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Earl Peel: My Lords, in addressing countryside matters, I shall not cite all the ills embracing rural Britain today, for two good reasons: first, it would take too long; secondly, every noble Lord is well aware of the ills and how serious the situation is. I declare an interest as the owner of land in the north of England, all of which is subject to tenancies.

Not even the most short-sighted optimist could have doubted that change in farming was inevitable, even before BSE and foot and mouth disease ravaged the farming sector so tragically. But change is difficult to embrace. It needs to be supported by guidance and encouragement from above. Uncertainty, combined with a lack of confidence, is the real blight that needs to be addressed.

CAP reform remains a pivotal part of the future. Most people now acknowledge that the present agricultural support system, with all its baggage and distortions, must be phased out. Most in the rural sector appreciate that, if we are to earn public support, we must provide a wanted and respected service. Let us not forget that nearly 3 billion a year comes from the

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CAP into rural countryside in Great Britain. Support for well co-ordinated and well researched environmental schemes, along with support for new rural enterprises and new crops, is the way forward. I noted with great interest that Ben Gill, the president of the National Farmers Union, predicts that 12 million hectares of new crops could be planted by 2010, which would help to soak up harmful carbon dioxide emissions. I am certain that the noble Lord, Lord Palmer, would welcome that.

I welcome the mid-term review of the CAP announced recently by Herr Fischler, the Agriculture Commissioner. His recommendations for the decoupling of production support to paying farmers a flat rate in exchange for certain environmental and animal welfare standards seems a move in the right direction. I accept that the devil is in the detail and that the proposals must be realistic. But, in broad terms, I thought it was the sensible way forward. I also thought that it was generally accepted by most member states not simply as a means of providing the taxpayer with a more acceptable use of public funds but also of complying with our obligations under the various world trade organisations.

It seems that things are not quite as we assumed. Lo and behold, the old alliance of France and Germany at the European heads of state gathering re-emerged with their own cosy version of reform. I am bound to say that our Prime Minister appeared to be spectacularly sidelined in a manner that defies his claim of being at the centre of Europe. Will the Minister explain how two member states can claim to have introduced their own version of CAP reform, when such matters—I thought—were dealt with under qualified majority voting? Secondly, and just as baffling, how can two member states agree the financing of Europe's largest policy, the CAP, until the year 2013, when there has been no decision on the general level of financing of the EU after 2006. The real question is: does Herr Fischler's mid-term review remain a realistic proposal or simply one that Mr Chirac and Mr Schroder can scupper to meet their own narrow objectives? We need answers to those questions.

Returning to the more realistic world of domestic rural policy, I welcome the Government's decision to modulate 4.5 per cent of this country's shares of CAP by 2004; in other words, to put 4.5 per cent of the money that would have been distributed in agricultural production subsidies into agri-environment schemes and rural development. I also welcome the introduction of the broad and shallow environmental management scheme as suggested by Sir Don Curry in his very forward-thinking and comprehensive report. It is now called entry-level stewardship, as the original names are never retained. I also welcome the extra 500 million that the Government have committed to supporting such schemes over the next three years.

Farmers are the stewards of the countryside. There is no reason why, through proper support, the well-being of the countryside should not be put at the top of the rural agenda. But there remains one simple and overriding caveat, recognised and acknowledged by

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Sir Don Curry: farmers can survive only if they make a profit. It is essential that these environmental schemes, important though they are, give the farmer a proper return on his labour and capital, and that our farmers are not discriminated against by other EU states not engaging in modulated schemes. A payment based on profits forgone may be acceptable in the good times but it is simply unacceptable during the bad times.

I urge the Government to carefully monitor the success or otherwise of all such schemes. All too often in this country, environmental schemes are established, at considerable cost to the public, with the sole purpose of habitat restoration. When that is achieved, those responsible often sit back in the belief that the job is done. That is not enough. Only when the creatures associated with such habitats return can the scheme be deemed a success. Too often that does not happen. I compare this to the building of expensive houses that no-one lives in. It is essential to work closely with those who have to make such objectives operate, for it is often a worthless exercise, when those responsible for the financing and planning of such schemes fail to engage those with the practical skills and know-how, from the outset. It is not just about nature conservation or bio-diversity objectives. They do not just happen; it requires management and taking people with you.

Recently, in Johannesburg, Clare Short accused Greenpeace of being "eco-imperialists", pushing one agenda and ignoring the human dimension. I think she has a point. Important though the environmental initiatives are, and important though it is to secure public support for any subsidies that may flow from the public to the private sector, there remains one overriding essential that is dangerously overlooked at times. It is incumbent on every Minister, official, government agency, NGO, quango, tsar, retailer and consumer to do everything in its power to ensure that we have, once again, a healthy and profitable agricultural industry. I wish people would stop taking every opportunity to talk down what we produce in this country and that they would start looking at the good, which is there to be seen in abundance. Unless British farming is profitable, there may not be anyone left to look after the countryside, which we all wish to see well cared for.

To bring my concerns into context, a recent report by Deloitte and Touche claims that Britain's 65 billion food industry, which employs 500,000 people, is on the verge of collapse. The social fabric of the countryside, its infrastructure and management, are all at risk. So, too, is the tourism that flows from it. The lack of young people prepared to commit to farming is another barometer of concern. Farmers know they must change. But there are too many regulations, and those from Brussels are gold-plated on every occasion.

I am driven to ask the question: what has happened to the report of the noble Lord, Lord Haskins, entitled, Environmental Regulations and Farmers? How many of those recommendations have been implemented by the Government? To the best of my knowledge, the answer

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is none. We have imports coming into this country which are below the standards demanded of our own farmers and which undercut them. Our farmers are having to produce food of a very high standard, but at a very great cost to themselves. I know the answers to these problems are not easy, but solutions must be found. The Government must be seen to be leading from the front in putting farming back on its feet for all our sakes.

6.30 p.m.

Lord Beaumont of Whitley: My Lords, I regard it as a privilege to follow the speech of the noble Earl, almost all of which I agreed with; indeed, it was tremendously important. I calculate that this is the 26th debate on the Queen's Speech in which I have taken part, and for nearly the 26th time, I find myself concentrating more on what is not in it, but should be, than on what is.

My personal disappointment is that we had understood that the Government were contemplating the creation of an offence of corporate homicide. That is well overdue. I and my party, the Green Party, believe that as great a threat to both society and the citizen is posed by the power of transnational corporations (TNCs) as is posed by terrorist organisations. We may have been heard to say from time to time that TNCs metaphorically get away with murder. All too often, as we have seen in recent cases, they do so literally. This would have been an occasion to put an end to that state of affairs. I can only hope that the Home Office, the Lord Chancellor's Department, or whoever has such responsibility, has not abandoned the idea completely.

I should also like to comment that my party believes that a lot of the Home Office legislation, which looks, as usual, as if it wishes to impinge on the rights and liberties of the subject, would be better replaced by adequate finance for the present system of justice. But the main thrust of my party's domestic policy is concentrated on making the economic life in this country sustainable. As I hear from time to time the other parties represented in this Chamber paying lip service to the same principle, I live in hope that, sooner or later, something will be done about it. Indeed, I am sure that it will, although I fear that I shall not still be on the planet to benefit from it.

The principle of sustainability is that we should be able to pay a fair price for what we get in life. I shall no doubt be talking from time to time during the next year, as I have in past years, about our failure to pay for our food and our farming and rural community—a failure that is rapidly destroying the last two, as the noble Earl has just pointed out.

However, today I want to raise the subject of aviation. Of all the many ways in which we rob the planet when we travel by plane, the most obvious is our complete and utter failure to tax aviation fuel. This week sees the publication by the Green Party of a startling report by leading transport expert professor John Whitelegge, entitled Aviation's Economic Downside. Aviation is the most highly polluting

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transport mode in the world, and its pollution constitutes a major hidden cost to the economy. Professor Whitelegge's report calculates the health costs of air pollution by the UK aviation industry as more than 1.3 billion a year, the economic costs of aircraft noise at 3.3 million a year, and the costs of its contribution to climate change at 2 billion a year. None of this includes sums such as the 500 million of subsidy given to British Aerospace to help it to develop a new airbus.

Aviation is massively under-taxed compared to other sectors. Flight tickets, aircraft and aviation fuel are zero-rated for VAT. HM Treasury collects a billion pounds in air passenger duty per year, but forgoes 3 billion due to VAT zero-rating of aviation products and loss of excise revenue. Aviation fuel pays no tax at all.

I turn to the cost to the country of the massive size of airports, which we are constantly urged to expand. Many of your Lordships will have received an invitation to a celebration of the life and heritage of Five Parishes. This heritage, which has in the past nurtured such artists and creators as Shaw, Pissarro, Louis McNeice, Gustav Holst and John Pudney is now threatened by the proposed Stansted airport expansion.

The inhabitants of these villages are to be congratulated on the campaign that they are mounting against this threat, and are not to be dismissed as selfish NIMBYs. They may be saying, "Not in my backyard", but I hope that they are also saying NIABY (not in anyone's backyard). Aviation should be paying the full cost of the damage that it does to the community. If paying the full cost means that many fewer people will be able to afford to fly than do at present, so much the better.

This is not conventional wisdom, but then Green Party policy is usually ahead of conventional wisdom. We were warning about climate change when it was dismissed as the idea of cranks; and we were opposing huge roads expansion programmes long before other political parties and 61 per cent of the population agreed with us.

Professor Whitelegge's report proposes a seven-point plan for making aviation sustainable. We can no longer play with the idea of expanding our airports. We can no longer allow aviation fuel to go untaxed. Air traffic congestion charges have been proposed by the Greens in the London Assembly. We must concentrate on supporting other means of transport. It is a national disgrace that we have trailed so far behind the French in the Eurostar project that we have to travel at half the speed in our trains that they do. An article in today's Financial Times suggests that there is a sizeable switch on the Continent from travelling by air to travelling by rail, wherever the trains are good and efficient.

If the Government were to embark on these actions they would be carrying on the good work of the NGOs, which have organised this as aviation awareness month—including, the Aviation Environment Federation, CPRE, FOE, Transport 2000, and the

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National Society for Clean Air—and to which the report by Professor Whitelegge for the Green Party has made a valuable contribution.

I do not expect the Minister to reply to these points today. The noble Lord has far too much ground to cover, without having also to take to the air. But I shall return to the fray. Your Lordships might like a later opportunity to debate the report Aviation's Economic Downside when we could persuade the Government to at least think about the economic cost of sustainability instead of merely using it as a parrot cry.

6.37 p.m.

Lord Kimball: My Lords, I cannot follow the noble Lord, Lord Beaumont, regarding what is not in the Queen's Speech, because, like many others, I am very much concerned about what is in it. I must begin by declaring an interest. I am deputy chairman of the Countryside Alliance, and chairman of the Cottesmore Hounds in Rutland.

I was once lucky enough to be chosen to move the Loyal Address in your Lordships' House in 1989. I can still remember the Prime Minister of the day saying, "Chief Whip, guard the door", in order to ensure that there would be no leaks of the Queen's Speech. The door was unguarded and wide open on this occasion, as my noble friend Lady Blatch has already mentioned. I hope that we can return to the established custom of not leaking the gracious Speech in advance.

I was among the 1 million feet walking through London on 22nd September in support of country sport. At that point, I was much encouraged by the Prime Minister's remark:

    "I govern for the whole of the country, and will take note of opinions that are democratically expressed".

I realise the difficulties that the Government will face to gather sufficient support in both Houses of Parliament. But the Countryside Alliance will continue to approach the subject in a really constructive way.

The alliance feels that there is no evidence to justify a ban on any properly conducted hunting with hounds, especially in view of the evidence that emerged in the course of the consultation that took place in Portcullis House in September. There is, however, a need for a solution that would give public confidence as to the manner and circumstances in which hunting is conducted. We have never contested the relevance of utility and the need to avoid cruelty in the context of such a solution. We will maintain that stance.

Recent public opinion polls have confirmed a sharp and consistent swing away from a ban and in support of a regulatory system, which we support. If the Government were minded to regulate hunting with hounds by a fair licensing system, that would be supported by the hunting community and the broader rural community.

I would go so far as to say that if there were objections to the granting of licences, provided that the burden of proof lay with the objector, they would also be supported. If the Government declared that certain activities could not be licensed and were unlawful,

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there would be no objection provided that those forms of hunting with hounds were already outlawed by the hunting association and by the Independent Supervisory Authority for Hunting.

