Finally, I turn to Amendment 70ZE. In introducing legislation of this type, it is right that the Government seek to anticipate any attempts to avoid its effects by those to whom the legislation is intended to apply. This is why, for example, in defining a “pub-owning business” in Section 69 of the Act, there is a power to enable persons who are group undertakings in relation to a pub-owning business to be considered part of that business. This ensures that a pub-owning business cannot avoid the Pubs Code by distributing its tied pub estate to its subsidiaries so that no single part has more than 500 tied pubs.
There are provisions in the legislation that are relevant to the amendment in that they permit reporting by the adjudicator to the Secretary of State of potential avoidance activity and permit the Secretary of State to respond. Section 62 places the adjudicator under a duty to report annually on his or her activities in the previous year. However, noble Lords opposite have made a good point in presenting this amendment. I thank them for having raised this issue in a way that seeks to be constructive and to work with the grain of existing legislation. Therefore, having reviewed the amendment and considered its effect, the Government recognise that it provides a helpful process to accompany existing provisions to ensure that government and the adjudicator can ensure that the Pubs Code remains effective. Therefore, partly in the interests of good will, I confirm that Amendment 70ZE will be accepted.
The noble Lord, Lord Mendelsohn, advocated continuity in the civil servants dealing with Bills and implementing regulations. We will, especially after recent events, take great care to ensure continuity on implementation and follow-up. I cannot fully answer for the movements of individual civil servants, but the noble Lord will know from our meeting that a key civil servant involved in the original pub provisions has now joined the pub implementation team.
I thank noble Lords who have contributed to this debate within the House and outside it. I hope I have been able to reassure noble Lords that the Government are listening to their concerns and the concerns of stakeholders. We are extending the length of the first consultation to the middle of January to give sufficient
time for responses. We are aligning both parts of the consultation to the same deadline so that both consultations can be considered together, and we are continuing to engage with stakeholders. I am confident that this will mean that, when the consultations runs their course and the final regulations come before this House, we will reflect on a package that will provide a Pubs Code that is effective and delivers the intention of the underpinning legislation coming in by May 2016.
Lord Mendelsohn: My Lords, I thank my noble friend Lord Snape for his excellent intervention, and I thank the noble Lord, Lord Stoneham, who made the key point that we have departed from the original. I also thank the noble Lord, Lord Hodgson, for his intervention. Describing our amendments as unfair, ineffective or superfluous is the greatest compliment he has paid us during the passage of the provisions. The noble Baroness, Lady Wheatcroft, made a point about the condition of the pub industry. It is in a slightly different place from where it was. Consumer pressures about taste, issues about supermarkets and other matters still exist but—having monitored this quite carefully and read a number of companies’ plans and, in the last instance, the September report and presentation of Enterprise Inns—I am very encouraged by the future that some are starting to develop for the industry and the way they are responding, not just to some of the consumer changes but now to the certainty about regulation.
I shall make one observation to the noble Lord, Lord Hodgson, although I have to caveat that under FCA rules I should not give this advice: it may well be worth a flutter to back some pub companies fairly soon.
The noble Baroness, Lady Wheatcroft, helped to make the point we are making, which is that there is no point in changing legislation when consultation is going through. That is a very fair point. This is rather like a deal: we have agreed the heads of terms and now we are negotiating contracts, but if the contracts are substantially different from the heads of terms, you have to go back to the heads of terms. That is the position that we are in. That is part of the design. We are not hoping to change legislation. We specifically drafted these amendments to reinforce what came out of the previous Bill, to make the point in the context of the consultation that these changes should not be made.
I am very grateful, as ever, to the Minister, who has done a terrific job on this. She was presented with quite a difficult task just prior to the Grand Committee sitting on this. The return of a particular official is a very welcome addition to resolve some of these matters.
On Amendment 70ZD, the Minister made the key point that the PRA should simply be the provision of two rent assessments under tied and free-of-tie circumstances, which is exactly the assurance everyone was looking for. I am extremely grateful that she has taken the view that Amendment 70ZE is consistent with the previous provisions and adds some small or minor elements which give some more force.
On Amendment 70ZC, we are very clear that it was not the Government’s intention to cause these difficulties and that they are somewhat caught with the consultation
already being out, but we feel that these matters were discussed and agreed. These are a material variation of the terms and provide the basis to stop MRO having any real force. The evidence was not just whether stakeholders were spoken to. The evidence is publicly available and the documentation has been presented. I am now familiar with the company reports and presentations. Given that it is consultation, we feel that this is a central issue. It is key to the MRO option being available. It will restore tenants’ confidence that this process is going in the right direction. It is important that it follows what we agreed in Grand Committee—that we provide a proper option for MRO that cannot be gamed and that intentions that were agreed on are properly reinforced. It is with deep regret that I wish to test the opinion of the House.
5.37 pm
Contents 229; Not-Contents 208.
CONTENTS
Addington, L.
Adonis, L.
Allan of Hallam, L.
Alton of Liverpool, L.
Anderson of Swansea, L.
Andrews, B.
Ashdown of Norton-sub-Hamdon, L.
Ashton of Upholland, B.
Avebury, L.
Bach, L.
Bakewell, B.
Barker, B.
Bassam of Brighton, L. [Teller]
Beecham, L.
Beith, L.
Benjamin, B.
Berkeley, L.
Blackstone, B.
Blood, B.
Bradley, L.
Bragg, L.
Brennan, L.
Brinton, B.
Brooke of Alverthorpe, L.
Brookman, L.
Bruce of Bennachie, L.
Burt of Solihull, B.
Butler of Brockwell, L.
Campbell-Savours, L.
Carlile of Berriew, L.
Carter of Coles, L.
Cashman, L.
Chandos, V.
Clancarty, E.
Clark of Windermere, L.
Clarke of Hampstead, L.
Clinton-Davis, L.
Collins of Highbury, L.
Corston, B.
Cotter, L.
Crawley, B.
Davies of Oldham, L.
Davies of Stamford, L.
Dean of Thornton-le-Fylde, B.
Desai, L.
Dholakia, L.
Donaghy, B.
Doocey, B.
Drake, B.
Dubs, L.
Dykes, L.
Evans of Temple Guiting, L.
Falkland, V.
Falkner of Margravine, B.
Farrington of Ribbleton, B.
Faulkner of Worcester, L.
Fearn, L.
Featherstone, B.
Filkin, L.
Ford, B.
Foster of Bath, L.
Fox, L.
Gale, B.
Glasgow, E.
Golding, B.
Goudie, B.
Gould of Potternewton, B.
Grantchester, L.
Greaves, L.
Grender, B.
Griffiths of Burry Port, L.
Grocott, L.
Hain, L.
Hamwee, B.
Hanworth, V.
Harris of Haringey, L.
Harris of Richmond, B.
Harrison, L.
Hart of Chilton, L.
Haskel, L.
Haworth, L.
Hayman, B.
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Henig, B.
Hollick, L.
Hollis of Heigham, B.
Howarth of Newport, L.
Howells of St Davids, B.
Hughes of Woodside, L.
Humphreys, B.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Hussain, L.
Hussein-Ece, B.
Irvine of Lairg, L.
Janke, B.
Jolly, B.
Jones, L.
Jones of Cheltenham, L.
Jordan, L.
Judd, L.
Kennedy of Southwark, L.
Kennedy of The Shaws, B.
Kinnock, L.
Kinnock of Holyhead, B.
Kirkhill, L.
Kirkwood of Kirkhope, L.
Knight of Weymouth, L.
Kramer, B.
Lawrence of Clarendon, B.
Lee of Trafford, L.
Lennie, L.
Lester of Herne Hill, L.
Liddell of Coatdyke, B.
Liddle, L.
Lipsey, L.
Loomba, L.
Ludford, B.
McAvoy, L.
McConnell of Glenscorrodale, L.
McDonagh, B.
Macdonald of Tradeston, L.
McFall of Alcluith, L.
McIntosh of Hudnall, B.
MacKenzie of Culkein, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
Maclennan of Rogart, L.
McNally, L.
Maddock, B.
Mandelson, L.
Manzoor, B.
Marks of Henley-on-Thames, L.
Massey of Darwen, B.
Maxton, L.
Meacher, B.
Mendelsohn, L.
Miller of Chilthorne Domer, B.
Monks, L.
Morgan, L.
Morgan of Ely, B.
Morgan of Huyton, B.
Morris of Aberavon, L.
Morris of Handsworth, L.
Morris of Yardley, B.
Murphy of Torfaen, L.
Newby, L.
Northover, B.
Nye, B.
Oates, L.
O'Neill of Clackmannan, L.
Oxford and Asquith, E.
Paddick, L.
Palmer of Childs Hill, L.
Patel of Blackburn, L.
Patel of Bradford, L.
Pendry, L.
Pinnock, B.
Pitkeathley, B.
Plant of Highfield, L.
Ponsonby of Shulbrede, L.
Prosser, B.
Purvis of Tweed, L.
Ramsay of Cartvale, B.
Razzall, L.
Rebuck, B.
Redesdale, L.
Reid of Cardowan, L.
Rennard, L.
Richard, L.
Roberts of Llandudno, L.
Robertson of Port Ellen, L.
Rodgers of Quarry Bank, L.
Rowlands, L.
Royall of Blaisdon, B.
Sawyer, L.
Scotland of Asthal, B.
Scott of Needham Market, B.
Scriven, L.
Sharp of Guildford, B.
Sheehan, B.
Sherlock, B.
Shipley, L.
Shutt of Greetland, L.
Simon, V.
Smith of Basildon, B.
Smith of Clifton, L.
Smith of Gilmorehill, B.
Smith of Newnham, B.
Snape, L.
Soley, L.
Steel of Aikwood, L.
Stephen, L.
Stevenson of Balmacara, L.
Stoneham of Droxford, L.
Storey, L.
Strasburger, L.
Taverne, L.
Taylor of Blackburn, L.
Taylor of Bolton, B.
Taylor of Goss Moor, L.
Temple-Morris, L.
Teverson, L.
Thomas of Gresford, L.
Thornton, B.
Tonge, B.
Touhig, L.
Truscott, L.
Tunnicliffe, L. [Teller]
Turnberg, L.
Tyler, L.
Tyler of Enfield, B.
Verjee, L.
Wallace of Saltaire, L.
Wallace of Tankerness, L.
Walmsley, B.
Warwick of Undercliffe, B.
Watson of Invergowrie, L.
Wheeler, B.
Whitaker, B.
Wigley, L.
Williams of Crosby, B.
Willis of Knaresborough, L.
Wills, L.
Wood of Anfield, L.
Wrigglesworth, L.
Young of Norwood Green, L.
Young of Old Scone, B.
NOT CONTENTS
Aberdare, L.
Ahmad of Wimbledon, L.
Altmann, B.
Anelay of St Johns, B.
Arbuthnot of Edrom, L.
Ashton of Hyde, L.
Astor of Hever, L.
Attlee, E.
Balfe, L.
Barker of Battle, L.
Bates, L.
Bell, L.
Berridge, B.
Bew, L.
Bichard, L.
Black of Brentwood, L.
Blackwell, L.
Blencathra, L.
Borwick, L.
Bottomley of Nettlestone, B.
Bourne of Aberystwyth, L.
Bowness, L.
Brabazon of Tara, L.
Brady, B.
Bridgeman, V.
Bridges of Headley, L.
Brougham and Vaux, L.
Browne of Belmont, L.
Browning, B.
Buscombe, B.
Byford, B.
Callanan, L.
Carrington of Fulham, L.
Cathcart, E.
Cavendish of Furness, L.
Chadlington, L.
Chalker of Wallasey, B.
Chester, Bp.
Chisholm of Owlpen, B.
Colville of Culross, V.
Colwyn, L.
Cooper of Windrush, L.
Cope of Berkeley, L.
Cormack, L.
Courtown, E.
Crickhowell, L.
Cumberlege, B.
Curry of Kirkharle, L.
De Mauley, L.
Denham, L.
Dixon-Smith, L.
Dobbs, L.
Dunlop, L.
Eaton, B.
Eccles, V.
Eccles of Moulton, B.
Elton, L.
Empey, L.
Evans of Bowes Park, B.
Fairfax of Cameron, L.
Faulks, L.
Fink, L.
Finkelstein, L.
Finn, B.
Flight, L.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Freeman, L.
Freud, L.
Gardiner of Kimble, L. [Teller]
Gardner of Parkes, B.
Gilbert of Panteg, L.
Goodlad, L.
Goschen, V.
Grade of Yarmouth, L.
Hague of Richmond, L.
Hamilton of Epsom, L.
Harris of Peckham, L.
Hay of Ballyore, L.
Hayward, L.
Helic, B.
Heseltine, L.
Heyhoe Flint, B.
Higgins, L.
Hodgson of Abinger, B.
Hodgson of Astley Abbotts, L.
Hollins, B.
Holmes of Richmond, L.
Hooper, B.
Horam, L.
Howard of Lympne, L.
Howe, E.
Howell of Guildford, L.
Hunt of Wirral, L.
Inglewood, L.
James of Blackheath, L.
Jenkin of Kennington, B.
Jopling, L.
Kakkar, L.
Keen of Elie, L.
Kilclooney, L.
King of Bridgwater, L.
Kinnoull, E.
Kirkham, L.
Lamont of Lerwick, L.
Lang of Monkton, L.
Lansley, L.
Lawson of Blaby, L.
Leigh of Hurley, L.
Lexden, L.
Lindsay, E.
Lingfield, L.
Listowel, E.
Liverpool, E.
Livingston of Parkhead, L.
Lupton, L.
Lyell, L.
MacGregor of Pulham Market, L.
McIntosh of Pickering, B.
Maginnis of Drumglass, L.
Mancroft, L.
Marland, L.
Marlesford, L.
Masham of Ilton, B.
Maude of Horsham, L.
Mawson, L.
Mobarik, B.
Montrose, D.
Morris of Bolton, B.
Moynihan, L.
Naseby, L.
Nash, L.
Neville-Jones, B.
Neville-Rolfe, B.
Newlove, B.
Noakes, B.
Northbrook, L.
O'Cathain, B.
Oppenheim-Barnes, B.
O'Shaughnessy, L.
Patel, L.
Patten, L.
Patten of Barnes, L.
Perry of Southwark, B.
Pidding, B.
Polak, L.
Popat, L.
Porter of Spalding, L.
Prior of Brampton, L.
Rawlings, B.
Redfern, B.
Renfrew of Kaimsthorn, L.
Renton of Mount Harry, L.
Renwick of Clifton, L.
Ribeiro, L.
Ridley, V.
Risby, L.
Robathan, L.
Rock, B.
Rogan, L.
Rotherwick, L.
Rowe-Beddoe, L.
