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House of Lords

Wednesday, 25 November 2015.

3 pm

Prayers—read by the Lord Bishop of Rochester.

Royal Assent

3.06 pm

The following Act was given Royal Assent:

Northern Ireland (Welfare Reform) Act.

Domestic Abuse


3.06 pm

Asked by Baroness Prosser

To ask Her Majesty’s Government what action they will take to reduce the number of women killed by partners, ex-partners or family members and the incidence of domestic abuse.

The Minister of State, Home Office (Lord Bates) (Con): My Lords, the Government are committed to tackling domestic abuse and have placed domestic homicide reviews on a statutory footing to ensure that local areas learn lessons from each and every one of them.

Baroness Prosser (Lab): I thank the Minister for that reply, brief though it was—it took me slightly by surprise. For those in the Chamber who are not aware, today is the international day against violence towards women, hence the importance of the Questions on the Order Paper today. Since 28 October, when I put this Question down, eight more women will have lost their lives at the hands of a violent partner or ex-partner. Can the Minister tell the House, with some clarity and precision, just what the Government are doing to prevent this carnage and what specific training programmes police forces are required to undertake to recognise cries for help and spot dangerous situations? What measures are in place to ensure co-ordination across government departments?

Lord Bates: The noble Baroness is absolutely right that, on this International Day for the Elimination of Violence against Women and girls, we should focus on this issue because every one of those deaths was in some way preventable. We have often found in these cases that incidents will have been happening over a consistent period of time, until the point of the fatal action, and that if there had been earlier interventions something could have been done. That is the reason for changing the police training on this. The Crown Prosecution Service has also changed its procedures. As a result, we are seeing domestic violence convictions at a record level. Referrals from police and prosecutions are also at a record level. Those results are all heading in the right direction but there is an awful lot more still to be done.

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Baroness Gardner of Parkes (Con): Is the Minister aware that Britain was the first country to bring this into public notice, at the United Nations conference for women, and that because of this, other, smaller countries which had had terrible violence against women for many years were no longer ashamed for it to be known about? There is still a lot to be done but we have made considerable progress over those 20 or more years.

Lord Bates: That is a very important point because this is a UN international day, which is in its 17th year. We also remember the work done through DfID and the Girl Summit, which was hosted in this country last year, to get to grips with this issue in other countries as well. But we also have a great deal more to do in our own country to ensure that we have the response absolutely right.

Baroness Hussein-Ece (LD): My Lords, what is being done to pick up on early warning signs, given that the women who are losing their lives or suffering domestic violence are often harassed and stalked by partners and ex-partners over a period of time? Evidence has emerged that in some of these cases, when women have rung up the call centres, these signs have not always been picked up on or followed through appropriately. What is being done to ensure consistency and that call centre staff are trained appropriately to take these calls very seriously?

Lord Bates: The National Domestic Violence Helpline is run by two organisations, Women’s Aid and Refuge. As the noble Baroness will be aware, both those organisations have been given additional funds as a result of the Chancellor’s Statement today—£1 million each. A principal focus of the work will be looking at early intervention. We want to learn the lessons from that so that we can refresh the Government’s strategy for violence against women and girls, which is due to take place in the next few months.

Baroness Armstrong of Hill Top (Lab): My Lords, first, I remind your Lordships of my declaration of interests, because I work with two charities that are involved, among other things, with victims of domestic violence. I have worked for over 40 years on this issue and even I am shocked at the number of women I meet now who are homeless, whose lives have been riven with addiction and who are on the edge of the criminal justice system, nearly all of whom have been victims of sexual, physical or other abuse. Will the Government have another look and make sure that right across the board—not just in the Home Office but in the Department of Health, the Ministry of Justice and other departments —they recognise the importance of this? Many of these women have never talked to anyone but their lives have been ruined.

Lord Bates: The noble Baroness is absolutely right, and I pay tribute to her work over many years in this area. She will recognise that the number of places in refuges, which is the subject of ring-fenced funding of £40 million—there through this Government—has increased so that there are now 3,472 places available. The number of rape advice centres—also funded by

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the Ministry of Justice—has also increased by 15. But again, it is a collective effort to make sure that we all tackle this most abhorrent of crimes.

Baroness Howarth of Breckland (CB): My Lords, the Minister will be aware, as I have said this to him before, that where there is domestic abuse of women it is often also children who suffer. At this time when we are looking at the spending review and are aware of the pressure on local authorities, would he not acknowledge that much of the work in these families was carried out by social workers in local authorities? Will he not only commend the work that they do on behalf of society but hope to protect their budgets and the numbers in post?

Lord Bates: I will certainly do that. The noble Baroness will be as encouraged as I am to hear from the Chancellor that there will be new facilities in the social care budget to provide additional funding to that important area. The Government have also announced that we will give additional funding to an organisation called Behind Closed Doors, which works particularly with children to help and support them in those difficult times.

Lord Rosser (Lab): My Lords, the Government have not ratified a pan-European convention on women’s and girls’ rights—the Istanbul convention—after signing up to it in 2011. That convention seeks to protect women from sexual violence and gives them the formal right to counselling after suffering domestic violence or abuse. Why have the Government not ratified the Istanbul convention and when do they intend to do so?

Lord Bates: We are implementing most aspects of the Istanbul convention. One area—Article 44, I think, which deals with extraterritorial jurisdiction when dealing with forced marriage—requires primary legislation and is the only part that we have not introduced. Apart from that, this Government have been working on this through things such as the Girl Summit. I am not quite sure where my right honourable friend William Hague is in the metamorphosis from that place to this place.

Noble Lords: Tomorrow.

Lord Bates: Ah, my noble friend Lord Hague is due here tomorrow. He has done a tremendous amount of work in this area and that is being continued by my right honourable and noble friend Lady Anelay as well.

Violence Against Women


3.14 pm

Asked by Baroness Gale

To ask Her Majesty’s Government whether they are considering appointing a National Adviser for Violence against Women, Domestic Abuse and Sexual Violence, similar to the appointment made by the National Assembly for Wales in 2015.

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The Minister of State, Home Office (Lord Bates) (Con): My Lords, protecting women and girls from violence and supporting victims remain key priorities for this Government. We welcome all initiatives to tackle violence against women and girls.

Baroness Gale (Lab): I thank the Minister very much for his response, although I am a little disappointed in what he said. Does he agree that anything that can be done to reduce the high number of women suffering from domestic abuse—1.4 million in 2014—must be done? Will he agree to meet the Minister in Wales to discuss the ground-breaking law in Wales so that women in England can benefit in the same way as women in Wales do now from that new law, which would add to all our existing law?

Lord Bates: Yes. In fact, I probably recommended the meeting and I am very happy to sit in on it. We have appointed, for the first time, a Minister for Preventing Abuse and Exploitation, Karen Bradley, in the Home Office. She takes a lead in this area, and I am sure that discussions between those Ministers will be very important. It is very important that we all work together. The key element of the Act passed by the Welsh Assembly was to provide for a strategy. We have that in England and Wales in the cross-government strategy, but we can all learn from each other. It is a very important area and we need to do more.

Lord Wasserman (Con): Experience in Spain, Portugal and elsewhere has shown clearly that electronic monitoring or tagging in the context of domestic violence is an effective way of keeping victims of domestic violence alive and safe. As my noble friend will know, several police forces in this country—Hertfordshire, Northumbria and Cheshire—have purchased electronic monitoring equipment but they cannot use it unless the offender agrees. When will the Government amend the present law relating to the use of that technology so that tags can be fitted to domestic violence offenders with the authority of the courts, even if offenders are not minded to wear them?

Lord Bates: My noble friend makes a very good point. We have introduced domestic violence protection orders—2,500 have been issued—which have had a positive effect in enabling people to have protection. Often, the victim of domestic violence is the one who is forced to flee their home, whereas it should be the perpetrator who is excluded from the home. That use of technology would seem very worth while. I am certainly happy to follow that up with my noble friend afterwards.

Baroness Randerson (LD): My Lords, the Welsh commissioner referred to in the noble Baroness’s Question is a part-time appointment for what is very much a full-time problem. FGM is one aspect of that. The coalition Government undertook some commendable work, led by my noble friend Lady Featherstone, to raise public awareness of FGM. At that time, we understood the importance of NHS staff recognising and reporting cases of FGM. NHS staff in England

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have a duty to do so, but there was no such duty in Wales at that time. Is it still the case that NHS staff in Wales do not have to report cases of FGM?

Lord Bates: I am not sure about the answer, because it is a devolved matter for the Welsh Assembly to determine. It was certainly introduced here. Another very positive development which we introduced was FGM protection orders to give children at risk court protection to prevent them being moved out of the country to where those barbaric practices can be carried out.

Baroness Whitaker (Lab): My Lords—

Baroness Fookes (Con): My Lords—

Baroness Whitaker: My Lords, will the Minister join me in congratulating the Government of Gambia on banning female genital mutilation, as announced in a newspaper today?

Lord Bates: I am very happy to do that.

Baroness Coussins (CB): My Lords, what resources are being put into educating boys and men to make them understand that sexual violence and domestic abuse are neither normal nor acceptable?

Lord Bates: The noble Baroness is right, and that is why we have a ground-breaking, leading campaign called This is Abuse. The campaign plays a key part in that, as well as ensuring that there is appropriate sex and relationships education in schools. People need to understand the word “consent” and the meaning of the word “abuse”, and to live by those terms.

Baroness Fookes: Does the Minister agree that, where different authorities and persons hold evidence, they should actually talk to one another?

Lord Bates: That is absolutely right. It is very important that the cross-ministerial group, chaired by the Home Secretary, ensures that there is a joined-up response on these issues. That is also one of the purposes of the domestic violence disclosure scheme—the so-called Clare’s law—which allows people to find out whether a potential partner, whom they might be bringing into their home, has a violent or abusive past.

Baroness Afshar (CB): My Lords, is the Minister aware that, in order to deal with domestic violence within Islamic Muslim communities, it is absolutely necessary to have an adviser who understands the Koran, can understand the interpretation and can deal with the misguided view held by particular members of that community that they are entitled to be violent towards their women? It is essential to have someone who knows what they are talking about.

Lord Bates: That is very true. In answer to a question yesterday on stalking, I spoke about the charity which is working with us on that. Furthermore, I had the

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occasion to visit a team working in the Foreign Office—the Forced Marriage Unit—which is offering advice to those in fear of forced marriage. It is doing excellent work in this area and is very sensitive to the communities to which it is speaking.

Baroness Massey of Darwen (Lab): The End Violence Against Women Coalition suggests that children could be encouraged to protest and cope with abuse from peers, adults or the media. Does the Minister agree that schools could play a part in this by developing and delivering programmes that encourage children to develop resilience, self-confidence and knowledge about this issue? Why do the Government not make such programmes statutory in schools?

Lord Bates: We have been very clear that we expect sex and relationships education to be taught in all schools. In fact, it is inspected by Ofsted as such. We help the PHSE Association to develop materials for use in the classroom in this area. Of course, there is more that can be done, but it is particularly important that people in schools, who might be the first to hear of instances of domestic violence, have the confidence to know what it is and to report it.

Gender-based Violence: Women with HIV


3.23 pm

Asked by Baroness Gould of Potternewton

To ask Her Majesty’s Government what action they have taken to assist women with HIV who are experiencing gender-based violence.

The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, sexual health and HIV services are already sensitive to the risk of domestic abuse and sexual violence, including gender-based violence, in their routine consultations. In recent years, the Government have put nearly £40 million into specialist domestic and sexual violence support services and national helplines. We have also set up 15 new female rape support centres to raise the total to 86. We have taken strong action in the fight to eradicate female genital mutilation.

Baroness Gould of Potternewton (Lab): I thank the Minister for that reply but, with respect, it is not sufficient to answer the Question that I asked, which was about the relationship between HIV and sexual and gender abuse. Does the Minister not accept that the Government have a responsibility to work across the relevant departments, as others have said, to ascertain the number of women who are in this dire situation, to encourage them to seek support and help, which they so desperately need but which many are prevented from doing because of the stigma of their situation; and crucially to provide the resources, both staffing and financial, to help these women in such terrible situations?

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Lord Prior of Brampton: The noble Baroness raises the very profound point about stigma. Where people suffer from both HIV and domestic abuse, they are extremely vulnerable and feel it very difficult to raise these issues. The Government have done a lot to try and remove the stigma and make it easier for these very vulnerable women to come forward. I am sure that the noble Baroness is aware of the sexual assault referral centres. There are now 43 of those, funded by NHS England, the police and local authorities. They are a good example of cross-government support.

Baroness Walmsley (LD): My Lords, in 2012 the coalition Government set up a new research and innovation fund to collect information about violence against women in 10 African and Asian countries with the view to setting a new prevention strategy. Could the Minister tell us anything about how that strategy is progressing? Given the risk of HIV to many of these women, will that issue be covered in the strategy?

