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Lord Kennet: My Lords, that is not correct. In the paper I referred to the range of costs is given as 124 to 150 billion dollars. I used the lowest figure of 124 billion dollars.
Earl Attlee: My Lords, I am sure the noble Lord is right. The costs are significant. The noble Lord also raised important points about the dangers of antagonising Russia when the land forces in Russia are now minimal. However, he is right to pose the question. But whether he is right in his concerns remains to be seen.
On the occasion of the debate on the Queen's Speech I have usually spoken on defence and foreign affairs. On those occasions the debate was normally replied to by the noble Viscount the Leader of the House. However, some time ago I decided that on this occasion I would concentrate my remarks on industrial problems. But the noble Viscount will also reply to this debate. It is of course a great pleasure and an honour to take part in such a debate to which the noble Viscount will reply. He has experience of commercial life and the attendant pressures. I am sure he will appreciate some of the points that I will make. However, I cannot be as high powered as some of the speakers today, and indeed my remarks will not be as exhaustive.
Over the past 17 years government policy has been to increase competition and to transfer commercial concerns to the private sector wherever possible. I support that policy because I see it as providing the nation with the highest possible standard of living for all. Of course there is the odd blot on the landscape such as RAS and the sale of defence housing, to name but a few. However, I think your Lordships would be disappointed if I thought that everything in the garden was rosy.
Let us look at the good side. We have BT, Mercury and many other telecoms operators operating in direct competition with each other. We have a highly profitable and well respected airline industry. We have successful energy companies such as BP--that was an early privatisation. At last something has been done with the railway industry. What is even better, we are now starting to see some positive reports in the media. An article in yesterday's Financial Times was upbeat and reported improvements in service and a much more commercially minded management.
The commercial concerns that I have mentioned have a common requirement; they all need licences and would not be permitted to operate without one. In many cases their licences can be revoked, curtailed or reduced and are subject to regulation. I now have to declare an interest as I am president of the Heavy Transport Association and am also a member of the BRAKE all-party study group. Unfortunately, I do not have any financial interests in road transport, but I am working on it! Road transport should be a good
industry for many to enter, and for some cowboys, or even criminals, the streets are paved with gold, or at least with brass. The good points are that, first, one does not have to be highly educated, as being practical is more important. Secondly, sophisticated contacts and marketing are not necessarily required. Finally, the capital risk is not great. Transport assets are expensive but they lend themselves to being financed. Assets are normally easy to sell and residual values can be calculated. Even operating costs are easy to calculate, although actual rates obtained are often far less than operating costs.However, there is a flip side. The industry is easy to get into and is extremely competitive. But unfortunately it is poorly regulated. Just as with the industries that I glowingly referred to a few moments ago, road transport operators need a licence. The purpose of an operator's licence is supposed to be to ensure that only suitable persons can operate in the road transport industry. One of the many planks of the legislation is the requirement for what is known as good repute. The problem is that operator licences are quite difficult to lose, even in the event of serious wrong-doing. In any case it is easy to operate without a licence. In general there is large-scale illegal operation and that results in unfair competition. Illegal operation is undertaken by some licensed and unlicensed operators alike.
Outside of government much is being done. There is a new pressure group, BRAKE, funded by the respectable part of the transport industry. It is not like many other groups as it recognises the need for road transport but it would like to see it become 100 per cent. safe and legal. BRAKE has identified a number of problems and has produced some excellent reports. The House of Lords Select Committee on Transport has studied the problems and has produced a report. I agree with most of its recommendations, although I think that a few are slightly ahead of their time.