Ryder of Wensum, L.
Sanderson of Bowden, L.
Scott of Bybrook, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Shackleton of Belgravia, B.
Sharples, B.
Sheikh, L.
Shephard of Northwold, B.
Sherbourne of Didsbury, L.
Shields, B.
Shinkwin, L.
Shrewsbury, E.
Skelmersdale, L.
Slim, V.
Smith of Hindhead, L.
Somerset, D.
Stedman-Scott, B.
Sterling of Plaistow, L.
Stowell of Beeston, B.
Stroud, B.
Suri, L.
Tanlaw, L.
Taylor of Holbeach, L. [Teller]
Tebbit, L.
Trefgarne, L.
Trimble, L.
True, L.
Trumpington, B.
Tugendhat, L.
Turnbull, L.
Ullswater, V.
Verma, B.
Wakeham, L.
Wasserman, L.
Wei, L.
Wellington, D.
Wheatcroft, B.
Wilcox, B.
Willetts, L.
Williams of Trafford, B.
Young of Cookham, L.
Younger of Leckie, V.
5.50 pm
70ZE: After Clause 25, insert the following new Clause—
“Report on pub company avoidance
(1) The Pubs Code Adjudicator shall have a duty to report to the Secretary of State on cases of pub-owning businesses engaging in unfair business practices in order to avoid the provisions in Part 4 of the Small Business, Enterprise and Employment Act 2015, to the detriment of the tenant.
(2) A report under subsection (1) shall make recommendations on—
(a) actions to be taken to prevent pub-owning businesses from engaging in unfair business practices in order to avoid the provision in Part 4 of the 2015 Act; and
(b) provisions of redress for any affected pub tenant
(3) The Secretary of State shall issue a statement within three months of receiving any report under subsection (1) outlining what action he or she intends to take to protect the tenant, and if none is to be taken, the reasoning for that decision.”
Clause 26: Restriction on public sector exit payments
70ZG: Clause 26, page 44, line 26, at end insert—
“( ) Regulations shall make provision to require prescribed public sector authorities to consider, prior to making a public sector exit payment—
(a) whether the payment being paid is appropriate; and
(b) whether the payment would provide value for money.”
Baroness Hayter of Kentish Town (Lab): My Lords, in moving Amendment 70ZG, which stands in my name and that of my noble friend Lord Mendelsohn,
I will speak to the other amendments in the group, which deal with the unintended consequences of the Government’s rush to cap high exit payments.
We are not against what the Government said that they wanted to do. The words in the Conservative Party manifesto were:
“We will end taxpayer-funded six-figure payoffs for the best paid public sector workers”.
Best paid? No, the Bill will affect those with long service rather than with the highest pay. It does not just curtail payments to the “best paid” public servants but to some who earn only £25,000, despite the impact assessment having suggested that the cap would save in the “low hundreds of millions” over five years—which sort of anticipated that only small numbers would be caught. We now know that over 20,000 could be affected in the Civil Service and many more in arm’s-length bodies.
We have heard, I am sure like other noble Lords in this House, from some long-standing public servants, most in their mid to late 50s, with up to 30 years’ service behind them, who face possible unemployment but have specialist skills—such as Magnox engineers or librarians—or are in areas of high employment, who are unlikely to find equivalent work again but who will lose what they had reasonable expectation of being paid should cutbacks happen.
We have had strong representations from local government, which will be cutting expenditure by merging back-office functions or reducing departments, but whose ability to manage such restructuring will be hampered by not being able to negotiate with staff in a way that best meets the organisation’s interests and the individual’s need to retain a reasonable income to pay the mortgage or support a family.
What is more, if the £95,000 figure is not uprated, it will gradually affect more and more grades until, presumably, finally even Foreign Office cleaners will included. Although we have not retabled our amendment on this, we ask the Government to consider re-evaluating it annually, perhaps using the same uprating as for public sector pensions. Similarly, we ask the Minister to open discussions with relevant stakeholders on technical considerations, such as whether the cap will include other means by which an individual can access an unreduced pension—such as on compassionate grounds.
I will add one other point. Since this provision was first mooted, housing associations have been classified as public bodies by the ONS. It would therefore be helpful if the Minister could confirm the position of housing associations as affected by Clause 26. Given the Government’s commitment to bring forward measures to deregulate housing associations, with the aim of returning them to the private sector in the future, can the Minister clarify whether the Government plan to add housing associations to the list of exempted bodies?
This group of amendments aims to achieve four things, each recognising that the Government themselves acknowledge that there will be hard—or inappropriate—cases caught by the cap, in that Clause 153C empowers Ministers to make exemptions. These amendments spell out where and how such discretion might be exercised. First, Amendment 70ZG aims to help local
authorities and other public services, be they housing associations—if they are to be included—Magnox, or whatever, by requiring that any guidance on the waiver should include the ability to get “value for money”, thus enabling management to take the best decisions in voluntary redundancy to fit its objectives.
Secondly, we want any public body caught by the cap, not just local government, to have the ability to exercise a waiver, albeit with the approval of its governing body, much as for local authorities as set out in the draft statutory instrument. Under the Bill, only Ministers or the Scottish Government could agree a waiver, although the draft statutory instrument extends this to the Welsh Assembly and local authorities. However, we think that this needs to be for all relevant bodies, which otherwise will have no ability to exercise a waiver on the cap. These might be a fire and rescue authority, Magnox, the Forestry Commission, schools—where relevant governing bodies have their own decision-making powers—as well as all the others, which may not even realise that they are about to be caught by this provision. Hence Amendment 73A.
Thirdly, as set out in Amendments 70C and 70D, tabled by my noble friend Lady Donaghy, those earning below £27,000 or with long service should not be caught by the cap. After all, only the combination of their age together with their length of service, rather than high pay, includes them under the cap. We do not believe that that was the Government’s original intention. What is more, in January this year Priti Patel said that,
“those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants”.
That undertaking has not been kept. Let us take the example of a librarian with a career-average salary of perhaps £25,000 who has worked for 34 years with a council when its library closes and is made redundant at 55. It is a bit late to start a new career and there are not a lot of private libraries around. Similar examples include a 52 year-old tax investigator who has worked for 25 years, a 50 year-old health and safety officer with 20 years’ experience, or a 56 year-old school inspector after 16 years with Ofsted. Were these really the people the Government wanted to catch under the exit cap?
A 58 year-old Whitehall civil servant wrote to me to say that he has given 28 years of public service but now finds that he cannot take his department’s early exit offer as his full package would be over £95,000. Someone else wrote to me who has worked in the electricity supply industry for 35 years, mostly on shift, often over Christmas and New Year’s Eve, generating safe nuclear power. His ability to end his shift working because of his failing health is now in doubt because the cap would reduce what he could take to replace his income.
Therefore, having a disregard for those earning below £27,000 or setting a maximum number of years of service for the calculation would not undermine the purpose of the provision. Certainly there should be an exemption for those close to retirement who have been working with some expectations and who need time to adjust to a tougher regime. While the Minister has written that this whole clause will not be introduced
until late 2016, that is still very soon for someone in their late 50s to be able to make alternative provision for their retirement.
Fourthly, and perhaps most importantly, we must exclude what are known as “strain payments” from the cap, which especially affect long-serving public servants. These are actuarial adjustments, made by the employer to the pension scheme, to compensate the scheme for the early pension taken by the person leaving the service. These strain costs are not paid to the individual, and are therefore qualitatively different from other payments included in the cap. Where a pensions strain compensation cost is paid, the individual will only experience the benefit over a number of years as they gradually draw their pension. Even then, the impact on their pension is not great. For example, if their employer paid £10,000 as strain compensation, the individual would get only about £500 in additional pension but would have lost £10,000 from their exit payment.
6 pm
As strain costs are correlated to length of time in the pension scheme, those with the longest service will be most likely to be caught by the cap. Hence, a middle-ranking officer who has dedicated her working life to public service is more likely to breach the cap than a high-ranking one with only a few years in the public sector. For example, the pension strain cost for someone with 30 years’ service and earning £39,000 a year would mean that they would be caught by the cap when added to the statutory redundancy, effectively reducing their statutory redundancy which they had every right to expect. The buyout of early pension reduction means that even employees earning £27,000 who leave after long service will be affected. I do not believe that that is what the Government originally intended.
Schedule 4 shows that the pension regulations will have to be amended. This breaches the 25-year guarantee of no more meddling with the public sector pension scheme made by Danny Alexander, then a Minister, on behalf of the Government just four years ago. If the Government want to achieve their objective of stopping six-figure payments to the highest paid, rather than to the longest serving—who will actually be caught—then Amendment 70B, which removes early access to pension from the calculation of the exit payment, is the easiest way to achieve this. It is fair, it would prevent long-serving, lower-earning workers being caught and it would not discriminate against older workers. I beg to move.
Baroness Donaghy (Lab): My Lords, in supporting my noble friend Lady Hayter and speaking to the two amendments in my name, I want to give the Government the opportunity to keep their word and to give peace of mind to thousands of public service workers who will be affected if Clause 26 is enacted. The consultation period for this clause was brief and took place in the height of the summer vacation. The Delegated Powers and Regulatory Reform Committee was extremely critical of all aspects of this clause and the Minister’s assurance that any future changes will be subject to
affirmative procedure in no way mitigates the overwhelming centralising powers which the Government are giving themselves.
The first promise was that the exit cap would not apply to the lower paid. As my noble friend Lady Hayter said, the then Treasury Minister, Priti Patel, said in January 2015:
“those earning less than £27,000 will be exempted to protect the very small number of low earning, long-serving public servants”.
What has happened to this exemption? The purpose of Amendment 70C is to ensure that the figure, and the promise, is contained in the Bill.
The second promise appeared in the Conservative election manifesto, which said:
“We will end taxpayer-funded six-figure payoffs for the best paid public sector workers”.
The key phrase here is “best paid”: not low paid or averagely paid. The fact that this clause proposes to include those on very moderate pay, but with long service, shows that the manifesto statement was misleading. This is why exempting the pension strain payments is so vitally important to these workers, who will not receive a pension lump sum if they are made redundant after long years of service. This is why I support Amendment 70ZG and why I tabled Amendment 70D about long service.
The third promise to public sector workers—made after difficult negotiations on changes to public sector pensions—was that the new pension schemes would be a settled issue for 25 years. There is a statement by the then Cabinet Office Minister, now the noble Lord, Lord Maude of Horsham, to that effect. Suddenly, a few months later, over 100 pension schemes, affecting thousands of workers, will be forced to change their rules. People have made life plans on the basis of agreed entitlements. The anguish and stress on the lower paid caused by this clause could be prevented if the Government honoured their promise.
Finally, it is important that the Government are clear about when this clause might be enacted. The headline news is that the clause is intended to control excessive payments at the top end for the “best paid” public service workers. Not many would take issue with this, but the reality is that long-serving, lower-paid workers would also be affected, despite assurances to the contrary. This is a highly centralist measure giving this Government, and future ones, the right to overturn national agreements and increase uncertainty for public service workers who already face redundancy and reorganisation. It is still not too late for the Government to keep their promises.
Lord Stoneham of Droxford: My Lords, I said in Committee that there are a number of aspects the Government should be looking at. One was that they should retain some flexibility for dealing with special cases, particularly where value for money was involved. Given all the reforms in the public sector that will be required in the next few years, to miss out on the opportunity to compensate people who will be involved in those, and hit them with caps when they are seeking to co-operate, is not progress in any respect. We pointed out in Committee, as the noble Baroness, Lady Donaghy,
did this evening, that these measures are not just aimed at people in the public sector on high pay. They are aimed at quite low earners who, because of long service, could reach the proposed cap. That is unfair. We have also heard that pension arrangements struck only quite recently are being further undermined by imposing this inflexible cap. For these reasons, we hope the Government will show some flexibility on these amendments, to give them the capacity to respond to the injustice they are creating through a commitment they made at the general election without really realising the unintended consequences.
Baroness Neville-Rolfe: My Lords, I am grateful to the noble Baronesses, Lady Hayter and Lady Donaghy, for their amendments and their comments. I will begin by setting out why it is important to cap the highest exit payments in the public sector. The Government have taken a range of difficult decisions on public sector pay. Measures to restrain pay growth in the public sector have not been easy or popular, but they have worked. The OBR estimates that the resulting savings will protect the equivalent of 200,000 public sector jobs in this Parliament. The cap is a smaller measure, but it is being taken in the same spirit and for the same reasons. It will not have any impact on the large majority of public sector workers. It is focused on the highest payouts and will affect only the top 5% in value of all exit payments made in the public sector. In those limited cases where the cap will bite on middle-earners with long service, I hope to show why this measure is a fair and proportionate course of action. It will still allow such public sector workers to receive payments of up to £95,000 and retire with guaranteed and index-linked defined benefit pensions, which are likely to be far more generous than those received by counterparts in similar roles in the private sector.
Amendment 70ZG is concerned with appropriateness and value for money, but it is not necessary or desirable. There is already a fundamental duty on the public sector to ensure that exit payments are value for money and that they are made in the most appropriate manner. This is a principle that will run through my comments.
Furthermore, along with fairness and proportionality, appropriateness and value for money will be the starting points for the guidance that this clause and the draft regulations mandate. The guidance, which will be binding, will set out when a decision-maker should exercise the power to relax the restrictions imposed by the cap and in what circumstances. The guidance will do more than simply restate two well-established principles; it will set out how the principles should be applied in practice. This will ensure that proper scrutiny is given to exit payments and that employers act with discipline and proportionality. The draft guidance will be consulted on and will be published alongside the regulations when they are considered by this House. Accordingly, the Government agree with the spirit of the amendment but believe that this clause goes further. It allows for clear and detailed guidance on the policy and will set out how the underlying principles should be applied.
Turning to Amendment 73A, the potential inappropriate use of settlement agreements and exit payments more widely is precisely why our clause
requires approval by a Minister of the Crown, rather than the employer, when relaxing the cap. Ministerial or full council approval means that the power will be exercised objectively and only in exceptional circumstances, set down in guidance, to prevent circumvention and misuse. The power will be discretionary to allow for unique and novel situations. Regulations, as opposed to guidance, stipulating what such situations would be would limit flexibility. The multifaceted consideration that would be needed would not lend itself to the structure and prescriptive nature of regulations.
Amendment 70B, on pensions, was discussed both at Second Reading and in some detail in Committee. I appreciate that any discussion of pensions raises concerns and that good pensions are an important part of public sector remuneration. However, the proposal should be put in context. The Government are a strong supporter of public sector pensions. As has been said, strong new defined benefit pension schemes for public sector workers, protected by a 25-year guarantee, were introduced in the last Parliament—and this at a time when most private sector employers have said that defined benefit schemes are unaffordable and are moving away from them.