Lord Prior of Brampton: I think I am right that there are some 16 million women worldwide who suffer from HIV/AIDS so it is a huge problem, particularly in sub-Saharan Africa. I am not familiar with the innovation fund to which the noble Baroness referred, but I will investigate that and write to her.

Baroness Masham of Ilton (CB): My Lords, is the Minister aware that there are many African men living in the UK who deny that they may be HIV positive, refuse to have a test and therefore put women at risk? What will the Government do about that?

Lord Prior of Brampton: I believe that some 103,000 people are HIV positive in England, of whom two-thirds are men. The majority of people who are HIV positive come from sub-Saharan Africa. The noble Baroness made the point that some who know they are HIV positive are not taking appropriate action and asked what we can do about them. It is also worth pointing out that some 18% of people who are HIV positive are ignorant of the fact. We have a very big communication programme ongoing to try and educate and inform these men, and we will continue putting the necessary resources into those programmes.

Baroness Hayter of Kentish Town (Lab): My Lords, given that today is the UN International Day for the Elimination of Violence against Women, has the Minister taken a moment to see the associated ActionAid exhibition in the Upper Waiting Hall? In respect of women with HIV, the only survey we seem able to find about the prevalence of domestic violence is a 2013 one from Homerton, which showed that probably half of women with HIV reported experience of partner violence. Could the Minister undertake that there should be more research on this and that, if such a figure is found to be confirmed, everyone dealing with HIV women should be taught to be aware of their vulnerability to domestic violence?

Lord Prior of Brampton: I have not been to the Upper Waiting Hall to see the exhibition but will endeavour to do so if I have time after Questions this

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afternoon. The noble Baroness referred to the research done at the Homerton in 2013. I think the figure that study came up with was 52%. There has been a subsequent study but I cannot remember the name of it. It may not have been as extensive as the one done at the Homerton and put a figure slightly less than 52%—but it was still very significant. I will ask officials the status of that subsequent research to see whether we need more.

Baroness Gould of Potternewton: To help the Minister, it was Positively UK that did the other piece of work.

Religion: Advertisements


3.28 pm

Asked by The Lord Bishop of Chelmsford

To ask Her Majesty’s Government what assessment they have made of the freedom of religious and non-religious organisations to express their beliefs in the public sphere, in the light of the decision by Digital Cinema Media not to accept advertisements from the Church of England.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, freedom of expression, including freedom of the media, is fundamental to democratic society. Open discussion of faith issues has the benefit of bringing communities together, thereby giving rise to greater understand among faith groups. In this case, the decision not to accept the advertisement was by an independent media organisation. The Government made clear that they do not agree with that decision and urged the cinema to look again.

The Lord Bishop of Chelmsford: On these Benches, we very much welcome the support from the Minister and, indeed, from No. 10 and other Ministers—and, indeed, from Richard Dawkins and Stephen Fry, who are not usually people who support the Church of England. But perhaps I might press the Minister to go further. Does she agree that advertisements are about beliefs and lifestyles, and then they sell the product? Therefore, others should also be free to speak about ideas in the marketplace of ideas. Digital Cinema Media, by banning this advertisement, has narrowed the opportunities for beliefs and values to be spoken about in the public square, which risks undermining some of the values and freedoms that most of us spend the rest of our time seeking to promote—not least the freedom to be offended.

Baroness Williams of Trafford: I totally agree with the right reverend Prelate on that point, and the Government wholeheartedly support the freedom of expression and support faith and faith institutions in this country. The Government greatly value the vital role that religious individuals and organisations have in our society, and the part that they play in national life and public service. We also value the vital role that

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the Church of England and many Christian organisations and individual Christians have in our society, and the part that they play in national life, inspiring a great number of people to get involved in public service and providing help to those in need.

Lord Hunt of Kings Heath (Lab): My Lords, I very much take the Minister’s point, but is her Answer specifically directed at the special position of the Church of England, as the established church, or is she saying that she thinks that any religion—say, the Church of Scientology—or any political party should be permitted to advertise in the way that the Church of England wants to do? It is very important that we understand about whether a precedent is being set here.

Baroness Williams of Trafford: My Lords, I, and the Government, believe in the freedom of expression, and the freedom actually to not believe at all, as well as to believe in a variety of different religions.

Lord Pearson of Rannoch (UKIP): My Lords, does the Minister think that Digital Cinema Media, or any other media outlet in this country, would have dared to ban footage advancing the religion of Islam?

Baroness Williams of Trafford: I think that is a very good question. As I have said before, the freedom of religious expression should be apparent throughout society, and we should not be offended by religion.

Lord Farmer (Con): My Lords, I would just like to follow the right reverend Prelate’s Question. Perhaps like others in your Lordships’ House, I am often struck when I go to the cinema by the prevalence of advertisements, particularly at Christmas time, if you have been to see “Spectre” or anything like that, selling the idea that having stuff and giving each other stuff makes people happy. Does the Minister agree that secular materialism is now the dominant cultural influence in our society and is, more or less, a religion in its own right—and that young people should be made aware of this as part of the British values agenda in schools?

Baroness Williams of Trafford: My Lords, we have made clear our expectation that all schools should actively promote the fundamental British values of democracy, the rule of law, individual liberty and mutual respect and tolerance for those of different faiths and beliefs. Ofsted is embedding this with an inspection framework for all schools; it is right that all schools, including schools of a religious character, promote the fundamental British values of democracy, the rule of law, individual liberty and mutual respect. These are the bedrock of British values and, without them, we cannot expect any young person to play a full part in civic society in this country.

Lord Singh of Wimbledon (CB): Is the Minister aware that Christianity and other religions carry the potential to seriously destabilise society by talking about putting others before self, whereas the prevailing marketing culture says, “Me and mine”? It also does

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things like talking about forgiveness and reconciliation, which could seriously jeopardise jobs in the prison industry.

Baroness Williams of Trafford: My Lords, if there is a choice, I think I would go with the former. It is often shown that giving to others makes you far happier than thinking about me, me, me.

Baroness Harris of Richmond (LD): My Lords, will the Minister tell the House whether there were any representations from the Church of England to other faiths before it made the decision to launch this campaign?

Baroness Williams of Trafford: I have absolutely no idea. I will find out from my colleagues on the Bishops’ Benches and let the noble Baroness know.

Lord King of Bridgwater (Con): My Lords, at the risk of excommunication, perhaps I may say that I hope my noble friend has read the article in the Times today by Alice Thomson, which sets out very clearly indeed why there is some wisdom in the prohibition on religious or political advertising, particularly in the cinema. It is a rather better case than may have been made in your Lordships’ House. In spite of some of the voices that we have heard, every single Member of your Lordships’ House who I have talked to about it agrees with that article.

Baroness Williams of Trafford: My Lords, I have not seen the article. Perhaps we should put the advert in the context of where we are at the moment: the atrocious events that happened in Paris last week and the run-up to Christmas. If anyone looks at the advert, the context is very much thinking about the world and how we can make it a better place.

Baroness O'Neill of Bengarve (CB): My Lords, does the Minister accept that there is not and cannot be a right not to be offended? Offence is in the eye of the beholder, and the right to freedom of expression and the right to manifest religion or belief cannot be curtailed by a supposed right not to be offended.

Baroness Williams of Trafford: The noble Baroness is absolutely right.

Draft Investigatory Powers Bill Committee

Membership Motion

3.36 pm

Tabled by Baroness Stowell of Beeston

Lord Taylor of Holbeach (Con): My Lords, in the absence of my noble friend the Leader of the House and on her behalf, I beg to move the Motion standing in her name on the Order Paper.

That this House concurs with the Commons message of 9 November that it is expedient that a Joint Committee of Lords and Commons be appointed

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to consider and report on the draft Investigatory Powers Bill presented to both Houses on 4 November 2015 (Cm 9152);

That a Committee of seven Lords be appointed to join with the Committee appointed by the Commons and that the Committee should report on the draft Bill by 11 February 2016;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

B Browning, L Butler of Brockwell, Bp Chester, L Hart of Chilton, L Henley, L Murphy of Torfaen, L Strasburger;

That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;

That the Committee have power to send for persons, papers and records;

That the Committee have power to appoint specialist advisers;

That the Committee have leave to report from time to time;

That the Committee have power to adjourn from place to place within the United Kingdom;

That the reports of the Committee from time to time be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee be published, if the Committee so wishes; and

That the quorum of the Committee shall be two.

Motion agreed.

Small and Medium Sized Business (Credit Information) Regulations 2015

Small and Medium Sized Business (Finance Platforms) Regulations 2015

Motions to Approve

3.37 pm

Moved by Lord Ashton of Hyde

That the draft regulations laid before the House on 7 September be approved.

Relevant document: 4th Report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 23 November.

Motions agreed.

Civil Legal Aid (Merits Criteria) (Amendment) (No. 2) Regulations 2015

Civil Legal Aid (Merits Criteria and Information about Financial Resources) (Amendment) Regulations 2015

Motions to Approve

3.38 pm

Moved by Lord Faulks

That the Regulations laid before the House on 7 September and 22 October be approved.

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Relevant document: 5th and 8th Reports from the Joint Committee on Statutory Instruments (Special attention drawn to the instrument). Considered in Grand Committee on 23 November.

Motions agreed.

Renewables Obligation Order 2015

Motion to Approve

3.39 pm

Moved by Lord Bourne of Aberystwyth

That the draft order laid before the House on 21 July be approved.

Relevant document: 3rd Report from the Joint Committee on Statutory Instruments.Considered in Grand Committee on 24 November.

Motion agreed.

Spending Review and Autumn Statement


3.39 pm

The Commercial Secretary to the Treasury (Lord O'Neill of Gatley) (Con): My Lords, I refer the House to the Autumn Statement made by my right honourable friend the Chancellor of the Exchequer in the House of Commons, copies of which have been made available in the Printed Paper Office, and the text of which will be printed in full in the Official Report.

The following Statement was made earlier in the House of Commons.

“This spending review delivers on the commitment we made to the British people that we would put security first—to protect our economic security by taking the difficult decisions to live within our means and bring down our debt, and to protect our national security by defending our country’s interests abroad and keeping our citizens safe at home. Economic and national security provide the foundations for everything we want to support: opportunity for all, the aspirations of families and the strong country we want to build.

Five years ago, when I presented our first spending review, our economy was in crisis and, as the letter said, there was no money left. We were borrowing one pound in every four we spent, and our job then was to rescue Britain. Today, as we present this spending review, our job is to rebuild Britain—build our finances, build our defences, build our society—so that Britain becomes the most prosperous and secure of all the major nations of the world, and so that we leave to the next generation a stronger country than the one we inherited. That is what this Government were elected to do, and today we set out the plan to deliver on that commitment.

We have committed to running a surplus. Today, I can confirm that the four-year public spending plans that I set out are forecast to deliver that surplus so that we do not borrow forever and are ready for whatever storms lie ahead. We promised to bring our debts down.

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Today, the forecast I present shows that, after the longest period of rising debt in our modern history, this year our debt will fall and keep falling in every year that follows.

We promised to move Britain from being a high-welfare, low-wage economy to a lower-welfare, higher-wage economy. Today, I can tell the House that the £12 billion of welfare savings we committed to at the election will be delivered in full, and delivered in a way that helps families as we make the transition to our national living wage.

We promised that we would strengthen our national defences, take the fight to our nation’s enemies and project our country’s influence abroad. Today, this spending review delivers the resources to ensure that Britain, unique in the world, will meet its twin obligations to spend 0.7% of its income on development and 2% on the defence of the realm.

But this spending review not only ensures the economic and national security of our country, it builds on it. It sets out far-reaching changes to what the state does and how it does it. It reforms our public services so that we truly extend opportunity to all, whether it is the way we educate our children, train our workforce, rehabilitate our prisoners, provide homes for our families, deliver care for our elderly and sick, or hand back power to local communities. This is a big spending review by a Government that do big things. It is a long-term economic plan for our country’s future.

Nothing is possible without the foundations of a strong economy, so let me turn to the new forecasts provided by the independent Office for Budget Responsibility, and let me thank Robert Chote and his team for their work. Since the summer Budget, new economic data have been published which confirm this: since 2010, no economy in the G7 has grown faster than Britain. We have grown almost three times faster than Japan, twice as fast as France, faster than Germany and at the same rate as the United States. That growth has not been fuelled by an irresponsible banking boom, like in the last decade. Business investment has grown more than twice as fast as consumption, exports have grown faster than imports, and the north has grown faster than the south. For we are determined that this will be an economic recovery for all, felt in all parts of our nation, and that is already happening.

In which areas of the country are we seeing the strongest jobs growth? Not just in our capital city—the midlands is creating jobs three times faster than London and the south-east. In the past year, we have seen more people in work in the northern powerhouse than ever before. Where do we have the highest employment rate of any part of our country? In the south-west of England. Our long-term economic plan is working.

But the OBR reminds us today of the huge challenges we still face at home and abroad. Our debts are too high; and our deficit remains. Productivity is growing, but we still lag behind most of our competitors. I can tell the House that, in today’s forecast, the expectations for world growth and world trade have been revised down again. The weakness of the eurozone remains a persistent problem, and there are rising concerns about debt in emerging economies. These are yet more reasons why we are determined to take the necessary steps to protect our economic security.