The Minister in opening the debate referred to the Government's competition policy. I am certain that he does not support unfair or illegal competition, but he may not be aware how damaging such competition can be to the transport industry. The main problems are under-taxation of goods vehicles; use of stolen parts or even complete stolen vehicles; use of red diesel, thus saving fuel duty; and employing drivers who are claiming unemployment benefits. The Secretary of State for Social Security suggests disqualification for offending drivers. I would counsel against that as it would create even more serious problems; namely, disqualified drivers may turn to crime to earn a living. A better solution would be the automatic loss of good repute for an operator. Other problems are overloading of vehicles; forcing drivers by various means to drive for longer than the permitted hours; and simply not bothering to maintain vehicles. If an operator commits any of the first four of those infringements he ought to lose his good
repute and hence his licence. That certainly should be the case if there is a second infringement.There was a case of an operator who was convicted of stealing trailers worth several thousand pounds. However, he retained his good repute! How disreputable does one have to be to lose one's good repute? The licensing authority (the LA) can refuse to grant a licence or order a partial or full revocation of the licence. However, that weapon is not used to full effect. The licensing authority may fear making people unemployed. But what is actually happening is that the cowboy operator is using fewer people than are required to do the job properly. So in fact strict and effective enforcement could increase employment and tax returns while reducing social security costs.
The Minister, in his very upbeat opening speech, referred to reducing the burdens on business, particularly with regard to enforcement. I shall read his words carefully tomorrow. My concern is that the various authorities take into consideration the risk of a successful appeal by an aggrieved party. The noble Lord the Minister will have carefully read the report of the noble Lord, Lord Cullen. The education authority had its informed decision not to let out school premises overruled, and the police were fearful of the same problem. Both authorities knew that they were dealing with an "unsuitable person" but there were no supporting convictions. So we need to be careful how easy we make it to appeal against decisions.
If I had an illegal radio transmitter and was caught broadcasting, the transmitter would be confiscated. If I had an illegal firearm, it would be confiscated. If HM Customs and Excise catch an operator using a vehicle running on red (that is, untaxed) fuel they may well impound the vehicle. If the driver has no proper address and answers to the name of "Patrick", they definitely will. Now if the Customs and Excise can successfully impound goods vehicles, why cannot the Vehicle Standards Agency? Of course I accept that primary legislation would be required.
There are some difficulties. The authorities do not have a decent IT system, so it can be difficult to be certain that a vehicle is being operated illegally. The authorities must have the tools for the job.
My message to the Government is that the majority of operators in the road transport industry would like to run their business honestly. They would rather compete by means of making the best technical decisions, having well-trained staff and good man management. They do not want to compete on the basis of who can sail closest to the wind or even operate illegally without being caught.
On the wider front my worry is this. If the industry of which I have some understanding is not properly regulated, how can I be confident about the regulation of industries that I do not understand?
Finally, as for the amendment to the Motion, I have to say that I shall support the Government.
9.2 p.m.
Lord Harmsworth: My Lords, perhaps I may explore a project that has taken place in west Dorset under the Private Finance Initiative. It is a very exciting project, and one which I am sure the House will welcome. It certainly offers lessons for the future.
First, however, may I say that I am not discouraged by the hiccups from which this new funding activity in some areas is suffering. The projects are very complex, the art is a new one, and we are still learning. It is better to go more slowly and get matters right. Even so, the raw national statistics, and local information in Dorset, suggest a future of explosive growth for the PFI. It could well be the control of that growth, and not paucity of interest in these projects, that will exercise those involved.
Some noble Lords will recall from the debate that we held on local government in January last year that there are several major capital projects in west Dorset which are of a size that would tax the shrewdest of county councils. They include a major comprehensive school rebuild (a school which was built for 600 pupils, and now has 900) and the Weymouth relief road. The school, Colfox, is now at the forefront in exploring the possibility of PFI funding for its rebuild. The rebuild is now officially recognised by the DfEE as a "pathfinder" project. It still has to clear one or two hurdles at the beginning of next year before the starting gun for the rebuild; and the cost, at around £10½ million, is about one-third of the cost of the Weymouth relief road, now so necessary owing to the closure of the naval base at Portland and the need to revive the area in some non-military way.
The Colfox rebuild is very timely. I recently had the honour of opening a new computer network in the old building of the school. It is a project that might well itself have qualified for PFI funding. It cost £100,000, to be spread over five years. And that massive learning resource, very cleverly devised by the governors and senior teaching staff, and which would surely be the envy of any school in whatever sector, will easily transfer to the new building, which will cater for cabling below floors and behind walls, etc.