The noble Baroness, Lady Hayter, asked about the 25-year guarantee. This measure addresses exit payments, not entitlements to pay or pensions. The cap has no impact on an individual’s accrued pension and does not change the protected elements of the 25-year guarantee. A small minority of public sector workers to whom the cap applies will still be eligible for substantial taxpayer-funded increases in their pension entitlement.
There are fundamental reasons why an exclusion of employer-funded pension top-ups would not be desirable, and I should start by being clear that the issue we are debating concerns not retirement but redundancy. Any earned pension that has been accrued is untouched. The pension lump sum that is often paid as part of a public sector pension is outside the cap and does not count towards it. Instead, the pension costs that we are discussing are additional top-ups funded by employers when individuals depart early. The top-up payments, which provide an income stream from the day you leave, can greatly increase the value of pension payments above the level that has been earned through years of service.
In Committee, the noble Baroness gave several examples of public servants who might be caught by the cap. We have looked at these examples using assumptions, including of likely earnings. Of course, I accept that in the world of pensions different assumptions can always be made but, using our assumptions, we have found the following.
In the example of a librarian on £25,000 with 34 years’ service, we have found that an additional £95,000 pension top-up from the employer would in fact be enough to allow that person to retire on an unreduced pension at the age of 52. The same is true of the noble Baroness’s examples of a prison warder, whom we have assumed earns £28,000, retiring at 52 with 25 years’ service, and a school inspector, whom we have assumed earns £70,000, leaving at 56 with 16 years’ experience. In those cases, only if an additional redundancy lump sum were received on top of the pension strain payment could the cap be breached
at all. In the cases of the prison warder and the school inspector, the additional cash redundancy payment would have to be more than £37,000 and £50,000 respectively before the cap could be breached.
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For the other examples the noble Baroness quoted in Committee, the cap would indeed limit the value of the pension top-up to £95,000, but I would like to demonstrate that the effects of this should not be disproportionate. On our assumptions, a 50 year-old health and safety inspector with 20 years’ service on £50,000 a year would receive a pension of £12,000 a year, rather than the £12,500 they would have got before the cap. A 52 year-old tax inspector with 25 years’ service earning £60,000 a year would have a pension of £17,500 a year instead of £19,000.
Of course, pension top-ups do not just go to public sector workers on moderate salaries. Very senior staff on very high salaries can receive huge benefits in this way, and some of these payments have led to a great deal of public concern. The Government made it clear in their manifesto that they wish to end such six-figure payouts in the public sector, but the noble Baroness’s amendment would prevent us doing this. Within the wider context I have set out, I therefore do not believe that limiting the generosity of employer-funded top-ups is a disproportionate measure or that it will have disproportionate effects.
Turning to Amendment 70C, capping exit payments will mean that some public servants receive less than they otherwise would have. I understand that this is the difficulty but, as I said, every pound saved by curbing the largest exit payments is a pound freed up to be directed to front-line services.
I have given some detail on those who may be caught by the cap, and it is clear that those earning below the figure of £27,000 referred to in the amendment of the noble Baroness, Lady Donaghy, will not be caught, except in very unusual circumstances. This would generally require very long service, a large pension top-up and a lump-sum redundancy payment on top. Be that as it may, a £95,000 exit payment for such a person would represent nearly four times their annual earnings. Such a generous package would rarely be available to someone on that level of earnings in the wider economy. To set things in context, £95,000 is more than six times the maximum statutory redundancy lump sum available.
Priti Patel’s statement was of course made in January, during the previous Parliament, and the proposal for the cap set out in our consultation since the election did not include any lower earnings floor. Response to the consultation confirmed the Government’s intention to proceed without a lower earnings floor. While a significant number of consultation responses expressed concern about the potential impact of the cap, only a very small number argued that this should be addressed by putting in a lower earnings limit.
I fully accept that we need to strike a balance here. We need to ensure that government action is proportionate and that exit payments continue to provide employees with the support they need until they find another job. My view is that a cap of £95,000 allows for a good
level of support, whatever an individual’s previous earnings. Also, as I have discussed, these clauses give a power to relax or waive the cap in exceptional circumstances. This can include cases where the application of the cap would cause hardship. While I do not accept that those exiting with a payment of £95,000 will generally be subject to hardship, it is important to be clear that this power exists and can be used where needed.
The noble Baroness, Lady Hayter, also raised the issue of exits on compassionate grounds. These are not as clearly defined a concept as exits related to redundancy or ill health, as I am sure she will agree. They will generally involve a large degree of employer discretion. Therefore, the Government do not believe it would be right to grant a blanket exemption from the cap for exits on compassionate grounds, as this could be open to abuse. However, the waiver powers I have set out could clearly be used in such circumstances. Finally, I make it clear to the House that any exit payments related to ill health and attributable injury are entirely outside the scope of the cap.
It seems to me that similar arguments apply to Amendment 70D. The Government do not believe it would be right to impose a blanket exemption based simply on a definition of long service. Exit payments are determined by reference to both salary and length of service. There may be instances where individuals with very long service on more modest salaries could be affected by the cap. I hope I have shown here that the effects will not be disproportionate. However, there will also be individuals with long service on very high salaries. Under current rules, they can receive payments far in excess of £95,000. We committed in our manifesto to end six-figure exit payments and do not believe that it is right for them to continue. We have all seen cases reported in the news that are hard to justify: such as the NHS Trust Development Authority recently awarding a pay-off of more than £400,000 to a chief executive, which Unite rightly described as “outrageous”. This is a proportionate measure. The Government are showing flexibility through the waiver for exceptional circumstances. I have undertaken today to consult on our guidance, alongside the regulations.
Finally, on the issue of timing, consultation will start shortly after Royal Assent and we expect to see the regulations before this House in late summer.
I hope the noble Baronesses will decide on reflection to withdraw their amendments this evening.
Baroness Hayter of Kentish Town: I had anticipated some clarification on housing associations. I thought that had been arranged, but we will put it to one side.
Baroness Neville-Rolfe: I am extremely sorry if that was the noble Baroness’s expectation. I will write to her, but I do not have the information that is needed.
Baroness Hayter of Kentish Town: I thought that our relevant teams had coped with that. I think the answer the Minister is going to give will be very acceptable, but maybe we will get it in writing.
We have one voice between two tonight—we are sharing it. But on behalf of us both, I thank the Minister, particularly for the work she did on the examples I gave in Committee.
I hope I heard her wrongly when she said that, as a result of this, someone’s pension would be reduced “only” from £12,500 to £12,000 and from £19,000 to £17,000. If those are the figures, I think that that makes the case. For someone earning £12,500, to lose £500 a year is an enormous amount. Maybe not to thee and me, Minister, but for people on those sorts of earnings trying to hold together a family, changing their pension from £12,500 to £12,000 is serious. That, basically, is what we were trying to get at in our swathe of amendments, one way or another. If it is £19,000 to £17,000—although I may have got that wrong—that will have a very serious impact.
The other problem is that the Minister said that £95,000 is a lot of money, but they will perhaps never see £10,000 of that because it is a compensation paid to the pension scheme. So they cannot go off and use that money to live on while trying to retrain or move or find another job; it is an actuarial payment that never comes near their bank account. That is why Amendment 70B, which we will maybe have to come back to later, is so serious. This is not a sum of money they can use to buy themselves an annuity to help train or move or anything else—it is money they never see. I am really sorry that the Government have not responded to that.
If it is right that 5% would be caught, a lot of these waivers are going to go to the Minister. Well, I hope the Minister has more than seven days in her diary per week, because there are going to be a lot of applications for waiver. We are talking about schools and all sorts of small organisations.
The Government are making a mistake on this, not in their intention but in their approach. Luckily, the Bill has another House to go to yet, and I hope that further thought can be given to it because I really do not think that this measure is right or was the intention. It is not fair to take away some people’s anticipated income.
I will say only one other thing on the point that the noble Lord, Lord Stoneham, made. If local authorities are not allowed a bit of wriggle room, they will find all the 58 year-olds still there and all the youngsters going. That may not be the best way to merge departments or to get the best restructuring. Again, it seems to me a rather short-term view.
I hope the Government will take further thought on this but, for the moment, I beg leave to withdraw the amendment.
70AA: Clause 26, page 44, line 29, at end insert “except in the case of exit payments for potential claims under Part IVA of the Employment Rights Act 1996 (protected disclosures)”
Lord Low of Dalston (CB): My Lords, I wish to speak to Amendments 70AA and 70AB. The noble Lord, Lord Wills, will speak to Amendment 73B, which is also in this group.
Amendment 70AA would remove whistleblowing settlements from the cap on exit payments and
Amendment 70AB would exempt cases of discrimination, harassment and victimisation. We are all becoming increasingly aware these days that whistleblowing is in the public interest. Often, it is only as a result of the public-spirited action of a whistleblower that things like fraud and scandalous malpractice come to light, which shock us all when they do. Capping settlements in respect of whistleblowing cases could easily act as a deterrent to people blowing the whistle and, often, putting their livelihood and reputation at risk. That is why I have tabled Amendment 70AA, which seeks to remove from the cap settlements in Public Interest Disclosure Act cases.
A second concern is that capping settlements where there is no limit on the level of damages that may be obtained at tribunal can only operate as an incentive to go to tribunal. In Committee, the Minister sought to reassure us by saying that tribunal awards would not be capped. We had an interesting exchange, in which I was concerned to insist that that did not address the point about settlements, and the Minister kindly agreed to write to me about this. Reflecting on our exchange, I sought to clarify my position by saying that the Minister’s reassurance not only fails to address the point about settlements, but it strongly reinforces my argument that capping settlements while the amount a tribunal can award remains uncapped provides a clear incentive to people to take their cases to tribunal, rather than settle. That entails costly and contentious litigation which is in neither the employer’s nor the public’s interest.
In her letter, the Minister repeated that indicative regulations provide that any award directed by a court is outside the scope of the cap on exit payments. New Section 153C(1) of the Small Business, Enterprise and Employment Act 2015, which would be inserted by Clause 26 of the Bill, provides a power to “relax any restriction” of the cap in appropriate circumstances. Unlike court-directed payments, however, which involve a clear finding in respect of the claim, settlement agreements are generally made before any such finding is made. Therefore, the Minister said, if settlement agreements relating to potential whistleblowing claims were outside the scope of the cap, “I am concerned that it could encourage people to make spurious claims of public interest disclosure simply in order to avoid the effect of the cap”. Furthermore, she said that the Treasury would be issuing guidance on the exercising of the power to relax the restrictions imposed by the cap. It is envisaged that the guidance will make it clear that where payments relating to potential whistleblowing claims are correct, the power to exempt exit payments from the cap could be exercised.
On the risk of spurious whistleblowing claims, I suggest that the introduction of the public interest test will help to mitigate this risk as it will give the employer a good argument to resist such claims during settlement negotiations. Employers will also have legal advice. This will enable them to assess the merit of a claim and make it easier for them to resist such an attempt to get round the cap. I therefore think, particularly on account of the tendency for a settlement cap to incentivise people to take their case to a tribunal, that we should seek to remove from the cap settlements in Public Interest Disclosure Act cases, as Amendment 70AA would do.
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Amendment 70AB would exclude payments relating to claims of unlawful discrimination, harassment and victimisation under the Equality Act 2010 from the proposed public sector exit cap. The exception would apply both to payments awarded by an employment tribunal following litigation and to payments under terms of settlement agreed by the parties during litigation. Although the Minister has given assurances that tribunal awards will not be capped, and indicative regulations may provide for this, it would nevertheless be best if we could have it spelt out in the Bill.
The Government propose to exclude from the cap exit payments following litigation in respect of unfair dismissal and breach of contract claims, but not discrimination claims. The exclusion from the cap of tribunal awards for certain types of claim but not others will create a significant incentive for claimants to add excluded claims to their case and so pursue the case to determination by tribunal. Thus, under the current proposals, claimants alleging discrimination might be encouraged also to seek an award for unfair dismissal or breach of contract to avoid the cap. The Government’s rationale for distinguishing between tribunal awards and settlements is that excluding from the cap payments under settlements could create a loophole, allowing unscrupulous parties to bypass the cap altogether by bringing unmeritorious claims concerning excluded matters. In my submission, a more effective way of ensuring such loopholes are not created and exploited is through the existing system, whereby high-level public sector litigation settlements require Treasury approval. This is required for severance payments by public bodies before they are offered. Proposed payments will be thoroughly scrutinised. Stricter limits are placed on those who seek retrospective approval of severance payments on a case-by-case basis. This scrutiny is designed to provide assurance that public sector payments arising under litigation settlements are merited and deliver value for money. The risk of the proposed approach is that it will disincentivise settlement of disputes by the parties to litigation, instead encouraging claimants to pursue their claims to secure a tribunal award. This is likely to increase pressure on increasingly scarce judicial resources and discourage the early settlement of claims.
The Government’s proposed approach of not excluding discrimination awards and settlement payments from the cap fails to recognise the practical realities of employment litigation. Factually connected multiple claims are often made in the same case. The proposals are likely to make it more difficult to achieve settlement in high-value multiple claims in circumstances where some claims are covered by the exit payments cap and some are not. The correct approach is to exclude all payments in respect of discrimination legislation, both tribunal awards and settlements, from the public sector exit payments cap, while ensuring that the existing robust safeguards in place through the Treasury approval process operate effectively to deter unmeritorious claims and encourage settlement where this is merited, and offer value for taxpayers’ money. That can be achieved in the legislation, as proposed by Amendment 70AB.
These are complex matters. We have a couple of amendments which drive in broadly the same direction, but there are some differences in detail. For instance, Amendment 70AA relates only to settlements, but Amendment 70AB covers both settlements and tribunal awards. There may therefore be merit in a consolidated approach. Perhaps the Minister would be willing to meet us before Third Reading to explore this approach and, I hope, reach agreement on a common way forward. If she is, I am sure that neither the noble Lord, Lord Wills, nor I would feel it necessary to press our amendments to a vote.
Lord Wills (Lab): My Lords, I support the amendments, which have been so persuasively argued for by the noble Lord, Lord Low. I want to speak particularly to Amendments 70AA and 73B, to which I have added my name.
It is clearly right that there should be rigorous controls on the use of taxpayers’ money for exit payments, but the Minister will be aware of widespread concerns across the House about unintended consequences of this legislation in discouraging whistleblowers and the resulting potentially damaging impact on public services. We have discussed this issue many times in your Lordships’ House, and I do not want to rehearse at great length arguments on the merits of whistleblowers, save to say that I support what the noble Lord, Lord Low, has just said. We have seen the value of whistleblowing in both the public sector and the private sector over and again—Volkswagen might have been very well served by a whistleblower some years ago, which might have saved it and millions of motorists great grief. We have seen the advantages of whistleblowing in the National Health Service and throughout the public sector. I hope that the Minister will agree that it is very important that, in moving forward with this legislation, which broadly I welcome, that there are not unintended consequences of the sort that the noble Lord, Lord Low, has just described in discouraging genuine whistleblowers from coming forward.