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That brings me to the forecasts for our own GDP. Even with the weaker global picture, our economy this year is predicted to grow by 2.4%. Growth is then revised up from the Budget forecast in the next two years to 2.4% in 2016 and 2.5% in 2017. It then starts to return to its long-term trend, with growth of 2.4% in 2018 and 2.3% in 2019 and 2020. That growth is more balanced than in the past. Whole economy investment is set to grow faster in Britain than in any other major advanced economy in the world this year, next year, and the year after that.

When I presented my first spending review in 2010 and set this country on the path of living within its means, our opponents claimed that growth would be choked off, a million jobs would be lost and inequality would rise. Every single one of those predictions has proved to be completely wrong. So, too, did the claim that Britain had to choose between sound public finances and great public services. It is a false choice; if we are bold with our reforms we can have both. That is why, while we have been reducing Government spending, crime has fallen, a million more children are being educated in good and outstanding schools, and public satisfaction with our local government services has risen. That is the exact opposite of what our critics predicted. Yet now, the same people are making similar claims about this spending review, as we seek to move Britain out of deficit and into surplus, and they are completely wrong again.

The OBR has seen our public expenditure plans and analysed their effect on our economy. Its forecast today is that the economy will grow robustly every year, living standards will rise every year, and more than a million extra jobs will be created over the next five years. That is because sound public finances are not the enemy of sustained growth; they are its precondition. Our economic plan puts the security of working people first, so that we are prepared for the inevitable storms that lie ahead. That is why our charter for budget responsibility commits us to reducing the debt to GDP ratio in each and every year of this Parliament, reaching a surplus in the year 2019-20 and keeping that surplus in normal times. I can confirm that the OBR has today certified that the economic plan we present delivers on our commitment.

That brings me to the forecasts for debt and deficit. As usual, the OBR has had access to both published and unpublished data, and has made its own assessment of our public finances. Since the summer Budget, housing associations in England have been reclassified by our independent Office for National Statistics and their borrowing and debts been brought on to the public balance sheet, and that change will be backdated to 2008. This is a statistical change and therefore the OBR has re-calculated its previous Budget forecast to include housing associations, so that we can compare like with like.

On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts debt this year to be lower at 82.5%. It then falls every year, down to 81.7%. On that new measure, debt was forecast in July to be 83.6% of national income this year. Now, today, in this autumn statement, the OBR forecasts

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debt this year to be lower at 82.5%. It then falls every year, down to 81.7% next year, down to 79.9% in 2017-18, then down again to 77.3%, then 74.3%, reaching 71.3% in 2020-21. In every single year, the national debt as a share of national income is lower than when I presented the Budget four months ago.

This improvement in the nation’s finances is due to two things. First, the OBR expects tax receipts to be stronger—a sign that our economy is healthier than thought. Secondly, debt interest payments are expected to be lower, reflecting the further fall in the rates we pay to our creditors. Combine the effects of better tax receipts and lower debt interest, and overall the OBR calculates that it means a £27 billion improvement in our public finances over the forecast period, compared with where we were at the Budget.

This improvement in the nation’s finances allows me to do the following. First, we will borrow £8 billion less than we forecast, making faster progress towards eliminating the deficit and paying down our debt—fixing the roof when the sun is shining. Secondly, we will spend £12 billion more on capital investments, making faster progress to building the infrastructure our country needs. Thirdly, the improved public finances allow us to reach the same goal of a surplus while cutting less in the early years. We can smooth the path to the same destination.

That means that we can help on tax credits. I have been asked to help in the transition as Britain moves to the higher-wage, lower-welfare, lower-tax society the country wants to see. I have had representations that the changes to tax credits should be phased in. I have listened to the concerns. I hear and understand them. Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit.

What that means is that the tax credit taper rate and thresholds remain unchanged. The disregard will be £2,500. I propose no further changes to the universal credit taper or to the work allowances beyond those that passed through Parliament last week. The minimum income floor in universal credit will rise with the national living wage.

I set a lower welfare cap at the Budget. The House should know that helping with the transition obviously means that we will not be within that lower welfare cap in the first years, but the House should also know that, thanks to our welfare reforms, we will meet the cap in the later part of this Parliament. Indeed, on the figures published today, we will still achieve the £12 billion per year of welfare savings we promised. That is because of the permanent savings we have already made and further long-term reforms that we announce today.

The rate of housing benefit in the social sector will be capped at the relevant local housing allowance—in other words, the same rate that is paid to those in the private rented sector who receive the same benefit. That will apply to new tenancies only. We will also stop paying housing benefit and pension credit payments to people who have left the country for more than a month. The welfare system should be fair to those who need it and fair to those who pay for it.

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Improved public finances and our continued commitment to reform mean that we continue to be on target for a surplus. The House will want to know the level of that surplus, so let me give the OBR forecasts for deficit and borrowing. In 2010, the deficit we inherited was estimated to be 11.1% of national income. This year, it is set to be almost a third of that, 3.9%. Next year, it falls to less than a quarter of what we inherited, 2.5%. The deficit is down again to 1.2% in 2017-18 and down to just 0.2% the year after that, before moving into a surplus of 0.5% of national income in 2019-20, rising to 0.6% the following year.

Let me turn to the cash borrowing figures. With housing associations included, the OBR predicted at the time of the Budget that Britain would borrow £74.1 billion this year. Instead, it now forecasts that we will borrow less than that at £73.5 billion. Borrowing falls to £49.9 billion next year and then continues to fall. It falls to lower than was forecast at the Budget in every single year after that: to £24.8 billion in 2017-18 and down to just £4.6 billion in 2018-19. In 2019-20, we will reach a surplus—a surplus of £10.1 billion. That is higher than was forecast at the Budget—Britain out of the red and into the black. In 2020-21, the year after that, the surplus rises to £14.7 billion.

So the deficit falls every year; the debt share is lower in every year than previously forecast; we are borrowing £8 billion less than we expected overall; and we reach a bigger surplus. We have achieved this while at the same time helping working families as we move to the lower- welfare, higher-wage economy, and we have the economic security of knowing our country is paying its way in the world.

That brings me to our plans for public expenditure and taxation. I want to thank my right honourable friend the Chief Secretary, our other ministerial colleagues at the Treasury and the brilliant officials who have assisted us for the long hours and hard work that they have put into developing these plans.

We said £5 billion would come from the measures on tax avoidance, evasion and imbalances. Those measures were announced at the Budget. Together we go further today, with new penalties for the general anti-abuse rule, which this Government introduced, and action on disguised remuneration schemes and stamp duty avoidance, and we will stop abuse of the intangible fixed assets regime and capital allowances. We will also exclude energy generation from the venture capital schemes, to ensure that they remain well targeted at higher-risk companies.

Her Majesty’s Revenue and Customs is making efficiencies of 18% of its own budget. In the digital age, we do not need taxpayers to pay for paper processing or 170 separate tax offices around the country. Instead, we are reinvesting some of those savings, with an extra £800 million in the fight against tax evasion—an investment with a return of almost 10 times in additional tax collected.

We are going to build one of the most digitally advanced tax administrations in the world in this Parliament, so that every individual and every small business will have their own digital tax account by the end of the decade in order to manage their tax online. From 2019, once these accounts are up and running,

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we will require capital gains tax to be paid within 30 days of completion of any disposal of residential property. Together, these things form part of the digital revolution we are bringing to Whitehall with this spending review. The Government Digital Service will receive an additional £450 million, but the core Cabinet Office budget will be cut by 26%, matching a 24% cut in the budget of the Treasury, and the cost of all Whitehall administration will be cut by £1.9 billion. These form part of the £12 billion of savings to Government Departments that I am announcing today.

In 2010, Government spending took up 45% of national income. This was a figure we could not sustain, because it was neither practical nor sensible to raise taxes high enough to pay for that, and we ended up with a massive structural deficit. Today the state accounts for just under 40% of national income, and it is forecast to reach 36.5% by the end of the spending review period. The structural spending that this represents is at a level that a competitive, modern, developed economy can sustain, and it is a level that the British people are prepared to pay their taxes for.

It is precisely because this Government believe in decent public services and a properly funded welfare state that we are insistent that they are sustainable and affordable. To simply argue all the time that public spending must always go up and never be cut is irresponsible and lets down the people who rely on public services most.

Equally, to fund the things we want the Government to provide in the modern world, we have to be prepared to provide the resources. So I am setting the limits for total managed expenditure as follows. This year, public spending will be £756 billion. Then it will be £773 billion next year, then £787 billion the year after, then £801 billion, before reaching £821 billion in 2019-20, the year we are forecast to eliminate the deficit and achieve the surplus. After that, the forecast public spending rises broadly in line with the growth of the economy and will be at £857 billion in 2020-21.

The figures from the OBR show that over the next five years, welfare spending falls as a percentage of national income while departmental capital investment is maintained and is higher at the end of the period. That is precisely the right switch for a country that is serious about investing in its long-term economic success.

People will want to know what the levels of public spending mean in practice and the scale of the cuts we are asking Government Departments to undertake. Over this spending review period, the day-to-day spending of Government Departments is set to fall by an average of 0.8% a year in real terms. That compares with an average fall of 2% over the last five years, so the savings we need are considerably smaller. This reflects the improvement in the public finances and the progress we have already made. Indeed, the overall rate of annual cuts that I set out in today’s spending review is less than half of those delivered over the last five years. So Britain is spending a lower proportion of its money on welfare and a higher proportion on infrastructure; seeing the budget balanced, with cuts half what they were in the last Parliament; making the savings we need, no less and no more; and providing economic security to the working people of a country with a surplus that lives within its means.

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This does not, of course, mean that the decisions required to deliver these savings are easy. But nor should we lose sight of the fact that this spending review commits £4 trillion over the next five years. It is a huge commitment of the hard-earned cash of British taxpayers, and all those who dedicate their lives to public service will want to make sure it is well spent. Our approach is not simply retrenchment, it is to reform and rebuild.

These reforms will support our objectives for our country: first, to develop a modern, integrated health and social care system that supports people at every stage of their lives. Secondly, to spread economic power and wealth through a devolution revolution and invest in our long-term infrastructure. Thirdly, to extend opportunity by tackling the big social failures that for too long have held people back in our country. Fourthly, to reinforce our national security with the resources to protect us at home and project our values abroad. The resources allocated by this spending review are driven by these four goals.

The first priority of this Government is the first priority of the British people—our national health service. Health spending was cut by the Labour Administration in Wales, but we Conservatives have been increasing spending on the NHS in England, and in this spending review we do so again. We will work with our health professionals to deliver the very best value for that money. That means £22 billion of efficiency savings across the service; it means a 25% cut in the Whitehall budget of the Department of Health; and it means modernising the way we fund students of healthcare. Today there is a cap on student nurses—over half of all applicants are turned away, and it leaves hospitals relying on agencies and overseas staff. So we will replace direct funding with loans for new students, so that we can abolish this self-defeating cap and create up to 10,000 new training places in this Parliament.

Alongside these reforms, we will give the NHS the money it needs. We made a commitment to a £10 billion real increase in the health service budget, and we fully deliver that today, with the first £6 billion delivered up front next year. This fully funds the five-year forward view that the NHS itself put forward as the plan for its future. As the chief executive of NHS England, Simon Stevens, said,

“the NHS has been heard and actively supported”.

Let me explain what that means in cash. The NHS budget will rise from £101 billion today to £120 billion by 2020-21. This is a half a trillion pound commitment to the NHS over this Parliament—the largest investment in the health service since its creation.

So we have a clear plan for improving the NHS. We have fully funded it, and in return patients will see more than £5 billion of health research in everything from genomes to antimicrobial resistance, a new dementia institute and a new, world-class public health facility in Harlow. And more—800,000 more elective hospital admissions; 5 million more out-patient appointments; 2 million more diagnostic tests; new hospitals funded in Cambridge, in Sandwell and in Brighton; cancer testing within four weeks; and a brilliant NHS available seven days a week.

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There is one part of our NHS that has been neglected for too long, and that is mental health. I want to thank the all-party group led by my right honourable friend the Member for Sutton Coldfield (Mr Mitchell), the right honourable Member for North Norfolk (Norman Lamb) and Alastair Campbell for its work in this vital area. In the last Parliament we made a start by laying the foundations for equality of treatment, with the first ever waiting time standards for mental health. Today, we build on that with £600 million of additional funding, meaning that by 2020 significantly more people will have access to talking therapies, perinatal mental health services and crisis care—all possible because we made a promise to the British people to give our NHS the funding it needed, and in this spending review we have delivered.

The health service cannot function effectively without good social care. The truth we need to confront is that many local authorities will not be able to meet growing social care needs unless they have new sources of funding. That, in the end, comes from the taxpayer, so in future those local authorities that are responsible for social care will be able to levy a new social care precept of up to 2% on council tax.

