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I beg to move, That the clause be read a Second time.
The new clause deals with something that has really got under the skin of people working in probation. It relates to something I am asked about every time I meet probation officers: the Secretary of State’s decision to prevent probation trusts from bidding from contracts. Probation officers feel very strongly about this.
We have included local authorities in the new clause because they are also well placed to lead on bids to conduct this work. They already play a leading role with youth offending teams, and they have good experience with crime and disorder reduction partnerships. They are suitable organisations to hold the ring on these issues.
Appropriately, the new clause brings us back to the wider concerns with which we began our debate on clause 1. It is in my name and those of my hon. Friends the Members for Hammersmith and for Kingston upon Hull East and the right hon. Member for Dwyfor Meirionnydd. It provides that probation trusts and local authorities should be permitted to bid for contracts to provide probation services.
Rather than building on the system we have in place, the Government have opted for a national, irreversible upheaval based on the Secretary of State’s gut feeling. I know we are back where we started, but the Opposition have not shifted their view of what the Government intend to do, and I am sure the Minister has not shifted his. It would be wrong to leave the Committee’s consideration of these issues without returning to our fundamental disagreement with the Government’s proposals. In some way, the new clause would make things a little better, although we still disagree with the Government’s direction of travel.
I completely agree with the sentiment that as many experts as possible from the probation service should have a strong involvement in running the new system. However, will the hon. Lady explain how a probation trust or local authority that is funded by the taxpayer could take on a private sector contract? The whole point of such a contract is that the private sector takes the risk, but how can the taxpayer take the risk a private sector organisation should take? That does not seem logical. If the hon. Lady could explain that, I would be grateful.
Whenever we raise this issue—I have raised it with the Minister, too—we hear exactly that question. As Members would expect, I take that challenge back, and I have to say that I am met with a great deal of bewilderment—and sometimes laughter—because local authorities, in particular, are risking public money all the time. Every time they embark on a protracted bidding process, for example, they are investing time, skills and resources that could be used elsewhere on something that may or may not come up. That is putting public money at risk.
Under the previous Government, we had local area agreements for local government under which there was effectively a payment by results system. Admittedly, the system was very bureaucratic and could have been slimmed down, but the principle was that local authorities would select some outcomes that they wanted to improve, such as figures for teenage pregnancy, on the basis of national indicators. If they were successful, a reward grant was available, so that was payment by results. We are talking about one arm of the state paying another arm of the state to do a job, and that, to my mind, is not putting public money at risk.
I am still unable to accept the hon. Lady’s argument because the whole point of the private sector is that it involves profit making, risk taking-types of organisation. The process for change has already been set out in legislation, as we have discussed. Will she explain why probation trusts could not convert themselves into mutuals? I would have thought that becoming a part of a mutual would be a beneficial way of delivering exactly what she is seeking.
Some of the trusts will take the mutual route, but they will have to devote a lot of time, skills and resources to that process, which may or may not be successful. They should have been able to follow a far simpler route. I would have liked not only trusts, but other state organisations, such as local authorities, to be able to take part in the process in a far more straightforward manner than will be the case.
The hon. Lady asks about putting public money at risk and says that private sector companies are better equipped to take risk and make profit. They probably will be very good at taking the profit, but I think that we are the ones taking the risk. The proportion of the contract that will be given as a reward under PBR seems to be ever diminishing, and the Government are still unable to give—[Interruption.] I realise that this is probably wearing a bit thin with the Minister, but we still do not have an answer. We are still no clearer about what proportion of the contract will be paid regardless of performance, and how much will be gained if a company achieves its targets. If we are talking about a small reward element, it is difficult for us to understand why the process is not something in which an entrepreneurial probation trust or local authority could participate. If we had allowed probation trusts to carry forward surpluses to allow for longer-term planning, we might have more confidence in their capacity to take on such a task. I have confidence in them, but clearly the Minister and the Secretary of State do not. Probation trusts are some of the most entrepreneurial parts of the public sector, and I would rate their ability to take part in such a competition very highly. It is regrettable that they will not be able to do so without going through the whole unnecessary fandango of having to reorganise themselves.
I also have confidence in the existing system. I have been consistently bewildered throughout the Bill’s passage because I have not yet heard a good example of why the existing system needs to change, nor a reason why we cannot hold a pilot and we have to move wholesale from a system that is working to one that is completely untested.