One of the important consequences of the decision to use the PFI for the school rebuild has nothing to do with the school itself. It is the freeing of a bottleneck. The county council is no longer confronted with two major capital spends. The school PFI project comes under revenue expenses, and capital funds can still be directed towards the relief road. That makes me wonder whether some mechanism might be put in place for prioritising PFI projects, partly on consideration as to whether some possibly quite unconnected but beneficial side-effect is to be had out of it. Perhaps it may be possible to find some way of flagging up at business case stage, say, these possibly unconnected bonuses.
Another message which emanates from the Colfox experience is that it is very important that the public sector partner is totally clear about what stream of services it wants. This project had an advantage. The preliminary work was already at an advanced stage when the decision to try PFI was made. I suspect it will
be the kind of project with which the private sector partner, whoever that may be, will feel fully at ease. I understand that another, similar project, though not similarly located, has had a less easy run, partly owing to the difficulty of establishing the stream of services required by the school--a task made difficult owing to certain matters out of its immediate control not being resolved in a timely fashion. This may be a point worth emphasising even more strongly than it is already in the Treasury's excellently produced booklets on how to proceed. Perhaps more emphasis should be given to the need to sort out questions of ownership, heritage matters, and so on, early enough to ensure that private sector partners are not put off.My third thought relates to small projects. Some must surely be too small to interest private sector contractors of the required calibre, partly because of the high cost of pre-tender work, to which Members of your Lordships' House have already referred. Might it be possible to devise a mechanism whereby several small projects--say, primary schools or even mixtures of types of build and flows of services--are placed together? It would be interesting to know what scope there may be for setting up this sort of exercise.
The PFI is a most exciting concept. I worked for some time in a government department without ever fully understanding why capital and revenue public expenditure should be segregated. PFI moves me further in that direction. I welcome the erosion of the distinction.
My right honourable friends the Chancellor of the Exchequer and the Secretary of State for Health recently delivered very upbeat and encouraging speeches to the annual conference of the Private Finance Panel. I trust those speeches addressed many of the concerns so powerfully expressed by my noble friends Viscount Weir and Lord Sanderson of Bowden. In its July report the CBI cited like-for-like achieved management savings in certain projects of 14 per cent. annually over comparable publicly-operated projects and savings of 30 per cent. on the capital element. For my part, I am certain that the PFI growth that we have already seen will continue at a fast rate and that, if we handle it well, it will become an export in its own right like privatisation, which overseas has done this country so much credit. It will spread throughout the world. The road ahead contains many challenges and even pitfalls but also major benefits. I hope the Government will pursue this initiative with the utmost vigour.
9.11 p.m.
Lord Dubs: My Lords, I should like first to congratulate my noble friend Lord Currie of Marylebone on the excellent maiden speech he made earlier today.
In looking at the history of this country from 1979 to the end of the century, I think that the future will judge the Conservatives in Government to have been extremely lucky--undeservedly lucky. Let me give two examples to support that.
First, North Sea oil. Without the benefits of North Sea oil, very few of the policies that the Government have introduced since 1979 would have been possible; or the
damage inflicted on this country would have been even greater had there not been the cushioning effects of the benefits of North Sea oil.Secondly, in a perverse sort of way the Government were very lucky to have Black Wednesday because that at least stopped the most disastrous economic policies of all and enabled the Government to change course. Without Black Wednesday the economy would be in much worse shape than many noble Lords have claimed in the debate today.
Let me turn to three points that I want to cover briefly in the course of the next few minutes: first, energy policy; secondly, the regulation of privatised utilities; and, thirdly, if I may dare, moral standards, as that subject seems to be the fashion of the times.
I do not believe that there was any mention of the word "energy" in the gracious Speech. Yet energy is crucially important to the economy, industry and well-being of this country. Therefore I endorse with enthusiasm the amendment standing in the name of my noble friend Lord Peston, on which we shall vote shortly.