We have heard already that this legislation, which applies a uniform cap of £95,000 across all settlement agreements for employment disputes, does not take into account the uncapped damages that can be awarded for very good reasons under the Public Interest Disclosure Act. It is common ground that the public interest is best served by creating an environment which encourages genuine whistleblowers to come forward with their information and to do so in a timely way. Such whistleblowers usually take considerable personal risks in doing so and many of them do not work again in their chosen industry or profession after making a public interest disclosure. It is crucial that there is robust legal protection for such courageous individuals. Uncapped damages at employment tribunals are an important part of such protection—for example, encouraging those with high earnings in professions which are often of great public concern to come forward. It is important that such people do so, as they often possess potentially the most important information.
In view of the Government’s frequently stated concerns to protect whistleblowers, it is hard to believe that they intended the cap in this Bill to damage these public policy aims, but that could still happen. As the noble
Lord, Lord Low, has just set out, a blanket cap might encourage the parties to be less flexible in their negotiations, to be more aggressive and litigious. At the very least, there is potential for confusion, given that the level of the cap in this legislation does not match the current employment protection legislation, in particular claims under the Public Interest Disclosure Act.
The Minister has suggested that the Government will deal with this issue by the Treasury issuing guidance, which—I quote from the noble Baroness’s letter to the noble Lord, Lord Low, of 17 November—will,
“make clear that where payments relating to potential whistleblowing claims are correct then the power to exempt exit payments could be exercised”.
It is not clear what this might mean in practice. For example, what does “correct” mean? What is the significance of the words suggesting that the power “could be exercised” instead of “would be exercised”? It is important that the Minister clarifies the position on this as the Government have a propensity, despite all their fine words, for incoherence in the way that they provide adequate protection for whistleblowers.
The Minister may recall, for example, our exchanges during the passage of the small business Bill about extending whistleblowing protection towards job applicants. The Government eventually recognised the need to do this for NHS workers as a result of the Francis report—this was most welcome—but they then refused to implement such protections for anyone else. Then the Government produced no reason why such protection should not be available to workers in, for example, social care, the City of London or the construction industry, where informal blacklisting is just as likely and the public interest in disclosure is potentially just as important as in the NHS.
At the time the Minister claimed,
“there is work to be done to get this right and it will take time, beyond this Parliament, to reach a suitable solution”.—[
Official Report
, 26/1/15; col. GC 10.]
Time has passed and there is a new Parliament, so will the Minister take this opportunity to reassure your Lordships’ House that the Government have been addressing this anomaly? If they have not done anything yet, can she reassure me that she will at least ask one of her officials—assuming that there are any left after the Autumn Statement—to consult about how best to address this anomaly, including potentially talking to the whistleblowing charity, Public Concern at Work, and write to me at some point—say, before the Summer Recess—about the progress she has made?
As we have heard, Amendment 73B contains provision to tackle continuing concerns about so-called gagging clauses and the need to ensure that, if a whistleblower and an employer enter into negotiations to end the employment relationship, any unresolved or outstanding public interest concerns at the centre of the dispute are passed on to a relevant regulator or law enforcement body. As noble Lords are aware, the Public Interest Disclosure Act provides a defence against gagging practices by making any clause in an agreement void if it would prevent a protected disclosure being made. This means that an employer would not be able to rely on a confidentiality clause within the settlement agreement
either to prevent a relevant concern being raised by a whistleblower or to threaten monetary penalties for a breach of a provision in the settlement agreement. The Government have in the past relied on this to resist previous attempts to tackle these so-called gagging clauses. However, the law is not the problem; the problem is the evidence of a widespread perception that confidentiality clauses contained within settlement agreements gag individuals from escalating their concerns with a regulatory or law enforcement body.
The National Audit Office researched public sector whistleblowing settlement agreements and looked at 50 agreements. It concluded that none of them would breach the Public Interest Disclosure Act but, when they interviewed the whistleblowers who were party to those agreements, it was found that they were under the impression that they were so gagged by the agreement. This is due to the opaque wording of many of the confidentiality clauses within the settlement agreements considered in the research.
The amendment deals with this problem in two ways: first, through ensuring that a worker in this difficult situation has access to legal advice so that they are fully aware of the defence provided by the law and so preventing the erroneous perception to take hold that these individuals are gagged when they sign a settlement agreement. The second part of the solution is to create a referral system within regulations relating to the cap to ensure that incidents of wrongdoing, malpractice or health and safety danger are sent to the relevant regulatory body so that the signing of a settlement agreement does not prevent the concerns being raised and the public interest being pursued.
These amendments represent an opportunity for the Minister to reassure the public that the Government are determined to do everything possible to protect and encourage genuine whistleblowers by removing the confusion and incoherence that this legislation risks creating and by tackling a long-established obstacle to the transparency that is so critical to the effective and safe delivery of public services. I hope the Minister will seize this opportunity with enthusiasm and accept the amendments; or, at the very least, as the noble Lord, Lord Low, said, agree to meet him, me and my noble friend Lady Hayter to discuss a possible coming together of minds on this before Third Reading. I certainly would not wish to press this to a vote either.
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Lord Stoneham of Droxford: My Lords, I have a specific point for the Minister. These two amendments raise important issues and I am broadly supportive of them. In Committee, the Minister said that, where a whistleblower successfully brings a case to an industrial tribunal, the cap will not apply to the award made. That relates to the point raised by the noble Lord, Lord Low, that if you have the cap lifted only for tribunal cases and awards, it will encourage that process rather than a settlement, which would be quicker, probably cheaper and simpler. I therefore again put to the Minister the point made by the noble Lord, Lord Low: can we have a mechanism that does not confine this only to employment tribunal awards? Will it apply to tribunal conciliation settlements? More importantly, it would be helpful if it could apply to general settlements
in cases where whistleblowers are particularly vulnerable. As the noble Lord, Lord Wills, said, often in public cases these people do not work in the sectors in which they have made their sacrifice.
Baroness Hayter of Kentish Town: My Lords, the case for the amendments has been made by both my noble friend Lord Wills and the noble Lord, Lord Low. I merely re-emphasise that undermining everyone’s desire to outlaw discrimination or to encourage whistleblowing in the public interest—which is good for patients, consumers and fellow workers—by including any compensatory payment in the cap would be yet another unintended consequence of this clause.
The point raised by the noble Lord, Lord Stoneham—and, in a way, by Amendment 70A, although not formally moved—is the general worry that a court-approved or ordered settlement would be exempted. We support what the Government are trying to do elsewhere to get early settlements, including by ACAS, but we are worried that unless those sorts of settlements are excluded there will be a perverse incentive to go to tribunal or court because, otherwise, the settlement could disappear under the cap. This could be for unfair dismissal, harassment or victimisation in addition to discrimination and whistleblowing.
If the Minister agrees to discussions on this issue and how we can support what the Government are trying to do elsewhere—which is to achieve settlements before going to court and not at the court gate—it would be very helpful.
Baroness Neville-Rolfe: My Lords, I am grateful to the noble Lords, Lord Low and Lord Wills, for their careful scrutiny and for these amendments. I say from the outset that this clause is not intended to disincentivise employers from entering into appropriate settlement agreements, nor is it intended to limit the payments that are available to aggrieved individuals in whistleblowing or discrimination claims.
I agree with the points around the importance of these matters made by the noble Baroness, Lady Hayter, and the noble Lord, Lord Stoneham. However, I repeat the point I made in my letter to the noble Lord, Lord Low, that there is an important difference between payments that have been directed by a tribunal and payments made under a settlement agreement. If a claim is successfully brought to tribunal, there is a clear finding of fault. I make clear today that payments directed by a court or any tribunal will not be within the scope of the cap. The draft regulations will be specific on that point, and we do not need to put it into the Bill.
However, in the case of a settlement agreement, this is of course only a potential claim and we will not know whether it in fact has merit. As the noble Lord, Lord Low, has said, guidance on relaxing the cap will clarify that these are the kind of circumstances in which it may sometimes be appropriate to make settlement payments above the level of the cap. The Treasury guidance on relaxation of the cap will make it clear that such payments should be made only after appropriate scrutiny. Otherwise, if we were to exempt certain categories of claim from the cap as proposed in the amendment,
we would actually create a loophole that could encourage some people to make unmeritorious claims in order to avoid the effect of the cap. This could lead to payments in excess of the cap being made in cases where that is clearly not appropriate. I stand by the point. I have said that the draft regulations will exclude all tribunal-directed payments from the scope of the cap.
We have no desire to encourage claims to proceed to tribunal where settlement is more appropriate. It seems to me that, if some types of settlement on the grounds of whistleblowing or under the Equality Act were excluded, that would complicate employment law proceedings in just the way that the noble Lord, Lord Low, described. I fear that, if we were to proceed as proposed, we might discredit genuine claims by whistleblowers and of unlawful discrimination by association with a legal loophole, so our clauses include such payments within the scope of the cap but allow for the restrictions to be relaxed in appropriate cases.
Amendment 70AA raises the important topic of whistleblowing. The Government take this issue extremely seriously.
Lord Wills: I appreciate that the issue cannot be given greater clarity at the moment, but if she can, will the Minister say a little more about how she would describe “appropriate cases” and who will be the judge of those?
Baroness Neville-Rolfe: Perhaps I may pick that up at the end and deal now with the point on whistleblowing, which we take very seriously.
People who take the bold step of disclosing malpractice in the public interest play an important role in bringing wrongdoing to light. It is essential that they are protected from suffering detriment at the hands of their employers. As the noble Lord, Lord Wills, said, they often take considerable personal risk. The legal framework to protect whistleblowers has been substantially strengthened over the past year, partly due to the great work of the noble Lord and of the charity Public Concern at Work. I am sure I speak on behalf of many in the House when I say how grateful I am for those efforts.
Amendment 73B also concerns whistleblowing and has three components. The key point is that a settlement agreement cannot prevent an employee making a public interest disclosure. The Employment Rights Act 1996 provides that any agreement that seeks to do so will be void, so a whistleblower signing a settlement agreement remains completely free to report the wrongdoing to the relevant body. The issue can be properly investigated without the need for a regulatory referral system as proposed in the amendment.
The time is late. I am entirely happy to meet noble Lords, along with officials from the Treasury and BIS, to talk about some of the points raised, including, for example, an update on the progress of the Francis report changes, although I think they need to settle in, as I indicated earlier. On the point about “appropriate cases”, this is an important issue for the guidance and we will consult on it in parallel with the draft secondary legislation next year. Noble Lords will have the opportunity to see it in advance of the regulations being considered.
That is the long way round of saying that the meeting that I have just accepted should take place should do so. However, I cannot accept the amendment. If the noble Lord wants to press it, he will have to test the opinion of the House but, as I say, I am happy to have a meeting to see whether we can take things forward, particularly on the guidance and the implementing regulations.
Lord Low of Dalston: I apologise to noble Lords for that hiatus. In my naivety about procedure, I rather thought the noble Baroness, Lady Hayter, was going to reply. I am grateful to the Minister for her response, and to the noble Lords, Lord Wills and Lord Stoneham, who have both spoken. The Minister has graciously agreed to the meeting that we have asked for, so in those circumstances it would be churlish to press any of these amendments to a vote. We look forward to taking up the offer made by the Minister, who also suggested that she might bring the Treasury along, which would certainly be helpful. One does not always say that bringing the Treasury along would be helpful, but on this occasion one hopes it might be. Since a good deal of my briefing on this issue has come from the Equality and Human Rights Commission, I hope the Minister will agree that it might be helpful to bring a representative along to provide that particular expertise. With that, I am happy to withdraw the amendment.
The Deputy Speaker (Baroness Stedman-Scott) (Con): My Lords, in calling Amendment 70AB, I must tell noble Lords that there is a printing error in the Marshalled List. The word “award” should be followed by the word “or”.
Baroness Hayter of Kentish Town: My Lords, I spoke to this amendment when addressing an earlier group. It is the amendment that would leave out from the exit cap the “strain payments”, if you like: compensatory payments made by an employer to a pension scheme which do not go to the person leaving the service. I beg to move the amendment at this point, and I wish to test the opinion of the House.
6.57 pm
Contents 113; Not-Contents 152.
CONTENTS
Adams of Craigielea, B.
Addington, L.
Alderdice, L.
Avebury, L.
Barker, B.
Bassam of Brighton, L.
Beith, L.
Berkeley of Knighton, L.
Best, L.
Bichard, L.
Bonham-Carter of Yarnbury, B.
Bradley, L.
Bragg, L.
Brinton, B.
Brookman, L.
Burnett, L.
Burt of Solihull , B.
Butler of Brockwell, L.
Cameron of Dillington, L.
Carlile of Berriew, L.
Chidgey, L.
Clark of Windermere, L.
Collins of Highbury, L. [Teller]
Cotter, L.
Davies of Oldham, L.
Desai, L.
Dholakia, L.
Donaghy, B.
Dykes, L.
Falkner of Margravine, B.
Faulkner of Worcester, L.
Fearn, L.
Featherstone, B.
Foster of Bath, L.
Fox, L.
Glasgow, E.
Grantchester, L.
Greaves, L.
Grender, B.
Hamwee, B.
Hanworth, V.
Harris of Richmond, B. [Teller]
Hayter of Kentish Town, B.
Healy of Primrose Hill, B.
Humphreys, B.
Hunt of Chesterton, L.
Hunt of Kings Heath, L.
Jones, L.
Jones of Cheltenham, L.
Jones of Whitchurch, B.
Judd, L.
Kennedy of Southwark, L.
Kerr of Kinlochard, L.
Kerslake, L.
Kirkhill, L.
Kramer, B.
Lee of Trafford, L.
Lester of Herne Hill, L.
Liddell of Coatdyke, B.
Liddle, L.
Lipsey, L.
Loomba, L.
Low of Dalston, L.
Ludford, B.
McAvoy, L.
McDonagh, B.
McFall of Alcluith, L.
Mackenzie of Framwellgate, L.
McKenzie of Luton, L.
McNally, L.
Maddock, B.
Manzoor, B.
Masham of Ilton, B.
Mendelsohn, L.
Miller of Chilthorne Domer, B.
Monks, L.
Morris of Aberavon, L.
Morris of Handsworth, L.
Paddick, L.
Palmer of Childs Hill, L.
Parminter, B.
