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Baroness Scotland of Asthal: My Lords, the situation of any family in relation to this matter is, of course, the same as with any accused who has been arrested. There are opportunities for victim support and for legal aid to be provided if someone has been
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charged. All those issues are continuing. There are real anxieties about how any offender or victim is treatedand all will be treated in the same way.
Baroness Scotland of Asthal: My Lords, I am not able to comment on that issue. No indication has been given to me that the IPCC has behaved improperly or outwith its usual procedure. Of course, once we know the precise details, there will be an opportunity to comment.
Lord Ashley of Stoke: My Lords, I beg to introduce a Bill to impose duties upon certain persons and bodies in respect of disabled persons; to confer certain rights upon disabled persons for independent living; to amend the Mental Health Act 1983; to amend the Care Standards Act 2000; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That Standing Order 41 (Arrangement of the Order Paper) be dispensed with on Friday 16 June to allow the Motion standing in the name of the Lord Davies of Oldham to be taken before the Second Reading of the Piped Music and Showing of Television Programmes Bill [HL].(Baroness Amos.)
Moved, That the debate on the Motion in the name of the Lord Brooke of Sutton Mandeville set down for today shall be limited to three hours and that in the name of the Lord Fowler to two hours.(Baroness Amos.)
The noble Lord said: My Lords, four and a half years ago in your Lordships' House, the noble Lord, Lord Levene of Portsoken, in the City of London, initiated a debate to call attention to the place of the financial services industry in the economy of the United Kingdom, and to move for Papers. His kindness in so doing enabled me to make my maiden speech in uncontroversial terms. Since then, he has remained chairman of IFSL, the former British Invisiblesan activity frivolously stigmatised by Nigel Dennis in Cards of Identity as a form of profiteering conducted by ghostsand has become chairman of Lloyds. Prior to the earlier debate, he had been a most distinguished public servant, a most enterprising exporter in visible trades, a chairman of the Docklands Light Railway, chairman and chief executive of Canary Wharf and a most notable Lord Mayor of London in the final year of the old millennium. He is the epitome of the spirit of the City of London and it is most happy that he is going to be speaking here again today.
When I made that maiden speech, I embroidered it with fripperiesa medieval City trade which, alas, never made it to becoming a livery companybut none of that is worth reviving within a five-year period. What I shall repeat is my declaration of interest in being a former name at Lloyds, now seven years in run-off, and the remark once made to me by a foreign banker working in the City, when I was the City's MP, that what distinguished London from all other centres was that somewhere in London there would always be someone who would do a deal on any risk, and that that was not so elsewhere.
What illumines today's subject as an index is the depth and richness of source literature about it. I cite the Corporation of London's research publications, including the recent work on the bond markets and its regular City News Monitor; the briefing from the British Bankers' Association, which also published in March The Importance to the UK Economy of a Successful Financial Sector, which it commissioned from Lombard Street Associates; the Greater London Authority, which timorously produced briefing yesterday afternoon; London First's report, a little earlier in the year, written by the Centre for Business and Economic Research, entitled Keeping the UK Competitive, which I suspect may be the harbinger of the appearance of the noble Baroness, Lady Valentine, in today's speakers list; and, of course, the most recent searchlight on these matters from the Treasury, whose spokesman in your Lordships' House is again, most happily, responding to the debate.
Financial services in London: Global opportunities and challenges, published at the time of the Budget, marks the debut of the Economic Secretary, Mr Balls, on financial services matters, accompanied by his first
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relevant interview, which was in the Financial Times on 23 May. He alluded in that interview to the Government's concern to support London's financial services on the world stagea global programme that is perhaps best exemplified by the current Lord Mayor's travel schedule for 2006, which has already seen him, with business back-up, in Algeria, Egypt, Saudi Arabia, Bahrain, Mongolia, China, Hong Kong, India, Finland, Brussels, the Philippines, Indonesia, Brunei and Thailand, and which will see him before his year of office ends in early November in Hungary, Turkey, Japan, Korea, Portugal, Spain and on a second visit to China. The schedule has a breadth similar to that of the trading companies to which London gave birth between the Middle Ages and the 18th century. Nor should one underestimate the operational sophistication of London's expansion in those eras. The Merchant Adventurers' Company, which, in a 30-year period in the 16th century, produced almost all London's lord mayors, generated its capital in London, but its 50 principal officers were all based in Antwerp because the Scheldt then provided swifter navigation facilities than the Thames.