My hon. Friend puts her finger on it. We are not that much further forward although, as we have discovered this morning, there is a great deal in the Bill on which we agree. We have just nodded through half a dozen clauses without debate. We have welcomed many of the Minister’s comments and been as collaborative as we can, but we disagree fundamentally about what the Government are doing to probation services.
The new clause would only ameliorate some of the difficulties with which the service is being presented. It would prevent the loss of some of the most highly performing organisations in criminal justice, if not the whole public sector. The Government claim that they want to harness the best of the public, private and voluntary sectors, yet they are not permitting local authorities to compete and they require trusts to undertake massive internal upheaval at the same time as they continue to manage their workload and safeguard the public. The Minister knows from his negotiations with staff representatives that morale in the service is low. Although the staff are trying to muster enthusiasm for the new system and thinking ahead—they have the needs of the communities they serve at heart—they are concerned and do not think that services for offenders, victims or the wider community will improve at all. They think that those services are being threatened by the Government’s reforms, as the hon. Member for Solihull will have heard from people working in the trusts.
Local authorities have significant experience in this area and are well placed to link up services such as housing, social services and youth offending teams, and to build on existing partnership arrangements. They are already at the table with community safety partnerships and are well placed to understand local needs. They have well-developed arrangements throughout the country with police forces and the voluntary sector specifically through crime and disorder reduction partnerships. If anything, the previous Labour Government were a bit shy about crowing about those successful projects that led to a reduction in crime.
Prior to the requirement to work in partnership, it was often difficult to find someone to take up an issue. For instance, we were told that antisocial behaviour or neighbour disputes involving threats of violence were not policing issues and not really to do with the local authority, and that we might have been able to get environmental health involved, if we were lucky. There was nobody to go to and say, “This is an issue affecting safety in the community.” When that changed, it made a big difference to people who had been suffering due to such crimes, sometimes for long periods, and we should be proud of that.
My hon. Friend hits on an important point, so I hope that she will set out a little more of her thinking. Local authorities, by definition, are responsible for the neighbourhoods and areas to which offenders return when they have completed a short prison sentence. Local authorities have a huge incentive to ensure that those individuals do not reoffend and start becoming law-abiding citizens. Who has a better motive to get this right than a local authority?
My right hon. Friend is, of course, right. Local authorities are also accountable. When the Government introduced police and crime commissioners, they said that they were keen on expanding democratic accountability for policing, crime and disorder. For all our deep scepticism about the effectiveness of police and crime commissioners and how they were introduced, it is worth having that golden thread of democratic accountability, so we should think about how we maintain it in our criminal justice system. That process would be helped through engaging with local authorities and allowing them to take more of a lead.
Local authorities are run by elected representatives who are answerable to their communities, so the Government will be missing an opportunity if such authorities are prevented from taking part in the process unless they go through unnecessary and ridiculous reorganisations—although I am sure that some of them would gladly embark on those, as they are in the habit of carrying that out. They should, however, be focusing on getting the job done. My area’s local authority, probation trust and police and crime commissioner are trying to get their heads around how they might create a vehicle that would deliver these services. However, it is not straightforward, and the process might not be successful. There has been talk of public money being put at risk, but that is already happening as a result of those bodies going through a process at the end of which services in the area may be delivered by G4S anyway. The Government should give more thought to that.
The probation trusts have the greatest experience and have been engineered to provide the service, yet rather than being allowed to provide stability, to take on new challenges and to build on their strengths, they are being told to pull themselves apart, to scatter staff in different directions and to create new companies in their spare time. They are meant to be providing the service that they have been giving for the past few years. When one visits a trust, it is a shame to find that all people want to talk about is their anxieties around how they will cope during the transition and which staff members will go where. In previous years, the talk would have been of rehabilitative programmes and innovative work with employers—those things on which 100% of trusts’ attention should be focused. The Government’s change is unnecessary and unasked for, and they may come to regret it.
