight and tomorrow.

With respect to businesses and tour operators, I shall expand on what I said. BIS has published detailed guidance to help business as a result of events in Greece. It is available on the Government’s websites along with a business support telephone number. As I also said, the Trade Minister has met a number of UK companies and business groups to discuss the situation and they seem pretty calm. He plans to meet with them again this week. The same goes with respect to our contacts with a number of important tour operators.

It is indeed the case that the four largest Greek banks have branches in the UK. However, their balance sheets are pretty small by the standards of these things, with deposits totalling less than £225 million. Eurobank is now a branch of the Luxembourg subsidiary and so the Luxembourg subsidiary deposit guarantee scheme will provide protection to eligible deposits there. The others are covered by the Greek deposit scheme. There is one Greek bank with a subsidiary in the UK, Alpha Bank, and this is a separate, stand-alone entity from its parent bank. It is small with assets slightly over £0.5 billion at the end of 2014 and, as a UK subsidiary, it is regulated by the PRA and its deposits are covered by the Financial Services Compensation Scheme.

There were further questions about the schemes in place for the deposit guarantee. The amount of €100,000 was agreed back in 2010 in euro terms. It is being reduced in sterling terms at the end of this year merely because of the resulting appreciation of the pound against the euro.

5.01 pm

Lord Lawson of Blaby (Con): My Lords, we are fortunate in this House in having a Treasury Minister of exceptional financial expertise and understanding. He will be well aware that Greece should never have entered the eurozone in the first place. He will also be well aware that there is no solution to the Greek problem without a substantial write-off of Greek debt—what the noble Lord, Lord Davies, referred to somewhat euphemistically as a “restructuring”. Is the Minister not also aware that there will be no solution to the Greek crisis without Greece leaving the eurozone altogether? That is necessary for Greece and for the eurozone. It is important that this exit should be conducted in as orderly a way as possible.

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Lord O'Neill of Gatley: My Lords, I thought the days where I was speculating about which members were suited and which ones were not to participation in the euro had long since gone. In that regard I can only say that I do not believe it is particularly useful for anybody for me to offer my own judgment on such matters at this time, particularly ahead of some very important discussions this evening and tomorrow.

Lord Elystan-Morgan (CB): My Lords, can the Minister tell the House as a matter of basic law whether the treaties that brought about the formation of the eurozone and the regulation thereafter contain any provision at all with regard to a member state unilaterally leaving the eurozone of its own accord or the states, other than an errant state, in some way bringing about the departure of such a state from the eurozone? Am I right in thinking that the treaties altogether are as silent as the grave with regard to the departure of any state from the eurozone?

Lord O'Neill of Gatley: My Lords, as far as I understand the considerable things written on this topic, it is somewhat unclear. It will be a very interesting test case in the event of such an outcome from these important discussions in the next couple of days, and I can imagine a number of legal types will have some fun pursuing these discussions in the event of such an outcome.

Lord Davies of Stamford (Lab): My Lords, I do not think I can readily recall another instance in history in which a Government have succeeded in such a short time in running their economy into the ground, going in six months from an economy which was expanding again and with falling unemployment, to the brink of catastrophe, where Greece stands at present. The Greek Government have now been supported in their policies by the Greek electorate in yesterday’s referendum, apparently on the basis that the more self-destructive their behaviour, the more likely they are to get a large amount of money out of the rest of the world—either out of the rest of the eurozone, or out of the rest of the European Union or the IMF, both of which we are of course members. Does the noble Lord agree that it would be extremely regrettable if such a precedent were created? It would be a major moral hazard if one could get away with such blackmailing policies, and it is very important that this country in particular, as a member of the IMF and the European Union, has nothing to do with any such proposal.

Lord O'Neill of Gatley: My Lords, I am afraid that I will answer in a similar spirit to my answer to my noble friend Lord Lawson’s question a couple of minutes ago. I have spent many years talking about these kind of things, but we are at such a delicate stage of discussions following the outcome of the weekend’s referendum, which, I think I am right in saying, was considerably larger than was anticipated by virtually anybody. Now, through this evening and tomorrow, very delicate discussions will take place, and it would not be advantageous for anybody if I offered my opinion on anything that the noble Lord asked about such important, critical details.