It is an index of London's past as a trading and financial centreall my observations include Canary Wharf as well as the Citywhich has so much to do with the traditional accumulation of experience and expertise, that the City has been the richest and busiest archaeological site in Europe in the past quarter of a century, with a quarter of its land space still without deep basementing, and is thus prodigal in its still-buried social treasure. But the City's tradition has always been, mutatis mutandis, global. The Jews were mulcted out of Cheapside in the early 13th century by royal taxation, but were back by the end of it. They were replaced by the Italians. Anyone in your Lordships' House who has read Maurice Druon's great six-novel series, Les Rois Maudits, about Europe in the Middle Ages will recall the Lombard role in London both as bankers and as international intelligence agents. There was a major enclosed German enclave around what is now Cannon Street station deriving from the Hanseatic League. The names of merchant banks in 20th-century London, before they were subsumed after Big Bang into larger groupings, were redolent of inward immigration, whether from the Continent or Scandinavia, during the previous 200 years.
How do the statistical data back London's present claims? Of the 347 authorised banks located in the UK a year ago, 264 were branches or subsidiaries of foreign banksthe largest number of foreign banks of any financial centreand more than half of the UK's banking-sector assets are held by foreign banks. We are the largest source of cross-border bank lending, with 20 per cent of the global total, and an even larger recipient of cross-border bank lending, with 23 per cent of that same total. Around half of European investment-banking activity is conducted in London. Five of the 16 largest banks in the world, by tier-one capital, are from the UK, and, of the UK's top 12 companies in the DTI's 2003 value-added scoreboard of wealth-creating companies, five were
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banks. In niche markets, we have 36 to 43 per centdepending on one's sourceof the world's over-the-counter derivatives traded, 70 per cent of the Eurobonds traded, 90 per cent of non-ferrous metals traded and 50 per cent of the world's shipping brokerage. Forty-six per cent of Eurex trading turnover in 2005 was based in the UK. Fund management, a lead shared with New York, comprised £3,000 billion of assets in London in 2005. Three-quarters of European-based hedge fund assets at the end of 2005 were managed out of London. London is the world's largest international insurance market. In international legal services, we again share the lead with New York.
Perhaps the best global encapsulation of our position is contained in the Globalisation and World Cities Study Group and Network data by Taylor and Walker. Their measure is based on 46 global service firms, with a marking ranging from zero for no presence in a financial centre to three for having their headquarters there. The maximum score46 times 3is thus 138. New York scores just over 100; London is just below. Paris is third at around 70. Hong Kong, Tokyo, Los Angeles and Singapore are at or above 60. Frankfurt, Milan, Sydney, Brussels, San Francisco, Washington and Madrid are at or above 50. Toronto is above 40. That ladder, although very rough and ready, underlines the domination of London and New York.
London's achievements are the fruit and product of our past. How healthy is the continuing present? The financial sector has been the fastest-growing in the economy since 1992, just asto avoid a charge of south-eastern biasEdinburgh has been one of the swiftest-growing cities in the UK on the back of financial services. The financial sector is growing at more than double the rate of the economy at large, and its productivity is growing at more than three times the national economic figure. London's productivity as a whole is about a quarter ahead of the rest of the economy.
I should add that there are paradoxes and apparent inconsistencies in London's overall performance beyond the financial sector, but that can be dealt with on another day. However that may be, in output terms total financial exports grew from £5.4 billion in 1993 to £10.1 billion in 1997, or by 86 per cent over four years, and from 1997 to 2004 by 76 per cent over those seven years to £17.8 billion. I am not seeking to make a political point with those numbers, but simply remark that although the absolute growth remains remarkable, the relative growth is slowing down. Overall, however, the financial services surplus and net investment income, taken together, cover most of the deficit in invisible trade that amounts to almost 5 per cent of GDP. They are crucial to our overall national economic health.
Before concluding on the potential policy contribution to success reinforcement, I want to say a brief specific word on emerging markets. Inflows of external finance to emerging markets have risen from $200 billion in 2002 to reach $550 billion in 2004, and are likely to have increased further in 2005. Asia is the
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largest destination, followed by central and eastern Europe, Latin America and the Middle East. Despite the spotlight on Africa, sub-Saharan Africa, apart from South Africa, remains sadly peripheral. The UK is a major source of external finance for emerging markets, with a 17 per cent share of international bank finance on a global basis, as well as a 13 per cent share of portfolio investment, making us second only to New York.