Any attempt to include properly conducted hunting with hounds would result in fierce resistance within the rural community, because no evidence has emerged to justify such a form of hunting being banned, either because of an inherent lack of utility or the infliction of unnecessary suffering.

6.41 p.m.

Lord Palmer: My Lords, it is once again an honour for me to be able to take part in the debate on the gracious Speech. For the past three years I have done so in the belief that as one of the 90 elected Peers it would possibly be my last contribution.

As usual, I was distressed that rural affairs have not featured, other than the vague reference to a Bill about hunting with dogs. Here I echo the comments of the noble Baroness, Lady Blatch. To my mind, even to consider the implementation of the Parliament Act on such a Bill is a parliamentary scandal. I think that political commentators will look back in 30 years' time in sheer and utter disbelief that Westminster, and indeed, the devolved fiasco in Edinburgh, have wasted so many hours in debating the welfare of the fox while crime is rampant, hospital waiting lists are at an all time high and, as we have heard this evening, Her Majesty's Government's education policy is in tatters.

I must declare an interest as someone who is struggling to farm, as a lover of the British countryside and as president of the British Association for Biofuels and Oils. Farmers, who are the custodians of our rural environment, as the noble Earl, Lord Peel, so eloquently said in his powerful contribution, have always faced a tough life. They are out in all weathers and they cannot farm from nine to five, whether they be arable, livestock or dairy farmers.

The right weather at the right time can be all important to yields and quality. For example, I have just finished sowing all my winter sown crops. During the past 15 days we have had half our annual rainfall. I have stopped preparing budgets as I have no idea what my winter sown crops will cost me to grow, to harvest, to dry and, more importantly, what they will be worth.

No other business has to operate under such conditions of uncertainty. There are far too many uncertainties which are beyond the control of farmers. This, of course, discourages investment, especially bearing in mind the long turn around period that shrouds the farming world. In layman's terms, to change or expand an agricultural enterprise takes very careful long-term planning. When I used to make biscuits, technically speaking we could produce a new product and market it within weeks, whereas in the farmers' case it takes years.

I wish for a moment to quote some statistics which I hope will emphasise the real and perilous plight of the farming community. I make no apology for quoting

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my own figures, but at least I can guarantee that they are accurate. In 1982 I received 114 per tonne for my wheat; this year, 20 years later, the gross figure I received was 62—a drop in actual terms of 52 per cent. The farm gate price of malting barley has dropped 38 per cent and yet the price of a nip—it is nice to see the noble Lord, Lord Mackie of Benshie, arriving at such an opportune moment—has increased by 116 per cent in the past 15 years. Wages in the agricultural sector have risen by 179 per cent while the basic hours worked have decreased by 3 per cent.

Of course, I am aware of the introduction of the IACS payments but in reality they fall very far short of giving farmers a decent return. Pre-IACS, my cereal income 20 years ago was 314,000 and this year my cereal income along with my IACS payment is 176,000, which in actual terms is a drop in income of 182 per acre. Milk is perhaps the only bright star on the horizon. The price paid to the producer has increased by 2.6 per cent over the past 20 years—2.6 per cent in 20 years. Yet most producers are losing 2p per litre on every tanker that leaves their farm. Fortunately I no longer produce milk, but my neighbours do and to think that bottled water is more expensive than milk is a classic example of the mess, muddle and confusion that we are in.

I turn to potatoes. The current producer's price of top quality white potatoes is 60 per tonne. That is 13 per tonne less than it was 20 years ago. How much does that tonne cost to produce today?—73 per tonne. Yet those same potatoes are retailing at just under 1,000 per tonne. Farmers cannot and will not be allowed by the banks to struggle on in such a crazy financial climate.

I wish I had the answers to help the country out of this frightening situation—and I believe it is frightening. I have not, but for the twenty-first time on the Floor of your Lordships' House, I am going to beg, to beseech and to implore Her Majesty's Government to take on board the really positive role that biofuels could and will play in rural regeneration given a little help—and I emphasise the word "little"—from Her Majesty's Government.

Biofuels are a cost effective means to help the Government meet the terms of the Kyoto agreement and indeed their domestic energy targets. Biofuels reduce greenhouse gas emissions by as much as 50 per cent in comparison to fossil fuels. In the long term, biofuels will stimulate economic development in rural areas. Even a 5 per cent blend of the total fuel use would create a substantial number of jobs.

Biofuels increase national fuel security which, at this particular moment in time, I should have thought must be paramount. One must not forget that North Sea oil is not going to last for ever. A 30 pence per litre reduction in excise duty for a minimum of five years would be sufficient to start investments in the UK for both bio ethanol and biodiesel.

Everyone I meet from any walk of life who knows my interest in agriculture and, indeed, in biofuels asks the same question, why won't the Government listen? I simply do not understand the Government's

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reluctance to grasp this lifeline to help not only the rural economy but to meet their environmental obligations and for the sake of national security.

I should like to ask Her Majesty's Government how the 81 million of public money spent on biomass support for electricity generation and CHP has benefited the taxpayer, how many tonnes of carbon have been saved and at what cost per tonne? I should also like to ask Her Majesty's Government what amount of public money has been spent on support for liquid biofuels for road transport in the past five years?

It is worth reminding your Lordships of the report of the Commons Select Committee on Environment, Food and Rural Affairs published only last Thursday which states:

    "The framework in which agriculture operates, which determines whether it is able to function profitably, is largely dependent on decisions taken by the Government and the European Union. Whether it likes it or not, DEFRA is more than just an interlocutor for agriculture and a wide range of other related industries; it is a funder, regulator, negotiator and mediator. It is important, therefore, that DEFRA makes clear the central role played by agriculture in delivering a host of its objectives and in particular those relating to rural communities, the countryside and sustainable development".

I believe most sincerely that the electorate will never forgive a government who put food and fuel supplies in jeopardy and I hope that Her Majesty's Government will act now and act before it is too late.

6.52 p.m.

Lord Livsey of Talgarth: My Lords, the noble Lord, Lord Palmer, graphically described the situation in farming at the present time. I make no apology whatsoever, therefore, in addressing the subject of agriculture as it has tended to be shaded out by the creation of DEFRA which has many functions other than purely agriculture.

Under the DEFRA mantle, water appears as an important topic in the gracious Speech. I believe that the hunting with dogs legislation is, frankly, an absorber of parliamentary time and a misconceived utiliser of Back-Bench energy. Therefore, I should like to speak about an alternative measure that we should adopt; namely, a new agriculture Bill and, indeed, Act. It seems extraordinary that the Labour Party that created the epoch making Agriculture Act of 1947 now seems unable to tackle the enormous crisis in farming, which is at its most serious since the 1930s. I believe that a new agriculture Bill is required due to the virtually terminal crisis afflicting UK farming. No one should underestimate the impact that the farming recession is having on the rural economy.

There is only one small glint on the horizon in the gracious Speech in the form of the possibility of entry into the European single currency after June next year. In the past 12 months, 15,000 people have left the land, 8,700 of them farmers. As a former Member for Wales, I am aware that if 15,000 people lost their jobs in a steelworks—as, indeed, they did in the early 1980s—that would be considered a major crisis. However, the situation in farming constitutes a drip, drip of erosion of the rural population from viable employment.

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The issue of abysmal farm incomes has been ignored. The most recent farm management survey results indicate for the year ending March 2001 that the average net income of all UK farms was 5,000—a figure substantially lower than the national minimum wage. In the same year hill farm incomes in Wales were as low as 2,000. Reports from the 2001–02 year show that many farms are making a loss. At this rate making a living from farming in the UK is now unsustainable. The very future of farming is at dire risk and many young people are leaving the land. Is that really what the Government want? I hope not.

The report by Sir Don Curry proposed a number of routes out of the crisis although I cannot agree with its comments on world prices because in my book there is no such thing. Nearly all food production in the western world is subsidised in one way or another. Making farming sustainable in terms of making a living as well as sustaining the environment must surely be the objective, but such is the level to which farm commodity prices have sunk in the UK that, as we have just heard, grain prices are at the level they were 25 years ago. Until very recently, lamb prices were at the level they were 20 years ago. However, I am happy to report that the situation is slightly better now. However, milk prices are lower than the cost of production.

Making rural areas sustainable is in large part linked to the fortunes of agriculture. Adding value to farm and horticultural produce must surely create rural jobs and improve incomes for all rural communities. I refer to competition from food imports into the UK marketplace that are eased in at prices less than the cost of UK production. Added to that is an excessively strong pound and subsidised farming in many countries that contribute to the global market. UK farmers, with practically no marketing infrastructure, are being picked off by the big battalions in their own marketplace.

What is required now is the kind of vision that we saw in the early 1930s when UK farmers were in almost the same dire position. The riposte then from government was the creation of the marketing boards, not least the late lamented Milk Marketing Board. Co-operative power against the big battalions to which I have referred is absolutely essential if higher prices are to result. The answer must surely lie in new style co-operatives that should address milk, meat, grain, horticulture and biofuels, as have just been mentioned. Otherwise, we simply cannot compete in the marketplace. The alternative is that the rapacious big retailers offering ever lower prices will create a situation where farming is totally unsustainable. A new agricultural marketing Bill is also needed. That is an important point. Such a measure must come in a new guise that conforms with the rules of the European Union.

As has already been mentioned, UK farmers received 3 billion in support. I believe that supermarkets have siphoned off most of that money by exerting downward pressure on commodity prices; in fact, a 30 per cent decline. In other countries, for example, the United States, it is illegal for retailers to

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purchase farm produce at less than the cost of production. Eight years ago, UK farming had a 3 billion net profit. Today it is less than 1 billion. I believe that the supermarkets have pocketed a good deal of the deficit of 2 billion lost by UK farmers. In fact, the taxpayer has paid for this. Indeed, the Competition Commission carried out an investigation about two years ago. The supermarkets were supposed to be subjected to farmgate prices in the investigation. That was sidelined into whether consumers were getting a fair deal and the conclusion, of course, was that they were. The Welsh Select Committee in the other place, of which I was a member, called the four main supermarkets before it. They produced four different accounting methods to try to prove their case. The waters were muddied and indeed they all said that they were whiter than white. In fact, they had marked up by a factor of four many depressed produce prices. Now they are deconstructing organic prices, too, and organic farming in the process.

Supermarkets are a social phenomenon. They are convenient and lead food fashions. They even persuade the consumer to buy the produce they have, even when, possibly, six months earlier the consumer did not really want it. Their main preoccupation is the bottom line of their accounts and I believe that any other interpretation is very naive indeed. We should compare the situation when the UK milk co-operative wanted 35 per cent of the market about three or four years ago, which was ruled out of order by one Stephen Byers of the DTI. This was at a time when the Dutch and Danish co-ops had 80 per cent of their market. It is a one-in-three hill climb for UK milk producers.

The Government want cheap food at the cost of family farms. That results in mammoth profits for the supermarkets. Indeed, some of the money is pocketed by two political parties. I believe that there are other big issues which cannot be ignored and in the next two minutes I shall try to mention them. We support CAP reform and the mid-term review and the decoupling of support from commodity prices. I am glad that the Government do as well.

Modulation is a very important matter and the capping of modulation will assist family farms. The Chirac-Schroder deal was devious and pre-emptive, but by capping the budget to 2006 and then to 2013 means that transition is going to be less painful for UK producers. It takes a long time to turn around natural systems of production.

The 10 new accession countries will be a huge problem, but gradual transition arrangements should take care of that. I was going to go into the problems of DEFRA, but the noble Lord, Lord Haskins, is looking into it. I shall be most interested to learn of his results.

As regards the rural economy, the regional development authorities in England have made a good start. Devolution in Wales and Scotland has proved very successful indeed and I congratulate the Government on the creation of these bodies. The countryside is the jewel in our crown. I believe that tourism has enormous potential.

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Finally, I make no apology for saying that we need a new agriculture Bill and a new marketing Act. We want a sustainable rural community with proper rewards for sustaining the environment and the countryside. We want an income on which people who live and work in the countryside, and family farms in particular, can live because they are not going to be there much longer at the present rate.

7.4 p.m.

The Lord Bishop of Hereford: My Lords, it is a privilege to take part in this debate and bewildering to know on what subject to speak given the very wide variety of topics we are talking about today. The right reverend Prelate the Bishop of Truro had been hoping to make his maiden speech on this debate on agricultural and rural affairs on which he is a considerable expert but, sadly, he is not able to be here today. So I should like to divide my brief time between that subject and another arguably even more important one, the environment.