As a country, we need options in our sources of energy. We need low-cost fuel, reliable supplies of energy and environmentally safe fuels. Looking at the changing pattern of energy-use in this country, coal is in decline; gas is increasing very rapidly and in the early part of the next century will account for over 50 per cent. of power generation; and nuclear power will decline from its present level of about 26 per cent. to something in the region of 18 per cent. but will still be important. There are interesting differences between various countries. In the United States nuclear power accounts for 20 per cent. and in France for between 70 and 80 per cent., but the big expansion of nuclear energy at the moment is in Japan, Korea and China.
This country needs above all reliable supplies of energy for the future. I do not know to what extent we may face an energy crisis in the next century. We have had them in the past and I do not forecast that there will be an energy crisis. But I should have thought that at the very least we ought to look ahead and allow for what might be the worst case option--that is to say, an energy crisis some time in 20 or 30 years after the turn of the century. I have a fear that if all else fails in terms of energy supplies, we might again have to look at importing nuclear technology and perhaps importing it from the countries that will have developed the technology most; namely, Japan, Korea and China. They will be the countries which will be abreast of technology and we may not be. At the very least, there is an importance in keeping our technological skills in this area up to date, without building any more nuclear stations but certainly to keep abreast of developments.
But perhaps more importantly than that, we need to keep developing coal technology. In the United States, coal accounts for 60 per cent. of power generation. We shall be down to 20 per cent. after the turn of the century. We need to keep developing it because we may have to turn back to coal in terms of both extraction and clean and efficient use of coal for electricity generation.
There is another consideration. If energy costs in the world are to rise--at the moment they are falling--coal would become a more economic fuel and we might wish to get out of the ground some of the coal that is left there at the moment. My fear in energy policy is that governments will not look far enough ahead. Often our timescale is only until the next election. We need to contrast that with the way in which some companies in the oil business look ahead. I went to a presentation given by the Shell oil company a couple of weeks ago. That company's scenario for the future looked 60 or 70 years ahead. I wish that the Government could look a little further ahead than just into the very short-term future.
However, looking ahead, I believe that the basis of our approach to energy should be that we must have choices of fuel which will contribute to a competitive and efficient economy. We need competition in energy, not as an end in itself but as a way of protecting consumers, both domestic and industrial consumers. We need security of supply and we need to redouble our efforts as regards environmental concerns in terms of what different fuels are doing to damage the environment.
I turn to regulation, which was comprehensively debated by your Lordships in December last year. I shall say just a little about that. When we had publicly owned utilities, they were monopolies. They had the advantage of being accountable, not so fully as I should have liked but there was an element of accountability. The difficulty with the Government's headlong rush into privatisation is that the idea of competition was left far behind. Only after the industries were privatised, have the Government given adequate thought to the way in which competition could be introduced into many of those industries, particularly gas and electricity. The problem there is that the interests of consumers were not well enough protected. So, we had the concept of the regulator.
I believe that one key problem in the privatised utilities is that they are virtually safeguarded against bankruptcy. I doubt whether the regulator could possibly allow in practice British Gas, say, to go under. I do not suggest that British Gas will do so, but the concept that we have privatised industries and then shelter them from competition means that they are in a situation of heads they win and tails they do not lose. The upshot is that the consumer is not so well protected as he might be.
Therefore, I feel that we have given the regulators awesome responsibilities. Generally, they do well; but it is a difficult task that we have set them. They have to act as if there were competition when there is not competition. Also, in a sense, they have to try to introduce competition. We have made it extremely difficult for the regulators. Let me repeat that I give them many good marks but they should not have to operate in a context which is so difficult for them. We need to look again at the way in which the regulators operate.
When I was in the United States in the summer, I noticed that in some states the regulatory boards are elected. I heard on the radio in Oklahoma City a woman
who had the Democratic nomination to stand for election for the regulatory body. That is very good for public perception but I do not suggest that we should go all that way and have our regulators elected.I believe that the way forward is for us to re-examine the functions of the regulators and the way in which they operate; there might be a case for examining whether the gas and electricity regulators should be merged into one energy regulator; and we have to consider whether the interests of consumers and their need to have low fuel prices are given sufficient priority in the way in which the present system operates. I am not satisfied that we have the right balance between incentives to efficiency and protection of the consumer.
