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The Government could do more to help entrepreneurs when they come to consider selling equity in their businesses. Someone who wants to drive a large business will not be able to keep all the equity; it is far better to have a little share of a big business than to have a big share of a little business. How those two issues work together needs to be expressed more, so that entrepreneurs and investors understand the relationship and how it works.

In conclusion, I want to put across my personal conviction that it is absolutely necessary to increase our investment in new technology and in the development side of industry; we should do everything that we can as a nation to support and encourage that. The future wealth and prosperity of all our people will come from what are now very little ideas in people's minds, but over the next 40 or 50 years they will become the economic drivers that will enable this country to continue to be great.

5.42 pm

Lord Dykes: My Lords, the noble Lord, Lord Wade, has combined traditional northern common sense with a very distinguished career in business and in politics. I am sure Members of the House were listening very carefully to his wise advice. He has been a very distinguished chairman of Midas. It is also a pleasure to record thanks to others who have taken part in this interesting debate, which has not ranged over too many subjects but has concentrated on very interesting ones, such as the relationship between government and business, which is an important matter for all Governments.

First, I have pleasure in congratulating the noble Lord, Lord Truscott, on his arrival on the government Benches. For some time, we were both members of European Union Sub-Committee C. I deliberately embarrass him by saying that when he made his many contributions in that committee, I guessed that it would not be long before he was on the government Benches, making contributions such as that made today. We thank him for his remarks. Equally, I am

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sure that the noble Lord, Lord McKenzie, in reply will concentrate on the many important matters that have been raised in the debate.

Of course, the greatest pleasure, as already recorded by a number of noble Lords, is to thank our two maiden speakers, the noble Lords, Lord Bilimoria and Lord Rowe-Beddoe. The passion of both was very extraordinary indeed and it was a great privilege for us to hear their speeches. I do not want to embarrass or annoy the noble Lord, Lord Bilimoria, by constructing a totally artificial and false connection, but it was marvellous to hear him in the House today. He mentioned with pride his antecedents as a Parsi. That coincides with Julian Barnes’s excellent book about the son of a Parsi vicar. The vicar was Parsi by birth but became a Church of England vicar in Staffordshire and his son was cruelly, wrongfully and illegally imprisoned for crimes he did not commit in Staffordshire in the first part of the 20th century. Although there is absolutely no connection, it is wonderful to see the progress of the Parsi tradition. I hope he takes that in the spirit in which I offer it. I wish him well in his career in this House.

The noble Lord, Lord Rowe-Beddoe, showed all the passion for Wales that we expect from our colleague, my noble friend Lord Roberts, when he is in his place. He too is well known for that passion. We wish him great success.

It is worth repeating that the noble Lord, Lord Sainsbury, made a great contribution as Minister and I am sure we all hope that he will continue to be a very active Member of this House.

Considering the Queen’s Speech, the contributions made today and people's thoughts on the economy, business, future progress and the huge problem of climate change, a number of themes emerge. What a contrast to the sad and terrible disaster in Iraq and the mess in the Middle East which is partly the responsibility of the US—and Britain in following the US unwisely down paths which I am sure the Government now regret. That has also been a personal tragedy for the Prime Minister who has been a very competent Prime Minister in many other ways. There is an extraordinary contrast between that failure overseas which commands so many column inches now in British newspapers—quite rightly as the mess continues and everyone wonders how we will get out of it—and the extraordinary competent success of the Government on the British economy. I believe that, since 1997, the Government are entitled to claim full credit for a number of significant achievements, especially after the years of stop-go, which were referred to, when Ministers first took office after the 1997 election.