I am tempted to start with three cheers, or at least with two cheers, because I believe that this is the very first time that the gracious Speech has included two references to environmental matters to,

    "measures to protect our environment, including legislation on the conservation and proper management of water",

to which the noble Baroness referred in her opening speech, and to the,

    "implementation of agreements reached at the World Summit for Sustainable Development in Johannesburg, tackling climate change and finding new ways to meet our energy needs".

That is indeed very welcome, especially the emphasis on water conservation.

But I fear that the government proposals lack a sense of urgency and fail to make any adequate provision to deal with the most pressing of all the problems that confront the human race. Climate change is having a much more serious impact and much more quickly than even the most expert people believed to be the case. Drought in southern Africa, drought in the Horn of Africa, drought in Australia, catastrophic flooding in many parts of the world and rising sea levels are already having a devastating impact on people and often on the poorest and most vulnerable, those least able to cope or to take counter-measures, those without any resources of food or water to sustain them over a period of crisis.

The Government's own document about the Johannesburg conference, Reaching the Summit which, incredibly, failed to mention the Kyoto Protocol—although it was doing its best to find some good news stories—emphasised that,

    "environmental problems affect us all, but they affect the poor most . . . The poor live in the most marginal areas: they are the most vulnerable to natural disasters and they often depend directly on natural resources for their livelihoods".

So for their sake, if not for our own, we must give a higher priority to tackling climate change. Although Kyoto was most welcome as a beginning and the Government's proposed emissions trading Bill is a step in the right direction, all this is totally inadequate to

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deal with the colossal scale of the problem. I have been involved in correspondence with the noble Lord, Lord Sainsbury of Turville, about this without receiving a lot of satisfaction. I would urge the Government to look again, with much greater enthusiasm and commitment, at the project called Contraction and Convergence developed by the Global Commons Institute and now vigorously championed by the Institute for Public Policy Research, and specifically affirmed by the Anglican Congress on the Environment, which brought together representatives of the 70 million members of the Anglican communion around the world and which met in South Africa in the week before the Johannesburg summit.

In the barest outline, Contraction and Convergence involves calculating the maximum tolerable level of greenhouse gases in the atmosphere—450 parts per million volume. That is a considerable increase on present levels and reflects on what present levels are already doing to the climate. Then one has to calculate the reduction in emissions which would enable us to stabilise that degree of atmospheric pollution by the end of this century. Then one has to allocate to every member of the human race an identical target for per capita emissions—the principle of equity—then place a financial value on that target figure, the "permission to pollute"; and then introduce a system of emissions trading by which the developed countries, which are already grossly exceeding the per capita target which we would have to aim at, would be able to buy from developing countries during the period of convergence the right to continue excessive pollution while they took vigorous measures to bring their own emissions down to the permitted per capita level. That would involve all those wise things which the noble Lord, Lord Ezra, was speaking about, and many others besides, in terms of biofuels, energy conservation and so on. There would be a dramatic change in our lifestyles and transport systems. It would require an enormous effort.

Contraction and Convergence is scientifically based, as Kyoto was not. It is equitable, as Kyoto is not. It would help developing countries by giving them the means to invest directly in clean energy technology which we in the developed world could provide for them. The most extraordinary thing is that it would overcome every single objection raised by the United States Government to the Kyoto Protocol. It sounds too good to be true, but it is possible.

Let the United Kingdom Government take a vigorous lead in propounding this scheme. There is not much time. Alas, I have not time to quote to your Lordships from an article underlining the desperate urgency of this matter. But let not the Government of this country simply express vague and polite interest in Contraction and Convergence; let them make every possible effort to bring it about for the salvation of the planet.

I turn to rural affairs and, in particular, to matters which have already been mentioned by many noble Lords—that is, the deepening crisis faced by the farming community and especially by small and medium-sized farms. Is there any good news? I believe

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that there is some. But, in trying to draw up a balance sheet to weigh the encouraging factors against the problems, I fear that the outcome looks very gloomy with the difficulties far outweighing the actual or even potential signs of hope.

What are those signs of hope? From what some noble Lords have said, one might imagine that there are none at all. I believe that there are a few, and the fact that the Curry report is being implemented is a matter of congratulation for the Government and a matter for some rejoicing. Entry-level stewardship and some degree of modulation are good news. But there are pressing questions as to how quickly any of those benefits can, in practice, feed through to farmers and whether they are economically sustainable, even if they are environmentally sustainable.

Secondly, land prices remain remarkably stable, which is good news for those who own their own land. Thirdly, the rural White Paper of two years ago, with its emphasis on vital villages, market towns, rural housing and transport and planning issues, gave some grounds for hope. Fourthly, the food chain initiative is very welcome as an attempt to enable farmers to retain a higher proportion of the value of what they produce. Fifthly, farmers' markets are excellent and very encouraging so far as they go; but of course they can help only a limited number of farmers and are patronised by a very small percentage of the shopping population.

That seems to be the sum total of the good news that I can think of. I shall now embark on the task which the noble Earl, Lord Peel, perhaps rather prudently avoided—that is, to catalogue the downside. Briefly, it includes: desperately and impossibly unsustainable low prices; the fall-out from foot and mouth disease; globalisation; ridiculously cheap imported food produced in often highly dubious conditions; the power of the supermarkets; the ruthless demands and often cynical manipulation of contracts; and red tape and gold-plating—again, again and again.

There is a new threat—this time from the European Union—to small abattoirs from EU documents 1420 and 1774. To its credit, DEFRA is vigorously opposing them, but they are seriously bad news. Inadequate import controls are still a bitter cause of complaint. I believe that there are still only two dogs, unless the noble Lord, Lord Whitty, has been able to find some more since he spoke about this a week or so ago. There are new threats of animal disease, such as blue tongue. Shall we foresee animal disease this time, as we did not in the case of foot and mouth? Bovine TB is a desperate problem, and there is still no proper solution. The 20-day rule is inflexibly and damagingly insisted on, despite the very different judgment made in Scotland on the same scientific evidence.

There is still no retirement scheme for farmers, especially tenant farmers, and still no help for young enthusiastic entrants to the industry. There are delayed payments to farmers—whether arable area payments or foot and mouth clean-up payments. There are organophosphate health problems and a reluctance to acknowledge them. There is the unwelcome and

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unrealistic demand that producers pay a levy to share the cost of future outbreaks of animal disease. From what income, I ask, can it possibly be done?

There are at least 15 reasons to be deeply, deeply concerned and there is, once again, no mention in the gracious Speech of the need to support farming. No food and farming Bill has been promised. We face a meltdown of farming. The Deloitte & Touche report, to which the noble Earl, Lord Peel, referred, is only one of many showing just how desperate the situation is. By the time that some of these hopeful or beneficial measures begin to take effect—if they do—very few farmers may be left to enjoy them. Like other Members of your Lordships' House, I beg the Government to take the extreme seriousness of the farming crisis to heart and to take some vigorous action on it.

7.14 p.m.

Lord Smith of Leigh: My Lords, in this wide-ranging debate, I want to beg your Lordships' indulgence and bring the discussion back towards the matters of local and regional government with which we started. In doing so, I need to declare my interest as the leader of Wigan Council, as the former chair of the North West Regional Assembly and the English Regions Network and, in view of something else that I want to say, vice-chair of the Special Interest Group on Municipal Authorities. Perhaps, although he is not in his seat, in the view of the noble Lord, Lord Waddington, I am therefore a fourth-rate political hack.

I turn, first, to the proposed local government Bill, which I welcome very much. I believe that it will give legislative backing to the Government's promise to give greater freedoms and flexibilities to local authorities, while still exposing them to the rigours of delivering successful local services. I believe that they will find a positive way of rewarding performance and a far better way of maintaining a proper partnership with local authorities than the more negative methods used by previous governments and by this Government. Therefore, I welcome the Bill.

As is often the case with the Office of the Deputy Prime Minister and its various predecessor organisations, it does not always march to the same beat of the drum. We shall find that some parts of the department are not consistent with that message. To raise a point which is particularly personal to me, the allocations for housing capital, housing renewal, disability grants and so on will go down for my own authority by approximately 0.5 million this year. Why? Because we are a good performer; we are rated as three-star and likely to improve. We have beacon council status in this area but, because the performance measure is being taken down by the regional office, we shall begin to lose money. Therefore, it is more difficult to sustain such a policy.

I turn to a matter which has already been referred to by noble Lords—that is, the proposed changes to the council tax. I certainly welcome the idea of increasing the number of bands, but I hope that the Minister will

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remember that they have to work at the lower as well as at the higher level. In my own authority, only 48 houses out of 130,000 are in the current high band of H. Therefore, we need to see more distinction at the lower level to ensure that people can afford to pay what is necessary.

However, I am more interested in the proposed revision to council tax values, which the Government are proposing to carry out over a 10-year timescale. I am very disappointed to see that timescale. We should recall that, when Mrs Thatcher introduced the council tax in order to get rid of the embarrassment of the poll tax, it was not done in a scientific way. The then Secretary of State employed a few estate agents to drive round areas and guess what the council tax banding might be for particular housing. On the whole, it stuck. It seemed a sensible and reasonable compromise. But the fact that we are still working on the valuations of the early 1990s and that one has to ask what a new house built in 2002 would have been worth more than 10 years ago is something of a nonsense.

All building societies and many government agencies keep on record the rate of house price inflation. I believe that the measures of council tax bands could be updated on a regional basis so that it did not come as a big shock to people to find that, because such an exercise had not been carried out for a very long time, their properties suddenly came under a different valuation. If the job could be carried out more slowly, that would help to make the tax a little more buoyant to local authorities. I hope that my noble friend will regard that as being a bolder approach because I understand that someone said that we are at our best when we are bold.

In view of the comments made earlier by the noble Baroness, Lady Blatch, I want to comment also on the review of local government finance that she mentioned. I believe that we need to remind ourselves that the Government are proposing a reform of a system that, again, was introduced in 1990 by the then Conservative government. What happened then was the exact reverse of what the noble Baroness implied would happen now; in other words, funding was moved away from the North and into the South and London. If the Government do what they say they will do, they will only be getting the playing field back to the same level that it was at previously.

However, this time the Government are proposing to include in any changes floors and ceilings which balance out any large shifts that might occur in the system. In 1990, as we found to our cost, the government simply offered us crude capping. That was not the way forward. The council tax levels in the North tend to be much higher for the same band of property than in the South and in London. That is reflective of the funding gap. Those authorities have benefited for 12 years or more from generous funding. I hope that the noble Baroness is right and that my noble friend will assure me that the Government will put money into northern authorities like mine.

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I turn to the regional assemblies. I am sorry that the noble Lord, Lord Waddington, is not in his seat. I speak as one from the North West, as he claims to, but I speak for the 72 per cent of those in the North West who, in a recent opinion poll, said that they would welcome the introduction of regional assemblies. The party opposite is quite used to being in a minority. That is why it is in its present state. As was said earlier, it opposed devolution to Scotland and to Wales. It was wrong then and it is wrong on this issue now.

When the Conservatives were last in government they recognised that there was a regional dimension to what happens in Britain; that there is not just national and local government, but that there is a regional tier of government. Their solution was two-fold: first, to appoint a load of unaccountable quangos to run big public services in the regions; and, secondly, they came up with a wonderful idea of regional offices with regional directors. From my perspective that was the last vestige of empire. Whitehall civil servants were appointed to go into the far reaches of the empire—now much reduced—to the North East, the North West and Yorkshire, and administer to the natives to ensure that they do not become too uppity but understand what is taking place.

Local people have no influence over all the key decisions taken in relation to them. In the North West the quangos and the government offices are responsible for 7 billion worth of public expenditure over which the people in the region have no real control. I believe that we should have more elected, democratic, regional government to fill that deficit.

However, that is not the only reason. As there is now devolution in Scotland and in Wales, English regions are at a disadvantage because no one is able to voice a coherent view and develop coherent government in the areas. In the North West we have contact with Scotland and Wales and we see the way in which those locally devolved bodies are much more dynamic in dealing with issues. They may make mistakes, and may do things that I would not want them to do, but they are accountable to local people, and if they do not conduct matters correctly the local people will treat them in the way that they should all politicians who do such things and kick them out.

Eighteen months ago I heard a Cumbria farmer on the radio comment on the foot and mouth disease and on the different way in which he was treated in Cumbria as opposed to a farmer across the Border in Dumfries, which was more responsive to farmers and was much more successful in controlling the disease. That is a reason to have regional governance.

Economic performance is another point and the key to the matter. It is not surprising—I believe the noble Lord, Lord Waddington, admitted this—that those regions in the North that lag behind are those that are most supportive of regional self-governance. The GDP of the North West is over 3,600 less than in the South East. The neglect by previous Conservative governments helped to reinforce the view that the people will get nothing from London and that they will have to do more for themselves.