Our system suffers from a lack of accountability, a lack of transparency in the way regulation operates and a little too much secrecy in the process. We need to broaden the decision-making process. Perhaps we have given too much responsibility to individual regulators. Maybe they should be buttressed by having panels of non-executive directors to work alongside and support the regulators.
We might also look again at the formula used. I fear that too few of the gains from extra efficiency in some of those industries have been returned to the consumer, whether it is the domestic or business consumer. There may be a case for looking at a profit-sharing pricing rule that would share profits between shareholders and consumers while still providing incentives for management and a fair rate of return for investors.
Perhaps I can refer briefly to morality. We have heard a lot about that recently and I do not claim to be able to compete with some of the people who have been commenting on it. I say this. A large element of morality is surely in the example set to young people. I believe it is proper to say to people, "Yes, you may get rich, provided you have worked for it and have not been too greedy"--essentially, provided they have worked for it.
But what have we seen in some of the privatised utilities in recent years? We have seen people getting very rich for doing nothing; we have seen enormous pay rises not justified by performance; we have seen massive capital gains from share options, again not justified by performance. It is no wonder people in this country are angry. When I talked of this to some people in the United States, they were quite shocked at the way matters had got out of hand here. Their view was that capitalism must operate with an element of consent and if industry pushes it as far as the privatised utilities have done in this country--not in all instances, but in many--that consent may be lacking.
I conclude with this thought. How can we expect our young people to hold high moral standards when they see what is going on? Moral standards must surely come at least as much from example as from preaching and exhortation. I urge the House to support the amendment of my noble friend Lord Peston.
9.22 p.m.
The Earl of Harrowby: My Lords, I agree with the noble Lord, Lord Dubs, as regards the benefits of Black
Wednesday. But he will remember--I believe it is common knowledge--that it was caused by going in at the wrong rate.I expect noble Lords will sympathise with me slightly, speaking at this stage of a 30-strong list when practically everything one wanted to say has already been said and I shall be as brief as I can with some layman's remarks. First, I want to refer to the EMU debate on 24th July on the "ins" and "outs" of the EMU and express surprise that there was no discussion during that debate on any halfway house; on any partial move towards the middle way.
The House will probably remember that my noble friend Lord Cockfield raised this subject on an earlier occasion--I enjoyed his speech today though he did not refer to this subject--when he advocated that the ecu would be pronounced legal tender. If each party to a transaction agreed with that, there would be considerable benefits in it. It would help business greatly. By their action the Government would be a willing participant in that concept, and others--if the cost of administration and buying equipment paid them--would rapidly follow suit. We would therefore have a dual economy for those who wished to benefit from it.
I remember discussing this project many years ago with a general manager of Barclays Bank. I want to make the point that that action would help to dispel the animosity growing in Europe. Our European partners are at present our friends but they are fast becoming not so. That is a dangerous situation in which to be. A willing, helpful attitude would be advisable and that would be one of the possibilities.
Those of my generation will have some sympathy with Chancellor Kohl's motivation--I certainly have--but I believe the Prime Minister is right, as my noble friend Lord Boardman has already said, in preserving his options. It is madness to give them away when one does not have to give them away. I was delighted to see--I hope I have not misinterpreted the report I read--that Mr. Cook is beginning to take the same line.
Some of what I now want to say, which is not much, has already been said by the noble Lord, Lord Barnett, with whose speech I 90 per cent. agreed. It seems to me that, anyhow, it is quite likely that there will be no EMU in 1999. The German population is two-thirds hostile to EMU. Eighty per cent. of the German population think that the Euro will be less stable than the Deutschmark. The French have so many difficulties facing them that it is possible that they, too, will be in exactly the same position. There is Air France with its deficit; there is SNCF, French railways, with an enormous deficit; there is the bail out of Credit Lyonnais; there are the social security problems which the French are trying to solve at the moment but which may bring considerable discord this autumn; and there is trouble also with financing France telecom. Will it be that convergence will not be genuine? The politicians may well try to fix the Maastricht rules. They may well succumb to financial engineering and to bending the rules. I hope not, because the consequence would be a complete destabilisation of the Euro. It is also aggravated by ignoring price parity.