The money raised will have to be spent exclusively on adult social care, and if all authorities make full use of it, it will bring almost £2 billion more into the care system. It is part of the major reform we are undertaking to integrate health and social care by the end of the decade. To help to achieve that I am today increasing the better care fund to support that integration, with local authorities able to access an extra £1.5 billion by 2019-20. The steps taken in this spending review mean that by the end of the Parliament, social care spending will have risen in real terms.

A civilised and prosperous society such as ours should support its most vulnerable and elderly citizens. That includes a decent income in retirement. More than 5 million people have already been auto-enrolled into a pension thanks to our reforms in the last Parliament. To help businesses with the administration of that important boost to our nation’s savings, we will align the next two phases of contribution rate increases with the tax years. The best way to afford generous pensioner benefits is to raise the pension age in line with life expectancy, as we are already set to do in this Parliament. That allows us to maintain a triple lock on the value of the state pension, so never again will Britain’s pensioners receive a derisory increase of 75p.

As a result of our commitment to those who have worked hard all their lives and contributed to our society, I can confirm that next year the basic state pension will rise by £3.35 to £119.30 a week. That is the biggest real-terms increase to the basic state pension in 15 years. Taking all our increases together over the past five years, pensioners will be £1,125 better off a year than they were when we came to office. We are also undertaking the biggest change in the state pension for 40 years to make it simpler and fairer by introducing the new single-tier pension for new pensioners from April of next year.

I am today setting the full rate for our new state pension at £155.65. That is higher than the current means-tested benefit for the lowest income pensioners

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in our society and another example of progressive government in action. Instead of cutting the savings credit, as in previous fiscal events, it will instead be frozen at its current level where income is unchanged.

So the first objective of this spending review is to give unprecedented support to health, social care and our pensioners. The second is to spread economic power and wealth across our nation. In recent weeks, great metropolitan areas such as Sheffield, Liverpool, the Tees Valley, the north east and the west midlands have joined Greater Manchester in agreeing to create elected mayors in return for far-reaching new powers over transport, skills and the local economy. It is the most determined effort to change the geographical imbalance that has bedevilled the British economy for half a century.

We are also today setting aside the £12 billion we promised for our local growth fund and I am announcing the creation of 26 new or extended enterprise zones, including 15 zones in towns and rural areas from Carlisle to Dorset to Ipswich. But if we really want to shift power in our country, we have to give all local councils the tools to drive the growth of business in their area and the rewards that come when they do so, so I can confirm today that, as we set out last month, we will abolish the uniform business rate. By the end of the Parliament, local government will keep all of the revenue from business rates. We will give councils the power to cut rates and make their area more attractive to business and elected mayors will be able to raise rates, provided they are used to fund specific infrastructure projects supported by the local business community.

As the amount we raise in business rates is in total much greater than the amount we give to local councils through the local government grant, we will phase that grant out entirely over this Parliament and we will also devolve additional responsibilities. The temporary accommodation management fee will no longer be paid through the benefits system. Instead, councils will receive £10 million a year more, up front, so they can provide more help to homeless people. Alongside savings in the public health grant, we will consult on transferring new powers and the responsibility for its funding, as well as elements of the administration of housing benefit.

Local government is sitting on property worth a quarter of a trillion pounds, so we will let councils spend 100% of the receipts from the assets they sell to improve their local services. Councils increased their reserves by nearly £10 billion over the last Parliament. We will encourage them to draw on those reserves as they undertake reforms.

That amounts to a big package of not only new powers but new responsibilities for local councils. It is a revolution in the way we govern this country and if we take into account both the fall in grant and the rise in council incomes, it means that by the end of the Parliament local government will be spending the same in cash terms as it does today.

The devolved Administrations of the United Kingdom will also have available to them unprecedented new powers to drive their economies. The conclusion last week of the political talks in Northern Ireland means

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additional spending power for the Executive to support the full implementation of the Stormont House agreement. That opens the door to the devolution of corporation tax, which the parties have now confirmed they wish to set at a rate of 12.5%. That is a huge prize for business in Northern Ireland and the onus is now on the Northern Ireland Executive to play their part and deliver sustainable budgets so that we can move forward. Northern Ireland’s block grant will be more than £11 billion by 2019-20 and funding for capital investment in new infrastructure will rise by more than £600 million over five years, ensuring that Northern Ireland can invest in its long-term future.

For years, Wales has asked for a funding floor to protect public spending and now, within months of coming to office, this Conservative Government are answering that call and providing that historic funding guarantee for Wales. I can announce today that we will introduce the new funding floor and set it for this Parliament at 115%. My right honourable friend the Secretary of State for Wales and I also confirm that we will legislate so that the devolution of income tax can take place without a referendum. We will also help to fund a new Cardiff city deal. So the Welsh block grant will reach almost £15 billion by 2019-20, while the capital spending will rise by more than £900 million over five years.

As Lord Smith confirmed earlier this month, the Scotland Bill meets the vow made by the parties of the Union when the people of Scotland voted to remain in the United Kingdom. It must be underpinned by a fiscal framework that is fair to all taxpayers and we are ready now to reach an agreement. The ball is in the Scottish Government’s court. Let us have a deal that is fair to Scotland, fair to the UK and built to last. We are implementing the city deal with Glasgow, and negotiating deals for Aberdeen and Inverness too. Of course, if Scotland had voted for independence, it would have had its own spending review this autumn. With world oil prices falling, and revenues from the North Sea forecast by the OBR to be down 94%, we would have seen catastrophic cuts to Scottish public services.

Thankfully, Scotland remains a strong part of a stronger United Kingdom, so the Scottish block grant will be more than £30 billion in 2019-20, while the capital spending available will rise by £1.9 billion through to 2021—the UK Government giving Scotland the resources to invest in its long-term future. For the UK Government, the funding of the Scotland, Wales and Northern Ireland Offices will all be protected in real terms.

We are devolving power across our country, and we are also spending on the economic infrastructure that connects our nation. That is something that Britain has not done enough of for a generation. Now, by making the difficult decisions to save on day-to-day costs in departments, we can invest in the new roads, railways, science, flood defences and energy that Britain needs. We made a start in the last Parliament, and in the last week, Britain topped the league table of the best places in the world to invest in infrastructure. In this spending review, we go much further. The Department for Transport’s operational budget will fall by 37%, but transport capital spending will increase by 50%, to

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a total of £61 billion—the biggest increase in a generation. That will fund the largest road investment programme since the 1970s—for we are the builders.

That means that the construction of High Speed 2 to link the northern powerhouse to the south can begin and that the electrification of lines such as the trans-Pennine, the midland main line and the Great Western can go ahead. We will fund our new Transport for the North to get it up and running, London will get an £11 billion investment in its transport infrastructure, and having met my honourable friend the Member for Folkestone and Hythe (Damian Collins) and other Kent MPs, I will relieve the pressure on roads in Kent from Operation Stack with a new quarter of a billion pound investment in facilities there. We are making the £300 million commitment to cycling that we promised, we will spend more than £5 billion on roads maintenance this Parliament, and thanks to the incessant lobbying of my honourable friend the Member for Northampton North (Michael Ellis), Britain now has a permanent pothole fund.

We are investing in the transport we need, and in the flood defences too. The day-to-day budget of the Department for Environment, Food and Rural Affairs falls by 15% in this spending review, but we are committing more than £2 billion to protect 300,000 homes from flooding. Our commitment to farming and the countryside is reflected in the protection of funding for our national parks and for our forests—we are not going to make that mistake again. In recognition of the higher costs they face, we will continue to provide £50 off the water bills of South West Water customers for the rest of this Parliament—a Conservative promise made to the south-west, and a promise kept.

Investing in the long-term economic infrastructure of our country is a goal of this spending review, and there is no more important infrastructure than energy. So we are doubling our spending on energy research with a major commitment to small modular nuclear reactors. We are also supporting the creation of the shale gas industry by ensuring that communities benefit from a shale wealth fund that could be worth up to £l billion. Support for low-carbon electricity and renewables will more than double. The development and sale of ultra-low emission vehicles will continue to be supported, but in light of the slower than expected introduction of more rigorous EU emissions testing, we will delay the removal of the diesel supplement from company cars until 2021.

We support the international efforts to tackle climate change, and to show our commitment to the Paris talks next week, as the Prime Minister just explained, we are increasing our support for climate finance by 50% over the next five years. The day-to-day resource budget of the Department of Energy and Climate Change will fall by 22%, we will reform the renewable heat incentive to save £700 million, and we will permanently exempt our energy intensive industries, such as steel and chemicals, from the cost of environmental tariffs, so we keep their bills down, keep them competitive and keep them here.

We are introducing a cheaper domestic energy efficiency scheme that replaces the energy company obligation. Britain’s new energy scheme will save an average of

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£30 a year from the energy bills of 24 million households, because the Government believe that going green should not cost the earth. And we are cutting other bills too. We will bring forward reforms to the compensation culture around minor motor accident injuries, which will remove over £l billion from the cost of providing motor insurance. We expect the industry to pass on this saving, so that motorists see an average saving of £40 to £50 per year off their insurance bills.

We are a Government who back all our businesses, large and small, and Conservative Members understand that there is no growth or jobs without a vibrant private sector and successful entrepreneurs. So this spending review delivers what business needs. Business needs competitive taxes. I have already announced in the Budget a reduction in our corporation tax rate to 18%. Our overall review of business rates will report at the Budget, but I am today helping 600,000 of our smallest businesses by extending our small business rate relief scheme for another year.

Businesses also need an active and sustained industrial strategy. That strategy, launched in the last Parliament, continues in this one. We commit to the same level of support for our aerospace and automotive industries, not just for the next five years but for the next decade. Spending on our new catapult centres will increase. We will protect the cash support we give through Innovate UK—something we can afford to do by offering £165 million of new loans to companies instead of grants, as France has successfully done for many years. That is one of the savings that helps us reduce the budget of the Department for Business, Innovation and Skills by 17%.

In the modern world, one of the best ways to back business is to back science, and that is why, in the last Parliament, I protected the resource budget for science in cash terms. In this Parliament, I am protecting it in real terms, so that it rises to £4.7 billion. That is £500 million more by the end of the decade, alongside the £6.9 billion capital budget. We are funding the new Royce Institute in Manchester, and new agri-tech centres in Shropshire, York, Bedfordshire and Edinburgh. And we will commit £75 million to a transformation of the famous Cavendish laboratories in Cambridge, where Crick and Rutherford expanded our knowledge of the universe. To make sure we get the most from our investment in science, I have asked another of our Nobel laureates, Paul Nurse, to conduct a review of the research councils. I want to thank him for the excellent report he has just published. We will implement its recommendations.

Britain is not just brilliant at science; it is brilliant at culture too. One of the best investments we can make as a nation is in our extraordinary arts, museums, heritage, media and sport. Now, £1 billion a year in grants adds a quarter of a trillion pounds to our economy—not a bad return. So deep cuts in the small budget of the Department for Communities and Local Government are a false economy. Its core administration budget will fall by 20%, but I am increasing the cash that will go to the Arts Council, our national museums and galleries. We will keep free museum entry and look at a new tax credit to support their exhibitions. I will help UK Sport, which has been living on diminishing

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reserves, with a 29% increase in its budget, so we go for gold in Rio and Tokyo. The right honourable Member for Kingston upon Hull West and Hessle (Alan Johnson), a former Home Secretary, has personally asked me to support his city’s year of culture, and I am happy to do so with a grant. His campaign has contributed to the arts, while his Front-Bench team contributes to comedy.

The money for Hull is all part of a package for the northern powerhouse that includes funding the iconic new Factory Manchester and the Great Exhibition of the North. In Scotland, we will support the world famous Burrell collection, while here in London we will help the British Museum, the Science Museum and the V&A move their collections out of storage and on display, and we will fund the exciting plans for a major new home for the Royal College of Arts in Battersea. We are also increasing the funding for the BBC World Service, so that British values of freedom and free expression are heard around the world.

All this can be achieved, as my right honourable friend the Prime Minister said, without raiding the Big Lottery Fund, as some feared. It will continue to support the work of hundreds of small charities across Britain. So too will our £20 million a year of new support for social impact bonds. There are many great charities that work to support vulnerable women, as was mentioned in Prime Minister’s Questions. My honourable friend the Member for Colchester (Will Quince) has proposed to me a brilliant way to give them more help. Some 300,000 people have signed a petition arguing that no VAT should be charged on sanitary products. We already charge the lowest rate—5%—allowable under European law and we are committed to getting the EU to change its rules. Until that happens, I will use the £15 million a year raised from the tampon tax to fund women’s health and support charities. The first £5 million will be distributed between the Eve Appeal, SafeLives, Women’s Aid, and The Haven, and I invite bids from other such good causes.

It is similar to the way we use LIBOR fines—and today I make further awards from them, too. We will support a host of military charities, from the organisation for guide dogs for military veterans to Care after Combat. We renovate our military museums, from the Royal Marines and D-Day museums in Portsmouth to the National Army museum, the Hooton Park aerodrome, and the former HQ of RAF Fighter Command at Bentley Priory. In the Budget, I funded one campaign bunker, but more have emerged since then.