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Lord Higgins (Con): My Lords, I understand the point made by my noble friend, but none the less, it is very important that the Chancellor’s expertise and our own in this matter should be fed in, at any rate behind the scenes, perhaps to try to pour oil on troubled waters, which up to now has been very difficult. I previously expressed in your Lordships’ House a view similar to that of my noble friend Lord Lawson. The economic reality which Greece is facing is that it is locked into an uncompetitive exchange rate, and it is not going to become competitive. No amount of bailing out or assistance otherwise will prevent that happening. If it is patched up now, we will be back in the same situation in a comparatively short time.

None the less, I urge my noble friend to make two points in these discussions, if need be behind the scenes. First, it is very important to make clear to Greece, and for our European partners to do so, that leaving the eurozone does not mean that it has to leave the European Union, the political implications of which would be very serious indeed. Secondly, if we get to a situation where Greece leaves the eurozone, it will be tremendously difficult to sustain the new exchange rate, and it would be advisable for the financial assistance that would otherwise be given in the form of bailout to be given to sustain Greece so that after leaving the eurozone it did not end up in a constant cycle of inflation and devaluation. Such a situation would have to be stabilised, and we should do all we can to ensure that it would be. Will my noble friend seek to ensure that that would happen?

Lord O'Neill of Gatley: My Lords, my noble friend raises some very interesting ideas and suggestions, and in the course of our ongoing discussions with our friends in all parts of the eurozone, which I am sure will continue through the rest of today and tomorrow, we will pass those ideas on. I thank him.

Baroness Falkner of Margravine (LD): My Lords, the noble Lord, Lord O’Neill, is wise to resist the encouragement of the noble Lord, Lord Lawson, to comment on his own views about the current situation in Greece, particularly given the role that Goldman Sachs played in Greece’s original submission to join the eurozone. However, I will ask a concrete question which is covered in the Minister’s brief. He said that his right honourable friend the Chancellor of the Exchequer has had conversations with the head of the IMF. Given our exposure to Greece, given the IMF’s exposure to Greece—something in the region of £23 billion—and given that the IMF believes that the debt sustainability needed by Greece is roughly £50 billion, would the United Kingdom Government be prepared to expose themselves further, were the IMF to go ahead and offer Greece emergency lending at this point?

Lord O’Neill of Gatley: My Lords, Greece has already missed a payment to the IMF, as everybody knows, and has fallen into arrears with the fund, which is not technically a default. The IMF has said that its shareholders will not suffer losses, saying:

“Notwithstanding the overdue obligations, member countries’ claims on the IMF are fully secure and the IMF will continue to meet its obligations to members and lenders”.

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Greece has, of course, an existing IMF programme and it is important that future support for Greece helps it to meet the conditions necessary to continue with that programme, including the agreements of conditionality, sufficient financing assurances and the clearance of any arrears.

Lord Campbell-Savours (Lab): My Lords, we cannot do very much because we are not in the euro but there is some way in which we can help. There is a crisis in hospitals in Greece. Equipment is breaking and there is a lack of medicines and equipment for treating ill people. Can we do anything to help on a humanitarian basis?

Lord O’Neill of Gatley: My Lords, let me reassure Members of this House that—as I said in my prepared comments and in repeating my right honourable friend the Chancellor’s Statement—we will do whatever is possible to make sure that any tourists or businesses going to Greece get the right guidance and advice. As to the issues on the ground for the Greek people, raised in the noble Lord’s question, we will be looking for further updated guidance over coming days, pending how the discussions go tonight and tomorrow on the financial and economic relationship between Greece and the rest of the eurozone. But, of course, we would all like to think that we will try whatever is within our means to help the Greek people in potentially challenging circumstances if they were to deteriorate further.

Lord Howell of Guildford (Con): My Lords, one idea that has been widely referred to but was not mentioned in the discussions in the other place this afternoon is that Greece could temporarily leave the eurozone and return if and when matters settle down later. I do not expect my noble friend to give an opinion on that now, but will he see that that point is looked at in the considerations in the coming days? Can he give us any guidance—possibly he cannot—on the treaty-changing implications of that or any other proposal connected with this growing crisis?

