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Lord Wallace of Saltaire: My Lords, we may need to probe that matter a little further in Committee. I have only recently discovered that there is a similar funding mechanism within the third pillar—the European Refugee Fund. Will other such bodies also come into this category, so that we may expect more and more of these agencies to qualify for the same privileges?

Baroness Symons of Vernham Dean: My Lords, I was just coming on to that point, because the noble Lord was very clear in the question that he asked. Basically, he asked whether we needed to take a hard look at the sort of privileges and immunities conferred on the EU bodies that are established in the future and why such immunities and privileges would be appropriate. The fact is that privileges and immunities
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are conferred on organisations and bodies to ensure that they are able to carry out their functions without being impeded. That is the whole point.

The general policy of this Government—which after all goes back to the policy of the previous government in the 1980s—is that privileges and immunities should be granted primarily on the basis of functional need. So each time there is a proposal to set up an EU body, the Government take a view on whether the body needs legal capacity and/or privileges and immunities. It is only if such a need is established that we proceed to negotiate a privileges and immunities agreement.

So the short answer to the noble Lord's question is that we look at each case as it arises and judge whether the privileges and immunities are merited. We then negotiate an agreement and bring it into UK law by whatever means we can—sometimes by Order in Council and sometimes by primary legislation, as in the case of the Bill.

However, my blood ran cold when the noble Lord got to his feet and described this as "tidying up legislation". I hesitate to agree with that description; the last time a Minister did so we never heard the end of it. Especially as this Bill has a European dimension, I counsel the noble Lord to join me in using a good deal of caution with such descriptions.

The noble Lord asked why we were extending immunities to families. Where those involved are connected to senior court officials—such as those on the European Court of Human Rights—it is very important to ensure that those officials cannot be undermined by threats against close members of their families. That is why it is important to confer immunities on family members.

The noble Lord was also worried about the increasing number of people covered by immunities. In fact the Bill does not confer a huge number of immunities. Of all the bodies mentioned, the only one based in the United Kingdom is the Commonwealth Secretariat, which employs up to 280 staff. The figure is currently a bit below that, but that is the complement.

We need the legislation because of visiting members of other bodies such as the ICC, which is based in The Hague. When its officials visit this country they have to have those sorts of protections. We are talking about six international organisations, but I would not want your Lordships to think that this is a huge extension in the number of those covered by immunities and privileges. That would not be the case.

The noble Lord raised queries about the OSCE. The OSCE is an enormously important organisation. Of course we have recently had our difficulties, but, my goodness, it is a vibrant organisation, as I saw when I went to its recent meeting in Sofia. It played a vital role most recently in the elections in the Ukraine, and earlier this year in the elections in Georgia. We seek constantly and constructively to engage Russia in refocusing OSCE activity. We do not want to see any weakening of our relationship with the OSCE. I think
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that the relationship is a very valuable instrument to have at our disposal, and I hope that I shall be able to persuade the noble Lord that that is the case.

I thank very much the noble Baroness, Lady Rawlings, for her support—if not for the lengthy list of questions that she produced. I shall do my best to answer what I can of those. I assure her that this Bill has got nothing to do with the EU constitutional Bill; it deals with legislation that we need to have on the statute book.

The noble Baroness was quite searching in her questions about why we have waited so long to confer this provision on, for example, the ICC. I had hoped that I touched delicately on this issue in my opening remarks when I said that it had not been possible until now to find a legislative slot for this legislation. That is the truth. Many of us wish that it had been possible to find a slot before now, but at least we have the legislation in front of us now. So I hope the noble Baroness will be generous on that point.

As for the legal basis and why we need to deal with this matter when the EU does not have a legal personality, the bodies need legal capacity and privileges and immunities to operate. Once we have agreed to the Council decisions or other measures to establish these bodies, the UK is under an obligation to confer those under international law. I am sure that the noble Baroness will wish to probe the matter further in Committee. I am also sure that my noble friend Lady Crawley and I will have a great deal of fun in dealing with that in the future.

The noble Baroness also asked why the immunities to which I referred in answering the noble Lord, Lord Wallace of Saltaire, did not include civil partners. The aim of the Civil Partnership Act is that civil partners should be accorded parity of treatment with spouses. The Bill does not refer to spouses. The phrase used in the Bill is,

We believe that that covers civil partners as it now covers spouses. Therefore, there is no need expressly to provide for civil partners in the Bill. We believe that other legislation has dealt with that issue.

The noble Baroness raised a number of other questions. I shall go through them very carefully and I hope to give her satisfaction in the answers I provide. I was happy to see that we agree on the excellent erudition and powerful arguments of the noble Lord, Lord Moynihan. However, I regret to say that we disagree on the appropriateness of the intervention.