At the suggestion of my right honourable friend the Member for Mid Sussex (Sir Nicholas Soames), we will support the fellowships awarded in the name of his grandfather by funding the Winston Churchill memorial trust. We will fund the brilliant Commonwealth War Graves commission, so it can tend to over 6,000 graves of those who died fighting for our country since the second world war; and we will contribute to a memorial to those victims of terrorism who died on the bus in Tavistock square 10 years ago. That is a reminder that we have always faced threats to our way of life, and have never allowed them to defeat us.

We deliver security so we can spread opportunity. That is the third objective that drives this spending review. We showed in the last five years that sound

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public finances and bold public service reform can help the most disadvantaged in our society. That is why inequality is down, child poverty is down, the gender pay gap is at a record low and the richest fifth now pay more in taxes than the rest of the country put together. The other side talks of social justice; this side delivers it because we are all in this together.

In the next five years, we will be even bolder in our social reform. It starts with education, because that is the door to opportunity in our society. This spending review commits us to a comprehensive reform of the way it is provided from childcare to college.

We start with the largest ever investment in free childcare, so working families get the help they need. From 2017, we will fund 30 hours of free childcare for working families with three and four-year-olds. We will support £10,000 of childcare costs tax free. To make this affordable, this extra support will now be available only to parents working more than 16 hours a week and with incomes of less than £100,000. We will maintain the free childcare we offer to the most disadvantaged two-year-olds. To support nurseries delivering more free places for parents, we will increase the funding for the sector by £300 million. Taken together, that is a £6 billion childcare commitment to the working families of Britain.

Next, schools. We build on our far-reaching reforms of the last Parliament that have seen school standards rise even as exams become more rigorous. We will maintain funding for free infant school meals, protect rates for the pupil premium and increase the cash in the dedicated schools grant. We will maintain the current national base rate of funding for our 16 to 19-year-old students for the whole Parliament. We are going to open 500 new free schools and university technical colleges, and invest £23 billion in school buildings and 600,000 new school places. To help all our children make the transition to adulthood—and learn about not just their rights, but their responsibilities —we will expand the National Citizen Service. Today, 80,000 students go on National Citizen Service. By the end of the decade we will fund places for 300,000 students on this life-changing programme pioneered by my right honourable friend the Prime Minister.

Five years ago, 200 schools were academies: today, 5,000 schools are. Our goal is to complete this school revolution and help every secondary school become an academy. I can announce that we will let sixth-form colleges become academies, too, so that they no longer have to pay VAT. We will make local authorities running schools a thing of the past, which will help us save around £600 million on the education services grant.

I can tell the House that as a result of this spending review, not only is the schools budget protected in real terms but the total financial support for education, including childcare and our extended further and higher education loans, will increase by £10 billion. That is a real-terms increase for education, too.

There is something else I can tell the House. We will phase out the arbitrary and unfair school funding system that has systematically underfunded schools in whole swathes of the country. Under the current arrangements, a child from a disadvantaged background in one school can receive half as much funding as a

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child in identical circumstances in another school. In its place, we will introduce a new national funding formula. I commend the many MPs from all parties who have campaigned for many years to see this day come. The formula will start to be introduced from 2017, and my right honourable friend the Education Secretary will consult in the new year.

Education continues in our further education colleges and universities—and so do our reforms. We will not, as many predicted, cut core adult skills funding for FE colleges; we will instead protect it in cash terms. I announced in the Budget that we would replace unaffordable student maintenance grants with larger student loans. That saves us over £2 billion a year in this spending review, and it means we can extend support to students who have never before had Government help.

Today I can announce that part-time students will be able to receive maintenance loans, helping some of our poorer students. We will also, for the first time, provide tuition fee loans for those studying higher skills in FE, and extend loans to all postgraduates, too. Almost 250,000 extra students will benefit from all this new support that I am announcing today.

Then there is our apprenticeship programme—the flagship of our commitment to skills. In the last Parliament, we more than doubled the number of apprentices to 2 million. By 2020, we want to see 3 million apprentices. To make sure they are high-quality apprenticeships, we will increase the funding per place, and my right honourable friend the Business Secretary will create a new business-led body to set the standards. As a result, we will be spending twice as much on apprenticeships by 2020 as compared to when we came to office.

To ensure that large businesses share the cost of training the workforce, I announced at the Budget that we will introduce a new apprenticeship levy from April 2017. Today I am setting the rate at 0.5% of an employer’s pay bill. Every employer will receive a £15,000 allowance to offset against the levy, which means over 98% of all employers and all businesses with pay bills of less than £3 million, will pay no levy at all. Britain’s apprenticeship levy will raise £3 billion a year and will fund 3 million apprenticeships, with those paying it able to get out more than they put in. It is a huge reform to raise the skills of the nation and address one of the enduring weaknesses of the British economy.

Education and skills are the foundation of opportunity in our country. Next we need to help people into work. The number claiming unemployment benefits has fallen to just 2.3%—the lowest rate since 1975. But we are not satisfied that the job is done; we want to see full employment. So today we confirm we will extend the same support and conditionality we currently expect of those on jobseeker’s allowance to over 1 million more benefit claimants. Those signing on will have to attend the jobcentre every week for the first three months. We will increase in real terms the help we provide to people with disabilities to get them into work. This can all be delivered within the 14% savings we make to the resource budget of the Department for Work and Pensions, including by reducing the size of its estate and co-locating jobcentres with local authority buildings. It is the way to save money while improving

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the front-line service we offer people and providing more support for those who are most vulnerable and most in need of our help.

We cannot say we are fearlessly tackling the most difficult social problems if we turn a blind eye to what goes on in our prisons and criminal justice system. My right honourable friend the Lord Chancellor has worked with the Lord Chief Justice and others to put forward a typically bold and radical plan to transform our courts so they are fit for the modern age. Under-used courts will be closed, and I can announce today that the money saved will be used to fund a £700 million investment in new technology that will bring further and permanent long-term savings and speed up the process of justice.

Old Victorian prisons in our cities that are not suitable for rehabilitating prisoners will be sold. This will also bring long-term savings and means we can spend over £1 billion in this Parliament building nine new modern prisons. Today, the transformation gets under way with the announcement that the Justice Secretary has just made. I can tell the House that Holloway prison—the biggest women’s jail in western Europe—will close. In the future, women prisoners will serve their sentences in more humane conditions, better designed to keep them away from crime.

By selling these old prisons, we will create more space for housing in our inner cities, for another of the great social failures of our age has been the failure to build enough houses. In the end, spending reviews like this come down to choices about what your priorities are. I am clear: in this spending review, we choose to build. Above all, we choose to build the homes that people can buy, for there is a growing crisis of home ownership in our country. Fifteen years ago, around 60% of people under 35 owned their own home. Next year, the figure is said to be just half that. We made a start on tackling this in the last Parliament, and, with schemes such as our Help to Buy, the number of first-time buyers rose by nearly 60%, but we have not done nearly enough yet, so it is time to do much more.

Today we set out our bold plan to back families who aspire to buy their own home. First, I am doubling the housing budget to £2 billion a year. We will deliver, with Government help, 400,000 affordable new homes by the end of the decade. Affordable means not just affordable to rent, but affordable to buy. That is the biggest house building programme by any Government since the 1970s. Almost half of them will be our starter homes, sold at 20% off market value to young first-time buyers, and 135,000 will be our brand new Help to Buy: Shared Ownership, which we announce today. We will remove many of the restrictions on shared ownership—who can buy them, who can build them and who they can be sold on to.

The second part of our housing plan delivers on our manifesto commitment to extend the right to buy to housing association tenants. I can tell the House that this starts with a new pilot. From midnight tonight, tenants of five housing associations will be able to start the process of buying their own home.

The third element of the plan involves accelerating housing supply. We are announcing further reforms to our planning system so that it delivers more homes

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more quickly. We are releasing public land suitable for 160,000 homes and re-designating unused commercial land for starter homes. We will extend loans for small builders, regenerate more run-down estates and invest over £300 million in delivering at Ebbsfleet the first garden city in nearly a century.

Fourthly, the Government will help address the housing crisis in our capital city with a new scheme—London Help to Buy. Londoners with a 5% deposit will be able to get an interest-free loan worth up to 40% of the value of a newly-built home. My honourable friend the Member for Richmond Park (Zac Goldsmith) has been campaigning on affordable home ownership in London. Today we back him all the way.

The fifth part of our housing plan addresses the fact that more and more homes are being bought as buy-to-lets or second homes. Many of them are cash purchases that are not affected by the restrictions I introduced in the Budget on mortgage interest relief, and many of them are bought by those who are not resident in this country. Frankly, people buying a home to let should not squeeze out families who cannot afford a home to buy.

So I am introducing new rates of stamp duty that will be 3% higher on the purchase of additional properties, such as buy-to-lets and second homes. It will be introduced from April next year and we will consult on the details so that corporate property development is not affected. This extra stamp duty raises almost £1 billion by 2021, and we will reinvest some of that money in local communities in London and places like Cornwall, which are being priced out of home ownership. The funds we raise will help build the new homes.

This spending review delivers: a doubling of the housing budget; 400,000 new homes, with extra support for London; estates regenerated; right to buy rolled-out, paid for by a tax on buy-to-lets and second homes, and delivered by a Conservative Government committed to helping working people who want to buy their own home. For we are the builders.

The fourth and final objective of this spending review is national security. On Monday, the Prime Minister set out to the House the strategic defence and security review. It commits Britain to spending 2% of our income on defence, and it details how these resources will be used to provide new equipment for our war-fighting military, new capabilities for our special forces, new defences for our cyberspace, and new investments in our remarkable intelligence agencies.

By 2020-21, the single intelligence account will rise from £2.1 billion to reach £2.8 billion, and the defence budget will rise from £34 billion today to £40 billion. Britain also commits to spend 0.7% of our national income on overseas development, and we will reorientate that budget so that we both meet our moral obligation to the world’s poorest and help those in the fragile and failing states on Europe’s borders. It is overwhelmingly in our national interest that we do so, so our total overseas aid budget will increase to £16.3 billion by 2020.

Britain is unique in the world in making these twin commitments to funding both the hard power of military might and the soft power of international development. It enables us to protect ourselves, project our influence

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and promote our prosperity. We do so ably supported by my right honourable friend the Foreign Secretary and our outstanding diplomatic service. To support them in their vital work, I am today protecting in real terms the budget of the Foreign and Commonwealth Office.

But security starts at home. Our police are on the frontline of the fight to keep us safe. In the last Parliament, we made savings in police budgets, but thanks to the reforms of my right honourable friend the Home Secretary and the hard work of police officers, crime fell and the number of neighbourhood officers increased. That reform must continue in this Parliament. We need to invest in new state-of-the-art mobile communications for our emergency services, introduce new technology at our borders and increase the counterterrorism budget by 30%. We should allow elected police and crime commissioners greater flexibility in raising local precepts in areas where they have been historically low. Further savings can be made in the police as different forces merge their back offices and share expertise. We will provide a new fund to help with this reform.

I have had representations from the shadow Home Secretary that police budgets should be cut by 10%, but now is not the time for further police cuts. Now is the time to back our police and give them the tools to do the job. I am today announcing that there will be no cuts in the police budget at all. There will be real-terms protection for police funding. The police protect us, and we are going to protect the police.

Five years ago, when I presented my first spending review, the country was on the brink of bankruptcy and our economy was in crisis. We took the difficult decisions then. Five years later, I report on an economy growing faster than its competitors and public finances set to reach a surplus of £10 billion. Today we have set out the further decisions necessary to build this country’s future. Those decisions are sometimes difficult, yes, but they build the great public services families rely on; build the infrastructure and the homes people need; build stronger defences against those who threaten our way of life, and build the strong public finances on which all these things depend.

We were elected as a one nation Government. Today we deliver the spending review of a one nation Government: the guardians of economic security, the protectors of national security, the builders of our better future—this Government, the mainstream representatives of the working people of Britain.”

3.39 pm

Lord Davies of Oldham (Lab): My Lords, I am delighted to see the Minister in his place making one of his more constructive speeches in the House. I will give him a chance to answer a few questions, but before I get on to that I shall put the Statement into some kind of context.

The Chancellor was obviously buoyed by, as he saw it, some successes in recent months. However, I shall ask the first obvious question: whatever happened to the long-term plan? For years we heard nothing but Conservative Members of Parliament talking about the long-term economic plan. We all know what the

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conclusion of that plan was meant to be: the elimination of the deficit during this year. The deficit has not been eliminated this year; in fact we are £69 billion in debt. It is quite clear that the Government have jettisoned the long-term economic plan in favour of a second version, which is that we will have a surplus of £10 billion in 2020. Even the Institute for Fiscal Studies gives the Government only a 50:50 chance of hitting that target, so we wonder what credence we should give the Chancellor following his speech in the Commons today.