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Unfortunately, at the moment the gap is not narrowing. That is not just bad for those in the North West, but it is also bad for the country as a whole. We are failing to maximise our production potential, but there is also the danger of over-heating in parts of the country where all the development takes place. In my area we do not have the wonderful increase in house prices that appears to be causing problems in the South. We need to understand that parts of the country are behaving differently economically from other parts. When the regional assemblies are in place it is important that we apply that test.

One thing that made up my mind in regard to regional government was what happened to a major scientific investment in Daresbury. Welcome decided to move it to Oxford, of all places, because it did not believe that the North West was suitable. No one could voice the opposition that a regional government could supply so I support it.

7.25 p.m.

Lord Elliott of Morpeth: My Lords, like the previous speaker, I want to refer to the proposal in the gracious Speech that legislation will be introduced to provide for the holding of referendums on the issue of regional governance.

In another place I represented a constituency in the North East for a considerable period. In the 1950s of the last century the region knew considerable social problems consequent to the rapid contraction of the then principal industries: shipbuilding, steel and coal. In my early days in another place the major concern of those of us who carried responsibility for the social wellbeing of so many people was unemployment. Redundancy became a dreaded term. I have many memories of interviewing decent people who were facing redundancy at such times as Christmas and knowing falling incomes and a bleak future.

However, things are different now in the North East. Today the position is that much old industry has been replaced by new industry; the pits have gone altogether and the steel mills have disappeared. They and other redundant industries have been replaced by long-term, good, new industries, employing a remarkable number of people. Unlike the North West, the improvement has been rapid indeed. Regional unemployment in the North East stands at 6.2 per cent; the national average is of course lower than that, at 5.3 per cent. I well remember, over a long period, the gap between those two percentages being much wider than it is now.

Government aid in the dreadful days of the 1950s and 1960s during the time when both major parties were in government was considerable but local effort—it is important to emphasise that as we look to the future—has also been considerable. I remember Consett in County Durham having its main source of employment, the steel works, closed in September 1980. Immediately an enormous number of people were made redundant and to add to the difficulty at that time, two adjacent collieries were closed. In the other place I used to be asked whether in the North

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East one could see unemployment and I used to say, "No, the centre of Newcastle looks very prosperous", but in the Christmas Recess following the closure of the Consett ironworks one could see the effects of unemployment. However, because of the efforts of the Derwent Development Agency—an excellent body—which at that time had full local government support and co-operation, Consett now has a remarkable trading estate filled with new, shiny factories, employing ex-steel workers and their descendants and ex-miners and their descendants. Now Consett is a remarkably prosperous town.

I suggest that that well-known phrase "the north/south divide", which has already been referred to in our debate today, no longer applies. The North is always described as the deprived area, but in some respects that situation has been reversed.

A recent survey was conducted nationwide in England. It should be noted that the best place to live, according to that survey, in England was not in the South or the South East but in Northumberland. The town that won the highest marks for being the most desirable town was Alnwick, which is right in the middle of Northumberland. Just 20 miles south of Alnwick is the town of Morpeth where I was born.

Morpeth has always been referred to as "the ancient borough". It is an ancient borough. The historian Gibbon once wrote:

    "Morpeth was a borough before Newcastle was there at all".

He added:

    " 'Tis a fairer town than Alnwick".

Alnwick and Morpeth, both of which I know well, are typical today in the prosperity of the comparative well being of the North.

Therefore, my suggestion is—in the short time that I have available—that the North East has recovered enormously from being a deprived area to being a quite prosperous and, in industrial terms, an advancing area. So do we need a regional council? I do not believe that we do.

We have had agencies in the North East which have done very well. There have been three in past years. I was a member of each. It is quite right that such agencies have representatives from members of another place. Whenever they were set up the agency had a wide choice of Labour Members from Newcastle, Tyneside and Wearside. There was just me on the Conservative side. So I was on every body. I used to call it a temporary embarrassment. Unfortunately, it is still an embarrassment.

Those agencies did well. The present agency, One North East, an RDC, is doing a very good job in the North East of England. All the good work done by the agencies and by local effort has been in co-operation with democratically responsible local government. When we hear talk of regional government, there is always the great fear that this will be the end of county councils. I think that that would be disastrous. County Councils are good bodies. They have representatives from each area of each county. The representatives on

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the council know their people, their region and their areas. I should be very sad indeed if such bodies were abolished in favour of regional government.

Long-established bodies such as Northumberland County Council or Newcastle City Council should remain in being to ensure the continuing progressive well being of the North East of England.

7.33 p.m.

Lord Mackie of Benshie: My Lords, I have listened to the agricultural part of this debate so far with great approval. I think that the criticisms made are right and proper. It is quite extraordinary the lengths that the Department for Environment, Food and Rural Affairs went to in order to avoid the word "agriculture". There is tremendous suspicion in the farming community that DEFRA does not care what happens to it; that DEFRA is dominated by people who care more about corncrakes than crofters.

However, I must say to the noble Lord, Lord Whitty, that among his colleagues and the farming community he is reckoned to be by far and away the best Minister. Having buttered him up a little, I shall now proceed to produce one or two more useful figures. The noble Earl, Lord Peel, said that he would not produce the many figures available. But I think that there are one or two quite significant ones that illustrate the state of agriculture in the country generally and its effect on the country.

One is that household food consumption is up 18 per cent. Retail food prices are up 19 per cent, but the input costs are up 14 per cent. That means that the people of this country are able to buy the food at the price, but that its main cost is borne by the farming community.

Another significant point is that in 1990, 86 per cent of foods that we grow well in this country were produced in this country. That is now down to 75 per cent, which means more are imported. The percentage of GDP is only 0.7 per cent or some such figure. We are falling short in manufacturing goods and relying more and more upon services. So I do not think there is any question about the plight that farming is in.

This concerns not only the small farms. No one can tell me that the big farms can make money out of selling feeding barley at 50 to 60 when it was 120 five years ago. It is not possible. The figure of 5,000 income, which was quoted by my noble friend, is devastating. There is no doubt that applications for positions in the Fire Service from the farming community could be very large indeed.

The figures are quite interesting, but I turn to the total position. In the 1930s we had globalisation. In this country we were subjected to imports from all over the world at very cheap prices. Farming was in a desperate state. In Norfolk, for example, the people who care about the environment would have been delighted. The hedges were 10 yards wide. The fields were filled with weeds, thereby supporting a large number of rare species, I suppose. But it is better to see countryside doing something real—producing food and supporting people who maintain it properly.

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Modulation and converting a large amount of the acreage payments into payments for the environment is a good idea. But it must be administered with great care. It will be enormously difficult to administer.

We should consider the history of globalisation and a free market in agricultural produce. Every time, all over the world, the farmer has been hit. For example, if we ask the countries in Africa that are suffering at present to import their food at world prices, they will denude their countryside. That is what happened in Nigeria when they received oil money: they ruined farmers who were growing peanuts and so on in the north of the country. They flocked to Lagos and produced one of the most dangerous cities in the world.

There is no question but that millions of small agricultural producers will be hit by globalisation and we need the sort of measures that are in the common agricultural policy—not those of the present system but we need support. The reorganisation of the CAP will be enormously difficult. France, Germany and Austria have a point when they say that their countryside and tourist industry are dependent on it being a living countryside, not an empty one.

All those things pose enormous difficulties for the Government, but the noble Lord, Lord Palmer, is right to be fixated about bio-fuels, because nothing could help the environment so much as to produce bio-fuels in this country. A small amount put into diesel enormously improves diesel's performance as regards the environment. Government tax concessions and grants should be helping the setting up of large concerns. That will not be done unless the Government push it, but it must be done.

The Government say that farmers should co-operate, but they destroyed co-operation through the competition committee after the abolition of the Milk Marketing Board—for which I did not see the reason. I may say that this is the first time that I have heard a speech made from the my party's Front Bench with which I entirely agree, but it is true that without a real push, nothing will be done.

Farmers are willing. All over the country, people are producing new marketing schemes and companies, but they need a little more assistance. Milk Marque was broken into four, with the result that the supermarkets have simply been able to do what they like with farmers.

I end my speech with a little investigation of my own. Apples in the supermarket to which I went were 1,450 a tonne; carrots were 460 a tonne, of which farmers were receiving 50; tatties were 49p a kilo, which is 490 a tonne, of which farmers may have been receiving 60; and milk was 61p a pint, which is 109p a litre, of which farmers were receiving 17p. A little co-operation is necessary before we can combat the great power of the supermarkets—although, in many cases, I applaud what they do.

Bureaucracy is appalling. Perhaps the Minister will listen to this little tale of a friend of mine, who is a progressive fruit-grower who needs to employ a lot of students from Europe. They are happy to come, and he

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was installing four sewage tanks—septic tanks. He had to apply for permission for them and the geological surveyors came along, said that they had surveyed the area and that it was okay, but sent in a bill for 550. Then the Scottish Environmental Protection Agency said that it needed to inspect, but that before it inspected the four tanks—which were all in a short radius—it had to be paid. Its fee for inspecting four tanks, paid in advance, was 2,320.

That may not seem a lot to some people, but it is the greatest possible discouragement to enterprise. The fellow—the inspector—was there for half an hour, walked round the four tanks and said that they were okay. That is only a small example, but it is something of which the ministry should take notice.

7.46 p.m.

Lord Hanningfield: My Lords, as a Member of the House and leader of Essex County Council, I welcome this opportunity to comment on the gracious Speech.

The Government have set out their stall to reform public services, but reform is not an end in itself. It must be a path that leads to improvement in the delivery of services. My colleagues and I in local government are absolutely committed to delivering improved services. We support modernisation and the development of improved working practices and we welcome new ideas and fresh thinking.

However, the Government's vision for local government does not support those objectives. Their approach seems rigid and bureaucratic. Modern local government is not about institutions; it is about outputs, processes, flexibility, partnerships and networks. The plans set out in the gracious Speech will take us a step backwards. The Government have put forward old-fashioned, out-dated, ill-judged and expensive proposals. They are committed to reform, but have no feel for local government and no idea about local government's role in bringing about real improvements in the lives of real people.

Many in local government will welcome sections of the local government Bill. However, there are sections to which we take exception. Through comprehensive performance assessment, the Audit Commission has established a template that defines the relative importance of every service for every local authority in the country. Every authority of the same type will be judged on the basis of the same template—regardless of size, demography, local circumstances or local priorities.

Essex County Council, serving a population of 1.3 million people, with a budget of 1.1 billion a year and a staff of almost 40,000, now gets marks out of 48. Wherever one goes in local government circles, one will hear whispered discussions about whether an authority has 36 or 37 points and how one might squeeze another point out of the Audit Commission. The irony is that the Audit Commission has now said that if those inspections do not result as expected, the results will be adjusted, so the whole thing could be a waste of time.

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Inspection does not come free. It costs us 800 million a year. It also shifts the focus of authorities onto the inspection process and off the delivery of services. We need inspection, but not as the only tool in the box. Real improvements to public services will be made only when central government gives local government genuine freedom to deliver. The local government Bill does not do that.

The local government Bill was a missed opportunity; the proposed planning Bill is altogether more disastrous. Of course, we support the creation of a faster, simpler, more accessible planning system, but why do the Government think that removing counties from the process will achieve that? According to the ODPM's analysis of responses to the planning Green Paper, nearly 70 per cent of local authorities, 75 per cent of businesses, 93 per cent of environmental and community groups and 96 per cent of the public were opposed. Perhaps everyone else in the world is wrong and the Government are right. There is a first time for everything.

The obvious reason for removing counties from the process would be their performance. That is not the Government's reason. The planning Green Paper contained no criticism of county councils' performance of their planning responsibilities. The Government's rationale is that counties are no longer the most appropriate level at which to deal with strategic planning issues because many of those issues cut across county boundaries. Of course they do; they always have done. They also cut across regional boundaries. Thames Gateway—a national priority for Government—cuts across the eastern and south-eastern regions, as well as London.

The Government's proposals are centralising, rigid, static and dogmatic. They will cost upwards of 60 million a year in one-off costs and 62 million in additional running costs. We have talked about many things in the Chamber today, but we have not talked much about money. The Government's proposals will make planning decisions less transparent. The Council for the Protection of Rural England has said:

    "The regions remain too big, too unaccountable, and too remote to be making vital strategic decisions on where new development should go".