Lord O’Neill of Gatley: My Lords, while that may not have been discussed in the other House, it has, as I am sure my noble friend Lord Howell is aware, been suggested by some other members of the eurozone. It is certainly something that we are aware of having been raised and it will be mentioned again in discussions; that is for sure. I reiterate, however, that it is not appropriate for me or my right honourable friend the Chancellor to talk about such matters ahead of the delicate discussions that will take place tonight and tomorrow.

Lord West of Spithead (Lab): My Lords, will the Minister confirm that contingency work has been done on the implications of what is happening in Greece for the eastern Mediterranean flank of NATO? Is he aware of any moves by the Russians to deal with Greece by giving assistance similar to that offered to Cyprus to get access to bases there? Lastly, are we thinking of any way to help the Greeks with the tens of thousands—in fact, more than 100,000—refugees who have poured into Greece as a result of the war in Syria et cetera?

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Lord ONeill of Gatley: My Lords, while I am sure an offer of Russian help could appear, it is within the aspirations of both Greece and its European colleagues and friends to solve the outstanding challenges between them, whatever is offered from Russia.

With respect to the further questions of the noble Lord, Lord West, we should be careful about what specifics we suggest we may offer until we see further evidence of what may emerge from the discussions tonight and tomorrow. As the Chancellor has said, we should be prepared for the worst but should actively seek to be in a position to help the Greek people and, of course, to protect our own economic interests.

Lord Lamont of Lerwick (Con): My Lords, while it is true that the Syriza Government have made some bad policy decisions and have at times been very provocative, is it not also true that on one fundamental point they are right—in 2010 there should have been a much more extensive write-off of the Greek debt? If we are to have a sustainable situation in Greece, it requires, as the IMF has now said, a substantial further write-off of debt because the debt is not sustainable. This continuing extending and pretending is only shoring up more trouble in the long run.

Lord ONeill of Gatley: My Lords, as my noble friend says, these opinions have been offered by many people, including in the past week or so, according to media reports, the IMF. It is not of great help in resolving issues today to reflect on what might or might not have happened in 2010. However, in the discussions that take place this evening and tomorrow, all sorts of options and ideas will be pursued to, I hope successfully, bring these growing economic risks and challenges under better control.

Lord Birt (CB): The Minister has rightly emphasised that we are at an extremely delicate stage. At such delicate times, is it not also important to be really clear about the principles involved? The Greek Government have willingly, knowingly borrowed money on a massive scale from a number of institutions, including within the EU, over a very long period. Will the Minister agree that—if only pour encourager les autres—the worst of all options would be to accept that a sovereign Government should not repay their debt?

Lord ONeill of Gatley: My Lords, my reaction, possibly based on my past experience, is as with a number of other questions that have been put to me. Ahead of such important discussions, I do not think it is particularly useful for me as the Minister, or for anybody in similar areas of government, to speculate idly about what is right or wrong. A lot of information is available about events that have led up to this crisis. It is the responsibility of the Greek authorities, having taken their stance to the Greek people over the weekend, together with eurozone Finance Ministers and their leaders, to try to bring this crisis to a better resolution in the next couple of days.

The Lord Bishop of Chester: My Lords, I was struck in the Statement by the sentence:

“Greece is a proud nation and a very long-standing ally of the United Kingdom”.

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The danger in all of this is that, because we are not in the eurozone, we slightly sit on the fence, hedge our bets or stand on the sidelines. That can leave a certain vacuum. I have been very upset by the rhetoric between Germany and Greece in recent weeks—on both sides. The two nations are a little like chalk and cheese in so many ways. Politically, I wonder whether there is not a role, precisely because we are not in the eurozone politically, that we are not taking. What high-level contacts have there been between the Greek Government and the UK Government on these political issues?

Lord O'Neill of Gatley: My Lords, the right reverend Prelate asks, again, a slightly delicate question. I mentioned in my formal comments that the Prime Minister and the Chancellor in particular had a number of discussions with key participants from the eurozone and the head of the IMF earlier today and this afternoon. I suspect that there will be further discussions during this evening and tomorrow. We are obviously aware of our position as an EU member relative to those inside the eurogroup, and we will offer in private the views that we think may be of some use in helping them come to the right resolution.