With New York we are the most important destinations for foreign listings of companies from emerging markets, on the London and New York stock exchanges. Substantial growth opportunities remain, as only 6 per cent of global inflows of portfolio investment and international bank lending are to emerging markets. Given the time, I will not include the statistics for the outward direction.
As for policy contributions, I shall also leave judgment of the FSA to others. The Corporation of London is broadly approving, but the authority is not without its critics elsewhere. My observations in this category of comment will be addressed, in alphabetical rather than priority order, to global warming; inflation; regulation, especially from Brussels; skills; and transport, these last two being encompassed by the imminent and threatening comprehensive spending review.
On global warming, it is worth saying that in trading terms the £2 billion fall in the trade surplus in financial services between 2004 and 2005 was mainly due to insurance payouts as a result of Hurricane Katrina. Closer to home, I remind your Lordships' House that when the Thames Barrier was opened on a bipartisan basis in 1982 it was expected that it would be used once every three years, whereas it is now being used seven times each yeara 21-fold increase in less than a quarter of a century. To put Hurricane Katrina in perspective, if the barrier ever failed we would be writing a cheque for £36 billion.
On inflation, I simply state that the London cost of living has risen by more than 5 per cent in the past year against a national rate of 1.8 per cent. I remark neutrally that this information, which has emerged from the Mayor of London's office, does not appear to refer to the 15 per cent compound growth in his own precept since the mayoralty was set up in the millennium year.
On regulation, despite recognising that the price of liberty is eternal vigilance, I take comfort from Mr Balls's interview with the Financial Times last month when he said that nothing should be done to risk our light-touch, risk-based regulatory regime. He went on, incidentally, to say that if control of the London Stock Exchange were to change hands, Her Majesty's Government would want to satisfy themselves that any owner's plans and any implications for the way it was regulated met the test of being what is best for the City as a financial centre in the long term. I declare a personal interest in that Senator Sarbanes is one of my oldest friends, but I have the impression that Sarbanes-Oxley has helped London more than New York.
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On skills, I have to declare an interest at the margin as pro-chancellor of the University of London. When I was an MP there was more higher education in my constituency than in any other in the UK. London Higher, the sector's umbrella body, has recently published massive and impressive data on higher education's contribution to the London economy. But the best indices of its future contributionand that of further educationare, first, that 1.5 million adults in London have low or intermediate skills and, secondly, that when unemployment is rising elsewhere, new vacancies in the City rose 58 per cent between the last quarter of 2005 and the first quarter of 2006, and have overtaken the supply of new candidates. It would be sad if growth were held back by that becoming a continuing phenomenon.
On transport, I refer to the speech of the noble Lord, Lord Levene, in 2001 when he asked, semi-rhetorically, whether we had to wait four years for the upgrading of the Waterloo and City Line. We now know the answer to that question. The two crucial lines are Crossrail and the extension to the East London Line, if Thameslink is fated to the Waterloo and City Line experience. The East London Line will presumably be a beneficiary of the Olympics. As to Crossrail, which joins up with the East London Line at Whitechapel, it will reduce the time from Ealing Broadway to Liverpool Street from almost 40 minutes to 20, and from Heathrow to Canary Wharf from 70 minutes to just over 40. Those are real gains in productivity.
A final idiosyncratic analogy: in 1577, Sir Francis Drake, whom some might describe as a self-employed pirate, circumnavigated the world in the "Golden Hind" with a crew of 76 and 18 guns. When he returned to London laden with treasure, the Queen, who had taken a private equity interest in the voyage, topsliced the treasure to give Sir Francis £10,000 in 1577 sterling. She then repaid the entire royal debt and still had £42,000 over to invest in the Levant Company. Put another way, the noble Lord, Lord Skidelsky, tells me that in 1930 economists calculated that if the entire treasure had instead been invested at 3 per cent compound, it would by 1930 have exceeded the entire national wealth of the whole country. Describing the piracy more properly as enterprise, our financial services are a national treasure and we should cherish, protect and sustain them. I beg to move for Papers.
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