I shall end by speaking about the Government's proposals for elected regional assemblies. Again, it seems that, while the rest of the world moves forward, the Government remain stuck in the past. We must free ourselves from the obsession with structures. In order to respond flexibly and quickly in the modern world, we need a system in which partners can join together to work for their mutual benefit. That may mean different partners at different times for different projects. That is what modern governance is all about.

The Government's proposals for the regions will bring massive upheaval. The reason given for the abolition of county and district councils is that three tiers are too many. That is not an argument. The Government have put forward no coherent argument to justify the dismantling of the existing structures.

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The cost of reorganisation in Essex alone would be about 120 million. We have barely mentioned money today. For people in Essex, it will beggar belief, given the pressures faced by public services, that the Government cannot find a better way to spend such a colossal sum.

The Government show little respect for and little faith in local democracy. One size does not fit all. What is right for Essex—a county not much smaller than Northern Ireland and bigger than at least one existing member of the European Union and at least three of the countries trying to join—may not be right for smaller units. The Government continue to believe that central command and control is the key to improved public services. That is a big mistake. John Stuart Mill said:

    "It is but a small portion of the public business of a country, which can be well done, or safely attempted, by the central authorities".

The sooner the Government heed that warning, the better off we will all be.

7.54 p.m.

Baroness Maddock: My Lords, like the noble Lord, Lord Sawyer, I wish to discuss housing matters. In doing so, I declare several interests, as president of the National Housing Forum, a vice-president of the National Federation of Housing Associations and a vice-president of the National Home Improvement Council.

I shall begin by setting the scene. In this country, we have an insufficient supply of homes for the ever-growing number of households. Many homes are old and in poor condition. There are one million older people living in homes that are in poor condition. The new houses being built are not environmentally brilliant, if we are to be serious about sustainability. Some 750,000 homes lie empty. In areas of high demand and high economic growth, key workers—particularly those in public services—find themselves priced out of the market. Yet, in other areas, there is a total collapse of the housing market. Whole streets of houses can be bought for the price of a modest house in a boom area. The Government have introduced some measures that have made inroads into some of the problems, particularly street homelessness. That is to be welcomed. However, the number of people in temporary accommodation, particularly in bed and breakfast accommodation, continues to rise.

How have we got to that situation, although we are one of the richest economies in the world? For 20 years, we have built far fewer homes than we have created families and households. In 2001, the total figure for new housing completions was the lowest since 1924, excluding the war years. UK completions per thousand of population are among the lowest in the European Union. In the United Kingdom, between 1985 and 1998, gross fixed investment in residential building as a proportion of our gross domestic product was consistently the lowest in the developed world. Producer subsidies and personal subsidies for housing from governments have reduced in recent years. I find it even more surprising that, after

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five years, this Labour Government have never managed to equal even the figures for producer subsidies for housing for the last year of the previous Conservative administration.

That has a direct influence on the production of affordable housing. Over the past three decades, house prices have risen by a factor of 20, while construction prices have risen by a factor of only 10. That translates into higher land prices in areas of land demand and/or low supply. For obvious reasons, high land prices are particularly problematic for social housing developers. More money alone is not a total panacea. Our planning system has created ghettos of rich and poor. That ghettoisation has been exacerbated by land and property prices.

The Government seem slow to act on housing, despite the fact that tackling housing problems would greatly assist with many of the problems that they want to tackle, such as poverty—particularly fuel poverty—social exclusion, health inequalities and the rising cost to us all of our health service. On these Benches, we believe that housing is an important area. It defines people and their life opportunities. Where someone lives can dictate social position, access to education, the attitude of potential employers and what people think about themselves and the life opportunities that are available to them. That is why we need a coherent housing policy that tackles the long-term underlying problems, as well as taking immediate action in some of the crisis areas, such as bed and breakfast accommodation, affordable accommodation for key workers and the lack of affordable housing in rural areas, which we heard about briefly this evening.

What do we see in the gracious Speech to assist with the provision of more housing, better housing and more affordable housing? First, in the local government Bill, the freeing-up of capital finance and the reduction in the number of statutory plans is a step in the right direction. On these Benches, we welcome particularly the prudential framework for capital finance. It is largely based on proposals that the Liberal Democrat group in the Local Government Association has been putting forward for at least four years. However, the proposed system to pool and redistribute capital receipts threatens to undermine those proposals. The Government need to look carefully at the effect of those proposals on debt-free councils.

We also welcome local authorities being given the right to remove council tax discounts on second homes. Again, that is a measure we have proposed in the past. We particularly welcome the fact that council tenants will no longer subsidise housing benefit for other people in their area through the housing revenue account.

However, there seems to be relatively little movement on some of the key ideas raised in consultation over the draft local government Bill, particularly on those designed to achieve deregulation. The Government's approach remains interventionist and additional regulatory measures will only

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compound problems for local authorities. How does penalising poor-performing local authorities help the communities suffering under such administrations? Central government must learn to let go of its over-zealous hold over local authority income, especially if we are to speed up more affordable housing provision and improve poor housing conditions.

As to the planning Bill, it is interesting that in the introduction it was referred to as the "Housing and Compulsory Purchase Bill". Is that the only addition to the Bill since the consultation, I wonder. We welcome the Government's intention to speed up the system and to improve the involvement of local authorities. However, we wonder whether what is in the Bill will achieve that.

We also welcome a simpler, fairer and quicker compulsory purchase system. This will greatly assist local authorities in two main areas—tackling the problem of long-term empty properties and enabling faster land assembly.

As to Section 106 agreements, simpler, more transparent agreements will be welcome, but the Government's reliance on them to produce more affordable housing is misplaced. Research by Alan Holmes has shown that perhaps 15,000 homes were produced under Section 106 agreements, not all of them additional homes. As many people believe that we need at least 200,000 additional dwellings each year, one can see that that is a drop in the ocean.

The Liberal Democrats believe that Britain needs a planning system which is driven from the ground upwards rather than directed from the centre. We believe that the United Kingdom should have a federal form of governance—my noble friend Lord Greaves will say more about this—with the powers at each level clearly defined.

Elected regional governments, free of central government interference, should be allowed to draw up their own spatial strategies in partnership with local authorities. We are particularly keen that household numbers should be decided at local and regional level and not at national level.

I did not intend to say too much about regional governance but, after listening to some of the contributions today, I should say particularly to the noble Lord, Lord Elliott of Morpeth, that now that I live in his area I strongly disagree with him about what he believes is happening in the North East of England. I have stood in this Chamber previously and I have reeled off statistic after statistic after statistic which shows that the whole region is under-performing and is one of the poorest in the country.

As to the regional government plans, we want to see a decoupling of arrangements for changes in local government organisation and the regions. That should not go together.

If we are to make the planning system work effectively, there need to be taxation incentives to encourage better land use. Once again we propose equalising the VAT on new build, refurbishment and conservation.

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As to a specific housing Bill, we are told that there is only a draft Bill and that we shall have to wait until the new year for that. Five years, and still there is not even a draft Bill to regulate houses in multiple occupation.

The private rented sector has much the largest proportion of properties in poor condition—more than 50 per cent—and recent research shows that the level of rent has little bearing on the amount of money invested in them.

Many of the homes in disrepair are in the privately-owned sector. Most are occupied by elderly people. The houses are in poor condition, lack decent heating and are in a hazardous state of disrepair. This means that when the occupiers go to hospital they cannot go home, which contributes to bed blocking.

I look forward to seeing the draft housing Bill. I hope that it will tackle some of these problems. In looking at all the local government Bills and any housing legislation, we on these Benches want to create neighbourhoods which are economically, environmentally and socially sustainable with a demographic balance. More importantly, they need to be under a system which gives the greatest freedom to local communities to organise their own local solutions for their own local needs.

8.5 p.m.

Baroness Billingham: My Lords, having spoken in the House before on regeneration, I make no apology for doing so again. But this time my comments and questions are against the background of the Queen's Speech, and in particular with reference to the planning proposals.

As the chair of an urban regeneration company in Corby, I acknowledge that planning is a vital—perhaps even the key—issue for successful outcomes. While drawing on and using Corby as an example of the tasks involved in urban regeneration, I have no doubt that very similar comments would be made on behalf of the 10 other urban regeneration councils, the URCs, which face the task—indeed, the uphill task—of renewing and revitalising their own areas, all of which show considerable decline and are among the poorer parts of our country.

My first question in regard to the planning legislation is, quite simply, will that legislation provide us with a solution to one of our greatest difficulties—that is, planning delays? We need the shortest possible timetable from the beginning to the end of the planning process to give investors the confidence to undertake essential long-term investment. Since the launch of Catalyst Corby some two years ago the timescale has been a key issue. Essential baseline and master plans have to be drawn up. They are all time-consuming but essential. The raising of public expectation following a launch has to be acknowledged and the time from the launch to tangible evidence of regeneration is crucial. Time saved in gaining the requisite planning permission would be invaluable and enormously welcome.

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I also express the hope that the planning legislation will be helpful in setting out proper road and rail infrastructures in relation to URCs. Regeneration is totally dependent on first-class accessibility and excellent public transport. Indeed, does Corby have the prospect of shedding from itself the unwelcome tag of being the largest town in Europe without a passenger railway station?

The Corby project is ambitious. It is set to double its size from 50,000 to 100,000 people. Critical mass is crucial to the huge investment needed to develop a first-class town. We aim to build at least 28,000 new homes, homes which will be served by public open spaces and excellent leisure facilities—in fact, all the features of a modern, vibrant town. All those factors hinge on a proactive planning framework. More specifically, will the planning legislation give special help to the regeneration of our town centre? Like many other towns, the centre has sadly declined with too many charity shops rather than retail outlets.

So, my Lords, my heart lifted when I read about the "Ikea issue", if I may call it that. At last, the concept of out-of-town giant retailers is being challenged. Is that a planning philosophy for the future? If so, it will be music to regenerators' ears. There has to be a better way forward. The heart of a town can be rejuvenated. Sensible compromise could see those excellent stores, such as Ikea, being brought, so to speak, "inside the city walls". Everyone would benefit—environmentally, socially and economically. In addition, will the planning legislation provide a framework, not just for new build, but for better build?

My noble friend Lord Rogers has set out those objectives in his fine report. Will we have the stimulus to strive for designs which will last and be a delight for generations to come? I am aware that the Deputy Prime Minister will be making a major statement in January specifically on the subject of sustainable communities, but there is no doubt in my mind that planning will form the backbone and, as such, is crucial to us today. There is a real urgency, not only in local regeneration, as has already been said by several other speakers, but within the framework of national need.

Nationally we are building fewer new homes than at any time since the 1920s. At the same time we have population growth, social and domestic change and higher expectation. Combined, those factors are stoking up demand at a greater rate than ever. With overarching planning needs so apparent, surely it is timely to remind the planners that Corby is ready, willing and able to expand and help address the shortfall. As part of the Corby/Milton Keynes axis, will we be given greater support?

I have dwelt solely on the planning aspect of forthcoming legislation, but be assured, we shall be lending our support to measures to make our community safer, applauding the strengthening of our health and education systems, and looking forward to further protection of our environment. I have no doubt that we shall even look positively at the

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liberalisation of the licensing laws, which will bring us in line with continental Europe and should bring the welcome benefit of more sensible drinking practice.

In short, we look to measures which will help us provide a decent town for young and old to savour. To conclude, perhaps I may add a note of hope that URCs will be increasingly well funded. As the real generators of regeneration, the 11 URCs must be supported and sustained. The proposals in the Queen's Speech give us real cause for optimism. We look forward to seeing our aspirations become reality and our poorer towns and cities become the focus for better living and a better future.

8.12 p.m.

Lord Dixon-Smith: My Lords, I am sure that the Minister will understand if I do not view the world through quite the same rose-tinted spectacles with which she introduced this particular part of the debate on the gracious Speech. In part, that is inevitably the consequence of my own experience. I began in local government in 1965 when the late GLC was created. Reforms have been planned, discussed, and implemented in the restructure of local government within about five years of every reorganisation that has previously been completed. That has continued until the present day, at huge cost. My noble friend Lord Hanningfield mentioned the costs of the proposals now under discussion and possible legislation. We have lived with that process for nearly 40 years. The cost in cash terms is huge, but the cost in physical terms, intellectual effort, disruption of service and the lack of concentration on the provision of service to the public is incalculable. At least, I have not yet seen anyone attempt to do so.

Now we come to a matter in respect of which I had hoped the Government might have learnt from the previous government. They have not and they intend to continue the process. Other countries have managed without such constant upheaval. They have modernised and restructured by co-operation, but we have constitutional turmoil. The fact that my own party initiated much of it gives me no satisfaction whatever. One might have thought that others might have learnt, but we are to consider the creation of regions.