Lord Richard (Lab): I also have a slightly delicate question. The Minister referred a number of times to the delicate negotiations and discussions that are going to take place today and tomorrow. Can he perhaps lift the curtain just a little about what input Her Majesty’s Government hope to have in those discussions? Have we been asked for any advice specifically? Are we giving advice? I am not asking what the advice is; only that our presence should be established. Is that the position?

A noble Lord: Are we observers?

Lord Richard: My noble friend asks are we just going to be observers or will we be participants in one form or another.

Lord O'Neill of Gatley: My Lords, it is important to remain focused. In terms of our own policies, we must focus on what we can do about the future of our own economy and, in the context of this crisis, make sure that we are protected from any potential further contagion in the best way that we can. As I also said, in private, we will offer discussion and ideas as and when we are asked. But the key for us is to make sure that we have the right control over the levers that we can control ourselves and that are relevant to the performance of the UK economy.

Concessionary Television Licences


5.22 pm

The Earl of Courtown (Con): My right honourable friend the Chancellor of the Exchequer will be making his Budget Statement on Wednesday, but in the light of the news reports on Sunday, I want to take this opportunity to confirm details of the agreement that we have reached with the BBC.

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The Government have reached agreement with the BBC that it will take on the cost of providing free television licences. This will be phased in from 2018-19, with the BBC taking on the full costs from 2020-21. Having inherited a challenging fiscal position, the Government are pleased that the BBC has agreed to play its part in contributing to reductions in spending like much of the rest of the public sector, while at the same time further reducing its overall reliance on taxpayers.

As part of these new arrangements, the Government will ensure that the BBC can adapt to a changing media landscape. The Government will bring forward legislation in the next year to modernise the licence fee to cover public service broadcast catch-up television. In addition, the Government will reduce the broadband ring-fence to £80 million in 2017-18, £20 million in 2018-19, £10 million in 2019-20 and zero in 2020-21.

The Government will consider carefully the case for decriminalisation in the light of the Perry report and the need for the BBC to be funded appropriately. No decision will be taken in advance of charter renewal. The Government anticipate that the licence fee will rise in line with the CPI over the next charter review period, subject to the conclusions of the charter review in relation to the purposes and scope of the BBC and its demonstrating that it is undertaking efficiency savings at least equivalent to those in other parts of the public sector.

The commitment made in the Conservative manifesto that all households with an over-75 year-old will be eligible for a free TV licence will be honoured throughout this Parliament. As requested by the BBC, it will take responsibility for this policy from then on. Charter review will include an opportunity to consider wider issues relating to the purposes and scope of the BBC, and we look forward to using that to engage on the full range of issues with the public, industry and this House. I will make an announcement about the process for the review in due course.

5.25 pm

Lord Stevenson of Balmacara (Lab): My Lords, five years ago a private deal was done over the funding of the BBC. The licence fee was frozen. The BBC took over funding of the World Service, BBC Monitoring, S4C, and picked up other costs. Together that amounted to a 16% cut in the budget. Here we are again: another back-room deal pre-empting the open consultative process that we have been promised on the BBC charter. However, what is different this time is that the Government are blatantly requiring the BBC to take on responsibility for a matter of social policy that is nothing to do with its main charter responsibilities. Surely if the Government want to maintain free TV for over-75s, as they said in their manifesto, they should fund it. Are we to believe that the Budget later this week will ask the bus companies to assume responsibilities for free bus passes for pensioners? If not, are we not entitled to see this agreement for what it is—a politically inspired attack on the BBC, ahead of and ring-fenced from the charter review process?

Where is the BBC expected to find this money—from the World Service or from S4C, or by cutting channels or reducing programme quality? The Chancellor in his

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interview mentioned the BBC website. If the Government have views about the social policies the BBC should be pursuing, perhaps they also have views about content. Can the Minister tell us what is now expected of the BBC, since the relationship no longer seems to be at arm’s length? Finally, when this matter was raised in 2010, the then trust threatened to resign if the Government went ahead with their proposal. This time, we are told that the BBC Trust has agreed with the proposal. Does that not raise questions about the trust itself and its capacity to safeguard the vital charter responsibilities of the BBC now and in the future?