I wish the EMU well because it is necessary to show good will towards it. We should prepare for it, as the Governor of the Bank of England has already strongly advocated, whether we go in or not, and we should fully participate in the discussions of the conditions. But, at the end of the day, it is likely that the decision will be that, rather than go in at the earliest possible time, we shall want to wait and see how it fares.
The EMU will face enormous difficulties. First, it will have the indigestion of the new members which ultimately must, under logic, be expected to join, though that will take many years. Secondly, it will have the financial problems and the political upset resulting from the reorganisation of the CAP. Lastly--and this subject is not so frequently mentioned--the rigidities of the mainland European economic system will, unless they are overcome, make the Euro uncompetitive and we shall be reduced--or they will be reduced--to a fortress Europe, which would be disastrous. I remember making that point many years ago in my maiden speech in this House. Otherwise, there will be a consequential decline in living standards, which inevitably will happen on the Continent in any event.
My final point is made in parenthesis in relation to what the noble Lord, Lord Barnett, said. If and when we decide to accept ECB jurisdiction via a probationary step in the ERM or if we decide to accept euro linkage, may we please remember to do so while the sterling index stands at 85 and is not touching 90.
9.30 p.m.
Viscount Chandos: My Lords, I do not propose to make your Lordships' night much longer in the final debate on the loyal Address for what, after all, is mercifully a short Session. I shall therefore be brief in speaking in strong support of the amendment proposed by my noble friend Lord Peston, particularly in the light of the powerful case made by my noble friend in his speech as well as, however uncontroversially and subtly phrased, by my noble friend Lord Currie in his excellent maiden speech.
Perhaps I may begin by paying tribute to the Government on an unusual achievement. After nearly 20 previous gracious Speeches since they took office, from which we can trace a depressingly clear pattern; with inevitably subdued expectations as parliamentary time is limited now that the general election can finally be put off no longer; with a realistic recognition of the effects of the Conservatives' diminishing parliamentary majority; despite every allowance that can be made, this Government still manage to disappoint expectations, demonstrating new levels of muddle and indecision and providing a depressing reminder of 17½ years of broken promises and wasted opportunities.
North Sea oil has been largely squandered, with a £260 billion net increase in indebtedness, as my noble friend Lord Peston observed. Long-term investment in education, training and the infrastructure has been neglected. That is damage which will take a whole generation to repair. We have to lament the Government's failure for yet another year to bring forward the badly needed competition Bill. That is a
stark illustration of the thin programme proposed, before and after the Prime Minister's extraordinary U-turns, and the emptiness of the claims made by the Front Bench opposite to be promoting a truly competitive and dynamic economy.Your Lordships' House will have the opportunity to debate the economy in a month's time with the benefit, if that is not a contradiction in terms, of having seen what the Chancellor proposes in his Budget. I look forward to seeing to what extent the Chancellor pays heed to the encouragement of the noble and learned Lord, Lord Howe, to make virtue the keynote of his pre-election Budget, not baubles for the floating voter. I suspect that at least some of the Chancellor's Cabinet colleagues believe that he might now be more compliant in offering electorally appealing measures if only he had been soundly caned a little more often while at school.
There can be no doubt that today's interest rate rise represents an ominous sign of the trouble that has been stored up by this Government's policies, which may become increasingly apparent during the final months that the party opposite clings desperately to office. It is like John and Ken's cocktail bar where a frothy and initially sweet-tasting concoction slips down quite nicely, but the dangerous combination of constituents--excessive borrowing, masked in part by creative accounting coupled with chronic under-investment--can be guaranteed to leave most people with a vicious hangover.
I should like to believe that next month's Budget will contain measures that offer fair taxes for all, not loopholes for the lucky, and a focus on the quality of public spending, not just the quantity. There is no virtue in reducing public expenditure to some arbitrary percentage of gross domestic product to conform with that applying in whatever Asian country is this month's fashionable and shallow comparison if the services provided cost the consumer more--a clear risk arising from the Government's excessive, distorted and cynical reliance on PFI.