On Question, Bill read a second time, and committed to a Grand Committee.

Consolidated Fund Bill

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I beg to move that this Bill be now read a second time.
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Moved, That the Bill be now read a second time.—(Lord McIntosh of Haringey.)

On Question, Bill read a second time; Committee negatived.

Then, Standing Order 47 having been dispensed with, Bill read a third time, and passed.

Pre-Budget Report 2004

Lord McIntosh of Haringey rose to move, That this House takes note with approval of the Government's assessment as set out in the Pre-Budget Report 2004 for the purposes of Section 5 of the European Communities (Amendment) Act 1993.

The noble Lord said: My Lords, I welcome this opportunity to open this debate on the information provided to the European Commission under Section 5 of the European Communities (Amendment) Act. Each year, the Government report information to the Commission on our main economic policy measures.

The procedure is set out in Articles 99 and 104 of the European Community treaty, which relate to the broad economic policy guidelines, convergence and stability programmes and the excessive deficits procedure. The objective is to ensure that member states' economic policies are consistent with the goals of the treaty, including non-inflationary economic growth, a high level of employment and social protection, and better living standards for citizens across both the UK and the EU.

Those goals are consistent with the Government's own approach to economic policy. Section 5 of the European Communities (Amendment) Act 1993, usually known as the Maastricht Act, requires Parliament to approve the information sent by the Government to the Commission for that purpose. The Government's strategy for economic policy is, most recently, set out in the Pre-Budget Report, published earlier this month. This material forms the basis of the information that we send to the European Commission and is subject to the usual parliamentary scrutiny and approval. Sharing the information in the Budget with our European partners allows us to influence the development of the EU, bringing enhanced employment and growth to Britain and other member states.

The background for this debate is one in which UK gross domestic product has grown strongly over the year and the global recovery has gathered momentum, despite higher world oil prices. Although a number of risks continue to surround the international outlook, the sound macroeconomic fundamentals in the United Kingdom will help to support continued growth and stability. More specifically, not only is the United Kingdom experiencing its longest expansion since records began, with sustained growth for 49 consecutive quarters, but it managed to maintain that record during the recent downturn, while all other G7 economies experienced at least one negative quarter of growth.
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Alongside that impressive growth record, the UK is also enjoying the longest period of sustained low inflation since the 1960s and, at the same time, interest rates remain low by historical standards. As a result of this strong macroeconomic framework, the Government have been able to deliver record high rates of employment and record low rates of unemployment; with 1.9 million more people in work now than in 1997.

Setting employment records is not possible without an environment that promotes business development and growth. That is why the Government have taken steps in every Pre-Budget Report, Budget and Comprehensive Spending Review to support enterprise in the United Kingdom. As a result of those policies, there are 300,000 more new small businesses in the UK than in 1997.

As always, we will continue to maintain the fiscal discipline that is at the heart of our strategy for long-term stability. In the Pre-Budget Report, the Chancellor announced that we were meeting our fiscal rules. Debt this year is forecast to be just over 34 per cent of national income, compared to 44 per cent in 1996-97, and well below the 40 per cent ceiling of the sustainable investment rule.

The Chancellor also announced that we are meeting the golden rule over the economic cycle, with a surplus in this cycle of £8 billion, including the annually managed expenditure margin. Therefore, the Treasury is able to afford all of our existing commitments abroad and at home, and yet to release extra resources for the nation's priorities in the years leading up to 2008.

Central to the Government's economic objectives is building a strong economy and a fair society where there is opportunity and security for all. The strategy set out in this year's Pre-Budget Report highlights our determination to take long-term decisions by entrenching macroeconomic stability and by building a flexible, enterprising economy with a highly skilled, high-productivity workforce and a strong science and innovation sector.

The challenge is to combine our macroeconomic stability and our new-found confidence in our economic potential with the resolve to make the right long-term choices. The challenge is to secure and maintain the stability and growth of the economy, and yet to invest more in the education, skills, science, and innovation that will drive the growth and prosperity of our future. It is to invest, also, in our vital health service and transport infrastructure, increasing the well-being and prosperity of individuals, as well as delivering for UK business; to invest, in an uncertain world, in law and order, security and defence in order to protect our citizens at home and our interests abroad; and to meet, too, our global responsibilities to others, by investing in international development and the achievement of the millennium development goals.

Productivity growth, alongside high and stable levels of employment, is central to long-term economic performance. As a result of macroeconomic stability and market failures, the UK has historically experienced low rates of productivity growth compared to other major economies. The Government's strategy to close
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this productivity gap focuses on five key drivers of productivity performance: improving competition; promoting enterprise; supporting science and innovation; raising UK skills; and encouraging investment.