The Government’s argument that trusts cannot compete because public money cannot be put at risk is spurious, given that the proportion of the contract covered by payment by results may be as low as 5%. I am happy to be contradicted on that 5% figure, but I never have been, so I assume that the proportion will be somewhere between 5% and 10%. The Secretary of State will not rule out the involvement of companies that are under investigation for fraud, but that really winds up people working in trusts. Their organisations are told that they cannot bid, yet organisations under criminal investigation are not told that. It makes no sense to people working in the field, as it makes no sense to me, that the Government have got themselves into that position. I wonder whether they regret saying that local authorities and probation trusts should not be allowed to bid. It would have made their lives an awful lot easier if they had allowed a competition involving the public sector, as is the case for prisons. Probation trusts could easily have coped with an up-front payment. Their participation in the process could have been far more straightforward than will be the case under the Government’s plans.
The Government say that they want to create high-quality competitive markets for probation services, but preventing those expert providers with the knowledge and track record that offer the best-quality service from taking part in the process seems like a backwards step at the start of the programme. Probation trusts are significant local players. They participate in local strategic partnerships and children’s trusts. Although those organisations are no longer required by law, they still exist in many areas, and probation trusts know it is in their interests to take a leading role at the table.
If the Minister could wipe the slate clean and start again—many of us would say that he should—I wonder if, rather than introducing this market model, he would bring forward something that would genuinely allow expert public providers to compete for this work. We do not accept his argument that that would put public money at risk.
If the Minister could say that 20% or 25% of the value of the contract would be put at risk under a model of payment by results, there might be something in his argument, but he is giving us every reason to believe that a small amount will be put at risk and that those bidding for the contracts will be able to take a profit regardless of performance. If they could walk away without achieving any of the additional targets yet still make a profit, there would be a question of how they are putting money at risk. We think the Secretary of State is missing a valuable opportunity by ignoring existing organisations that are best placed to deliver these services.
Paul Goggins rose—
I shall bear your comment in mind, Ms Dorries.
It is entirely appropriate that my hon. Friend the Member for Darlington has brought the Committee back to where it started its deliberations by asking fundamental questions about what the Government are doing through their Bill and their other proposals for reform. I shall, briefly, make a number of points.
My hon. Friend spoke about the invaluable work that probation trusts do, but that has not always come easily. Probation trusts have had to earn their place at the table where local partnerships are brokered and developed. They have done that by sheer hard work, by proving their credibility, by engaging and by ensuring that they get good results. Probation trusts have made tremendous achievements in recent years. The trust in my area of Greater Manchester has brought reoffending rates down by 2.36%. My hon. Friend the Member for Rotherham has taken every opportunity to praise the South Yorkshire probation trust, but I do so on her behalf on this occasion, because that trust has reduced reoffending rates by 12.77% compared with 2007-08.
Such substantial achievements have been achieved by probation trusts not only through hard work, but though imagination and creativity, an example of which is the intensive alternative to custody scheme that is run by the Greater Manchester probation trust, which I know that the Minister, like his predecessors, would acknowledge. That innovative scheme has made a difference to and had a real impact on a difficult group of offenders. Such organisations work diligently and in partnerships. They are effective and they bring down rates of reoffending.
My hon. Friend is right. The Government should be enhancing and developing the role of probation trusts, not scaling the trusts back and effectively dismantling them. It is a great regret to many of us that that is what the Government seem to be hellbent on doing.
Another aspect of the work of probation trusts is their evolving relationship with prisons. The Greater Manchester probation trust has worked effectively to develop partnerships with prisons, but those are at risk because of the Government’s proposals. Those offenders that the Minister is helping us to focus on through the Bill—those who get short prison sentences and often have chaotic lives—need a neat join between prison and the probation world, but that was not always in place. Successive Governments have tried to ensure that probation and prisons work ever closer together, but I fear that the changes under the Bill will impair that progress.
My hon. Friend made important points about risk. Manchester city council, which covers two thirds of my constituents, manages risks every day—not just in relation to the health and well-being of the citizens of Manchester, but regarding some of the big projects that have regenerated the city over the past 10 to 20 years. The council is in the risk business. The extension of the Metrolink system in my constituency is an investment worth hundreds of millions of pounds to bring the trams in to Wythenshawe and connect it to the airport and all parts of Greater Manchester. That huge project involves huge risks. All the investment has to be seen against what passenger numbers and income might be over 10, 20, 30 or 40 years. That is the risk business in which local authorities such as Manchester are engaged. Manchester airport, as well as being in my constituency, is the local airport for my right hon. Friend the Member for Dwyfor Meirionnydd. The Greater Manchester local authorities created that airport and are still major shareholders in it. They understand the risks involved when 20 million passengers a year are passing through an airport. Local authorities therefore understand risk.