There were two significant climbdowns: one was no further cuts to the police force—here, some credit is due to the Opposition, who made it clear to the Government that further cuts were quite unthinkable in the present context—and the other was a credit to this House and a direct reflection of its holding the Government to account and asking them to think again. Having thought again, they jettisoned that original totally unfair and improper policy. We very much welcome both climbdowns in the Chancellor’s Statement.

We still need to consider a range of fundamental economic failures, though, and I shall be addressing those in specific questions to the Minister. Is not the productivity gap between the UK’s performance and the rest of the G7 countries’ at its widest since 1991? That shows this country in a very poor light, and of course the Government must take responsibility for a great deal of that against a background of what is recognised as an absolutely chronic balance of payments position under this Government. That can be remedied only if we invest in the development of skills and begin to export more successfully.

Every hour worked in Germany, France or the United States is worth one-third more in terms of achievement than an hour worked in Britain. This must be because the Government have been so content over the past five years to see wages fall—we all know how dramatic and persistent that fall has been over this period—and have neglected skills development and run, essentially, a low-wage, low-skill economy, which cannot be the future of the United Kingdom.

The Government are always negative about public sector investment. In the railways, for example, even a successful public sector-run franchise, the east coast main line, was jettisoned in favour of a free and open competition—as long as no British public institution could compete. However, state railways from France and Germany were welcome to take over part of our railway system. Of course, the same is happening with our nuclear power stations—we are making ourselves dependent upon investment from the People’s Republic of China. It is interesting to see that the Conservative Party now finds itself in cahoots with a very significant state-run society.

Public sector net investment in 2009-10 was at 3.2% but is now down to 1.5%. It is therefore not surprising that certain aspects of public work and investment are at a very low level. That is shown, for instance, in the quality of our roads. Are the Government comfortable with the fact that our roads are rated below the standards of Spain, Portugal and—wait for it—little Croatia? The only areas in which the Government have shown a commitment to investment are projects they inherited: Crossrail and HS2. It will be noted that

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although they sustain these projects, the Department for Transport is to take its 30% cut, which will be effected by cuts in “administration”. If one believes that, one can believe most things.

Overall, investment in skills has been woeful. It is clear that the business department is being cut to the bone. The number of jobs lost there is very significant, and it is clear that training and development is to be vested solely in the enterprise of private industry, to which the state has very little to contribute. Yet industry is crying out for the skills of young people. That is particularly true in the construction industry, which of course enjoys the reputation of translating investment into jobs quickly, and can meet a need in circumstances where our housebuilding programme is at its worst peacetime level since 1920. What a record the Government have on housing our people!

Then of course there is the whole question of the National Health Service. We are delighted that the Government have indicated that they know they need to increase investment in the National Health Service. We are also pleased that they recognise that alleviating pressure on hospitals can be achieved through increasing social care places. However, 3,000 beds have been lost in recent years and there is no indication that they will be replaced quickly. Of course, the promise that local authorities can increase council tax provided that they spend the money on care homes is to be welcomed.

As for the police, I can find no reference to what the Government will in fact do about the police, except that that there are 17,000 fewer officers since they came to power. They have indicated that they will not put any further pressure on police by cuts, but there is no indication of what money will be devoted to the police force and where it will come from.

I therefore want the Minister to answer three questions. First, if the Government wish to promote infrastructure, does he accept that public sector net investment has halved as a percentage of the GDP under the Government? Can he accept such a deplorable state of affairs? Secondly, we know that we need to boost productivity. Is the Minister concerned that the gap between productivity per hour worked in this country and in the rest of the G7 is so very wide? Thirdly, the Chancellor said that he has balanced the books, yet the deficit is set to be very substantial this year.

Finally, the Government are ending their onslaught on tax credits, for which we are duly grateful, and this House takes a great deal of credit for that achievement. The House acted constitutionally and properly and caused the Government to think again. However, this spending review and Autumn Statement indicates that only a £3.385 billion saving will be rendered in respect of tax credits. In fact the Government have always maintained that £4.4 billion would be saved. Are the public to find that other billion in this next year?

Baroness Kramer (LD): My Lords, it is always a pleasure to follow the noble Lord, Lord Davies of Oldham, but I confess that he disappointed me today. He did not throw anything, so we have missed out on the drama of the other place. I was also somewhat disappointed in the Budget. It is less generous than it

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appears on first viewing: we still have a £12 billion cut in welfare. If I understand it correctly, that will now happen as people transfer into universal credit. I am sure that the Minister will advise noble Lords about that—it would be good to understand how it will work. Of course, I am absolutely delighted that the Chancellor reversed his plans to cut tax credits for poor working people. I think, with some interest, that had the Chancellor been a Member of this House a couple of weeks ago, when the relevant statutory instrument was debated, he would have supported neither the Conservative nor the Labour Motion, but the Liberal Democrat fatal Motion.

We are also pleased with the upfronting of money for the NHS in this Budget, especially the investment in mental health. That is welcome, but can the Minister confirm whether that £600 million is new money for mental health and does not contain any former promise within it? We are supportive of stamp duty on buy to let and very supportive of the increased spending on infrastructure. We note that the Chancellor partially explained that that was because borrowing is now cheap. That is what we have been saying for weeks, so we are very glad that he has listened to that argument.

However, if I lived in a deprived community, I would be exceedingly concerned today. Perhaps the Minister can help us. Although the Government have said there will be no cuts in the policing bill, I am somewhat confused. Does that mean that the grant levels for policing will continue to be the same from central government, or is part of the money to be replaced by a precept raised locally, by police and crime commissioners? I did not follow that and therefore do not understand what might be happening. If I am in a deprived community and find that I have an additional bill on my council tax for policing, I am almost certainly going to have an additional bill on my council tax for social care, because, as Members of this House will know, the most vulnerable elderly tend to live in the most deprived communities, with the narrowest council tax base. Therefore, paying for social care through an additional precept on council tax will be very tough for those communities. I would indeed be worried.

I would also be worried in another sense. The Chancellor significantly slashed the revenue side—that is, the operations budget—of the Department for Transport. Immediately in my head went up the warning sign that much of that is spent on bus grant. Again, with local authorities under great financial pressure, are we looking at either losing a lot of our bus services outside the big urban centres, where the systems can wash their face themselves, or are we looking at additional council tax being raised to pick up bus services?

The repatriation of business rates is something that we have always supported in principle, but I did not quite follow that; again, perhaps the Minister can help us. If I understood the Chancellor correctly, the equalisation will disappear. As this House will know, business rates have been centrally collected and then redistributed on the basis of need. As that is eliminated, will we again find that our most deprived communities, with the least capacity to generate new business and new business rates, will be the ones that suffer, while somewhere such as Kensington and Chelsea or

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Westminster will be in heaven? I hope very much that the Minister can support us, because one knows that, with Budgets, the devil is very much in the detail.

Perhaps the Minister can help us also on further education. What I heard was a real-terms cut in the further education budget, which will be protected only in cash terms. In this House, we have all discussed—indeed, the Minister himself has discussed—the significant problem of the lack of skills that is holding back economic growth. Especially now, as we are constraining migration, it is really important that British people have lifelong learning. Apprenticeships and universities have a huge role to play, but the underpinning in our ever-changing world, where people constantly need to update their skills, means that further education is absolutely critical. Have we just heard a cut in that sector?

Perhaps the Minister can help us with this policy of equalising per pupil spending in schools. It sounds on the surface not to be an issue, but does this mean that schools, for example, in London, in some of our most difficult communities and which have delivered outstanding success, are about to have a cut in their per pupil spend based on this equalisation? We really need to know and understand the detail of that.

I will make just two more comments. Although there were many measures to support new ownership, the private rental sector was ignored. We have 1.6 million people on the waiting list for social housing who will obviously not be helped, and so many in generation rent, who spend half their income on rent, have not been helped either.

My last point is that this Budget relies on a £27 billion fine by the OBR in increased tax receipts and low interest rates. I point out that both could change or disappear. Given the constraints of the fiscal charter, what are the consequences for this Budget if that should happen?

Lord ONeill of Gatley: My Lords, I thank the noble Lord, Lord Davies, and the noble Baroness, Lady Kramer, for their interesting and detailed responses to the Autumn Statement and the spending review. One of the unfortunate consequences of their detailed response is that I have only three minutes or so to respond.

Let me start by trying to make some overall comments. An important backdrop to today’s Autumn Statement and spending review is that the independent Office for Budget Responsibility has become more optimistic about our economic growth than it was previously, consistent with other respected domestic institutions. Importantly, in line with that, it has become more optimistic about our modelling of the path and profile of tax receipts.

As highlighted by the Chancellor, the OBR now calculates that this means a £27 billion improvement in our overall public finances over the forecast period. This allows the Government to borrow £8 billion less than forecast and, importantly, and in contrast to what the noble Lord, Lord Davies, suggested, spend £12 billion more on capital investment and cut less in the early years, while still achieving a budget surplus consistent with what was previously projected. In fact, that surplus will be slightly higher, by £100 million, by 2019-20.

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In practical terms, this means: a £10 billion real-terms increase in the NHS budget; investment in our national security; real-terms protection of the police budget—I will have to write to the noble Baroness, Lady Kramer, on the technicalities of her question; doubling the housing budget; the largest ever investment in free childcare; a 50% increase in transport capital spending; extra support in science and innovation, in contrast to what was widely expected by the media; the biggest real-term; increase to the basic state pension in 15 years; and, of course, avoiding the need to lower the tax credit thresholds.

Through the spending review, the Autumn Statement also sets out the details of the Government’s commitment to deliver £12 billion of savings to the cost of governance. It delivers the economic security on which our future growth is based and protects national security, which it is, of course, the first duty of any Government to provide.

I shall quickly try to respond to some of the key specifics. The noble Lord, Lord Davies, as he has done in previous debates in this House, referred to a number of aspects of the economy. I have probably had more access and time to look at some of the things presented in the Autumn Statement and, crucially in this regard, by the independent OBR. With respect to, for example, the never-ending references to our balance of payments deficit, as significant as that has been, one of the sources of the upward revision by the OBR is the improvement in the balance of payments position that has recently occurred. As I pointed out in the Chamber a week or so ago, the trade part of the current account balance of payments has been improving for some time.

With respect to other specific asks, I am particularly pleased with some aspects of this in the context of what the noble Lord, Lord Davies, said, both from the northern powerhouse perspective and in terms of our broader energy dependency. In that regard, I should like to highlight the announcement of £250 million towards research for small nuclear reactors, which will benefit a considerable number of parts of the north of England. In addition, there is £250 million for a devoted potholes fund.

With respect to the ongoing and crucial issue of skills, the Autumn Statement spells out specifically how the apprenticeship levy will be funded. While some are making reference to that being some form of tax, as we have discussed here before—and as I have been among those most prominently pointing out—it is important for our corporate sector, which is at the forefront of pointing out our skills shortage, that it takes ownership in providing the necessary skills. It will apply only to the largest employers and anyone who achieves their target will get their funds returned in any case.

I have already touched on answers to some of the interesting comments made by the noble Baroness, Lady Kramer, but I want to start by bringing us back to universal credit. I will refer to what the Chancellor himself said this morning and then make additional comments. He said with respect to tax credits:

“Because I have been able to announce today an improvement in the public finances, the simplest thing to do is not to phase these changes in, but to avoid them altogether. Tax credits are being phased out anyway as we introduce universal credit”.

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He concludes the section of his wonderful presentation by saying that the House—that is, the other place,

“should know that helping with the transition obviously means that we will not be within that lower welfare cap in the first years, but the House should also know that, thanks to our welfare reforms, we will meet the cap in the later part of this Parliament”.

With respect to the observations about the role played by this House, it is important to remember that the Chancellor said the day before our debate that he was prepared to listen and there was on offer an alternative Motion that could have been respected.

Lord Taylor of Holbeach (Con): My Lords, before the Clerk starts the clock for Back-Bench questions, we have 30 minutes. I know a lot of noble Lords want to contribute. Can they please be as brief as possible? That gives as many noble Lords as possible a chance to express their views and ask questions of the Minister. Thank you.

4.04 pm

Baroness Hollis of Heigham (Lab): My Lords, picking up the last comment made by the noble Lord, Lord O’Neill, but for this House, those tax credit cuts would have become law that night. The possibility that they would subsequently have been abated seems to me improbable if they had already been banked. I am delighted, as I am sure everyone is, that the Government listened to this House and to widespread concern in the country about tax credits, which was shared by all. I am sure that we are all relieved that some 3 million low-income families will now not receive letters at Christmas telling them that they would experience cuts of between £1,000 and £3,000 a year. Noble Lords should be much praised for their willingness to require the other place to think again, as they have done—and how glad I am that they have.

However, I am puzzled by some of the comments in the Statement. The noble Lord, Lord O’Neill, correctly quoted—I would expect nothing less—from page 10 of the Statement, where the Chancellor says that because of,

“an improvement in the public finances”,

the tax credit cuts will not now happen, so these cuts are not now apparently necessary. However, on page 3, the Chancellor says that the £12 billion of welfare cuts,

“will be delivered in full”.

