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Lord Harris of Haringey: My Lords, is it not the case that the professions in this country too often have it their own way in regulating their own professions? Would it not be in the interests of both good professional standards and the quality of education

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received by our children if there were a higher commonsense lay input into the inspection process rather than one which seems now to be pegged?

Baroness Blackstone: My Lords, I agree with my noble friend. However, we should have a balance between the valuable contribution that lay people can make and the professional background and experience of those who have worked in the education service in various different roles for a very long time. That is exactly what Ofsted is seeking to attain.

Viscount Cranborne: My Lords, can the Minister tell the House whether the report in The Times Educational Supplement of 27th December 1996 is accurate? The report states:

    "OFSTED has confirmed that lay inspectors with 'significant experience' of school inspections will be invited to take a four-day training course next year, and that lay inspectors should be taking charge of some inspections by September". If that is accurate, does the Minister regard a four-day training course as adequate?

Baroness Blackstone: My Lords, I never believe what I read in the newspapers, including The Times Educational Supplement.

Balance of Trade Deficit

3.7 p.m.

Baroness Sharp of Guildford asked Her Majesty's Government:

    What measures, if any, they are proposing to take to counter the growing deficit in the balance of trade.

The Minister of State, Department of Trade and Industry (Lord Simon of Highbury): My Lords, the global downturn has had a significant impact on UK trade performance, with lower exports to South-East Asia accounting for more than half of the widening in the UK trade in goods deficit last year. However, other areas of UK trade have continued to perform strongly, with record surpluses on both trade in services and investment income in 1998. The Government are continuing to encourage policies underpinning economic stability so that all businesses, including exporters, have a firm platform for long-term sustainable growth. They are also pursuing a wide range of measures to help increase UK competitiveness and promote UK exports.

Baroness Sharp of Guildford: My Lords, I thank the Minister for his Answer. Is he aware of the depth of the problem? The current deficit on the balance of trade is £27 billion; it is forecast to be more than £30 billion next year, 5 per cent of GNP. Large areas of this country are still dependent on manufacturing industry and it is on manufacturing that our trade depends. Is not the Minister concerned about the degree to which the high level of the pound is currently dividing the country between the haves and the have-nots and about the deprivation that that is causing in some areas which are

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losing jobs rather than gaining jobs? Is he not also concerned about the long-term effect this may have upon growth in this country?

Lord Simon of Highbury: My Lords, the noble Baroness is correct. There are always regional disparities within a national economy. As I said in my Answer, while we are aware of the difficulties that the high exchange rate is causing exporters, particularly to Europe and South-East Asia, we wish to ensure that the long-term stability, low inflation rates and sound public finance that the country desperately needs are achieved. I, as a former industrialist, know that we need to achieve that. We do not want to take short-term palliatives which will blow us off that fundamental course. There are many ways in which we can help the regions without losing our overall approach to stable economic management.

Lord Renton: My Lords, does the noble Lord agree that our balance of trade depends largely upon the value of the pound and that if we replace the pound by a common European currency the Government will lose a large part of their power to help our balance of trade?

Lord Simon of Highbury : My Lords, I am afraid that I do not agree. My memory of industry is that our exports largely demand skills on the part of people, quality goods, great marketing, and a great deal of enthusiasm and technical knowledge. To rely on the exchange rate of the pound is a chimera that is long past.

Lord Hylton: My Lords, as regards imports, does the Minister know of timber and wooden products entering this country at prices that constitute dumping?

Lord Simon of Highbury: No, my Lords, I am not aware of that particular sectoral problem. If there ever is evidence of that being the case, the courts, and indeed the European courts, are the places to look on issues of dumping policy. I should be happy to accept a letter if there is evidence of that kind, and we shall take the case forward.

Lord Stoddart of Swindon: My Lords, will my noble friend confirm that, in 1972, manufacturing in this country accounted for 32 per cent of GDP, and in 1997 the percentage was 20.7? Is he aware that that enormous, and serious, reduction in the capacity of our manufacturing industry has taken place against the background not of a rising pound, but in general of a falling pound? Is it not therefore merely an excuse on the part of manufacturers and traders that the high pound is hurting their export potential, when in fact a little more effort on their part would achieve a lot more?