The debate illustrates the Government’s ignorance about what actually happens in the public sector. The public sector takes risks with public money daily, whether by commissioning services or embarking on joint ventures with other authorities and, often, private sector organisations.
My hon. Friend is right to point out that some parts of the Government do not seem to understand that local authorities are in the risk business, but others do. For example, the Department for Transport has worked with the 10 local authorities in Greater Manchester on handing over the power to invest in transport infrastructure over the next 10 years. It is actually giving the money to the local authorities and therefore sensibly devolving decisions about how that money will be spent to the authorities of Greater Manchester, rather than leaving the matter for Whitehall. It is important that the Committee understands that local authorities are in the risk business.
We come back to a question that my hon. Friend rightly posed: what is the risk? If this were a system of payment by results that involved a 50:50 split, or 25% of the contract being paid up front with 75% paid if the company succeeded, it would represent a real risk. Local authorities would be very cautious if that was the proposal, but if we are talking about a system of 90% of the money up front and 10% to follow, what is the risk that these organisations will be taking? We need to consider the question of risk more carefully and seriously.
Local authorities are democratic organisations with a real feel for, and a sense of responsibility for, the neighbourhoods to which offenders return when they come out of prison. That creates a huge incentive for local authorities to have an active role in working with those offenders and making sure that they are rehabilitated. Local authorities are in a unique position to bring together housing providers, health services and those who provide advice on benefits, as well as those who provide help with the job search with which people leaving prison need to engage.
My right hon. Friend is well aware that the probation trust that serves Tees valley is one of the best—in fact, it is one of the two that have the highest accolade. Its close working relationship with local authorities, especially Stockton-on-Tees borough council, is extremely important. Health, local authorities, probation services and other agencies work very closely in partnership, and now the local authority is trying to take the lead to provide a model through which they can have such a contract. Is that what my right hon. Friend refers to when he talks about what could happen in the future?
Absolutely. My hon. Friend’s local authority and local probation trust, which has cut reoffending by 3.72% over the past five to six years, for which they should be commended, have understood the need to work together in partnership. I commend his probation trust and local authority. Many in the north-east have been ahead of the game by bringing services together and working effectively.
I am sure that the Minister agrees that probation trusts in the north-east are high performing and should be commended for what they do. If that relationship could be developed, we could drive down reoffending rates still further, because an incentive is present for local authorities to get it right.
I would be interested to know how my right hon. Friend would develop that. What advice would he offer the Government on how they could make that happen? What would they need to do with legislation to allow local authorities to take a lead in a partnership?
A good thing would be to accept the new clause tabled by my hon. Friend the Member for Darlington. It would allow local authorities and probation trusts to be able to become providers under the scheme that the Government are introducing and seeking to develop. It would underpin the legitimacy of local authorities having a role in the matter and being able to bid for resources to run the services. They would have a unique and important role to play. I am grateful to my hon. Friend the Member for Stockton North for raising the matter.
Local authorities are engaged in the partnership business, including partnerships to cut crime, to improve health and well-being and a whole manner of things. That means that local authorities are working with all those providers of the essential services that are required if people who are leading chaotic lives and engaged in criminality are to get some order into their lives, start behaving themselves, and become positive contributors to society rather than a negative influence.
The newly elected police and crime commissioners, part of the Government’s great thinking since 2010 and the creations of this Government, are the ones who are now saying that such partnerships are so important. They, having been elected, understand that if we are to cut crime and to make our communities safe, local partnerships are essential.
Another reason why new clause 5 would be an excellent addition to the Bill is that it would enable the Minister to do the thing that the Opposition have been arguing for from the beginning, which is to pilot different approaches.
At the moment, the Minister simply wants to hand 70% of probation work to private and/or voluntary organisations, which may be working in collaboration with them. That is a limited model. There is no evidence to suggest that the model will work on a payment-by-results system.
We are asked by the Minister and the Secretary of State to take it just on trust that they know that it will work. Actually, they should be trying out different systems. So, let the Minister try the approach that he and the Secretary of State are advocating and hand some of the work on a trial basis in a pilot area to private or voluntary organisations, or combinations of the two. Alongside that, let a local authority bid for the work and be the provider. Let us see how well they do compared with private providers. Let us have a mix and evaluate who does what and how well they do it, and then make proper choices in steady time, in order to ensure that the reforms are conducted properly.
