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Lord Sainsbury of Turville: My Lords, as I sought to indicate, the best figures for measuring foreign direct investment are those for the accumulated stock of inward investment rather than inward flows. The arguments in support of that are simple and set out on page 52 of the Treasury's report on its study of EMU and the business sectors. I am sure that the noble Lord has read it; indeed, he may be the only noble Lord in the House to have done so.

Inflows are a poor measure of foreign direct investment. On the basis of accumulated stock, we increased that stock by #86.5 billion in 2002. As a result, our accumulated stock for that year, as a percentage of the EU total, was 22.5 per cent, the highest figure since 1991 other than the figure for 2001. Those figures do not indicate that there is yet any reason to attribute our performance in any way necessarily to the euro.

Lord Hunt of Kings Heath: My Lords, is my noble friend aware that some companies continue to be concerned about the activities of animal rights terrorist groups and that this is having an adverse impact on certain inward investment decisions, in particular within the pharmaceutical industry? Will my noble friend redouble his worthy efforts to ensure that we take all possible action against these groups?

Lord Sainsbury of Turville: My Lords, I totally agree with my noble friend. There is not yet a great deal of evidence that this issue is being taken into account in

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investment decisions because it represents only one factor. However, that such activities are taking place is a matter of great concern to the Government. We have spent much time seeking to provide further protections and, indeed, legislation is to pass through both Houses to ensure even more protection. I confirm that it is a matter of great concern and we shall continue to provide as high a level of protection as possible.

Lord St John of Bletso: My Lords, given that the growth of GDP in the United Kingdom is likely to be four times faster than that in the rest of the euro-zone, while there may be a reduction in direct investment from the United States, surely one of the greatest attractions for inward investment to this country is our flexible labour market. Can the Minister give an assurance that that is likely to remain the status quo in this country?

Lord Sainsbury of Turville: My Lords, today a whole range of factors are taken into account by companies when they look at inward investment. The general economic climate is one of those, as is flexible labour which we intend to keep that way because it is important. However, many other considerations are taken into account. The science and technology base has become increasingly important, along with the availability of skilled labour at both graduate and intermediate levels.

Lord Willoughby de Broke: My Lords, in order to assist the noble Lord, Lord Taverne, can the Minister confirm whether the figures for unemployment are higher in the principal economies of the euro-zone than in this country, which is outside the euro-zone?

Lord Sainsbury of Turville: My Lords, we have a very low unemployment rate. Indeed, at the moment, the majority of our macro-economic indicators are stronger than those for most European countries. Clearly, when considering the whole question of entry into the euro, it is of the greatest importance that we do not put in jeopardy any of those factors. That is why the Chancellor of the Exchequer made the announcement that he did on 9th June.

Lord Brookman: My Lords, at the time of a most important debate in June, my noble friend the Minister was in America trying to obtain inward investment. Was his visit successful? In other words, has there been an improvement in inward investment, not only from around the world but from America in particular?

Lord Sainsbury of Turville: My Lords, only once on any of my inward investment visits have I been able to point to a direct result within a few months of such a trip. That involved establishing relationships with some high-tech clusters in America, where we see opportunities to make arrangements whereby they would put high-tech investments into the UK when they want to expand into Europe. It is a very important area which will yield important results in due course. It has not yet done so and, given the present climate,

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we shall not see a rapid change in that situation. However, it is significant that the latest Office for National Statistics balance of payments figures, released on 27th June, show that foreign direct investment stock in the first quarter of 2003 was at a record level of #398.8 billion, an increase of 6.8 per cent on the same quarter last year. So there are some signs that it is going the right way.

Baroness Miller of Hendon: My Lords, apart from the decline in inward investment—for which the Minister and other noble Lords have given reasons—does the noble Lord agree that there has been at the same time a great increase in outward investment, which has resulted in many UK large industrial organisations taking their operations overseas into more business-friendly regimes? That has meant a greater number of job losses in this country.

Lord Sainsbury of Turville: My Lords, I had hoped to indicate that, if one looks at the stock of inward investment, there has not been a decline. In fact a very considerable increase has taken place. As regards outward investments, there are all kinds of reasons for companies taking their operations abroad. Quite often it has to do with wanting to export to other parts of the world; quite often today it has to do with low labour costs. It is not possible to say which of those are affected by the business climate in the UK. There will be good reasons for some companies taking jobs abroad in terms of exports or labour costs, but it is impossible to separate that out from their view of the general economy.

Iraq: Cabinet Meetings

2.53 p.m.

Lord Wright of Richmond asked Her Majesty's Government:

    How many times the Defence and Overseas Policy Committee met to discuss Iraq and the Middle East in the six months leading up to the invasion of Iraq.

The Lord President of the Council (Baroness Amos): My Lords, there was no meeting of the Cabinet Defence and Overseas Policy Committee during this period because Iraq and the Middle East were the subject of regular Cabinet discussion from September 2002 until after the conflict. Indeed, Iraq was discussed at every regular Cabinet meeting in that period. Additionally, during the course of the conflict, an ad hoc group of Ministers, chaired by my right honourable friend the Prime Minister, met 28 times.

Lord Wright of Richmond: My Lords, I am grateful to the Minister for that reply. As I have the privilege of being the first Member of the House to have a

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Question answered by the Minister in her new position, perhaps I may add my personal congratulations.

Noble Lords: Hear! Hear!

Lord Wright of Richmond: My Lords, is the Minister aware that after the Falklands war the Franks report drew attention to the failure to call meetings of the Defence and Overseas Policy Committee—which was called the Defence Committee in the Franks report—with the implication that had that committee met before the war there might have been a better appreciation of the threat from Argentina? Does she agree that if there had been prior meetings of the Defence and Overseas Policy Committee before the Iraq war, the Government might have had a better appreciation of the real and present threat from Iraq?

Baroness Amos: My Lords, I thank the noble Lord for his good wishes. I thank all noble Lords for the support and best wishes that I have received since the announcement yesterday.

There were a number of Cabinet discussions before and during the conflict. In fact, every regular Cabinet meeting discussed this subject and the ad hoc ministerial committee discussed this subject. I am aware of the recommendation of the Franks report but the threat posed to this country and to the international community by Iraq was well understood across government.

Lord Howell of Guildford: My Lords, I add my good wishes to the noble Baroness on her new appointment. She has referred to a great many Cabinet meetings and discussions. Does she accept that, from what I can recall, these so-called very full Cabinet discussions are not always all that they are cracked up to be and may not give everyone a chance to express their opinion?

Does the Minister further accept that while there were, in our view, many excellent reasons for getting rid of the Saddam regime, which posed a permanent and dangerous threat to peace in the region—and, indeed, to world peace—not all of those reasons received priority during the run-up to the Iraq invasion? Does she agree that there is a great deal of confusion about what were and are the real and basic reasons and about what is the strategy behind government thinking now as we move forward? Would it not be useful to repeat the experience of the Franks report, to which the noble Lord, Lord Wright of Richmond, referred, and to have a full report on which were the valid reasons and which were the invalid reasons? That may help us to avoid making further mistakes in the future.

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