At the same time, the current spending round should not be conducted in a way that leads to VAT being introduced on asthma and incontinence products, for instance, supplied by NHS trusts, as Customs and Excise have recently ruled. Soft options such as those applied outside the process of parliamentary approval betray a government in a terminal state of decay. Whatever damage has been done to the UK economy, the forthcoming Budget could still be used to reduce poverty and disincentives to work, to start the long haul of increasing investment in education and training and to build an economy with long-term sustainable growth which is fundamentally different from the slow crawl out of the self-exacerbated recession over which this Government have presided. However, on past form I do not have high hopes that the next Budget will address those issues, although I am very much more optimistic about the one after that.
I should like to end by addressing one further specific point which may initially seem self-indulgent in the context of the appalling problems facing the long-term unemployed and those living in poverty, but which
I believe is nonetheless important as well as perhaps being a microcosm of larger and even more damaging issues. It also illustrates why the conviction of the noble and learned Lord, Lord Fraser of Carmyllie, that the country's reputation abroad has never been higher, is misplaced. I am sure that many of your Lordships will agree that the reputation of this country's arts has been outstanding and that the arts are a vital contributor not just to our culture, but to our economy and employment also. In the past three years the Government's grant in aid to the Arts Council has been reduced by nearly 10 per cent. in real terms with a further cut being signalled in the forthcoming Budget, despite the specific commitment of the Prime Minister that the introduction of the lottery would not lead to a reduction in the current funding of the arts. I should declare an interest as a director of English National Opera, one of the major clients of the Arts Council, although I know that my remarks are, sadly, as pertinent to nearly every arts institution in the UK as to the one with which I am most familiar.Costs have been vigorously, even savagely, cut in those institutions in a way that plenty of public companies have never even contemplated. Box office sponsorship and donor revenue have in many cases been significantly increased, but many major arts organisations with national and international reputations, such as the Royal Shakespeare Company, the West Yorkshire Playhouse, the major orchestras and the Welsh and Scottish opera companies cannot make further cuts--nor can they meet the requirements for providing three, four and five-year business plans when the only signs are that their grants will continue inexorably to be cut.
There remains massive confusion in the public's eyes about the role of lottery funding and its restrictions vis-a-vis current spending. While there are now in the new initiatives and stabilisation projects proposals for modestly using lottery funds to ease the current account problems, they are moving so painfully slowly that there seems little chance of them being available to address the existing acute and threatening pressures, let alone the longer-term problems. All the while, an estimated £300 million of allocated but undrawn lottery funds for capital projects are, or should be, earning interest--an amount of money which could on its own come close to covering the reduction in the Arts Council's grant in aid in recent years.
This should not be a partisan issue, as I believe has been demonstrated by the submissions to the Department of National Heritage and the Treasury of the noble Earl, Lord Gowrie, chairman of the Arts Council and a former distinguished member of the Front Bench opposite. I urge the Treasury to act upon these and other representations, even if only by the release of accrued interest on lottery funds, to avert irreversible damage to our national heritage leading to further significant direct and indirect increases in unemployment. I am intrinsically inclined to be thankful for small mercies. I am confident that a gesture in this area will be warmly welcomed on every side of the House. However, I harbour no illusions that the larger and even more desperate issues stand any chance of
being addressed in the remaining months of this Government. Therefore, I strongly commend to the House the amendment of my noble friend Lord Peston.9.40 p.m.
Lord Jenkins of Hillhead: My Lords, we have had a long and, on the whole, interesting last day of the debate on the Address. The noble Lord, Lord Currie of Marylebone, made an early and impressive maiden speech. I recall in particular the speech of my noble friend Lord Thurso, who spoke with knowledge and authority, and the experience and wisdom of the noble Lord, Lord Tugendhat, even though I disagreed with the position that he adopted at the end of his speech. That is unusual as between him and me. I also recall the speeches of, and at one stage the direct grappling exchange between, the noble Lord, Lord Healey, and the noble Lord, Lord Cockfield.