The debate is again an opportunity to urge caution on the Minister to be absolutely sure of the various different models that could be operated and to see which one would work best.
Does my right hon. Friend agree that all we are looking for is robust evidence? That is all we have been asking for throughout the proceedings—just to pause a little bit to try to get that robust evidence. That surely has to be the way forward.
My hon. Friend makes a powerful point. She has made it several times, and I agree. I said in response to a good speech by my right hon. Friend the Member for Dwyfor Meirionnydd the other day that, if the evidence was that a private provider was more effective than probation trusts in ensuring that the services were delivered, we would have to hold our hands up and say, “Okay, we got it wrong” and accept that the model produced by the Government is going to take us in a better direction. But at the moment there is no evidence and until that evidence is there we are sceptical and rightly so. Our electorate expects us to ask questions, not simply to take at face value the kind of proposals that are being offered to us. That is what is expected and, even at this stage, I would hope for more rigour from the Ministry of Justice on this issue.
A final reason why the Minister should agree to the new clause is that I still think that this is going to be a very difficult project for the Government to pull off within the time scale that they want to pull it off. Even if they remain hellbent on delivering their model to the published time scale, they could get into some real difficulties. The Minister might just like to have a plan B up his sleeve. One day, he might be grateful for the fact that there are some probation trusts and local authorities that would be keen to bid for some of this work and to be providers. In my argument, they would be very good providers and one day the Minister might just need them.
I will not go through all the arguments that we have already had around piloting and the substance of the reforms that we are making. The Committee is well aware that the extension of statutory supervision and rehabilitative support after release, which clauses 3 to 7 would provide, can only under our proposals be delivered alongside radical changes in the existing system for managing offenders in the community. As part of these changes, we propose to replace the existing probation trusts with a single national probation service and 21 community rehabilitation companies.
The central component of our new system is the fact that the community rehabilitation companies will be paid by results, so that they will be paid in full only if they are successful in reducing reoffending and if they fail—
In a moment. I know what the hon. Lady is going to say and I will try to deal with it in a moment. If they fail to make significant reductions in reoffending, they will lose a proportion of their overall payment. I give way.
I can certainly commend the hon. Lady’s persistence, if not her listening skills, because she has asked this question a number of times and I have answered it a number of times. The hon. Lady knows that we do not intend to give that figure at this point, because to a large extent we believe it is sensible to engage in a process of negotiation with those who may form part of this market, so that we get the right figure. However hard the hon. Lady tries, I am afraid I am not going to give her that figure today, neither, incidentally, am I going to confirm the figure that she has given. This issue of payment by results—
As I said, there is a process of discussion which we will continue in order to make sure that we get not just the best deal for the operation of the system, but the best deal for the taxpayer too. As I have said, the payment by results element in this system is an important motivating factor, which will drive those who have contracts to focus on outcomes, to innovate and to provide a high-quality service. To do that we need to be able to transfer financial risk to new providers in a meaningful way. In order to bid successfully, to own and run the community rehabilitation companies, bidders will need to meet the criteria we set, which will include the ability to take on and manage the necessary financial risk under our proposed payment by results mechanism. Any organisations that bid in our competition will be assessed in the same way against the same set of objective criteria.
The power to establish and abolish probation trusts lies with the Secretary of State for Justice; trusts are funded by the Ministry of Justice. Under our reforms, rehabilitation services will be delivered by the national probation service and, as I have said, by CRCs. Staff in the existing trusts will transfer to one of those organisations and the trusts themselves will at that point cease to exist. This means, of course, that trusts will not be able to bid in the competition because they will no longer exist, and we believe that approach is the right one. I need to make that point. Even if probation trusts were to continue to exist, they would still be funded largely by the Ministry of Justice, so we could not transfer financial risk to them in any meaningful way. If a probation trust failed under a payment by results system, the Ministry of Justice would still bear the financial cost of failure, which would not be true payment by results at all.
However—this is the point made earlier by my hon. Friend the Member for Solihull—it is perfectly possible for existing probation trust staff to form a mutual or other appropriate vehicle capable of taking on the necessary degree of financial risk. In fact, a number of staff within probation trusts have already expressed an interest in being part of a mutual bid to deliver services.