Patel, L.
Pinnock, B.
Razzall, L.
Rennard, L.
Roberts of Llandudno, L.
Rodgers of Quarry Bank, L.
Scott of Needham Market, B.
Scriven, L.
Sharp of Guildford, B.
Sheehan, B.
Shipley, L.
Shutt of Greetland, L.
Skidelsky, L.
Smith of Newnham, B.
Stephen, L.
Stevenson of Balmacara, L.
Stoddart of Swindon, L.
Stoneham of Droxford, L.
Storey, L.
Taylor of Bolton, B.
Taylor of Goss Moor, L.
Teverson, L.
Thomas of Gresford, L.
Tyler, L.
Tyler of Enfield, B.
Wallace of Tankerness, L.
Walmsley, B.
Wheeler, B.
Wigley, L.
Williams of Crosby, B.
Wills, L.
Wrigglesworth, L.
NOT CONTENTS
Ahmad of Wimbledon, L.
Altmann, B.
Anelay of St Johns, B.
Arbuthnot of Edrom, L.
Ashton of Hyde, L.
Astor of Hever, L.
Berridge, B.
Blencathra, L.
Borwick, L.
Bourne of Aberystwyth, L.
Bowness, L.
Brady, B.
Bridgeman, V.
Bridges of Headley, L.
Browne of Belmont, L.
Browning, B.
Callanan, L.
Cathcart, E.
Cavendish of Furness, L.
Chadlington, L.
Chalker of Wallasey, B.
Chester, Bp.
Chisholm of Owlpen, B.
Cooper of Windrush, L.
Cope of Berkeley, L.
Cormack, L.
Courtown, E.
Crickhowell, L.
De Mauley, L.
Deben, L.
Denham, L.
Dixon-Smith, L.
Dobbs, L.
Dunlop, L.
Eaton, B.
Eccles, V.
Eccles of Moulton, B.
Elton, L.
Evans of Bowes Park, B.
Fairfax of Cameron, L.
Faulks, L.
Fink, L.
Finkelstein, L.
Finn, B.
Fookes, B.
Forsyth of Drumlean, L.
Fowler, L.
Framlingham, L.
Freeman, L.
Freud, L.
Gardiner of Kimble, L. [Teller]
Gardner of Parkes, B.
Gilbert of Panteg, L.
Goodlad, L.
Grade of Yarmouth, L.
Griffiths of Fforestfach, L.
Hague of Richmond, L.
Hamilton of Epsom, L.
Harris of Peckham, L.
Hay of Ballyore, L.
Helic, B.
Higgins, L.
Hodgson of Abinger, B.
Hodgson of Astley Abbotts, L.
Holmes of Richmond, L.
Horam, L.
Howard of Lympne, L.
Howard of Rising, L.
Howe, E.
James of Blackheath, L.
Jenkin of Kennington, B.
Jopling, L.
Kakkar, L.
Keen of Elie, L.
King of Bridgwater, L.
Kinnoull, E.
Kirkham, L.
Lamont of Lerwick, L.
Lansley, L.
Lawson of Blaby, L.
Leigh of Hurley, L.
Lexden, L.
Lindsay, E.
Lingfield, L.
Liverpool, E.
Livingston of Parkhead, L.
Lupton, L.
Lyell, L.
McIntosh of Hudnall, B.
Maginnis of Drumglass, L.
Mancroft, L.
Marlesford, L.
Maude of Horsham, L.
Mawson, L.
Montrose, D.
Morris of Bolton, B.
Nash, L.
Neville-Jones, B.
Neville-Rolfe, B.
Newlove, B.
Noakes, B.
Oppenheim-Barnes, B.
O'Shaughnessy, L.
Patten, L.
Patten of Barnes, L.
Pidding, B.
Polak, L.
Popat, L.
Porter of Spalding, L.
Prior of Brampton, L.
Redfern, B.
Renfrew of Kaimsthorn, L.
Ribeiro, L.
Ridley, V.
Risby, L.
Robathan, L.
Rock, B.
Rogan, L.
Rotherwick, L.
Ryder of Wensum, L.
Sanderson of Bowden, L.
Scott of Bybrook, B.
Seccombe, B.
Selborne, E.
Selkirk of Douglas, L.
Shackleton of Belgravia, B.
Sharples, B.
Sheikh, L.
Sherbourne of Didsbury, L.
Shields, B.
Shinkwin, L.
Shrewsbury, E.
Skelmersdale, L.
Slim, V.
Smith of Hindhead, L.
Stedman-Scott, B.
Stowell of Beeston, B.
Stroud, B.
Taylor of Holbeach, L. [Teller]
Tebbit, L.
True, L.
Tugendhat, L.
Verma, B.
Wei, L.
Wellington, D.
Wheatcroft, B.
Wilcox, B.
Willetts, L.
Williams of Trafford, B.
Willoughby de Broke, L.
Young of Cookham, L.
Younger of Leckie, V.
7.08 pm
Amendments 70C and 70D not moved.
71: Clause 26, page 46, line 34, leave out “to which subsection (5) applies” and insert “under section 153A”
Baroness Neville-Rolfe: My Lords, these amendments address the recommendations of the Delegated Powers and Regulatory Reform Committee relating to Clause 26. The effect would be to make all regulations made under the clause subject to the affirmative resolution procedure. We have seen the committee’s report and I take the opportunity to thank the committee for its detailed scrutiny. We are happy to accept the recommendations, to which these amendments give effect. I commend them to the House.
Baroness Hayter of Kentish Town: My Lords, as we moved them in Committee, I do not think the Minister will be very surprised to know that we are delighted with these amendments.
Amendments 73A and 73B not moved.
74: Clause 29, page 49, line 16, at end insert—
“( ) section (UK Green Investment Bank: transitional provision) (UK Green Investment Bank: transitional provision);”
76: Clause 30, page 50, line 11, at end insert—
“( ) Paragraphs A1 and 11E of Schedule 1 (establishment of Small Business Commissioner as corporation sole and provisions about the application of the seal etc) extend to England and Wales and Northern Ireland.”
7.11 pm
Junior Doctors Contract
Statement
7.19 pm
The Parliamentary Under-Secretary of State, Department of Health (Lord Prior of Brampton) (Con): My Lords, with the leave of the House, I shall now repeat a Statement made earlier today by my right honourable friend the Secretary of State for Health in the other place. The Statement is as follows:
“With permission, Mr Speaker, I would like to update the House on the junior doctors’ strike. Earlier this month, the union representing doctors, the BMA, balloted for industrial action over contract reform. Because the first strike is tomorrow, I wish to update the House on contingency plans being made.
Following last week’s spending review, no one can be in any doubt about this Government’s commitment to the NHS, but additional resources have to be matched with even safer services for patients. That is why, on the back of mounting academic evidence that mortality rates are higher at weekends than in the week, we made a manifesto commitment to deliver truly seven-day hospital services for urgent and emergency care.
However, it is important to note that seven-day services are not just about junior doctor contract reform. The Academy of Medical Royal Colleges noted that,
‘the weekend effect is very likely attributable to deficiencies in care processes linked to the absence of skilled and empowered senior staff in a system which is not configured to provide full diagnostic and support services 7 days a week’.
So our plans will support the many junior doctors who already work weekends with better consultant cover at weekends, seven-day diagnostics and other support services and the ability to discharge at weekends into other parts of the NHS and the social care system.
But reforming both the consultants’ and junior doctors’ contracts is a key part of the mix because the current contracts have the unintended consequence of making it too hard for hospitals to roster urgent and emergency care evenly across seven days. Our plans are deliberately intended to be good for doctors. They will see more generous rates for weekend work than those offered to police officers, fire officers and pilots. They protect pay for all junior doctors working within their legal contracted hours, compensating for a reduction in anti-social hours with a basic pay rise averaging 11%. They reduce the maximum hours a doctor can work in any one week from 91 to 72 and stop altogether the practice of asking doctors to work five nights in a row. Most of all, they will improve the experience of doctors working over the weekend by making it easier for them to deliver the care they would like to be able to deliver to their patients.
Our preference has always been a negotiated solution but, as the House knows, the BMA has refused to enter negotiations since June. However, last week I agreed for officials to meet it under the auspices of the ACAS conciliation service. I am pleased to report to the House that, after working through the weekend, discussions led to a potential agreement early this afternoon between the BMA leadership and the Government. This agreement would allow a time-limited period during which negotiations can take place, and during which the BMA agrees to suspend strike action and the Government agree not to proceed unilaterally with implementing a new contract. This agreement is now sitting with the BMA junior doctors’ executive committee, which will decide later today if it is able to support it.
However, it is important for the House to know that right now strikes are still planned to start at 8 am, so I will now turn to the contingency planning we have undertaken. The Government’s first responsibility is to keep their citizens safe. This particularly applies to those needing care in our hospitals, so we are making every effort to minimise any harm or risks caused by the strike. I have chaired three contingency planning meetings to date and will continue to chair further such meetings for the duration of any strikes.
NHS England is collating feedback from all trusts but currently we estimate that the planned action will mean that up to 20,000 patients may have vital operations cancelled, including approximately 1,500 cataract operations, 900 skin lesion removals, 630 hip and knee operations, 400 spine operations, 250 gall bladder removals and nearly 300 tonsil and grommet operations.
NHS England has also written to all trusts asking for detailed information on the impact of the strikes planned for 8 and 16 December, which will involve the withdrawal of not just elective care but urgent and emergency care. We are giving particular emphasis to the staffing at major trauma centres and are drawing up a list of trusts where we have concerns about patient safety. All trusts will have to cancel considerable quantities of elective care in order to free up consultant capacity and beds. So far the BMA has not been willing to provide assurances that it will ask its members to provide urgent and emergency cover in areas where patients may be at risk, and we will continue to press for such assurances.
It is regrettable that this strike was called even before the BMA had seen the Government’s offer, and the whole House will be hoping that the strike is called off so that talks can resume. But whether or not there is a strike, providing safe services for patients will remain the priority of this Government as we work towards our long-term ambition to make NHS care the safest and highest-quality in the world. I commend this Statement to the House”.
My Lords, that concludes the Statement.
7.24 pm
Lord Hunt of Kings Heath (Lab): My Lords, I am very grateful to the Minister for repeating the Statement. My understanding is that since the Statement was read in the other place, progress has been made in the ACAS talks. Perhaps the Minister will update the House in response to my comments. I very much welcome the outcome of those ACAS discussions.
The Minister knows that the dispute has been very damaging to workforce morale. He also knows that many junior doctors have already voted with their feet, or are planning to over the coming months. What action is his department taking to stop the brain drain of our brightest medics to countries such as Australia and New Zealand? It is clear that the past few months have been very bruising to junior doctors and it is vital that this is turned around so that they come back to a positive view of working in our National Health Service. I hope that the progress that has been made this evening will mark a change in tone and approach on behalf of the Government.
No one disagrees that if you go to hospital in an emergency on a Sunday you should get the same treatment as you would on a Tuesday. But the Health Secretary has repeatedly failed to make the case for why reforming the junior doctors contract is essential to that aim. My honourable friend Mrs Heidi Alexander has made a genuine offer to the Health Secretary to work with him on a cross-party basis to do everything possible to eradicate the so-called weekend effect and to support any necessary reforms
to achieve that aim. But in return, the Health Secretary needs to be absolutely clear about what needs to change in order to deliver that.
As many studies have concluded, there needs to be much more research into why there is a weekend effect so that we can make sure we focus efforts on the actual problem. We hope that the Health Secretary will commit to commissioning new independent research into how reforming staffing arrangements at the weekend might help improve the quality of weekend services. Will the Minister say what other steps are being taken to ensure that we have consistent seven-day services, including making sure that social care is available outside the working week?
We welcome the fact that the Health Secretary finally agreed to ACAS talks last week and I very much welcome the news from those talks tonight. Nobody wants patients to suffer and let us hope that we can put the whole sorry saga behind us.
Baroness Walmsley (LD): My Lords, I, too, thank the Minister for repeating the Statement. I, too, understand that the junior doctors have now agreed to call off tomorrow’s strike. Will the Government therefore apologise to the 4,000 patients whose treatments tomorrow will have been delayed by this going right up to the wire and the Government being so reluctant to go to ACAS for negotiation?
I understand that more detailed negotiations will now take place. Will the Government be entering those negotiations without prejudice and with the well-being of patients—and the well-being of doctors, upon which the well-being of patients depends—in their minds as they negotiate? Will they take very seriously the concerns that have been put to them by conscientious junior doctors, who work very hard for us?
I, too, have some scepticism about the data in relation to the so-called weekend effect. I echo the call of the noble Lord, Lord Hunt, for some independent research into the causes of the less good outcomes that undoubtedly occur in some places—to what degree, we do not know. I am quite sure that the junior doctors and their contract are not the only cause of any such weekend effect.
Lord Prior of Brampton: My Lords, first, I am very pleased to confirm to the House that in the past few minutes the BMA and the Government have reached an agreement, which will allow time for negotiations to take place. The BMA has agreed to suspend industrial action, including that planned for tomorrow, and the Government have agreed not to proceed unilaterally with implementing the new contract. By any standards, that is very good news.
The noble Lord referred to the brain drain. The best thing we can do in the short term is to sort out the contractual dispute with the junior doctors. That is absolutely fundamental to restoring morale among doctors. There is a feeling among some junior doctors that they are not properly valued. This goes way
beyond some of the issues being discussed on the contract. It is about their training and a lot of other issues that bear on this.
There have been, I think, two studies published in the BMJ now about the weekend effect, along with studies in other parts of the world as well, such as the US. There is no doubt that there is a weekend effect. It is to do with lack of senior cover at the weekends, diagnostics and all those kinds of issues. This is a broad issue, which can be addressed only if we have a seven-day service. It is certainly not just about junior doctors.
We do not have much time but I will say this about the Secretary of State: patient safety is his motif. If he wishes to be remembered for anything, it is patient safety. That is why he agreed to go to ACAS when the BMA suggested it. He was absolutely right to do so and I congratulate both the BMA and the Secretary of State for coming to this agreement just in time.
7.31 pm
Lord Patel (CB): My Lords, I am not allowed by the rules to make any statement but only to ask a question, which is a pity because I wanted to make some comments about what the Minister just said. We will leave for another day the discussion of this mounting academic evidence that mortality rates are higher. They might be, but we need to investigate the cause-and-effect scenario. Leaving that aside, the Statement says:
“So our plans will support the many junior doctors who already work weekends with better consultant cover at weekends, seven-day diagnostics and other support services, and the ability to discharge at weekends into other parts of the NHS and the social care system”.
Is the Minister able to update us on whether we will have another Statement related to this or whether there are plans in process to deliver all that the Statement says?