Lord Tebbit (Con): Question!

Baroness Hollis of Heigham: My question, if the noble Lord, Lord Tebbit, will give me the courtesy of allowing me to speak, is: why do we need these cuts if public finances show that the tax credit cuts are not necessary, and where precisely will they fall? I have to say that the answers are not there.

Lord O’Neill of Gatley: My Lords, if I understand the noble Baroness’s questions correctly and specifically—I am not entirely sure that I do—it has been made clear in the Chancellor’s speech that there will be a series of measures over the term of the Parliament and the period covered by the spending review and Autumn

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Statement. By the end of the Parliament we will have achieved the £12 billion of savings that was set out, and the migration to universal credit will play the role that it was intended to play.

Lord Shipley (LD): My Lords, the Chancellor announced a big package of new powers and also new responsibilities for local councils. He also said that by the end of this Parliament local government would be spending the same in cash terms as it does today, so it will not be spending the same in real terms. First, will the Minister confirm that there will be no cost shunting from central to local government without the necessary funding following it? Secondly, can he confirm that over the next few years of this Parliament any new demands made of local government by central government will be properly funded?

Lord O’Neill of Gatley: Again, I have a slight problem hearing the specific words of the question. However, if I understand the broad gist of it, I point out that, given the new revenue-raising powers that all our local authorities will have available to them, their ability to have control over their plans will, of course, be considerably greater than is implied by the numbers that I think the noble Lord was referring to. That is particularly true of the big urban areas that have undertaken devolved responsibilities. In terms of where that destiny will be, as will be seen more clearly in the detailed documents to be released later, if not already, Greater Manchester is the first place that had devolved responsibility and it has now had its third negotiated settlement. There will be more for others, as I have personally been very eager to discuss as part of our initial agreements with many of them.

Lord Grocott (Lab): Can the Minister confirm that when this House made its decision on tax credits, and the Prime Minister and the Chancellor went into meltdown about the outrageous nature of the House’s behaviour and its affront to the constitution, as well as making several other extreme statements, they had a very simple solution to hand to reassert—if that was needed—the authority of the Commons, which was to introduce a small, timetabled, money Bill, which the House of Commons could have passed in no time? The Chancellor could have achieved his original objective. The fact that he chose not to—and we are very delighted to see that he will not go ahead with these cuts—means that he thought again at the request of the House of Lords, and the House of Lords was fulfilling its historic and important constitutional function of telling Governments to think again.

Lord O'Neill of Gatley: My Lords, at the risk of repeating aspects of what I said, I think I made it clear that the arguments advanced had legitimacy and were, as with any other arguments, capable of influencing the Chancellor—which, I might add, has been observable on a number of other economic policies. What was not legitimate was the fatal Motion carried in this House.

Lord Stoddart of Swindon (Ind Lab): My Lords, I will ask a quick question on transport, which I understand is to take a cut of 30%. Which services will that

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adversely affect? Will there be cuts in assistance to the railways and to London transport, in which case fares will increase, or are there other means of finding that 30% cut?

Lord O'Neill of Gatley: My Lords, as I think was touched on in part of the question asked by the noble Baroness, Lady Kramer, the cuts are in the Department for Transport’s operational budget. There is a significant increase in capital spending. With respect to a number of our investment challenges, I would also highlight that some of the additional £12 billion capital investment is specifically for transport. Tangential to that, I also highlight the more specific commitment to HS2, as well as—very importantly for the northern powerhouse project—a significant allocation of money for the rollout of Transport for the North, particularly the state-of-the-art ticketing proposals that we hope will come to the fore.

Lord Higgins (Con): My Lords, the Chancellor is determined to eliminate the deficit, but the results so far show very clearly that this is entirely consistent with having a rate of economic growth that compares very favourably with those of other countries around the world. To add one particular point, the Chancellor was clearly frustrated at being unable to zero-rate VAT on certain items because of the European regulations. When negotiating with the European Community, would it not be a good idea to include negotiations on this particular point, which inhibits us from taking the tax decisions that we wish to take?

Lord O'Neill of Gatley: My Lords, on the second question, which I assume specifically refers to the so-called tampon tax, the Chancellor took great delight in announcing to the other place that a number of women’s charities would be direct beneficiaries of the money we accrued from the imposed tax from the EU. In the mean time, the Government will continue to debate the merits of that tax with the EU.

On the first question, as I touched on, the basis for the OBR’s improved forecast is of course the circular connection between the improvement in the economy—which I repeat that the OBR has become slightly more optimistic about—and the improved nominal GDP outlook for the rest of this Parliament, as well as tax revenues. That has given the flexibility for the Chancellor to commit—or recommit—to the mandate that the Government successfully achieved from the electorate to reduce the level of debt and to move towards a fiscal surplus, while choosing various priorities in domestic spending. Indeed, it is that economic success that has been so helpful in giving the flexibility highlighted in today’s policies.

Lord Campbell-Savours (Lab): My Lords, I take the noble Lord back to the £12 billion figure, tax credits and his explanation that the relevant sum would be covered by migration—I think that was the term he used—to universal credit. Is he saying that the whole of the £12 billion will be covered by that migration or will there be additional benefit cuts in other areas? If there are to be additional benefit cuts, when will they be announced?

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Lord O'Neill of Gatley: My Lords, as is highlighted in the documents, the removal of the two particularly contentious parts of the tax credits cuts will result in a figure somewhere in the vicinity of just over £3.5 billion. A number of other policies have been adopted, which were there in any case, and have been announced today. Together with the planned phasing-in of universal tax credits, these will achieve over the course of this Parliament the £12 billion of planned savings that were scheduled at the start of it. I highlight the fact that the OBR documents suggest that that is likely to be achieved.

Baroness Williams of Crosby (LD): My Lords, I congratulate the Government on front-loading the money for the National Health Service, which should enable it just about to get through the coming year. However, will the Minister confirm that the original Nicholson savings still exist, and that therefore the NHS will have to find over this Parliament something of the order of £22 billion?

Lord O'Neill of Gatley: My Lords, the noble Baroness has slightly caught me off guard with that point. Certainly, the additional money announced today for the NHS does not mean that it is not expected to deliver the efficiencies that had previously been announced. It is still expected to deliver those efficiencies.

Lord Cormack (Con): My Lords, I declare an interest as president of the All-Party Arts and Heritage Group, which many noble Lords in all parts of the House support on a regular basis. I express my appreciation for the fact that the Chancellor has recognised that a cut in the very small budget of the DCMS would be a false economy. Will my noble friend assure me that English Heritage and Historic England will be similarly treated?

Lord O'Neill of Gatley: My Lords, the Chancellor’s Statement was very clear on this issue. He will welcome the noble Lord’s appreciative comments.

Lord McFall of Alcluith (Lab): My Lords, if it is the case that in a short three-month period from July to November the transformation in the Government’s figures was due solely to the generosity of the OBR, will the Minister confirm that spending by the Government will be £83 billion more in this Parliament, funded by £47 billion of tax increases and £35 billion of welfare cuts? Given the answer that was given earlier, the Autumn Statement is silent on the welfare cuts. Will the Minister indicate where that £35 billion will come from over this Parliament?

Lord O'Neill of Gatley: My Lords, as I have already said, it is indeed the case that the new baseline that the OBR presented allowed for considerably more flexibility in today’s announcements. However, it does not change the overall thrust of economic policy. What it has done, as I emphasised, is given more flexibility across the board in respect of three areas. As has been debated considerably in this House recently, there is a £12 billion increase in public sector investment spending

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over what was previously planned, which covers particularly housing but also transport, including both road and rail. Relative to the Budget in March in particular—the coalition’s final Budget—but also to the Summer Budget, there is also a lesser pace of spending reductions across the board. The Chancellor highlighted that, going forward, the aggregate real cuts would be something like 0.8%, compared with 2% previously, and that is a slower pace than was previously the case. If one looks at the mix—and there are some very interesting tables presented in the Treasury document and particularly by the OBR about the shifting balance—previously spending reductions made up significantly more than 50% of the planned savings but are now a bit less than 50%, and the balance is made up in other areas, including lower debt payments, which I think the noble Baroness, Lady Kramer, indirectly referred to.

Lord Spicer (Con): My Lords, one potential massive investment that could take place, which would not require taxpayers’ money or affect the public borrowing requirement, would be investment in Heathrow and the London airports system. Why is more not being made of that?

Lord O’Neill of Gatley: My Lords, I am pleased to say that the matter of Heathrow Airport is a bit above my pay grade, but I think that a decision on that subject will be made and announced before the end of the year.

Lord Scriven (LD): My Lords, it says in the spending review that an extra £1.5 billion for local government by 2019-20 is to be included in the better care fund. Is that new money or, as has happened previously, will some of that money be shunted from the NHS into social funds to be given to the better care fund?

Lord O’Neill of Gatley: My Lords, I will follow up with a written answer to that. I am pretty sure that this involves additional money for the better care fund but I will reply to the noble Lord in writing.

Lord Tebbit: My Lords, did my noble friend share my surprise at the allegation made by the noble Lord, Lord Davies, that our economy was performing very poorly compared with our overseas competitors? If that is indeed the case, why on earth are all those people at Calais fighting to get here instead of fighting to stay in President Hollande’s paradise of a socialist France? They must be mad.

Lord O’Neill of Gatley: My Lords, my noble friend Lord Tebbit goads me to spend a lot of time talking about the economy, which—looking at the clock and avoiding my own tendency—I will desist from rising to. But I implied in my answer to the noble Lord, Lord Davies, that I was somewhat baffled by his tone about the economy. I suspect that many noble Lords have not yet had the chance to read everything that has been said, particularly by the OBR, but in a number of areas of frequently highlighted vulnerability, particularly the balance of payments, the OBR is somewhat cheerier than is typically the case. As the Chancellor pointed

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out very clearly at the start of his speech, our economy continues to perform at the highest levels of the G7 economies and somewhat better than is generally expected by the consensus over the medium term, including the OBR’s own forecast beyond this year and next year.

Baroness Royall of Blaisdon (Lab): My Lords, there is much in the Statement about housebuilding and it is very welcome that the Government want to enable more people to buy homes, although I see that few of them will be in London and the south-east. But the only mention of social housing is the enabling power to allow housing associations to sell off their own homes, which will detrimentally affect housing, especially in rural areas. What is the Chancellor saying about building more social housing all over the country?

Lord O’Neill of Gatley: My Lords, I beg to differ with the substance of the question. While the new policies announced today go more broadly than social housing, the Government continue to focus on the needs in this area. What is particularly exciting about housing policy today is a stronger commitment, and specific policies to go with it, to encourage more housebuilding in general, including specific targeted measures to help those in London.

Lord Livingston of Parkhead (Con): My Lords, my noble friend the Minister is absolutely right to point out that the UK has an improving balance of trade. It is one of the best performing economies in the G7 and the strongest place in the whole of Europe for foreign direct investment. How does he think that may change when we have a shadow Chancellor who—God forbid he should ever get into power—likes to quote Chairman Mao?

Lord O'Neill of Gatley: My Lords, again, I am very tempted to rise to the bait of my noble friend’s question, but I have to be careful in this regard, given my own interest in China. All I would say is that as we creep through time, a number of the more sceptical voices about the performance of our own British economy in a sea of great turbulence and unpredictability around the world continue to improve, as does the most up-to-date, ongoing evidence of the economy’s performance.

Lord Haskel (Lab): My Lords, the Statement promised a lot on infrastructure; so did the Budget two years ago, when a £40 billion fund was established to guarantee it. But since then only about 10% of this fund has been used—largely, I suspect, because employment in the construction industry has gone down by perhaps 120,000 people. So what confidence can we have that the infrastructure promise in this Statement will be more successful than what was promised two years ago?

Lord O'Neill of Gatley: My Lords, I am slightly surprised at the tone of this question with respect to infrastructure, along with a couple of earlier questions. Let me repeat that within the £12 billion additional commitment to capital spending, much of it, in its broadest sense, is indeed on infrastructure. I also point out that since the summer Budget, an independent

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commission has been looking at the nation’s infrastructure needs. It will give advice and report back ahead of the next Budget.

I will add that, based on the involvement that I personally have with many other countries around the world, the guarantee scheme that the noble Lord refers to in terms of its low take-up is generally regarded as one of the most sophisticated and credible in the world. It will continue to be used, as we have highlighted in today’s Statement, and we will welcome many more proposals for infrastructure spending from the private sector, which may be interested in using that guarantee.

Lord Lansley (Con): My Lords, the announcement that a national funding formula for schools will be introduced from 2017 will be immensely welcome after years of campaigning. Clearly, this formula will not be simply a flat rate. It will mean that pupils in similar circumstances should receive similar funding, coming directly from the Government as it does. Can my noble friend say at all when we might see the consultation on the structure of that funding formula?