I know that the Minister is a reasonable man. Can he not see that if as little as 5% will be paid on delivery and the probation trusts will be prevented from taking part, it is causing no end of consternation among staff, who do not understand why they are being required to set up mutuals, new organisations and companies in order to take part? Can he at least indicate that he understands the consternation out there among people doing those jobs right now?
I am afraid that in this case, flattery will get the hon. Lady nowhere; I will not confirm the figure, however hard she tries. I am trying to explain that whatever the figure, if we allowed probation trusts to bid, the percentage related to payment by results would still be public money being put at risk. It would not transfer the risk away from the taxpayer in the way that we are seeking.
I should also say in relation to mutuals, which the Committee has discussed, that the Government announced on 20 May a package of measures to support the voluntary sector and mutuals. In particular, the Cabinet Office’s mutuals support programme is providing intensive one-on-one support to prepare fledgling probation mutuals for competition, including coaching on legal, financial and commercial issues. I understand that contracts for such support totalling more than £500,000 have been awarded.
I turn to the question of local authorities, which has been remarked on by many of those who have spoken in this part of the debate. Local authorities have general legal powers and much wider functions than probation trusts, it is true. Local authorities have a diverse range of funding streams, including commercial income, and therefore are not wholly dependent on central Government funding. Local authorities are not excluded from bidding in competition, either on their own or with partners. We would not exclude a local authority from the competition solely because it was a local authority.
However, like any other bidder, a local authority would have to convince us of its ability appropriately to take on and manage the financial and operational risks associated with payment by results. It is also important to remember that there are many ways in the new system to participate in service delivery. Local authorities might prefer to play a part in the delivery of the new services as subcontractors rather than bidding to own and run a community rehabilitation company covering a contract package area that may be substantially larger than the local authority area.
It is good to hear that the Minister will consider bids from local authorities, but again, we return to the issue of whether a significant portion of the contract will be ordered. If I were the leader of a local authority considering whether to take part, the amount of risk—whether 5%, to pluck a number out of the air, or more—would play a significant part in my decision-making process about how much resource I was willing to devote to preparing to take part. Is the Minister talking to local authority leaders or perhaps Local Government Association representatives about the process? If not, he may be missing an opportunity.
We are happy to talk to anyone who expresses an interest in the proposals. As I have said, there are numerous ways in which local authorities may choose to be involved. Indeed, I am aware that a number of local authorities have already registered as potential subcontractors as part of the process.
Of course, local authorities directly is one thing, but each local authority also maintains a Community Service Volunteers; the one in my area is called Winchester Area Community Action. CSVs are very much involved in the emerging community rehabilitation company bids.
My hon. Friend is right. He highlights that there is no one-size-fits-all approach; it will depend entirely on each local authority and how, if at all, it wishes to become involved. Again, it is worth pointing out that in relation to local authorities and any other bidder, there may well be an opportunity for them to say what they believe should be put at risk, and to talk about what might increasingly be put at risk in the future. That is another model that we, of course, will consider.
I finish by saying that, as others have said, we want to ensure that we have a broad and diverse market for this competition, and that as many organisations as possible are able to compete. I have explained why I believe that it is right that trusts themselves should not compete in their current form. However, we have taken many steps to ensure that the competition is open to those who are best placed to tackle the issues that lead offenders back to crime, including any staff who choose to form a mutual. We have ensured that the contract package areas are varied in size, and we have awarded funding to help the voluntary sector and mutuals to compete for contracts and deliver services to cut reoffending. As part of the rehabilitation competition, we have also run a registration process for the smaller providers, to maximise as far as possible the opportunities for them to be involved. In those circumstances, I invite the hon. Lady to withdraw her new clause.
I am sorry to disappoint the Minister, but having listened to what he has said, we are still in a position where we disagree with him. We would like to include new clause 5 in the Bill. The reason is that he is rushing this and is not able to tell us exactly how much money may or may not be put at risk by a bid from a probation trust. It is not acceptable for the Minister to prevent organisations that have the strongest track record in providing these services from taking part and saying that they will put public money at risk, while not being able to tell us—even a ballpark figure—how much money that would be. We do not think this is good enough. I would like to test the Committee’s opinion on including new clause 5.