The noble Lord, Lord Healey, spoke in cataclysmic terms about the single currency. The noble Lord has the great advantage, which I am afraid I cannot share with him, of unpredictability as to what he will say on European issues. I have seen him alternate from one side to the other approximately 35 times. But one matter that is absolutely consistent about him is that whatever his position at a particular moment, he always holds it with absolute certainty.
I found much of the speech of the noble Lord, Lord Cockfield, of interest and could agree with it, though he seemed to take a rather partisan view as to where profligacy in the management of the economy had occurred. If he looks back, he will find it very difficult to match from other parties the profligate record of successive Conservative Chancellors of the Exchequer, whose names out of delicacy I will not for the moment mention. He earned a mighty rebuke at one stage from the noble Lord, Lord Peston--a justified rebuke. But I nonetheless thought that his analysis of the costs of a higher interest rate was fascinating and important.
The noble Earl, Lord Harrowby, followed some of the arguments of the noble Lord, Lord Healey. I have known the noble Earl (regrettably not very well) since we were first at an officer cadet training unit together 54 years ago. He spoke in general in warm terms about a single currency, but it seemed to me that his speech did in a way encapsulate many built-in fallacies of the British position. Right back from 1950-51 onwards we have underestimated matters and said it is not going to happen: they will not bring off the common market or the Coal and Steel Community. We have so consistently said that that it would be the merest common sense for us to insure the other way. If you are riding a bicycle along a cliff path and you are in danger of bruising your arm if you steer in one direction and in danger of falling 300 feet if you steer in the other direction, it is rather wise to steer on one side rather than the other. The wise side for us to steer on, given our experience, given our track record--"track" is appropriate here--would be to assume things are going to happen, not that they are not going to happen. However, we will all see. You can never predict the future until it has happened.
It is a week since the gracious Speech, and already its contents seem like the most curled and faded of autumn leaves. The Prime Minister's performance in negating part of the speech within four hours of its having been delivered was extraordinary. It was obviously so from the point of view of the indications it gave of the Prime Minister's sudden switches of decision and nervous susceptibility to pressure. But there is another less obvious but equally significant consideration. The grandiloquent ceremony of the State Opening in which we indulge once a year is already in danger of being on the borderline between inappropriate fuss and magnificent historical pageant.
Part of the pageant is that the sovereign has to deliver with great solemnity words which are put into her mouth by the government of the day as their considered programme for the Session. But if the words are to be taken out almost as soon as they are put in, the balance is dangerously tilted towards farce. The present Queen in many ways, and certainly in relation to the opening of Parliament, has a higher sense of duty than had Queen Victoria. But even she, the present Queen, might be tempted to recall Queen Victoria's distaste for the ceremony. It was, she claimed in 1869, a great health hazard. It was too hot inside and too cold outside. Moreover, riding backwards in a carriage upset her.
It is typical of the Government's habit of proclaiming a general principle and then proceeding by all their practical actions to undermine it. Thus, having proclaimed in what in a way is a most un-conservative way, the total inviolability of every frozen aspect of our constitutional arrangements, they proceed to expose them to ridicule. Equally, they mount a holier-than-thou campaign, participation in which all politicians are extremely unwise to indulge, centred on the inculcation of moral principles into the young, while in practice giving them practically no facilities to do anything except to watch a declining quality of television and to have lottery draws twice as often as before.
Then we have yesterday's incident with Mrs. Shephard. On the issue I am on the Prime Minister's side. He seems to have acted for once with precipitate decisiveness. But what a way to conduct a government: to drag a Minister off the platform when she is paying what should be a dignified, authoritative ministerial visit in order to rebuke her, and then having done so, to make sure the press is informed of every detail of the rebuke. There are few less edifying sights than that of a weak man trying to make strong gestures.
I want to talk finally in this economic debate about a more agreeable subject. I certainly do not want to make a long speech at this time of night on the fifth day of the debate. My more agreeable subject is the Chancellor of the Exchequer. I believe that, on the whole, he has been a pretty good Chancellor during the past three years. That is remarkable for I do not think that he had made a great success of health, education or the Home
Office. He is, indeed, a standing contradiction to Tacitus's great aphorism. I am tempted to give it in Latin because it is so much shorter in Latin.
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