Lord O'Neill of Gatley: My Lords, given my own previous specific involvement in education as a non-exec at the Department for Education and a long-time educational philanthropist, I also welcome this measure. I suspect that it will be particularly helpful for young children and adults in the most disadvantaged parts of urban Britain, particularly outside London. I do not have the information to provide the details here on how it will be worked out but I am sure that, in the fullness of time, it will be made available to everybody, especially Members of this House.

Baroness Janke (LD): My Lords, it is very welcome that local authorities will be able to keep the business rate, particularly where there is concentration of business. However, in many local authorities there is not the same concentration of business. What plans are there for those local authorities and is it envisaged, as in the work of the City Growth Commission, that moving to more revenue-raising measures might be a further aspect or result of the Chancellor’s announcement?

Lord O'Neill of Gatley: My Lords, the announcement about the retention of business rates was made a number of weeks ago now. I may have misunderstood the question, but they are now available for all local authorities to retain. The latter part of the question was about the recommendation of the City Growth Commission, which I think most noble Lords will be aware that I used to chair. As we have agreed in principle with the deals we have already done, those areas that are prepared to take on mayoral responsibilities and have greater accountability will be given the powers to change and raise the rates suited to their own local desires and competitiveness.

Baroness Farrington of Ribbleton (Lab): My Lords, I want to speak about the Minister’s apparent optimism about the northern powerhouse and regions in the light of the fact, following the previous speaker, that

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there is a disparity of funding for young people taking A-levels in sixth form colleges, schools and FE colleges. All the predictions are that many FE colleges will close. As for the north of England, I speak with detailed knowledge of Lancashire, where we have a fine tradition of tertiary colleges. For the Chancellor to be offering the chance for new school sixth forms or academies is pathetic, given the needs. If the Chancellor is serious about, for example, the construction industry, or the Government are serious about the care sector, how do they put that alongside the fact that closing FE colleges will restrict the number of people who are qualified to work in those fields and many others? I am afraid that too many members of this Government went from school to sixth form to university. The Leader of the House is saying that this is not the case, but far too much of their modelling is based on that sort of history, and they do not know enough about further education.

Lord O'Neill of Gatley: My Lords, I would love to give a very long answer to this question, not least because I had the pleasure of graduating through the comprehensive system, and of course I am very passionate about the northern powerhouse. I will say one or two very quick things. First, the BBC published an interesting poll last week of the views of people in the north about the northern powerhouse. The BBC, predictably, did not highlight what was possibly the most interesting part of the response, which was that nearly 70% of young people in the north believe that the Government could make a difference to their futures. That was very gratifying to see.

The second thing is about the new national funding formula. My strong suspicion is that this will benefit particularly the most disadvantaged parts of the country, including the north, relative to what would have been there before—although, as I said a few minutes ago, the details of that are yet to be provided even to me, never mind to everybody else.

Lord Woolmer of Leeds (Lab): My Lords, before the last election, in the northern powerhouse we were told that the trans-Pennine rail electrification scheme was going to go ahead. Almost immediately after the election, that was abandoned and put on hold. Today in the Commons, the Chancellor said that the trans-Pennine electrification may go ahead. In the detailed document published in support of the spending review and Statement, on page 64, there is no indication at all of any project start or completion other than that of Manchester to Liverpool. The noble Lord will know that that does not take you over the Pennines. Can he tell the House whether the trans-Pennine electrification is going to proceed, when it will start and when it will be completed? Lots of dates are set out for other projects.

Lord O'Neill of Gatley: My Lords, I expressed my irritation about the unfortunate pausing of the trans-Pennine project, whenever it was. I am equally pleased that it was unpaused some weeks ago. It is inappropriate for the Chancellor or me to give a specific time when the trans-Pennine link will be completed.

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Let me finish with a point I touched on earlier. One of the many highlights of today’s announcements was the further significant commitment to transport for the north. What I would call phase 2 of the northern powerhouse project, beyond giving devolution to areas that want more responsibility, is building a state-of-the-art transport infrastructure between different parts of the northern powerhouse. Today, there has been a substantial announcement to take that further along this very exciting journey.

Enterprise Bill [HL]

Report (1st Day)

4.35 pm

Clause 1: Small Business Commissioner

Amendment 1

Moved by Baroness Burt of Solihull

1: Clause 1, page 1, line 9, leave out from second “to” to end of line 11 and insert “matters in connection with the supply of goods and services to—

and make recommendations.”

(i) larger businesses, and

(ii) public authorities;

and make recommendations.”

Baroness Burt of Solihull (LD): In Amendment 1 and this group of amendments, we see the Small Business Commissioner as a body that champions small businesses and seeks to protect them against imbalances of size and power.

We appreciate the amendments tabled by the Minister to give this body greater independence and its own staff, which we will deal with in the next group. We see those amendments as a great step forward in response to debate in Committee and thank her for them. We accept what the Minister said in Committee—that the commissioner will initially have to concentrate on late payments as it gets started—but payments are crucially related to other stages of the supply relationship, whether that is commissioning or operational experience, and the commissioner will need to delve, where necessary, into those areas to be effective. The commissioner should have the remit to do that when it is considered necessary.

Amendment 1 returns to the issue of providing for the widening of the remit so that the commissioner can be more effective and address issues which are not simply associated with late payment but are related. Imbalances of power lead to problems of commissioning and operational experience which become directly associated with payment problems.

The amendment seeks to include public sector organisations, whether national or local, as they are bodies that small businesses should be encouraged to deal with, where similar problems of size and power relationships will arise. Wherever there is an imbalance of power, there is an opportunity for exploitation,

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and that crosses public and private sectors. The Minister gave us reassurances in Committee that there was no need to involve the public sector because it is already being put in the right place by a whole series of measures, which she named: the mandatory period of 30 days for paying bills by public bodies, with interest owed afterwards; the mystery shopper scheme; the Public Contracts Regulations 2015; and the public policy commitment for central government to pay undisputed bills within five days. She accepted that the Small Business Commissioner would act as an important signpost to help small businesses with complaints with public bodies, but it would simply refer cases on. In most cases, this might be fine, but where it encounters delays and repeated bad practice in the public sector, are we saying that it should have no power to help the small business complaining?

If everything is rosy in the public sector, there will not be any problems, but will small businesses not benefit from a one-stop-shop approach? All they are interested in is getting their bills paid on time, and we want to see imbalances of power corrected. Either the Small Business Commissioner is all-embracing, across both the public and private sectors, or the new role will confuse small businesses and its reputation for effectiveness will be damaged. For these reasons, we believe that the remit should be capable of being widened beyond simply late payments, and the public sector should be included.

Amendment 10 returns to the issue of involving the Competition and Markets Authority where this is appropriate. The Minister reassured us in Committee that there is nothing to stop the commissioner referring a report or relevant information to the authority, but we would like this to be formally recognised in the legislation to counter abuse of market power and give the commissioner added authority to do this. I beg to move.

Lord Mendelsohn (Lab): My Lords, these amendments principally deal with the core issues of the office of the Small Business Commissioner: what it does and who it deals with. We accept the argument presented by the Government about making sure that the Small Businesses Commissioner has a focused remit. Our criticism is not about the principle of having a focus; it is about whether we are providing the means for that focus to be delivered and whether the focus is too slight to have an impact.

Little seems to have been learnt from the Australian experience over the last 13 years—gained through the establishment of the state Small Business Commissioners and the federal one—about the importance of providing a very sensible focus on improving the business environment for small businesses. In fact, one thing that could have been learnt from the Australian experience is that the one thing that the commissioner does not do very well, and should not be its focus, is late payments, and that legislation ensuring compulsion is a much better approach.

I will broadly set out the concerns that we had at the time of Second Reading. First, we accepted that, while there is a need to address the late-payment information due to arise from the Small Business, Enterprise and Employment Act 2015, defining the

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late-payments role as being for the Small Business Commissioner was probably the incorrect focus and would short-change small businesses, considering the support that they could have had if the brief were wider. Secondly, we said that its scale was far too narrow, as the Government anticipated that it would deal with only 500 cases a year. We thought this was too small to be able to make a big impact on what it was trying to achieve.

We also believed that, at its very core, the definition of the role and purpose of the Small Business Commissioner was far too limited, and that using the experience of others—including Mark Brennan, the very impressive and successful first Small Business Commissioner in the state of Victoria, and subsequently the Australian Small Business Commissioner—could improve the quality of the business environment by reference to the two enduring core responsibilities of government: namely, the provision of information and justice. Access to information is a key component of a competitive marketplace, and the enduring responsibility of government when intervening to regulate business is to provide an appropriate system of justice, manifested through policy to ensure fair competition and fair dealings between commercial entities and between themselves and consumers.

There is probably a consensus that the distinctive characteristics and functions of the Small Business Commissioner would cover: access to information and education; advocacy to government; investigation of small business complaints and business behaviour; facilitating the resolution of disputes, including and especially through mediation; influencing small business-conscious government and other key stakeholders, including regulators, media and the business community; and ensuring that such a commissioner would operate with an attitude of being concerned with substance rather than technicality and a dedication to resolving disputes by encouraging commercially realistic attitudes. It is also the case that an effective Small Business Commissioner improves the environment for all businesses and is not just there to operate solely for the interests of small businesses, to the detriment of others.

4.45 pm

Fourthly, we said that the legislative measures take no account of the importance of evolution in designing the role. Many people running small businesses represent those who have ambition, work hard and are the innovative, entrepreneurial backbone of employment and social responsibility in our country. They dedicate huge amounts of time to their businesses and perform a variety of functions. Small businesses can neither afford nor, in most cases, need professional managers with the skills, training and experience of those in larger organisations, nor should they be expected to have them. When we regulate, legislate, incentivise or disincentivise, we should be very conscious that policy is designed to work for those who manage small businesses. This means that such a role will continually adapt and develop, given the times and circumstances to achieve, its aims.

Fifthly, we suggested that the fact that the commissioner will not have any capacity to develop a mediation role is an omission that, in our view, will inhibit its ability

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to establish its place in the general business community. Universally, the Australian Small Business Commissioners say that this mediation role has led to the widespread support for the work of the commissioner across the business community, in large businesses as well as small ones, and established their credibility. The fact that this is underpinned by an important power—namely, that any company’s refusal to accept mediation with the Small Business Commissioner will have that taken into consideration over the question of who is responsible for costs during court action—acts as a very impressive and important incentive.

We have a variety of alternative dispute resolution mechanisms, and the commissioner should work with those. Providing the Small Business Commissioner with a role in mediation is not about addressing a lack of availability, and there is value in having a signposting role, which we do support. The Government have admitted in private that, inherently, the commissioner will have a mediating role. In a briefing to Conservative Back-Benchers in another place, the Minister said that the Small Business Commissioner would have a mediating function. The briefing said:

“Our intention is to assist parties in resolving disputes themselves. For the Commissioner to make sound recommendations, both parties must have meaningful input into an inquiry into a complaint”.

I am reminded of the argument I frequently had in Committee about “may” and “must”. The fact that the Small Business Commissioner “may” take a mediating role does not mean that it “must”. As the Government have said, the way to make that role work is to give it some form of mediation.

Fifthly, we said that the commissioner lacks the independence and long-term support to make it effective. That will be addressed in the second group of amendments.

We are very grateful that, throughout the consideration of the Bill in Grand Committee, we had a very useful debate on the issue of what the commissioner will do. We accept that the Government want to provide the commissioner with a particular focus in the first instance, and that is to deal with late payments to see whether it can improve the position there. We support that, but we suggest that the Government do not limit its role. Certainly, a number of the amendments in this group, particularly Amendments 10 and 16, address this question of what the commissioner does. In our view, and that of the noble Baroness, Lady Burt—whom I welcome to her role; with her first comments, she has shown that she will make a very impressive contribution to our deliberations—this is fundamentally important in making sure that the commissioner does something and has an ongoing role to support small businesses.

Secondly, there is the question about who the commissioner deals with and is able to work with to ensure benefit for small businesses. Clause 1, where it defines that the Small Business Commissioner will take complaints from small businesses against large businesses, is quite limiting. It is certainly true that large businesses account for some of the most egregious and problematic considerations. Actually, that gives me a good opportunity to praise someone in this place whom I was able to praise during the course of the small business Bill—the noble Lord, Lord Wolfson. His company is one of the most exemplary in paying

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suppliers on time and well known for it in industry. We have some excellent and first-class companies who do this. But the commissioner should not be limited to dealing just with large businesses. The noble Baroness, Lady Burt, made a very good case as to why public authorities should be embraced in this.

Our Amendment 8 would add small businesses, and it does that for a couple of reasons. It is not just the fact that small businesses comprise a large number of the companies with late-payment issues. We believe that, if the Small Business Commissioner had a role in this, given that very often the issue is one of access to finance, it would help in finding a way through that problem and be extremely helpful. However, some of the most serious problems lie in the fact that many small businesses are involved in a business-to-business relationship that depends on a larger company somewhere down the line. To exclude the possibility of a company being able to come forward to the Small Business Commissioner because the ultimate logjam in the cash-flow process is from a larger business significantly limits the number of businesses that can be assisted.