Lord Prior of Brampton: There is a recognition that the weekend effect is caused by many factors. It is certainly not just the ability of trusts to roster junior doctors at weekends but the absence of senior cover and the fact that much diagnostic capacity is not available at weekends. Of course, you also have to be able to discharge patients at weekends, which means that social care has to be working as well. To have a truly seven-day NHS requires a lot more people and resources to be available than just junior doctors.
Lord Lansley (Con): My Lords, my noble friend the Minister’s repetition of the Statement and what he was able to say additionally in response to noble Lords was very welcome. Does he agree that going back more than 20 years, to when the new deal for junior doctors was first brought in and we supported them on their concerns about Modernising Medical Careers, we on these Benches have never been lacking in support for junior doctors? We understand that when one is on the ward in a hospital at the weekend, very often the doctor who you see is a junior doctor. The point is that it is in the best interests of junior doctors and patients for seven-day working to be introduced, with proper
rostering, rather than discriminating between Monday to Friday and the weekend as if they were different parts of what is in truth the same service. If we get it right, as my noble friend says, it should be possible to achieve such an agreement without bringing any detriment to junior doctors as a consequence, but rather by supporting them in the work that they have to do.
Lord Prior of Brampton: I thank my noble friend for those comments. One of the issues often raised by junior doctors is that they do not always feel properly supported at weekends. I think that having more seniors available at weekends—and late at night, for that matter—will be welcomed by junior doctors. There is also sometimes a misunderstanding in the public mind, as junior doctors can actually be quite senior doctors. A medical registrar is, by most standards, a senior doctor so junior doctors are not just people who have recently finished their training.
Lord Tugendhat (Con): My Lords, does the Minister agree that during the build-up to this strike, which has now happily been called off, a great burden was put on to the shoulders of the NHS management? It is often much maligned and compared unfavourably with the doctors and nurses and other medical staff but, once again, the management staff have shown their ability to rise to the challenge. I hope that the Minister might feel it appropriate to give them a word of praise.
Lord Prior of Brampton: I am delighted to do that, having been the chairman of an NHS trust for 12 years myself and knowing that my noble friend was chairman of the Imperial NHS trust and that the noble Lord, Lord Hunt, who is opposite, was chairman of the Heart of England NHS Foundation Trust. Given the pressure and stresses on management and the complexity of its day-to-day role, I think that no other organisation is as challenging as a large acute hospital. Managers have to do their work in the full glare of publicity as well and it is extremely difficult, so I certainly join my noble friend in paying tribute to the extraordinary work that many of them do in the NHS.
Baroness Masham of Ilton (CB): My Lords, the Statement says that the Government’s ambition is,
“to make NHS care the safest and highest quality in the world”.
How is this to be achieved without enough high-quality doctors? Do the Government agree that, regarding the teams—the therapists and nurses, as well as the doctors—we need hard-working but contented staff?
Lord Prior of Brampton: The noble Baroness is absolutely right that the biggest asset in the NHS is the people who work in it. That is not just doctors and nurses but therapists, allied health professionals and all those people such as porters, caterers and the like. We have an extraordinary workforce, which, sadly, we often take for granted. I am always struck by the results of the NHS staff survey, which are nothing like as good as one would expect to see in many other businesses, so I agree entirely with the noble Baroness.
The North Sea under Pressure (EUC Report)
Motion to Take Note
7.37 pm
Moved by Baroness Scott of Needham Market
That this House takes note of the Report from the European Union Committee The North Sea under pressure: is regional marine co-operation the answer? (10th Report, Session 2014–15, HL Paper 137).
Baroness Scott of Needham Market (LD): My Lords, I am very grateful for the opportunity to debate this report this evening. It is fair to say that while regional marine co-operation in the North Sea is not the snappiest of subjects, the inquiry that led to this report was truly a worthwhile endeavour.
As your Lordships may know, the remit of what was then Sub-Committee D, which I chair, includes agriculture, fisheries, the environment, energy and climate change. Unlike the House of Commons Select Committees, one of the strengths of Select Committees in your Lordships’ House is the cross-cutting nature of our inquiries and reports. The report before your Lordships this evening is one such example, because the governance of the North Sea covers topics as diverse as reform of the fisheries policy, cross-border energy installations and the effect of persistent organic pollutants on seabirds.
I am grateful to the members of Sub-Committee D at that time who took part in the inquiry, many of whom were rotated off because of the new procedural rules. I am also pleased to see current members of the energy and environment sub-committee here this evening. As is often the case with inquiries, they lead you into places that you never quite expected at the outset, so we learned rather more about the Dogger Bank and radial and meshed energy grids than we thought possible. I extend my thanks to our specialist advisers, Dr Irene McMaster and Mr Rodney Anderson, the clerk, Patrick Milner, and our policy analyst, Alistair Dillon. Before going any further, I declare an interest as a member of the board of the Harwich Haven Authority, which is a trust board.
Before I go on to speak about the report itself, I would like to mention my concerns about the timing of the debate this evening. The reports produced by Select Committees of your Lordships’ House are widely read as they offer authoritative, well-researched and thoughtful contributions to whatever topics they look at. A great deal of effort is expended and they are usually very well received, far beyond this Chamber. It is therefore a great personal disappointment that we are here this evening debating a report that was published more than eight months ago and for which we took the evidence a year ago. Timely debate can be critical for the overall impact of an inquiry’s conclusions and recommendations. This is far too long to wait to debate a report here in your Lordships’ House, and I regret to say that this is not an isolated case. I would underline the need for the Government and the usual channels to take note of various resolutions of the House which call for regular debates of Select Committee reports in prime time.
The Government’s official response to our report came two months late and, when it came, it was sadly dismissive in tone. A letter from George Eustice MP, Minister for the Marine Environment, explained that the response was delayed by a “circumstance” outside the Government’s control. I would appreciate it if the Minister could elaborate on what that particular circumstance was.
The North Sea is one of the most industrialised seas in the world and is under enormous pressure. My committee found that attempts to manage the competing pressures in a strategic manner are embryonic and unpredictable. We are expecting more and more from this single natural resource, both economically and environmentally. These objectives should not be mutually exclusive, but delivering them in harmony requires effort to co-operate—between countries, between sectors, within sectors and on the rules that govern the sea. Whereas it is now common practice to manage a river by taking into account the whole system from source to mouth and including its surrounding area, rather than through each local authority managing its own part separately, we still manage the North Sea by administrative or national boundaries. We found this segmented approach to be unsustainable.
In our evidence, we found that the need to co-operate was universally acknowledged but that the main stumbling block is lack of political leadership. This is where we believe government has to step up to the plate. If it fails to give such leadership and to co-ordinate and co-operate effectively, we risk failing to take advantage of the opportunities offered by the North Sea and risk its long-term sustainability. My committee concluded that no existing body or mechanism has a sufficiently broad remit to facilitate the political co-operation required to make the necessary step change in managing the North Sea basin. We argued for the re-establishment of the North Sea Ministerial Conference. Our main recommendation to the Government was that they should convene this ministerial conference in an effort to deliver the urgently required political and strategic vision that will sustain the North Sea for generations to come. It was bitterly disappointing that the Government’s response to the report dismissed the recommendation, arguing that the previous North Sea Ministerial Conference came to an end because,
“all the significant discussions and legal developments were taking place in other fora”.
I would be grateful if the Minister could explain which other fora exist for this work, because in all our evidence, with the single exception of that for energy, we were unable to identify any.
We also concluded that English local authorities must be more engaged in North Sea co-operation and recommended that the Government work with English local authorities to identify and, most importantly, address barriers to their participation. This is currently minimal for English local authorities compared to those in Scotland and from other North Sea countries. Once again, the Government dismissed our recommendation. I would be grateful if the Minister could explain whether he believes it is important for local authorities to engage with the
North Sea Commission and why the Government will not work with the LGA and local authorities to facilitate this.
My committee found that although a lot of data are collected around the North Sea, by academic researchers and industries alike, very few of them are shared. We were concerned about a duplication of effort and that the best and most cost-effective use is simply not being made of those data. Having most of the data in one place would allow researchers and planners alike to develop a much clearer understanding of the sea and to plan for its future. It is telling that we were unable to source a single map depicting all the seabed uses of the North Sea. Commitment to a single database would allow resources to be allocated accordingly. It could become a one-stop shop, covering the costs not only of data collation but of quality assurance, which we heard can be expensive.
We called for greater progress on electricity interconnection. The North Sea has enormous potential to provide cross-border energy supply. This could be hugely important to every business and consumer if it can reduce costs by delivering energy more efficiently. Encouragingly, the European Commission has expressed its active support for greater energy co-operation around the North Sea and has committed to the development of an action plan. We heard that currently offshore wind farms are connected to national grids individually and that national grids are then linked independently through interconnectors. We recommend a pilot project creating a more “meshed” approach, which would integrate both offshore wind farms and interconnectors. We heard that there are technical obstacles to this measure, but they are mostly of a regulatory nature, relating to trading options, cost allocations and so on. We understand that the Government are already working to overcome these through their involvement in the North Seas Countries’ Offshore Grid Initiative. Could the Minister update us on that work?
The report was well received in other North Sea states, including Germany and the Netherlands, and a number of stakeholders have submitted their own responses, making helpful suggestions on how to take the issues forward. These include the East of England Energy Group and the Institute of Marine Engineering, Science and Technology’s joint Marine Special Interest Group. They told us told us that our recommendations, if implemented, could,
“start a process of unmatched international co-operation in the management of the North Sea”.
The North Sea Commission’s Assen Declaration with the Conference of Peripheral Maritime Regions of Europe followed up our key recommendation by calling for the Dutch presidency of the European Council, starting in the new year, to develop a North Sea agenda. Similarly, the European Commission’s response was positive and receptive to our message that increased regional co-operation is the key to harnessing the full potential of the North Sea.
To use the opening words of the report:
“Often out of sight and out of mind, the North Sea is the lifeblood of more than 60 million people who live on or near its shores”.
The North Sea is a shared resource and plays an important part in the lives of many of us, whether we are mindful of it or not. Regional co-operation enormously enhances the possibilities open to North Sea countries and industries and can bring significant benefits for the environment. We should not lose sight of this approach. I beg to move.
7.47 pm
Lord Hunt of Chesterton (Lab): My Lords, I commend the EU Committee on its report and this debate, which cover many aspects of the North Sea environment. I begin by endorsing the remarks of the noble Baroness, Lady Scott, about data exchange. I had many experiences of this in the Met Office, dealing with meteorological data. The situation was very poor 20 years ago, but it has improved progressively. I know that the interagency committee is dealing with data, and that is a very important point.
The North Sea plays a critical role in the life of all north European countries, including the UK. The coast and the different regions of the seas are extraordinarily precious environments, many of which have special qualities. Weather, oceanography, ecology, shipping and fishing all have traditional interests in the North Sea, and these are now joined in the 20th and 21st centuries by new interests relating to pollution and its dispersal. There are new kinds of pollution, mainly associated with radioactivity, which is a source of great concern to other countries around the North Sea. This radioactivity comes largely from the UK and France, although there is some from Germany.
The other modern feature of the environment of the North Sea this century, of course, is wind and wave power. There are also the geological resources: the extraction of gravel is a long-standing activity, and the idea of using the rocks under the North Sea as a repository of carbon dioxide was thought to be a central part of this Government’s environmental policy. That was until last Wednesday, when it stopped being part of their policy with a £1 billion cut in the money allocated to it, to the consternation of the Shells and the BPs and of other countries. Maybe the Minister will have something to say on that.
The other feature is that there is a strong tradition in the UK of the scientific study of the North Sea. I was delighted to find that the Venerable Bede, no less, discovered in the eighth century the changing times of the tides by using his contacts in the abbeys around the coast. Of course, we also have world-class governmental and institutional laboratories, including those of universities. As stated in the report, there is a plenitude of data and those institutions make their contribution.
I declare an interest as president of ACOPS, now the Advisory Committee on Protection of the Sea, founded by Lord Callaghan and later presided over by my noble friend Lord Clinton-Davis. It has been successfully pressing for strong environmental regulation at international organisations, in London at the International Maritime Organisation and through the London dumping convention. Every year, there is an ACOPS survey of marine pollution sponsored by the Maritime and Coastguard Agency. Those who, like me, are old enough may recall holidays in the 1950s on
the beaches when they were covered with tar. It was such conventions that prevented the spreading of tar from ships, which is an enormous boon. That came about, so the myth says, from the Callaghan family holiday in Wales at the time. He was an instigator of the founding of the organisation.
Another feature is that beaches are cleaner as a result of better sewerage systems, some of which, it must be said, followed privatisation of the water companies in the UK, and coal is no longer found on northern beaches. However, sadly, most visitors to the beaches that I know have experienced long-term deterioration of the biodiversity of flora and fauna. One sees fewer sea anemones, shrimps and crabs in the rock pools—except, as my daughter tells me, plastic crabs, so that children have something to play with.
However, the main complaint about the marine environment is not the aesthetic aspect of the coast but the reduction in fishing, which is different in various parts of the North Sea. There are signs that it is returning, but there has been a devastating impact.
The report begins with a very useful review of marine biodiversity and its degradation, but it is surprising that it does not include the strong recommendation that government laboratories and other institutional laboratories should be strengthened. A Minister recently revealed to the House of Lords Science and Technology Committee that he was surprised that it was so important to maintain government laboratories, as opposed to privatised ones. He said that the reason was that foreign countries have more confidence if that work is done in governmental laboratories. The laboratory of CEFAS and the Scottish Association for Marine Science laboratory in Oban are examples of that, and I hope the Government will assert that their work will continue.
The report rightly emphasises the need for collaboration between UK and European laboratories and to relate better scientific knowledge to the marine business environment and local authorities. The Government state in their response to the report, which rather disappointed the noble Baroness, that one of the most important measures being taken is the establishment of marine protected areas. I hope the Minister will tell us how many marine protected areas there are. I read document after document from Defra, but I never get an answer. All I know is that there is one, Lundy Island. I have been asking everyone where there is another marine protected area in operation, but I cannot get a positive answer. If the Minister’s colleagues here can give us an answer, that will be fantastic, because nobody else knows. There is a challenge.
What progress is expected in the establishment of marine protected areas? I know that it is difficult, because there is the big question of what happens to a Spanish ship when it gets to Lundy, for example. Sometimes you meet Spanish chaps in the pubs opposite Lundy—I know a little bit about that area. I would like to hear as much as the Minister can provide us with. What is the timetable for the expected so-called rollout of marine protected areas? As we all know, the country that has been most successful in that regard is New Zealand. Lobsters went into the marine protected areas there, were not caught, crept out and then the fishermen caught them on the outside. Fine: it works.