Lord Simon of Highbury: My Lords, there is something in what my noble friend says. It is clear that in almost all sophisticated industrial regions, whether the USA, the UK or continental Europe, the share of manufacturing and the total GDP is now broadly around the 20 per cent mark as manufacturing has shifted to lower cost areas; and, as I said, we have had great

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success in developing service industries. There is no doubt that our manufacturing will always need to rely on greater flexibility, better products, better quality, better sales abroad and sustained investment. The greatest weakness in our manufacturing sector has been too little investment, which has come about largely because we have not had the stable economic environment that our policies now seek to maintain in place.

Lord Mackay of Ardbrecknish: My Lords, is not the Minister just a tiny bit worried about the decline in manufacturing industry, given that closures and job losses are still being reported, including one this morning? Despite the Minister's previous answer, will he agree that the high value of sterling is at least one of the factors? Will he share with the House his view on the remarks made by Sr. Prodi in Italy regarding the likelihood that Italy may have to consider leaving the euro and the consequence of the continuing weakening of the euro, leading to a further increase in the value of sterling and causing yet more damage to manufacturing industry?

Lord Simon of Highbury: My Lords, I assure the noble Lord that I am always concerned where we appear to lack competitiveness. Manufacturing is a sector where our relative competitiveness, not as far back as 1972 but certainly over the past 20 years, has been a worry to all of us. So I share the noble Lord's concerns. Much of our competitiveness White Paper and the sustainable economic policy that we are putting in place are aimed precisely at rectifying our weaknesses. Like the noble Lord, I am aware that a strong pound does not help. However, I am absolutely certain that a weak pound would not be the answer to that problem. We have to work on the constituent parts of competitiveness in a much more effective way in the partnership that we have set up between management and the workforce throughout the country.

As to Sr. Prodi, his remarks were in Italian and were addressed to the chemical industry. The noble Lord's grasp of Italian chemical knowledge may be better than mine. I believe that Sr. Prodi was saying that the Italians, too, require long-term sustainable growth and that double the inflation rate in the rest of Europe would not be a good position for Italy over the long term. I fully agree. His comments were reported quite differently--but then my Italian is also specious.

House of Lords Bill

3.14 p.m.

The Lord Privy Seal (Baroness Jay of Paddington): My Lords, I beg to move that the Bill be now further considered on Report.

Moved, That the Bill be further considered on Report.--(Baroness Jay of Paddington.)

On Question, Motion agreed to.

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Clause 2 [Exception from section 1]:

Lord Strathclyde moved Amendment No. 21:

Page 1, line 14, at end insert--
("( ) If a vacancy arises by reason of the death or disqualification of an elected hereditary peer excepted from section 1 the vacancy shall be filled--
(a) until the end of the first Session of the Parliament after that in which this Act is passed, by the unsuccessful candidate who obtained the highest number of votes in the election at which the deceased or disqualified peer was elected; and
(b) for any subsequent Session of Parliament, by the holding of an election conducted in accordance with provision made by virtue of this section.")

The noble Lord said: My Lords, this is the first of an important series of amendments which will be moved from the Front Bench. Perhaps I may crave the indulgence of the House to mention them briefly.

Amendment No. 21 has been tabled to insist on the long-term replacement of what we now call the Weatherill Peers in a by-election. Secondly, Amendment No. 25 would bring in an independent appointments commission--something that the Government have promised for over two years but have not yet delivered. Then, possibly next Wednesday, we shall debate a related amendment, Amendment No. 52, which would limit the size of the House to 659, the same as another place, and so place a cap on the overall extent of patronage. I also commend to the House Amendment No. 46 in the names of my noble friends Lord Mancroft, Lord Goschen and Lord Renton of Mount Harry. The amendment would limit the ability of any future Prime Minister to flood the House in a bid to extend the life of a Parliament.

I must say at the outset that none of these amendments threatens the Bill. Taken together, they do not cut across its objectives, certainly not in the way that the Weatherill amendment, which has already been agreed and commended to the House by the noble and learned Lord the Lord Chancellor, did. They do not delay the Bill. They do not modify the composition of the House. They simply place safeguards around the exercise of patronage by any future Prime Minister. They also--and this applies particularly to Amendment No. 21--ensure that we do not find ourselves drifting down a slow road to an appointed House. That could happen if the principle of replacement is not included on the face of the Bill.

In the interim House, taking into account the Bill as amended and last weekend's creations, there will be some 218 Conservative Peers and 236 Labour and Liberal Democrat Peers, taken together--a Lib-Lab majority. It is also true that there will be 150 or so Cross-Benchers. But it will be far easier than we may now assume for the Government, who are creating a primarily appointed House, to gain control of procedure and the workings of the House. It would be wrong for the radical step of the creation of an appointed House to be brought about by sleight of hand through Standing Orders. Such an extraordinary step, which would create a hand-picked Chamber, almost unique in the world, should only come about openly, in the full glare of public debate, by primary legislation.