The White Paper dealing with the subject has a glossy shop-front feel about it. It looks attractive and invites one in. But the consequence of the elimination of county councils and district councils—unitary authorities will have to be created—is not touched on except to say that the local government boundary commission will consider the consequences.

It is necessary to look at the White Paper a little closer and pick out some of the key phrases which reveal the Government's thinking. The White Paper states that the proposal will bring decision-making closer to the people it affects. That can only be a reality if the Government cede real executive decisions and authority to the regional development authorities. But if that is not the case—and I have seen nothing to make

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me believe that it is—regions and unitary authorities are further from the people. Communities will be diminished as a consequence.

One sees a little of the Government's deeper thinking when on page 26 one reads:

    "The Government believes that regional planning bodies which involve only local authorities",

that is, locally elected representatives,

    "are not sufficiently inclusive and does not propose to recognise them for purposes of the new regional spatial strategies".

I hope I might be forgiven for believing that the Government have no confidence in local democracy as representing communities.

At page 35 things begin to get Machiavellian because one sees that a regional elected assembly,

    "will set out its key objectives in a small number of high-level targets, which it will agree with central government".

Well, we know what that means; that central government's targets will be applied.

Therefore, I believe that I have grounds for saying that two conclusions can be drawn from those statements. First, that the Government have no confidence in local democracy; and, secondly, that the Government will use their legislative programme to ensure that they get their own way. Of course the Government are the paymaster and they must have the right to oversee local government, but a large majority of local government is under the control of the Government's own political party. I have to wonder whether the Government either know too much about the membership of its own party or they do not trust the members of their own party.

There are other key indicators to which I shall turn. Let us consider the proportion of specific grants as a percentage of the revenue support grants paid to local authorities. My local authority, Essex, receives more than 45 per cent of its central government funding as specific grants. In 1997–98, that was 19.4 per cent. That is almost a ravishing increase in direct government control over the allocation of resources in a particular area. I regret that I do not have the national figure, but it follows that trend. This is specific government control over what happens in local areas. It is a reduction in the freedom of action of local communities.

An interesting point already touched on in the debate is that in regard to the local government finance Bill that will come before this House—and which has been subject to pre-legislative scrutiny—I have seen no explanation of the way in which revenue support grant might be distributed in the future.

Then there are all the other administrative tools used by government to whip the machine into line: regulations, guidance and plans—with funding tied to compliance. I asked my county council in Essex for a summary of the number of returns and plans it has to submit annually to the Government. The list is 23 pages long. I shall not attempt to explain it. With money linked to compliance, that is desperately controlling.

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If that is the case with local government, how about all the other government services, which are under direct government control anyway? My advice to any hospital that is considering its right and privilege to become a foundation hospital is that it should examine the small print very carefully. It will have to comply with a host of conditions before it does so, and it will still be rigidly controlled financially after it has acquired that enhanced status. It may be worth having—I agree with the principle of what the Government are doing—but the small print may well be wrong.

Industry and commerce do not escape. I am guilty, along with every Member of this House and indeed the whole of Parliament, of passing a flood of regulation and law annually. We look in detail at the way in which that law will work and we do our very best to make it practical. We rarely stop to see whether the overall impact of the combined effect of those laws is benign, even if the intention is benign in the first place.

It is an interesting fact that, as the quantum of legislation and controls has increased, the standing of politics and politicians has diminished. If I were to propound "Dixon-Smith's law", it would be just that: the standing of politics and politicians is in inverse proportion to the volume of law that they pass.

History has played its part, but this Government in particular have accelerated and exacerbated the situation. They believe in control. That will not be able to continue. The time will come when people will begin to demand that Parliament should once again take control over the "divine right" of the executive.

8.24 p.m.

Baroness Seccombe: My Lords, I shall confine my remarks to the issue of regional government.

I have always referred to myself as a mongrel, having a Scottish grandmother and a Welsh grandfather, in addition to two English grandparents. But having lived all my life in England, I do consider myself to be English and I am enormously proud to be so. I am proud of the wonderful heritage that has been left to us by our forefathers and the magnificent contribution that they and our fellow citizens today have made round the world. I am conscious also that this has been possible because of being British and because of the power of the United Kingdom. The UK is respected world-wide and our permanent membership of the Security Council reflects our standing in world affairs.

Maybe it is the Celt in me that gives me an understanding of the romantic desire of the Scots to have their own Parliament. However, I did not agree with them and I did not agree with the Welsh having an Assembly. Nor do I believe that the majority of Welsh people agreed with that, either. We should not forget that in Wales only just over half of the electorate voted and of those only 50.3 per cent voted in favour of devolution. For me, devolution was an error, and a costly one at that. One can only guess what Londoners think about their assembly.

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Excessive bureaucracy, extravagant new buildings and escalating expenditure place increasing financial burdens on taxpayers. We heard endlessly that the priority of this Government was "education, education, education". By their action it should have been, "bureaucracy, bureaucracy, bureaucracy". Ministers are indeed past masters at regulating everything and everybody. The problem is that the Prime Minister and his colleagues have let the genie out of the bottle and we are left in England with an Administration that is very Scottish in membership and that passes laws that affect our lives but do not touch Scottish and Welsh lives, while we in England have no say about laws in their countries. The West Lothian question has never been resolved and both Scotland and Wales are over-represented at Westminster.

Regional government in essence would replace county councils with regional assemblies that would be more under the control of the Government. Surely if the Government were really interested in devolving power and turning decision-making over to the people, the obvious answer would be to strengthen and to give more powers to existing local government. It would be a much cheaper and more flexible solution. The Government's main argument for regional assemblies appears to be the belief that by handing down decision-making from Whitehall to the regions, local people would be better able to tackle local problems. But county councillors representing smaller divisions are much closer to their local communities whereas a regional assembly member would overlap with the Member of Parliament. County councils could easily do much of the work envisaged for the regional assemblies. Why create artificial units where, within the same region, one community has little in common with another? I now declare an interest by describing the situation in my home county of Warwickshire. I live in the south of the county and five miles to the south-east is my doctor's surgery, and that is in Oxfordshire. Ten miles to the west is Gloucestershire and about 10 miles to the east is Northamptonshire. Under the proposals, Warwickshire—a small county, much of which is rural—would be situated in the West Midlands region, Oxfordshire would be in the South East region, Gloucestershire would be in the South West region while Northamptonshire would be in the East Midlands region. It seems crazy to me to draw new artificial boundaries lumping together communities that face very different local problems. People within about a 10-mile radius from me have little in common with, and face very different local issues from, those in Gravesend, Land's End, Deritend in Birmingham or Hulme End in Buxton. I believe that local government should be just that: local. Those vast regional assembly areas would be bound to be dominated by the large urban conurbations. The smaller rural counties would be overwhelmed and their very real and important concerns would not be understood and would be seen as insignificant in the grand scheme of things. Rural issues such as agriculture would be neglected in favour of urban priorities. That would benefit urban areas directly to the detriment of the countryside.

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I understand that there would be between 25 and 35 members of a regional assembly, with a total of between 250 and 350 countrywide. This could lead to constituencies three times the size of a Westminster one. At present, we have more than 20,000 county councillors, who know their areas and their constituents. Surely that is a much better way to get local people involved in making informed local decisions. Getting rid of historic county councils, far from bringing the Government closer to the people, would destroy an institution that people associate with, and feel an allegiance to. It would exacerbate the very real problem of apathy and would serve only to further alienate voters.

This Government say one thing and do another. The executive says it believes in devolving powers, but it centralises all it can by bypassing Parliament and keeping tight control in Downing Street. It may be convenient for European structures to have countries divided into regions, but it would be wrong for a small island to be insensitively hacked into chunks in such an arbitrary manner.

My father went through the First World War, so every year I support and watch the Remembrance Day programme. Last weekend, I was deeply moved as the horror of those terrible events was displayed before me. I cannot forget the pictures of young men laying down their lives for future generations, nor the haunting melodies of the songs that kept them going. As I was contemplating what I would say today, I heard "There'll always be an England". If this Government have their way, I fear that will not be so.

8.32 p.m.

Lord Cobbold: My Lords, I shall touch on two topics, the first of which relates to the Government's commitment in the gracious Speech to continue investing in the public services. I shall comment on public services specifically in relation to the beleaguered motorist. The motor car, perhaps more than anything else, has given more freedom, convenience, variety, travel and excitement to millions of people from all walks of life, particularly in the five decades since the last world war. That was not foreseen in the early days. The first new towns built under the 1947 Act were designed without garages. Now there is hardly a household without at least one car.

I am sure that noble Lords will agree that, by and large, motorists are a law-abiding, long-suffering bunch with an admirable safety record, given the volume of traffic. Why, then, are they so persecuted, and why do they not fight their corner more strongly? In all the Government's talk about improving public services, little is said about improving Britain's ageing and inadequate roads system.

As an inhabitant of the South East, based in Hertfordshire, I shall give a few examples, although there are obviously many others across the country. The first is the obvious need for a new east-west road linking Luton and Stansted, which would naturally form part of a new outer ring road to relieve the gridlocked M25 and create a link from Reading, via

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Luton and Stansted, to the east coast ports of Ipswich and Harwich. Another example is that we were long ago promised a widening of the two-lane sections of the A1 motorway. We were promised that, until as far north as its intersection with the M1 in Yorkshire, the A1 would be upgraded to motorway standard. Nothing has come of these promises. As many noble Lords coming from the North may agree from bitter personal experience, at the A1's London end, the recent so-called improvements to the Apex Corner roundabout are a joke, given the retention of the Totteridge junction. Mill Hill is an obvious candidate for a flyover. There are many such pressing examples across the country. Not much investment seems to be going into this public service.

Could the situation be improved by toll-charging for motorways? Have the Government considered the Swiss system, for example, whereby road-users buy an annual pass that is displayed on their windscreen and permits usage of the country's motorways? This system avoids the need for expensive toll gates, and related traffic jams. One wonders how long the patience of road users can be relied upon. I urge the Government to face up to the problems, and the cost, of our increasingly inadequate road network.

My second topic concerns the housing situation—once again, specifically related to the South East and the Home Counties. I should declare a possible interest in that I am a landowner with an indirect interest in farming. As the noble Lord, Lord Sawyer, and the noble Baronesses, Lady Maddock and Lady Billingham, mentioned, there is a chronic shortage of housing supply in the South East, especially of affordable housing. When a small cottage in a Hertfordshire village is on the market for 625,000, something has to be amiss.

All of us share a desire to preserve the countryside, but the English countryside would not be what it is today without the farmhouses and cottages dotted about among the trees and hedgerows. I ask the Government: is it sensible to freeze the situation exactly as it is now and never to permit any further natural evolution? Is it fair to deny the children of rural families the opportunity of living in the countryside of their birth, and of their parents and grandparents? Council housing avoided the problem in the past, but such housing is now a thing of the past. Is it right for villages to become 100 per cent commuter dormitories?

It is obviously sensible to make the best use of brownfield sites where available, and where not required for employment. But there are many bits and pieces of greenbelt land where housing would in no way threaten the countryside and where affordable housing could be built. Given the problems of the farming industry, about which we have heard from many noble Lords this evening, one idea to help farmers might be to permit them to build one or two cottages on their land for rent or for sale, with the number being related to the size of the farm. The planners would concentrate more on what was built rather than where it was built. Traditional styles and materials would be priority criteria.

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The plea that I wish to make to the Government is that the planning rules should not be totally inflexible. They should make some room for the individualism, imagination and diversity that has created our English countryside over the centuries.

8.37 p.m.

Lord Greaves: My Lords, we now enter the final straight of today's debate on the gracious Speech. It has been a fascinating debate from all sides of the House. I do not intend to rehearse the ground that has already been covered by my noble friends, who made some outstanding contributions. My noble friend Lady Sharp of Guildford made an absolutely splendid declaration in favour of what education is all about. I refer to "what education is all about" because if it also relates to something else, it is not education. Many people may have thought that what my noble friend Lady Sharp said was perhaps very old fashioned. However, I suggest that the wheel turns, as always. What she said is visionary—a reaction against the present obsession with the mechanics of teaching, testing, and so on. I propose to say nothing further about education.

I should like to thank my noble friends Lord Ezra and Lady Maddock for their contributions on energy and on housing. In today's debate, which covers such a wide range of subjects, we heard eight speeches overtly on education, six on rural affairs, seven on the regional proposals, but only two speakers concentrated on the environment. Perhaps that says something about noble Lords' interests, and about the way in which the environment has been sidelined by this Government. It has, to some extent, been put within DEFRA, but the Government lack an overarching strategy in relation to the environment. Therefore, it is most difficult to get a handle on the subject in such debates.