I understand that the problem is with implementation because of lack of agreement on fishing rights between different countries. The EC is apparently working to resolve that impasse; what is the timetable? The government response to the report shows the critical role of the EC. Are the negotiations the role of Defra, and which other government departments are involved?
Another scientific challenge raised in the report is the effect of wind turbine farms. Your Lordships may not realise that the Danish Government’s meteorological agency has been studying in detail the effect on Denmark’s climate of all the very large wind farms off Denmark. In fact, because wind turbines take force out of the wind—drag, as we would call it—that changes the airflow over the land, which has some effect on agriculture. It is a phenomenon seen in the United States, where huge wind farms in Texas have a significant impact on the rainfall downwind. That is a factor that needs to be considered. There are also reports on disturbances to the seabed by wind turbines because of the connecting cables and the frequent movement of maintenance ships. These disturbances can affect the sea bottom ecology and fishing. I would be interested to know the current position.
To return to the remark I made at the beginning, another challenge that causes great concern to the countries around the North Sea is the spreading of radioactive materials from nuclear processing. I personally believe that nuclear power is essential to the UK and France as a form of low-carbon energy, but it is very important that we ensure that radioactive materials are treated better. If they are dispersing, that should be openly known. Those issues are regularly considered by the International Atomic Energy Agency, but are they are also discussed by the EC groups dealing with the North Sea environment?
7.57 pm
Lord Greaves (LD): My Lords, it is a great pleasure to speak to the Motion and the report introduced by my noble friend Lady Scott of Needham Market. I congratulate her and the whole committee on a high-quality report. It has gone into the subject of the North Sea basin as a whole in great depth and breadth, covered a number of disciplines and asked some very pertinent questions of the Government—not all of which the Government have satisfactorily answered.
Reading the report took me back to many happy hours—days and nights, I think—spent in this Chamber on the Marine and Coastal Access Bill, as it then was. We were breaking new ground in a number of areas, particularly marine planning. There had not really been a marine planning regime before that Act came into force. It is interesting, reading the report, to see how far it has got—perhaps not as far as we had hoped. It also took me back to large amounts of time I spent when I was much younger taking holidays on the Yorkshire coast, on the North Sea coast, particularly at Filey—but perhaps that is for another day.
One theme that comes through the report is the fundamental need for co-operation between countries and communities and what I suppose people might call stakeholders—the users of the North Sea—all
around the North Sea basin. This is one area where the report is particularly critical; it points out that the only existing cross-border body is the North Sea Commission, which is formed of local authorities. For funding reasons, English local authorities along the North Sea coast have withdrawn from that body, which is surely not a good thing. Far be it from me, as a member of a local authority responsible for overseeing the finances of that local authority, to criticise councils when they find that their present financial circumstances are such that they really have to cut back on everything except the most essential things. If they have to choose between serious cuts in social care, for example, or cutting rural bus services or closing libraries and being a member of a European, North Sea-wide body, it is not difficult to see why they make the decision that they do. But surely it is not good. The summary of the report says:
“There are also substantial regulatory tensions. Different countries around the North Sea, for example, take different approaches to defining the environmental quality of their parts of the basin”.
They suggest that the European Commission should “improve guidance”, and so on. It goes on to say:
“As the responsibility for the marine environment lies at a local, an EU and an international level, we urge the UK Government to work with English local authorities to identify and address barriers to their co-operation with other authorities around the North Sea”.
The response from the Government to the committee, which as my noble friend said took them rather a long time to produce, is very unsatisfactory. It says:
“The Government believes that it is for each local authority to determine whether or not the costs associated with membership of the North Sea Commission or any other forum represents value for money and adds value to existing structures through which local authorities can collaborate on economic development such as LEPs”.
That is a very unsatisfactory response, because local authorities might well take the view—and probably do take the view—that it would be value for money and add value to existing structures, but they do not have the money to do it. This is the kind of response that we get increasingly from this Government to local authorities across a whole series of areas—that local priorities are for local authorities. But if you do not have any money, your priorities may be the same but the level at which you can fund them goes down. They talk in a way that shows they misunderstand the issue; they talk about the coastal concordat, which was launched in England,
“in November 2013 to increase cooperation between terrestrial and marine regulators and to streamline the consenting process for coastal development”.
It lists the concordat partners, which include various government departments,
“the Marine Management Organisation, the Environment Agency, Natural England and National Parks England”.
Those bodies will not really be able to organise co-operation across the North Sea with partners in Holland, Denmark or Norway. It is a totally unsatisfactory answer, which suggests that it is just a brush-off from the Government.
One thing that we were very conscious about when we saw the Marine and Coastal Access Bill through your Lordships’ House was that we were setting up a
new marine planning process—a new framework, to include both licensing, or development control, and a proper strategic planning of shared space through local marine plans. One of the disappointments of the marine planning system has been how long it has taken to get those plans into place. Planning is often regarded as a hindrance, but it is a positive thing; in the economic sphere it provides predictability for investment and in the environmental sphere it provides a reliable and firm framework and basis for proper ecological controls. We were very aware that it needed to be coherent and comprehensive. One innovation from the Marine and Coastal Access Act were marine conservation zones. Another disappointment is the slow progress and relatively small number of those zones that have been created. The first tranche was based on an initial series of recommendations to the Government by people who knew what they were doing—the Joint Nature Conservation Committee and Natural England—for 127 MCZs. However, the first tranche was only 27, and there is now a consultation, out since the beginning of this year, for another tranche, but the total number being looked at is only 23, which would be much less than half the number that was expected. My question for the Government is whether they think the number and extent of those zones will be sufficient to provide the coherent ecological network.
Lord Hunt of Chesterton: If I understand the noble Lord correctly, he is talking about plans, not about actual areas that are in operation. Is that correct?
Lord Greaves: The first 27 marine conservation zones are in operation; the next 23 are in tranche 2, on the drawing board.
I very much welcome the report; it was a very good read. I congratulate the committee and wish the Government would take it a bit more seriously. In particular, I wish that they were not pulling back resources for the whole area of marine regulation, planning and promotion. I have two questions. What has been the funding of the Marine Management Organisation since it was set up by the Act, and what number of staff does it have now compared with the number at the beginning? It has been subject to cuts like everybody else, and it is not surprising that things are slowing down.
8.07 pm
Lord Cameron of Dillington (CB): My Lords, like most Peers serving on EU Sub-Committee D during the preparation of this report, I am no longer on the sub-committee, or on the EU Committee. In passing, I should say that it is absurd that the quality of House of Lords committee work, arguably our greatest input to UK and EU life, should be sacrificed on the altar of Buggins’s turn—but I shall say no more and start again.
Like most Peers on Sub-Committee D during the preparation of this report, I was amazed at the urgent need for action on the planning of our marine environment. Anyone who has been to sea, out of sight of land, will probably have a vision of a vast and extensive watery desert, with no sign of human activity anywhere, either on the surface or under it. Little do
they know that there is a host of interweaving and sometimes contradictory activity going on; the landscape is constantly changing and getting more crowded.
For a start, our knowledge of our seas is poor; no formal map of EU marine territory exists, or even certainty about where member states’ responsibilities begin or end. There are sometimes gaps and sometimes overlaps. Imagine having parts of England devoid of any planning controls or regulation; imagine the mayhem and possible environmental degradation that would soon appear—or, possibly worse still, imagine if two different authorities reckoned that they were both running the same bit of countryside. Again, I would foresee chaos.
Then there is the fact that our seas are already in a state of some disarray; many commercial fishing stocks are not assessed, and many biodiversity features and characteristics are unknown or not assessed. There is no current overview of the spatial extent of human activities. There is little co-ordination of data, which every member state is bound to produce under the marine strategic framework directive.
The reason this is so serious is because change is happening so fast. It is almost out of control and, unless we know what we have, there is no incentive to manage that change. For instance, there is change from climate change. This includes higher sea temperatures and increased acidification. We were told that in recent decades acidification has been happening 100 times faster than in the past 55 million years. Higher temperatures have resulted in the movement of species northwards by more than 1,000 kilometres. Meanwhile, 39% of assessed fish stocks in the north-east Atlantic—which includes the North Sea—are overexploited. I might add that in the Mediterranean and the Black Sea that figure is 88% of stocks, so we are quite good compared to others.
Eutrophication remains a problem, particularly at the entrance to the Baltic. Around the shores of Europe, 34% of sea birds are not in good status. Marine litter is accumulating, particularly microplastics which are building up in the food chain. I think it would be true to say that the ecological boundaries for sustainable use of our seas are currently unclear.
Meanwhile, the potential for growth in human activity, particularly in the North Sea, has never been greater. North Sea blue growth, as it is called, is a recognisable phenomenon and already represents a gross value added of at least €150 billion and employs about 850,000 people. For Norway, which is outside the EU, the direct and indirect GVA is about €50 billion, mainly based on the oil and gas industry. The oil and gas sector around the North Sea employs nearly 600,000 people. The shipping industry in the North Sea handles 648 million tonnes, with direct employment of 60,000 and a GVA of €11 billion. Shipbuilding amounts to €5 billion GVA and 64,000 jobs, and probably double those figures if marine equipment activities are included. The cruise and ferry sector promotes 10,000 jobs in the North Sea, which is about the same as the growing coastal protection sector—that is sea defences to you and me. Fisheries are in decline as overfishing of species continues, but still employ 100,000 people.
Meanwhile, new industries are on the rise. The UK is leading the offshore wind growth, with our Government’s 2020 target of 9 gigawatts or 3,000 turbines, twice what we have now, which they hope will rise to 30 gigawatts by 2030. Sea-based aquaculture is on the rise, as is marine mining and gravel extraction, along with the cultivation of algae and, of course, energy production from tide and waves. Possibly the biggest new disruptors of the North Sea seabed are the numerous electric cables needed to enhance the connectivity of Europe while at the same time bringing power back from the wind farms.
So noble Lords can see that there is already a lot of activity in the North Sea, and this can only increase, along with the incompatibility of some of the activities. Fishing and cables do not always work together, particularly where the dreaded beam trawling is involved. Neither do wind farms and shipping go well together—or, for that matter, gravel extraction and environmental conservation. Meanwhile, the lack of any real understanding of the cumulative impact of all this led one of our witnesses to say that,
“if you ask me whether our marine ecosystems are healthy, I would not be able to answer that question”.
There is, it appears, actually quite a lot of information being collected by both the public and private sectors, but there needs to be more effort to harmonise the methodology between member states and also to analyse the cumulative effect, disentangle the replication and from there put in place international co-operation to implement an effective planning and control system. However, it goes without saying that it is only by collating and understanding the evidence that we are ever likely to promote the necessary action.
I would have to say that the North Sea Regional Advisory Council is a very good example of where international voluntary co-operation has transformed what could have been a disastrous situation vis-à-vis fisheries, but I do not believe that for the multifaceted blue growth I have been describing we can rely totally on voluntary co-operation. There are just too many parties to get around the table and too many interactivity compromises to be made. The situation is also too urgent. We desperately need some form of international planning with a degree of oversight and even compulsion.
However, we were told by our Government that their marine planning was still at an early stage. I am glad to see by their response that this is beginning to change, but any planning we do must be aligned with neighbouring member states, and this alignment should be an urgent priority of the Commission. It, too, seems to have been given a wake-up call by our report, and that is good to see as our report was targeted at Brussels and at European action. However, I do not believe that the Commission should dictate from the centre exactly what should happen and where; rather, it should drive a North Sea forum composed of all the relevant stakeholders and, above all, it must fund the forum. The successful North Sea Regional Advisory Council, which I mentioned, only just pulled through because Aberdeen County Council, of all bodies, funded it in its early days—to the eternal credit of Aberdeen and the everlasting shame of the EU.
Apart from the funding, I believe that the necessary decisions should follow the principles of polycentric government whereby, with a central driving force and firmly enforced principles from the EU, which really has to grip this one, key management decisions should be made as close as possible to the scene of the events and the actors involved.
I commend the report and suggest that both the UK Government and the EU need to grip this exciting agenda before the environment suffers—or, indeed, the blue growth itself gets cut off in its prime.
8.16 pm
Baroness Wilcox (Con): My Lords, I congratulate the noble Baroness, Lady Scott of Needham Market, and the members of the European Union Committee on a most compelling report The North Sea under Pressure: is Regional Marine Co-operation the Answer? The answer must be yes, but the question is, how? I will be very interested to hear the Minister’s response to the committee’s recommendations.
For once, my industry, the sea fishing industry, might be showing us the way. I recommend that noble Lords read paragraphs 125 to 131 of the report and the evidence of the co-operation—would you believe it?—between the European Union and fishery stakeholders that was so welcomed by the National Federation of Fishermen’s Organisations and the Scottish Fishermen’s Federation. That is not something I ever thought I would see written down on paper, but it goes to show that when it gets tough, everybody has to get going.
The noble Baroness, Lady Scott, and her committee,
“note the successes that have resulted from the work of the fisheries Advisory Councils and support their enhanced role in Commission-level consultations. In the light of their enhanced role, we recommend an urgent review of their funding by the Commission”.
They point out that the annual grant from the Commission of €250,000 has not changed since 2007 but that a change is well overdue, given,
“the pace at which their activities are developing”.
I really do not want to read out all of this report; it is a good read but not a very good stand-up event. Therefore it would be far better for me just to quote one or two things that the committee says at the end of its recommendations. It states:
“Successful future marine co-operation in the North Sea region will require strong and effective political leadership”.
It goes on to say that there is no strong, effective local political leadership—that was depressing.
The report goes on to state that, sadly,
“no existing body or mechanism has a broad enough remit to facilitate the political co-operation required to make the necessary step-change in the management of the North Sea basin. We recommend therefore, that the UK Government convene a North Sea ministerial conference in order to develop a holistic approach to all economic and environmental issues affecting the North Sea. Importantly, the conference should seek to deliver the urgently required political and strategic vision which will sustain this precious resource and secure it for future generations”.
These are great big statements to make and none of us knows exactly how to do it, but it is right and proper that the statements should be made. Eventually,
we will have to listen to the science. We must save our seas. The North Sea is only the first of them. Noah heard the warning and responded—and so must we if we are all to survive.
8.19 pm
Viscount Hanworth (Lab): My Lords, I emphasise the need for enhanced co-operation amongst the nations of the European Union in respect of the governance of the North Sea, which is suffering increasingly from environmental degradation. If one stands on the shores of Britain at any point other than at a busy sea port, one is likely to see an undifferentiated expanse of water stretching to the horizon that seems to be unaffected by human activity. Perhaps, if one is standing on the esplanade of a coastal town, one might see a cast-iron pipe of significant girth running out to sea, but one can easily imagine that whatever it is conveying will be widely dispersed in the vastness of the ocean.