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The original Bill before the House was such a Bill. It was universally condemned by commentators, right, left and centre, as a quango too far. So the Government retreated. They accepted the Weatherill amendment; and so, in honour, as I, like the noble and learned Lord the Lord Chancellor, feel bound in honour, there they should stay.

I do not think that there is a disagreement in principle between this side of the House and the party of government on this amendment. There should not be. We have always made it clear that we should have preferred a single stage Bill. "No stage one without stage two" was not only a good slogan; it was a good constitutional principle. But that battle is now gone. We have this dismal johnny of a Bill before us and we have to deal with it.

I accept that the noble and learned Lord and the Government intend to move on to a second stage Bill. But his and the Government's lips are sealed on what that second stage should be, and those of his colleagues likewise. So do they want to shake the comfortable nest that they will be taking over as life Peers by bringing in elected Peers? I look across the Chamber and do not see a reformist stage two gleaming in Members' eyes.

I accept the good intention of the noble and learned Lord the Lord Chancellor in that regard, but he is not immortal in his high office and cannot necessarily command a future Cabinet, a future House of Commons or a future Parliament. So we must treat the Bill as a stand-alone Bill, one that may last 10, 20 or even, as the current proposals have done, nearly 90 years. That means that if we are not to drift into the quango House that no one wants, we must have a system of replacing the 92 hereditary Peers as they die off.

In my amendment I have given the noble and learned Lord the Lord Chancellor or my colleagues in the next Conservative government time to move on to stage two; time to pass a Bill in the first Session of the next Parliament. In that time I have gone along with the noble and learned Lord's view that empty places be topped up from the election roll of 1999. But I have added the tiny insurance policy of writing it onto the face of the Bill. In the long term--and we must conceive of the long term--the top-up scheme is not a secure or stable system. Shall we say, for example, in 2020 that Lord X must come into the House because he was 132nd on the Cross Bench list in 1999? That is a nonsense and we all know it.

The best way to fill a Weatherill place in the long term is to follow the practice the House has had the wisdom to use twice previously for the Irish and Scottish representative Peers. That is by election. The noble and learned Lord the Lord Chancellor has himself referred to the greater authority that will come to hereditary Peers who remain in this place because they have been elected. Those who come here afterwards by election will have the same authority. The system will have the logic and certainty that the House requires.

I have made my view clear that I would prefer by-elections in future to involve the whole group of hereditary Peers in the party college so that they are truly representative of the hereditary peerage. In

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Committee, the noble and learned Lord appeared to hint that he might favour what the Romans called "adlection", election from the body of hereditary Peers by those hereditary Peers already in the House. I am less attracted to that approach, but I do not rule it out.

Those kinds of matters are far better resolved by the Procedure Committee and ultimately, of course, the House. They are matters which would fall to be debated and decided on the report of the Procedure Committee when it comes to your Lordships' House.

On behalf of these Benches, I must say how grateful I am for the firm assurance given by the noble and learned Lord in Committee that the debate on the Procedure Committee will be held before Third Reading. That was a wise and statesmanlike undertaking. The amendment is therefore simple. It does not seek to anticipate the details of a by-election system in the long term. That will be for your Lordships on another day. It is also non-prescriptive. It goes with the grain of all that is implicit in the Weatherill arrangement. It is common sense, and it provides, as a wise revising Chamber must, for stability in the long term if stage two never arrives.

I hope that the Government's response will be positive and that they will think carefully on the matter. I was disappointed to read the words of some unnamed spin doctor who claimed that the Weatherill Peers would be excluded if the House insisted on the amendment. I would like to think that that spin doctor was not speaking with the authority of the Government in this House.

I know that there are those outwith the House who do not understand the duty of the House to improve legislation and to guard against every eventuality, however unlikely it might appear. I know that there are those who do not understand the will of the House to be satisfied on the point. The amendment goes to the heart of sustaining the Weatherill arrangement and avoiding a totally appointed House if the second stage never arrives. I hope, therefore, that the Government can reflect on it. I hope that they understand its importance and that the Minister comes to the Dispatch Box this afternoon with a positive reply. If the noble and learned Lord cannot do so, I must warn him and the Government that I shall be obliged to test the opinion of the House. I beg to move.

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