The Earl of Courtown: My Lords, the noble Lord made a number of points but he specifically asked about the input on charter renewal discussions. There are 18 months until the current charter expires, and the Government are committed to a thorough and open process where all aspects of the BBC will be up for discussion. That debate with the public and with the BBC will continue as planned, and an announcement on how charter review will be run will be made in due course. The noble Lord mentioned Channel 4. There are no current plans to privatise Channel 4. He mentioned S4C. The Government are committed to the provision of minority language broadcasting. This settlement for the BBC will mean it has to make some choices about how the licence fee funds are spent.

Lord Fowler (Con): My Lords, this is a surprising statement. Does it mean that the continuance of the BBC licence fee has now been confirmed, that this is off the table and there is no question of it being reopened in the charter discussions? Otherwise, it would seem that much of what the Minister said does not have a vast amount of meaning. He says no decision will be taken prior to the charter review. Surely a massive decision has been taken prior to the charter review, in that an indiscriminate cut of £0.5 billion is being made in the BBC budget without any thought being given to the effect upon programming and news coverage. Surely, as the noble Lord opposite said, if free television licences for all those over 75 is Government policy, it should be funded by the Government and not just passed on to the BBC.

The Earl of Courtown: My Lords, my noble friend is well known for his interest in these matters. As I said before, providing a free licence to people over 75 was a manifesto commitment. The noble Lord made a number of other points and I am afraid I will have to write to him on those.

Lord Low of Dalston (CB): My Lords, will there be a compensatory adjustment to the BBC’s licence fee income as part of the charter renewal discussions to take account of this decision to switch the cost of funding free licences for the over-75s from the Government’s account to the BBC’s?

The Earl of Courtown: My Lords, the point the noble Lord makes will be under discussion over the 18 months of the charter renewal. The Government have said that they are committed to a thorough and open process where all aspects of the BBC will be up for discussion. As I said before, the debate with the

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public and the BBC will continue as planned and an announcement on how the charter review will be run will be made in due course.

Lord Birt (CB): My Lords, this is a truly shocking announcement. The BBC has been in existence for nearly a century. It is unique in the world for a number of reasons, one of which is that, very early on in its history, Winston Churchill tried to take it over at the time of the General Strike but the then director-general, John Reith, resisted it and essentially established its independence in a way that no other public service broadcaster around the world has managed. That independence was breached in the previous Parliament by the deal that has already been mentioned today, when, overnight, with no debate of any kind, 16% was taken outside the BBC’s budget and the Government—not the BBC—decided to use the licence fee to fund the World Service, S4C and, amazingly, BBC Monitoring, which is a very specialist service not much to do with broadcasting. This has happened again. This is taking a huge slice out of the BBC’s budget. Again, it has happened with no public discussion of any kind. This Government and the previous Government have set a very dangerous precedent.

The Earl of Courtown: I am afraid I cannot say a great deal more than what I have already said on this matter, except that all these matters will be up for discussion in the charter renewal.

Lord Razzall (LD): My Lords, I entirely agree with the remarks of the noble Lord, Lord Stevenson, and my former noble friend, the noble Lord, Lord Fowler. I appreciate that the Minister is in a difficult position here in that he is speaking with his master’s voice but does he really think it is fair that a policy to give free television licences to people aged 75 and over, which is in the Tory party manifesto and has absolutely nothing to do with the BBC, simply imposes the cost on the BBC? I ask him to say what he thinks rather than what his master tells him to say.

The Earl of Courtown: My Lords, all noble Lords will know that I speak for the whole Government from this Dispatch Box. I repeat what I said earlier: the manifesto commitment will be retained for the whole of this Parliament.

Lord West of Spithead (Lab): My Lords, the BBC is a great British institution. What has been decided is quite extraordinary, but my question for the noble Earl is: BBC Monitoring has been amazingly useful over decades for foreign policy and defence—I have seen it doing that. How on earth will BBC Monitoring be properly paid for within this new construct, bearing in mind that it is not a core thing for the BBC in terms of entertainment?

The Earl of Courtown: My Lords, the noble Lord mentions BBC Monitoring. I repeat once again: all these things will be up for discussion in the charter renewal.