I turn to the proposals for regional government outlined in the Regional Assemblies (Preparations) Bill. The noble Baroness, Lady Blatch, asked the Minister whether he would tell us the Government's proposals for the lord lieutenants and high sheriffs of the land. I come from Lancashire, where we have not only a lieutenancy and a shrievalty, but also a duchy. I counsel the Minister to keep his hands off the duchy; the Duke of Lancaster has enough problems at the moment. I had better move on quickly, as I do not want to be seized, put in a boat and taken down the river. It is widely thought in Lancashire that the Duke of Lancaster takes precedence over the sovereign!

I listened with great entertainment to the noble Lord, Lord Waddington. He is always good value when talking about regional government and regional affairs. I do not believe that everything he said was wrong—although most of it was. He was most wrong in his suggestion that the North West of England is an arbitrarily carved-up region with no sense of identity or belonging. I am no expert on Saxon or medieval history—I leave that to my noble friends behind me—

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but I believe that in this day and age there is a strong sense of identity in most of the North West. That is a basis for going forward with regional government.

I have been campaigning for regional government for some 40 years, so I am a great enthusiast. I have some doubts about the Government's proposals. I am not sure that they are devolving, rather than gathering up powers from local government. I am not convinced that they are taking democratic control over the existing regional quangocracy. I am not sure that their proposals will be sufficiently representative of such a large region either with the electoral system or the small size of assembly they propose. But at least the proposals are a basis for discussion and a step forward.

However, there are two great problems with the Bill, which no doubt we shall discuss when we debate it. One was raised by the noble Lord, Lord Waddington, who was not completely wrong: the linking of it to local government reform. There is something fundamentally wrong in proposing that people in Lancashire do not have the final say in the future of local government there. There will be a vote, if there is a referendum in the North West, which will involve dramatically changing the local government structure in Lancashire, Cheshire and Cumbria to a unitary system, on what basis we know not yet. But that vote will be determined by the votes of people in the two much larger sub-regions in the North West: Greater Manchester and Merseyside. It is entirely wrong that the future of the local government system in Lancashire and other counties should be changed by the votes of people in the other counties and regions of the North West. That is a flaw at the heart of the proposals that needs to be looked at.

The second problem is that people will be asked in a referendum to vote for a pig in a poke, because the referendum will come before the legislation setting out the powers, duties, size and other matters in relation to the regional authority. That is the wrong way round.

The Government will say that that is what happened in Scotland, but in Scotland there was a clear constitutional convention; everyone knew what was on the table. If the Government are to introduce regional government satisfactorily, we must know what is on the table before those of us who live in the North West, for example, are asked to go out and vote for it. I repeat what I have said before: I fear that regional government is one of those areas where, if you give New Labour a good idea, they will mess it up.

I turn to DEFRA. It covers two broad areas: the environment; and food, farming and rural affairs. As regards the environment, we are a little disappointed with the Bills that are to come before us although they are perhaps important in their own right. The Water Bill is certainly important, as is the Waste and Emissions Trading Bill—which no doubt will be known as the WET Bill—which we shall discuss the week after next. We should have liked to see a more ambitious programme of environmental Bills, for example, an environmental protection Bill, a clean energy Bill, a flood protection and marine habitats Bill and an animal protection Bill. If my party was running

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the Government—noble Lords should not laugh as we may be doing that sooner than they think the way things are going in British politics; noble Lords can laugh at that—we would introduce such Bills. However, we have to deal with the Bills that come before us.

I do not want to say much about the hunting Bill as we all have our individual views on it. I do not hide the fact that when the time comes I shall vote to ban fox-hunting. However, that is a personal decision. We on these Benches will be as split on the matter as noble Lords on other Benches. However, if the Government bring the hunting Bill forward in this Session, they should bring the matter to a close one way or the other. We cannot as a Parliament go on talking about the matter Session after Session after Session, Parliament after Parliament, for ever and a day. A decision has to be made one way or the other that people must then accept. That is my view.

A report was published last week by the Environment, Food and Rural Affairs Select Committee. I have not seen a copy of the report, which I look forward to reading, but I have read the BBC's account of it, which states that DEFRA appears to be,

    "a jack of too many trades and master of none".

The BBC suggests that DEFRA rose from the ashes of the discredited Ministry of Agriculture, Fisheries and Food. Those are the words of the BBC, not of the Select Committee. The BBC further states that DEFRA's aim was to lead renewal in rural areas and to streamline decision-making. We cannot disagree with that. But, according to the report, the,

    "significant change to the culture of the department is far from complete—indeed it has barely begun".

The report also states,

    "we remain concerned about the ability of senior managers to ensure [the changes] take place".

I do not want to criticise civil servants; the people responsible for this matter are not civil servants but Ministers and the Secretary of State and they must be accountable for it.

The report voices concern that the focus on promoting sustainable development—I raise my eyebrows at this—has led to a lack of priority for rural concerns. The report states:

    "It is vital that, as with sustainable development, mechanisms are put in place to enable Defra to exercise influence over other government departments to ensure they take account of the rural dimension in policy-making".

Surely, that is the real problem with DEFRA: it is responsible for everything in the countryside but, apart from farming, effectively it is responsible for nothing. Unless mechanisms are deployed to ensure that all the different government departments take proper account of the effect of their actions on rural areas, their efforts will come to nothing.

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I raised my eyebrows when I read of the great praise that appeared to be lavished on DEFRA's efforts with regard to sustainable development. However, the account related that even with sustainable development the MPs state that they,

    "are pessimistic about Defra's ability to ensure that government departments will do more than pay lip service to the objectives of sustainable development".

In other words, the Select Committee's report simply states that DEFRA is not working. However, it is in all our interests that DEFRA does work in terms of rural development, its work in the countryside in general and its work on sustainable development and the environment. It is absolutely vital that that department is a success as, if it is not, so much of what is needed in this country will not be implemented. I do not want to be too critical of the Minister who is to reply to the debate. I simply say to him that if he and the Secretary of State take measures to turn round the deplorable state of affairs in their department, they will have our full support.

Finally, I turn to agriculture and its future. A great deal of what I might have said has already been dealt with by a number of noble Lords, such as the noble Earl, Lord Peel, the right reverend Prelate the Bishop of Hereford and particularly my noble friend Lord Livsey of Talgarth. They all set out the absolute crisis which is now facing British agriculture. I wish that sometimes Ministers would admit that there is a crisis. Clearly, it is not all their fault; in fact, it is possibly not their fault in the main. All kinds of international, European and British local events have impacted on the situation. But if the Government would accept that a crisis exists and that it has to be dealt with, I believe that they would be in a much better position to begin talking with the farming industry to bring it round.

We are supposed to be in the middle of a big debate at the moment on the Curry report. We are supposed to be discussing what that report defines as "public goods", which are things done for the public good, for which it is reasonable to pay out public money in subsidies. I do not believe that that debate is taking place outside the farming industry, and I do not believe that most people in that industry understand the terms of the debate. All kinds of word are being used, many of them European which very few people understand, such as "digression", "decoupling" and "modulation", the "first pillar" and the "second pillar" and so forth. How many farmers understand all that and what politicians are talking about? I do not know. What I am absolutely certain about is that most people do not know.

If we are to move to a situation, as the Minister and the Secretary of State keeping telling us, in which subsidies for production and to support prices are to be abolished over a particular time-scale, and if in return there are to be subsidies for the public goods, what are they? It seems to me that the implications for half of the agricultural industry in this country of removing production subsidies and forcing it to compete without subsidy in the world market are that it will become more and more efficient; the number of

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units will decrease and their size will increase; and we shall move to a countryside which is full of prairies and ranches.

It is absolutely clear that we do not want that. We want a traditional British countryside— and that can be maintained only by small and medium-sized family farms in a great deal of the countryside. Let us be clear if that is what we are talking about. Let us be honest about it and let the Government tell us what it is they are saying. How do they see the industry in 20 years' time and how do they see the subsidy structure then? Unless they can be far more specific about what they are doing now, the decline of agriculture, which has been very well set out by other speakers, will simply continue.

8.53 p.m.

Baroness Byford: My Lords, it is my great honour to respond to the debate on behalf of my colleagues on these Benches. I consider it a great honour so to do, but it is a somewhat daunting challenge, I must declare. Perhaps I may also declare my family's farming interests and remind the House of them. I also have a brother who is not only a parish councillor, but a county councillor and a husband who is a governor of two schools, one a village school and one an inner city school, both with very different problems.

The education front this last year has appeared to many people as a parade of muddle and mismanagement, including the question of the Criminal Records Bureau, doubts about the A-level results and the threat of top-up fees to students at our universities, which have been referred to by many speakers already today.

However, there are other uncertainties, too. I move swiftly to some of them. For example, responsibility for funding home-to-school transport has remained with local education authorities. The more rural local authorities are facing huge increases in their transport costs. It is likely that local councils will restrict in some way the money made available for transport for those in post-16 education. That will affect the numbers who stay on into the sixth form and stick it out for those two years, both at school and at local FE colleges. There will be a consequent adverse effect on the moneys from learning and skills councils to fund post-16 education. Is that what the Government intend? Perhaps the Minister will enlighten us further when he comes to respond.

Another problem is that the Government have introduced a performance-related pay policy. Two years ago many teachers passed the threshold. From September they are entitled—or are they?—to a rise from upper pay spine level 1 to level 2. Will the Minister clarify how a governing body can refuse increments on budgetary considerations, even though the head teacher has attested to,

    "sustained and substantial performance and contributions to the school"?

Once again, I believe that the Government have created a situation which other people—many of them unpaid volunteers—will have to resolve. The

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Government are supplying only partial funding for those increases, and I believe that many schools—particularly those in counties low down the SSA tables—will have difficulty in finding the balance.

The question of funding and the timing of funding goes all through this Government's dealings with local authorities. Many noble Lords who sit in on our debates will know that there are fields full of fridges because the Government put in place legislation before money was made available to set up the mechanisms for dealing with the problem. Belatedly, funds have been found but it will take all of six months before the systems are ready to tackle a growing problem.

The Government have tightened the local authority budget protection system so that, under the Education Act 2002, a council must notify the Secretary of State for Education of its schools budget not later than 31st January preceding the new financial year. At the same time, they propose to change the current education SSA for each local authority. That seems unfair.

In addition, regulations were laid on 12th August requiring each authority to establish a schools forum no later than 15th January 2003. Some councils are doing so now in order to involve the forum in the entire budgeting process. But they are working in partial darkness because the department has not yet finalised various matters—for example, the detail of the reshaped Standards Fund, the precise definition of the "schools block" and the "LEA block", and how to calculate the passporting of the schools block. Yet decisions are supposed to be made on that basis.

We heard very good contributions from all around the House on the subject of education. The fine standard was set by my noble friend Lady Blatch, who has gained knowledge and experience over many, many years in the field of education. We are grateful for her contribution. Other Members touched on specific matters. My noble friend Lord Jenkin referred to the importance of science and the importance of the teaching of science in view of today's rapidly evolving knowledge on the subject. I believe it is important that science and the teaching of science move forward in a way that attracts people to participate in the subject. We need them badly.

My noble friend Lord Pilkington touched on the whole question of the exam system. We are seeking clarification from the Minister on the Government's thinking. My noble friend Lord Prior, who I thought was also going to speak on rural issues, reminded us of the importance of the phonics teaching system. It is a matter that I knew about but which had slipped my mind. We were reminded of how we have lost something that was considered to be most valuable. The teacher to whom my noble friend referred is known to my noble friend Lady Blatch.

My noble friend Lady Blatch then highlighted some of the big problems that we face. The question of truancy was raised earlier. Every day 50,000 children fail to attend school. That is a diabolical situation.

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There is also the situation with the A-level and AS-level examinations and the criminal checks that disrupted schools at the beginning of this term. First we were told that the children could not go back to school because the checks had not been carried out and in the end the Government had to make a U-turn and allow them back to school before all the checks were completed. The whole situation was a mess. Many noble Lords have raised the matter of top-up fees for university students. Are there to be top-up fees or not, or is the jury still out? Perhaps the Minister can clarify the position.

The most sobering and frightening points, touched on by my noble friend, are teacher recruitment and teacher retention. We all remember our school days and how important a particular teacher was as he or she inspired us to gain qualifications and to seek jobs. I believe that at the moment we are failing our children. The situation must be rectified quickly.