Building on reforms and initiatives already introduced, the Pre-Budget Report set out the next steps. These include: giving employers access to free and flexibly delivered training for their low-skilled employees through a national employer training programme; establishing an independent review to examine future skills needs of the United Kingdom economy; reforms to reduce the regulatory burden on business; publication of the interim report of the Hampton review consulting on improvements to the current system of regulatory inspection and enforcement to reduce the regulatory burden on business; setting out the vision of how significant reductions in compliance burdens for small businesses will be delivered through integration of Her Majesty's Customs and Excise and the Inland Revenue; the implementation of the changes recommended by the Graham review of the small firms loan guarantee by the end of 2005; and implementation of the 10-year science and innovation investment framework, through strengthening the partnership with business to raise investment in UK research and development, and taking forward the recommendations of the Lambert review on business/university collaboration, including through the northern science and industry initiative.

The UK is making progress in closing the gap with France and Germany measured in output per worker. In 1995, the gap was 22 per cent with France and 8 per cent with Germany. Latest Office for National Statistics data show that the gap with France has narrowed to 13 per cent and the gap with Germany has now closed.

The Government have examined the challenges and pressures that face the nation and are determined to make the right long-term spending plans for Britain. From our position of economic stability and growth, we are in a position to invest more, not less. This summer's spending review set departmental spending plans up to 2007–08, locking in the next step change in resources delivered in the three previous spending reviews and announcing extra resources to be delivered to our priorities.

In the competitive global economy of the future, it will be the intellectual capital of our country that will drive its economic growth. It is therefore imperative that we invest in our children's education, in adult skills and training and in science, innovation and enterprise. Those are the investments that will enable us to reach our potential as individuals and as a nation, and to make Britain a world leader of the future global economy. That is why the plans we announced in Spending Review 2004 focus extra resources on delivering that investment in the drivers of our future prosperity.

To support those spending plans for the future, the public sector will be seeking, as always, to deliver value for money, to maximise efficiency and minimise waste. This will allow the Government to release additional
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resources to the frontline without compromising our ambitious programme of public service delivery. The Government, building on Sir Peter Gershon's review of efficiency, are taking further steps to identify and implement more efficient business planning and management in the public sector. The Pre-Budget Report outlines further work to secure efficient delivery of public services. That includes the publication of Sir Michael Lyons's recommendations on asset management, calling for detailed asset disposal plans.

In addition, the Government have made clear our policies to promote fairness alongside enterprise, so that everyone can take advantage of opportunities to achieve their full potential in an outward-looking, flexible economy. The reforms of the welfare state introduced since 1997 reflect aims of eradicating child poverty, supporting parents to balance their work and family life, promoting saving and ensuring security for all in old age.

The Pre-Budget Report sets out the next steps the Government are taking to support these aims, including: a 10-year strategy for childcare, setting out the Government's long-term vision of affordable, flexible, high-quality childcare and providing parents with real choices in balancing work and family life; an extension of paid maternity leave from six months to nine months from April 2007; further steps to encourage saving and asset ownership through ISAs, the Saving Gateway and stakeholder products; and a package of measures to promote financial inclusion by increasing access to banking services, affordable credit and face-to-face money advice.

The Government want all children to have the best possible start in life, with opportunities to deliver their full potential and lead a fulfilling life. We have set an ambitious long-term goal of halving child poverty by 2010 and eradicating it by 2020. Significant progress has already been made in reversing the long-term trend of child poverty.

The Government are on course to meet our target of reducing the number of children in low-income households by at least a quarter between 1998–99 and 2004–05. The most recent data show that, by 2002–03, there were about 500,000 fewer children in relative low-income households than in 1998–99.

The Government also believe that a fair society guarantees security in old age and ensures that all pensioners can share in rising national prosperity. As a result, a £50 payment will be made to households including someone over 70 in addition to the winter fuel payment in 2005, to help meet the costs of council tax and other living expenses.

Our hard-won economic stability and sustained growth allow the Government to commit to more investment in the areas that matter to this country—not less, as noble Lords opposite would have it. That investment will enable Britain to develop into a world economic leader of the new global age.

That is the programme set out in the 2004 Pre-Budget Report, and that, with the approval of the House, is the basis on which we will send updated information to the
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European Commission. We are fulfilling our commitment under the Maastricht Act to report on our main economic policy measures and are maintaining the position developed by this Government at the heart of the EU policy process.

Moved, That this House takes note with approval of the Government's assessment as set out in the Pre-Budget Report 2004 for the purposes of Section 5 of the European Communities (Amendment) Act 1993.—(Lord McIntosh of Haringey.)

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