There is no doubt that such impressions are highly misleading. The seas around the British Isles and throughout the entire region of the North Sea have been greatly affected by human activity. A map has been reproduced in the introduction to the report on the North Sea from the European Union Committee that shows the competition for space in the seas surrounding the British Isles. The area is criss-crossed by power cables, communications cables and pipes for transporting oil and gas. Large areas are dotted by oil rigs, gas rigs and wind farms. Some areas are designated as waste disposal sites, and some are licensed for the dredging of seabed sands and gravels. Other areas are set aside exclusively for fishing. The region also contains some of the busiest shipping routes in the world.
The seas can be likened to the common lands that were available to the peasants of mediaeval Europe. In the absence of property rights, the lands were available to all comers. The incentive of those who had access to the commons was to take as much as they could in the knowledge that others were bound to do likewise. The inevitable overexploitation of the common lands depleted their fertility and rendered them barren and useless. The outcome has been described as the “tragedy of the commons”.
The open access to the North Sea has resulted in widespread fly tipping and waste disposal, and in the virtually unrestrained exploitation of its resources. As a result, the sea has been subject to oil pollution, to pollution by hazardous chemicals and radioactive substances and to eutrophication, which is the damaging introduction to the ecosystem of chemical nutrients, including nitrates and phosphates. These disturbances have posed a major threat to the various species and to their habitats. Fish stocks have been severely depleted by overfishing in a manner that continues to threaten their extinction. Some species have all but vanished from the North Sea.
These deleterious effects have been widely acknowledged for 50 years or more, but the efforts to protect the marine environment and to preserve its fauna have been remarkably ineffective. It has long been recognised that the North Sea requires an international system of governance comprising policy-making, political bargaining, legislation, administration
and enforcement. The committee’s report bears witness to the inadequacy of the present system of governance and makes numerous recommendations for its improvement.
There is now a patchwork of European policies, national policies, private initiatives and regulations on different levels that often conflict with each other. The European Union has produced more than 200 pieces of legislation that have direct repercussions on marine environmental policy and management. It is fair to say that this plethora of legislation is a consequence of the fact that the European agencies have insufficient power to effect meaningful policies for the protection of the marine environment. Instead, effective power remains at national and local levels. The EU legislation often amounts to no more than plaintive injunctions that are widely ignored. Notwithstanding the formal governance of the European Union, the tragedy of the commons is being enacted throughout the marine environment.
There is no better illustration of the conflict between national interests and those of the community as a whole than the disastrous common fisheries policy. Fish are a mobile resource. They do not remain for long in one place and they have no respect for political or national boundaries. It is difficult to establish rights of ownership over fish. Therefore, the issue of conserving fish stocks needs to be addressed not at a regional or a national level but at the level of the Community.
The common fisheries policy had its inception in the 1970s. The rules were drawn up in advance of the accession of the UK, Denmark and Ireland to the European Economic Community at the beginning of 1973. The new members had controlled what had been the richest fishing grounds in the world, and the new regulations gave all members of the community equal access to all the fishing waters. In effect, Britain ceded control of an estimated four-fifths of all the fish off western Europe.
The common fisheries policy, or CFP, establishes quotas for each of the member states, specifying the amount of each type of fish that they are allowed to catch. These quotas are determined, ostensibly, by the Ministers of the Council of the European Union on the advice of a scientific secretariat, and they make some reference to the traditional fishing rights of the nations. After the quotas have been fixed, each EU member state is responsible for policing its own, which some may be disinclined to do. Different countries distribute their quotas among their fishermen in different ways.
In practice, the advice of the scientists has been ignored frequently. The bargaining process over the allocation of quotas has invariably resulted in a total allowable catch that exceeds the scientific recommendation. The non-compliance with the rules and the quotas has been a significant problem. In several of the EU fisheries, illegal fishing accounts for one-third to one-half of all catches. Fishermen have been landing quantities far in excess of their quota, falsifying their records and conniving with the fish processing industries to conceal their malfeasance. The Spanish and the French have often been blamed for this, but the Scottish black
fish scandal revealed that during the first decade of this century Scottish fishermen had been flouting the rules on a massive scale.
One of the fundamental flaws of the common fisheries policy has been the allowance for fishermen to discard those fish in their catch that exceed the quota for their species, while continuing to pursue fish for which the quotas are unfulfilled. The discarded fish are dead when they are returned to the water. Undersized juvenile fish are commonly discarded in order to fulfil the quotas with larger and more profitable fish. The reforms of 2013 of the common fisheries policy are intended, eventually, to constrain fishermen to land everything that they catch, but it is doubted by many that this policy, which admits of many exceptions, will be enforced effectively.
The common fisheries policy has attracted vociferous criticism, both from environmentalists and from local fishing industries that have resented the constraints of the quota system while blaming their competitors for despoiling the fish stocks. The Commission has responded to these criticisms by a partial devolution of its authority to member states by establishing regional advisory councils. Some critics regard this as a retrograde step that implies a derogation of the essential central control. It may serve only to exacerbate the conflicts over rival claims to fishing rights.
The common fisheries policy has come to embody some specious injunctions that threaten further to imperil the fish stocks while seemingly being aimed at their preservation. A declared objective of the policy is to harvest the fish at the maximum sustainable rate. The maximum sustainable yield, or MSY, denotes the maximum rate at which the fish can regenerate themselves while being harvested. If the rate of harvesting exceeds the MSY, more will be taken from the sea than can be resupplied by the fish stock. The inevitable result of exceeding the MSY, even for a short while, will be an increasingly rapid diminution of the stock. To avoid this hazard, one must fish in a manner that will ensure that the MSY is never exceeded. Fishing at a lower rate will also result in a more abundant and resilient stock.
To the layman, the MSY might seem to be a felicitous concept. The term suggests a strategy that is both sustainable and that achieves a maximum economic return. In fact, it denotes a strategy that is more than likely to lead to species extinction. What is most disturbing is an allowance granted to protesting parties to permit them to take their time in meeting the target of the maximum sustainable yield if to do so more rapidly might jeopardise the social and economic sustainability of their fishing fleets. This is nonsensical. Such a recourse would guarantee the extinction of the fish stocks unless the fishing were to be severely curtailed or suspended in a timely manner.
Some would regard the contradictions and the failures of such policies as a justification for disengaging from the European Union. However, the interdependence of the member states is an inescapable fact. They occupy a common ecosystem. To advocate any kind of national independence in this domain is to deny a reality that must be confronted. There is an urgent
need for active marine co-operation throughout the European Union. The report of the European Union Committee has clearly highlighted this need.
8.30 pm
Lord Grantchester (Lab): My Lords, I thank the noble Baroness, Lady Scott of Needham Market, for her introduction and explanation of the committee’s report on the North Sea which is before your Lordships’ House.
The committee has identified the North Sea as being under tremendous pressure from exploitation and interests from many sectors—namely, energy, food, shipping and leisure—yet it concluded that EU member states and bordering countries and authorities lacked a coherent vision or strategy for the North Sea. The report reflected that there was a need for a single authority to co-ordinate disparate activities, provide a framework for development, collect knowledge and information and provide leadership for a strategy. Better co-ordination of existing activity through co-operation could achieve a step change.
The committee provided an excellent assessment of the existing structures and concluded with 20 recommendations on the Government’s approach, the EU’s activities and wider international organisations. The report appears to have been well received by other EU member states and various technical bodies. However, the Government appear to lack enthusiasm for taking many of the recommendations forward, saying that many initiatives already exist and that co-ordination could lead to duplication of resources and activity. Although it is understandable that the Government should point to the European Commission as being where leadership should be provided, there is, nevertheless, much that could be achieved.
When in government, Labour recognised that there are significant pressures on the marine environment around the UK and in the North Sea in particular. Through the Marine and Coastal Access Act 2009, Labour committed the UK to establishing an ambitious, ecologically coherent and well-managed network of marine protection areas, setting up these zones around the UK. Yet after 2010 there was a lack of commitment by the coalition Government: only 28 of the recommended 127 zones have been designated. My noble friend Lord Hunt highlighted the lack of urgency shown by the Minister’s department and asked whether there has been any further action beyond initiating just one zone. The noble Lord, Lord Greaves, remarked that, on further measures in that Act such as marine planning, little appears to have happened in taking forward those important areas, where the Government could have shown leadership.
In their response, the Government highlighted where they have joined in with other initiatives. Their second point was that,
“Defra has established a cross-government working group to examine opportunities for improving the efficiency and effectiveness of cumulative effects assessment”.
It will develop and implement a strategic work programme to deliver improvements and create a more consistent and predictable assessment and management process. This is one area where the Government have taken
forward activity. Will the Minister expand on this point and give the House some more details? What other government departments have been involved? How often is the group meeting? Where is it concentrating its focus? When will any assessment or report be forthcoming?
The Government also point to commercial agreements being more relevant as a platform to deliver improvements and change. This also reveals a sad lack of enthusiasm to seize the initiative and grip the situation, as the noble Lord, Lord Cameron, commented. All noble Lords who spoke highlighted the plight of the North Sea. My noble friend Lord Hanworth was critical of what the EU and its member states have been able to achieve, especially regarding fisheries policies.
The committee has produced a very thoughtful and worthwhile challenge to be seized. The Government need to show that they are taking the report more seriously and showing more commitment. I look forward to the Minister’s response.
8.34 pm
Lord Gardiner of Kimble (Con): My Lords, I very much welcome this debate and congratulate the noble Baroness, Lady Scott, on securing it. I also thank all committee members for their thorough report and acknowledge the work of the clerks and other staff, who, as is habitual in this House, make such a contribution to the work that we are all engaged upon.
I do not know whether this will be satisfactory for the noble Baroness, Lady Scott, but on the timing my understanding is that, because of the general election, the response was not started until the new Government were in place and policies had been decided on. The noble Baroness will perhaps be able to help me with this after the debate but I understand that the response to the report was further delayed while Scotland decided whether it wanted to be part of the Government’s response or to provide its own response. Eventually, Scotland decided that it wished to make its own response, but I am afraid that I am not aware of whether the Scottish Government have in fact supplied it. That may not be as satisfactory as the noble Baroness would wish but those are the reasons that I put to her.
The committee’s report considers whether the existing structures for a collaborative approach to the management of the North Sea are appropriate. This is against the background of the North Sea being one of the busiest sea areas in the world, with a diverse range of economic activities, described fully by the noble Lord, Lord Cameron of Dillington, and numerous environmental features that require protection.
Although one would not gain this impression from what noble Lords have said tonight, I say at the outset that the Government strongly support a co-ordinated approach to the management of the North Sea, particularly through co-operation with our North Sea neighbours. Indeed, we have been co-operating with our North Sea neighbours for many years—for example, through the International Maritime Organization, to which the noble Lord, Lord Hunt of Chesterton, referred, and the Ospar Convention, the Oslo and Paris conventions for the protection of the north-east Atlantic.
We also co-operate very closely with EU member states, and the Government share the committee’s enthusiastic welcome for the appointment of a European Commissioner responsible for both environmental policy and maritime affairs. This EU approach has already created benefits, including guidance to member states on, for example, fishery matters to protect habitats in marine protected areas. I notice that the noble Baroness, Lady Jones of Whitchurch, is in her place. This may be an appropriate moment to mention that we had a very interesting debate on world biodiversity only last week, when some questions were asked about marine protected areas. In responding to that debate, I referred to the fact that:
“16% of UK waters are already protected in marine protected areas”.
As I said in answer to the noble Baroness, Lady Jones,
“the second tranche of these is on course to be established in January 2016 and a third tranche of sites will follow”.—[
Official Report
, 24/11/15; col. GC 140.]
My understanding is that more than 100 UK marine areas, as well as sites of special scientific interest with marine elements, are already protected under provisions such as the habitats and birds directive. In addition, the Government have designated 27 marine conservation zones. They consulted on a further 23 such zones earlier this year, and there is a third tranche of sites to follow, which we believe will help to complete a network of sites.
I take this opportunity also to mention the extraordinary marine protected areas within the overseas territories, which were referred to in our world biodiversity debate. A marine protected area around South Georgia and the South Sandwich Islands covers more than 1 million square kilometres, which is equivalent to four times the size of the United Kingdom. Therefore, Her Majesty’s Government are particularly interested in protecting marine areas not only around our shores but internationally.
We are also acting, through Ospar, with the North Sea states to define and assess what constitutes an ecologically coherent network of marine protected areas at the regional sea scale. The UK Government support this co-operative approach to the designation of protected areas. Although final designation is a matter for each member state, the UK will continue to involve other member states in our consultation process.
We are also working with other member states to achieve good environmental status in our seas by 2020, under the marine strategy framework directive. Much of this is being processed through the EU marine strategy framework directive technical groups and through Ospar, including agreeing common indicators, data collection methodology, database management and analysis, which will assist in making cumulative impact assessments and better inform the collaborative approach that we wish to take.
In the North Sea area, Ospar also leads on the collaborative approach to taking action to address the issues identified, by pushing ahead to gather evidence that informs the development of appropriate actions that will contribute to the achievement of good environmental status. Indeed, Ospar’s regional action
plan on marine litter is just one example of a successful, wide-ranging and meaningful outcome from this collaborative and co-operative approach.
I was particularly struck by what the noble Lords, Lord Hunt of Chesterton and Lord Cameron of Dillington said about litter. Those of us who enjoyed British seaside holidays in our youth remember that tar on children and dogs was always an issue. When one reads of the number of birds being found with plastic around them, one sees that this is surely something that we must address altogether.
Co-operative working is also essential for the implementation of the reformed EU common fisheries policy. The UK, including Marine Scotland, works very closely with other member states in the North Sea region; for example, to develop regional discard plans and, most importantly, for the demersal landing obligation that comes into force in January 2016. Indeed, my noble friend Lady Wilcox spoke powerfully about sea fisheries and brought, in her own way, all the experience of that great industry and its way of life to this debate. The noble Viscount, Lord Hanworth, and the noble Lords, Lord Hunt of Chesterton and Lord Cameron of Dillington, all discussed the importance of fisheries and of getting this right—that is the point that we all need to now address. The Government welcome the enhanced role of the fisheries advisory councils under the reformed common fisheries policy. This co-ordinated and collaborative approach is already benefitting the sustainability of our fish stocks and our fishing industries in the North Sea, as we all seek to achieve the objective to which the noble Viscount, Lord Hanworth, referred: maximum sustainable yield.
This year’s Marine Stewardship Council’s amber listing of North Sea cod is just the latest indication of stock recovery, and cod should be fished to a maximum sustainable yield in 2016. This is clearly what we have to seek to achieve: the wise and sustainable use of fish stocks around our shores.