Beside the matters that have been brought to my attention, there is also a concern about a headline in The Times for today which states:

    "Labour misses 75% of targets 'tied to funding'".

There are three that relate to education:

    "An increase in the proportion of those aged 11 meeting the standard of literacy for that age from 63 per cent to 80 per cent by 2002: not met.

    An increase in the proportion of those aged 11 meeting the standard of numeracy for that age from 62 per cent to 75 per cent by 2002: not met.

    A one-third cut in school truancies by 2002: slippage".

All noble Lords will agree that all is not well in education, education, education.

Education is not the only aspect of the gracious Speech about which we have concern. However, we also welcome some points. We welcome the Waste and Emissions Trading Bill and the water Bill and hope that they will achieve what I believe they will set out to do. I hope that they will tackle the problem of waste. It is not just a matter of trading, but tackling it at source to ensure that we reduce the amount of waste. Water is the most important commodity in life. Without it we cannot survive and yet we waste it. I hope that that Bill will deal with the core issue and not just tinker with the edges.

We have heard speeches on the environment. The environment in which we live is highly prized by our citizens and by the many visitors who are attracted each year to our land, whether to ancient monuments, hills, mountains or just to our gentle lowland landscapes. The role of agriculture in the formation of those landscapes is absolutely crucial. Sadly, agriculture is still in decline. It is threatened by demography, by an ageing population—people are living longer—and by smaller families. In former years most farming families could be sure that at least one member of their family would work on the family farm. Nowadays people do not want to take on such a challenge. It is not considered glamorous; it is hard work and, most importantly at the moment, there is no future in farming so one understands the reservations.

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This morning's "Farming Today" broadcast gave the figures which are stark. Over the previous six years, 67,000 people have left the land and have not been replaced. In the past year, 8,500 farmers and 2,500 agriculture workers have gone. That cannot go on. Agriculture, as many have reflected, is still funded by handouts, whether from Brussels or from the Government. Some of those subsidies are outdated. We believe that they should be looked at urgently.

The gracious Speech made no mention of CAP reform, but its reform is urgent. Even more important—noble Lords have not touched on this matter today—is the reform of the common fisheries policy. A Britain without cod and chips is rather like a France without escargots and red wine. It is interesting to speculate that whereas our Continental neighbours would fight for their farmers, we believe our government are failing to fight for ours.

What steps have the Government taken to look at, for example, by-catches? What representation has been made about the industrial fishing of sand eels? What research has been carried out on the importance of sand eels to the ocean environment? There are so many environmental questions that need addressing.

I return to where I started—fridges. Attempts to control disposal of waste shows the other side of the coin. We must be careful that the new restrictions do not result in increased fly-tipping and illegal dumping. So far the signs do not augur well. Fly-tipping and illegal dumping of waste of all kinds is now a regular part of living in the countryside and in the city. It is not just a countryside matter.

My noble friends have covered that particular section fully. There was a moving speech made by my noble friend Lord Peel. He spoke about, and highlighted what I believe is crucial, the total effect that a declining industry may have on our food industry—65 billion. Many thousands of jobs may be lost if we cannot get agriculture back on the rails and able to make a profit. Profit is not a long word and one that at least I can spell.

Other noble Lords touched on the question of alternative fuels. The right reverend Prelate the Bishop of Hereford listed some of the good news. I share his view that the Curry report is an exciting report. I hope that the Government push ahead with its recommendations.

I turn finally to the question of regional government. I have declared that I have a brother who is a county councillor. Perhaps noble Lords will not be surprised that I have great reservations about regional government. To me government should be as local as it possibly can. Noble Lords will remember—it was perhaps only about 18 months ago—that there was a rumour that the Government wanted to get rid of parish councils. We fought a strong fight to stop the Government getting rid of parish councils. They are the nearest elected government. We feel equally strongly about regional government.

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Regional government is remote. My noble friend Lady Seccombe spelt the matter out clearly. Poor Warwickshire would be divided into four regions. Leicestershire I suspect would get lumped into East Midlands. That is not quite so bad. But what really does rural Lincolnshire have in common with urban Derby, Nottingham and Leicester? And which would carry more say? I would wish it to be the rurals. We shall certainly fight our corner. But I suspect by the very nature of what is being proposed that it would not be thus.

The debate we had this afternoon, which looked at local government, was interesting. One or perhaps two noble Lords spoke in support of regional government. That surely should send warning signs to the Government. I wonder whether they have got the matter wrong and whether even at this late stage they might have a rethink. Certainly, this Chamber has not given them the all clear today.

I turn briefly to the four proposed Bills. One deals with local government, about which I have spoken and about which we on these Benches have great concern. The second is the local government Bill. We have concerns about the comprehensive performance awards. Thirdly, there is the planning Bill—I understand that there were some 15,500 respondents—which proposes that 90 per cent of applications, including major developments, would be decided not by elected members but by the officers. If I am wrong, perhaps the noble Lord will clarify that matter for me.

It is absurd to take away the role of county councillors who know their area well, who know their locality, and hand that responsibility over to a vast organisation in regional government and, even worse, to people who are not elected and not democratically representative of anything. We need clarification on that.

Fourthly, I turn to the Housing Bill. The Government intend to increase affordable housing for key workers by 25,000 a year for the next 10 years. How will they do that? If that is to be on greenfield sites, will that devastate their greenbelt policy? If it is to be on brownfield sites, will they allocate more money to clear the sites in the first place and provide extra road and water infrastructure? Those are simple, basic questions that must be answered.

My noble friends Lord Dixon-Smith and Lady Seccombe spoke clearly about their view of regional government, but, if I may say so, they were outweighed by my noble friend Lord Waddington, who made it extremely clear why he thinks that regional government should not be introduced. I could not agree more with him. If I smiled slightly, that was only because it seemed so ridiculous that it could not possibly happen. But here we are: the truth faces us and it will happen. That is a nightmare for all of us.

Finally, I turn to a couple of smaller points on which I should like the Minister to comment. The article in The Times that lists the 75 per cent of targets missed

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mentions two others that return us to the Minister's brief and mine. I am sure that he will be as disappointed about them as am I. It states:

    "Other targets are dropped when events supersede them. A target in 1998 pledges to 'prevent outbreaks of serious animal, fish and plant diseases by March . . . 2002",

was abandoned—after, we accept, the biggest ever outbreak of foot and mouth disease. But the target has now disappeared. I do not see why, just because we had an outbreak of foot and mouth disease, a target disappears. Again, perhaps the Minister can tell me.

I turn to the other target, which again returns to my concern about the environment. The article cites a target to

    "Improve air quality by meeting our national air quality strategy targets".

The comment reads: "slippage". Does slippage mean that the target has finally disappeared, or will it return?

I asked the Library if it could help me. We would all agree that this Government have been full of consultation but not so full of action, so I thought that I would prepare my own brief. I asked the Library how many consultations DEFRA had undertaken—bearing in mind that it was formed in June 2001. Five, 10, or 20? Our English cricket team would be pleased with the figure: 83 consultations since June 2001.

Who pays for that? How many outside consultancies have been brought in for that? The cost of all of those must be huge. How many of those consultations have been acted on? I rest my case. We have heard that the Government have been consulting, but we look for action.

We welcome some of the Bills in the gracious Speech, and I have expressed our support for them. The Minister knows that I will try to support them in any way that I can. It is our role to ensure that they are workable. But the jury is out and we should have liked other Bills to have been mentioned—including, as the noble Lord, Lord Greaves, suggested, one to deal with labelling.

9.14 p.m.

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Whitty): My Lords, I thank all noble Lords who have participated in this wide-ranging debate, which is always difficult, covering as it does so many departments. I shall attempt to reply as best I can in the 20 minutes imposed by the new regime.

I will save a little time by saying that I do not propose to go into detail on hunting. As the noble Lord, Lord Greaves, said, the issue must be resolved, and the way to resolve it was spelt out in the Queen's Speech. It will be resolved, and I say to the noble Lord, Lord Palmer, that there is no constitutional reason why the Parliament Act should not be used, if that is necessary—I hope that it will not be. I will, therefore, put to one side what is likely to be the most controversial part of DEFRA's brief and concentrate on some other issues.

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Having agreed with the noble Lord, Lord Greaves, on one issue, I shall disagree with him on the next. The Select Committee in another place was excessively harsh on DEFRA. There are some things that we do not yet have in place, but to argue that we have had no influence over the rest of government policy on rural areas is wrong. We will respond to the committee's report in a few weeks, but, as a result of the impetus that established DEFRA and of DEFRA's influence, we have, for example, already doubled the amount of money available for affordable homes in rural areas. We have also helped health and social services ensure that there will be another 100 new primary one-stop mobile units in rural areas. The DTI decision to allocate 270 million to the Post Office to minimise the effects of the closure of, in the main, rural post offices is also due to that pressure. We have given another 30 million to ensure that there is additional rural policing in the coming year. From next year, public transport will be allocated another 239 million for rural areas.

All those things reflect the importance that the Government as a whole put on rural areas and the influence that my department has managed to exert on the Chancellor and on the delivery departments in Whitehall. That is a major effort. It must be improved and sustained, but it is not, to put it at its mildest, a record of failure for our rural areas—quite the opposite.

I must respond to the noble Baroness, Lady Byford, about DEFRA's targets. The animal disease target is now subject to the new contingency plans and the animal health strategy that we debated only a few weeks ago. It will continue to be a priority for the department. The air quality target, which is a target for the Department for Transport and DEFRA, has slipped. We intend to make good that slippage.

The noble Baroness made a point about consultation. Given all that has been said about being close to the people, listening to what they say and taking decisions that take account of their views, the fact that we have engaged in such a range of consultation ought, surely, to be a matter for congratulation, rather than criticism. I certainly do not take any criticism on that.

Agriculture continues to loom large among DEFRA's direct responsibilities for rural areas. The noble Earl, Lord Peel, my noble friend Lady Warwick of Undercliffe and others asked about the common agricultural policy and the reform of agriculture. Others referred to the difficult situation faced by much of British agriculture. The Curry report, of course, pointed the way forward for the UK. That was reflected by the way forward pointed out by Commissioner Fischler when he made his proposals for the mid-term review. The so-called Franco-German deal, which really related to the overall budget post-2006, does not, in any way, inhibit the progress that we intend to see in the mid-term review. Commissioner Fischler made that clear, we made it clear, and the German Chancellor made it clear.

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We expect radical reform following Commissioner Fischler's proposals, and we expect that, in the coming six months, there will be some difficult but, I believe, ultimately successful negotiations on the mid-term review. As I said when the mid-term review came out, it is clear that a sea-change has taken place in the approach to the common agricultural policy. The Fischler proposals give a new sense of direction, and the only questions are how fast, how far and in what timescale we go down that road. It is clear that the intention is that the common agricultural policy, like the Curry report, will deliver a shift away from production-related subsidies and towards subsidies that are for the public good, promoting environmentally sustainable systems of land management and the overall development of rural communities and rural areas.

A number of references were made to the present situation in agriculture which clearly deserve a reply. There is no legislative programme—primarily because much of this is dealt with at European rather than British level—but where we can within the CAP move faster than the CAP decisions along the lines outlined by the Curry report, we will do so unilaterally and as rapidly as possible. Indeed, the spending review has allocated the resources to enable us to do that.

But we have to consider how we deal strategically with the problems of low incomes in the agriculture sector now and the changes in agriculture which are taking place. We believe that the change in support for land management and for agriculture as a whole needs to shift away from production-related subsidies into broader support for effective environmental land management and contributions to the rural development theme. We need to phase that in and we need to take the farming community with us.

But we also need to transform the way in which farming relates not only to the remainder of the food chain—because this is a food chain problem, not only a farming one, and responsibilities rest on the remainder of the food chain as much as on the Government and the farming community to ensure that we get a sustainable farming sector in this country—but also relates to the environment and to the rest of the rural economy. How we manage our landscape will clearly have major effects on the desirability of operating many businesses—tourism and others—in our rural areas.

That will require a change of approach in much of farming from looking at subsidies towards looking at the market. The support will come for the public goods of a better landscape, a better environment and a better rural community, but the operation of the farming community over and above that must be more closely related to the market it ultimately supplies.

That does not mean that we are competing with world prices on commodity markets globally. It may mean that some parts of the farming sector can develop niche markets in their own areas—high added value products and so on—but others will be competitive. Those with proper investment, proper technology, training and support from the rest of the food chain and from government will be able to compete very well on a European basis and on an international basis.

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The noble Lord, Lord Greaves, asked me to say what agriculture will look like in 20 years time.

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