Against a background of higher than usual economic growth and lowish interest rates—not as low as they could be perhaps—until the recent rise from the Bank of England to 5 per cent, and substantial new public sector and private sector capital formation, the UK has been judged to be doing very well in recent years, with a spectacular growth in earnings from some invisibles and an excellent record in foreign direct investment. As ever was, there is always a price to pay for those tangible achievements. Pollution and damage to the

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environment from consumer and corporate excess has become alarming in a small national territory where thinking people feel increasingly vulnerable to congestion, traffic chaos and even overshopping, including on Sundays. Some people remain opposed to that concept but we have had to accept it, although—increasingly as time goes on—it may not be to people's liking. The house price boom has added its own pressures, not all on the plus side.

At the same time the UK is, as ever, a curate's egg economy if ever there was one. Our output base remains fundamentally small and truncated, as the noble Lord, Lord Brookman, said, particularly in relation to manufacturing. While we have many individual examples of highly successful companies—entrepreneurial companies, very impressive companies not only in retailing and clothing and those obvious sectors but also elsewhere, and in financial services too—sadly, for some reason, we cannot shake off our perpetual chronic trade deficit, except temporarily when the United Kingdom, post-war, has from time to time devalued. This deficit has to be propped up, as do our long-term debts, by interest rates that are often double the euro-land figures.

In other words, in contrast to very successful trading corporations of all sizes in Britain and small companies, the United Kingdom and its economy is like someone who is perpetually in debt and who cannot get out of it. Our investment rates in new assets as well as our savings ratios remain stubbornly low relative to other like nations, except for recent years' big rises in public sector investment. Furthermore, the huge mistake of not joining the euro earlier has added millions of often uncalculated extra costs to companies and consumers alike in onerous exchange and bank transfer rip-off costs. Meanwhile the consumer debt ratio has rocketed to an unacceptable level in Britain. The noble Baroness, Lady Noakes, referred to that with some concern, which I share.

There is increasing concern about a large number of households’ viability. As a ratio of GDP the figure recently had risen to 17.4 per cent compared with 8.5 per cent in France, 7.5 per cent in Germany and 3.4 per cent in Italy. With the size of our excess imports, including of course finished durable goods, it means the public are now almost uncontrollably locked into massive unsecured debts with bank and credit card real interest rates of 30 per cent or more, and the Government do nothing about that at all.

The comics called newspapers in the UK are now up to 350 pages of weekly or daily rubbish in huge supplements urging people to buy things they do not even need. It always amuses me how the right-wing neo-con economic fanatics and journalists such as Anatole Kaletsky castigate Germany and Japan for having low rates of domestic consumption, very high savings ratios and massive trade and export surpluses. How sinful can they get?

In many ways, Japan has the reverse syndrome to our own economy. It has high output, massive exports and a large manufacturing and processing base, but more backward farming systems shielded from competition and quite old-fashioned service structures in some

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areas. As the noble Lord, Lord Brookman, said, we have a pitifully small manufacturing and industrial base, perpetual deficits in visible trade and too much private debt, but highly efficient agriculture—notwithstanding the problems of the common agricultural policy—and highly organised and impressive service sectors in many fields. As my noble friend Lord Lee mentioned, tourism is an important area of success and achievement.

Perhaps the best blend of the two examples of the more virtuous dual economy in Europe is therefore to be found in Germany, despite the huge on-costs of East Germany it is currently bearing. However, the UK will benefit from the recent rises in FDI I referred to—presumably in output and some job creation, at least—which was $165 billion in 2005. That is well ahead of the US at just under $l00 billion and, successively, the People’s Republic of China, France and then, interestingly for a small country, the Netherlands. I hasten to add that the UK figure is, however, overwhelmingly dominated by mergers and acquisitions activity. Indeed, one transaction, Royal Dutch/Shell merging with Shell Transport (UK), accounted for $74 billion of the total. So the right-wing economists should not get too excited about magic new developments appearing here, there and everywhere.

In the last full period, incidentally, the number of production industry workforce jobs fell by 47,000 and the number in service industries rose by 256,000—an illustration of the changing trends in the British economy. The largest fall and the lowest rate of unemployment were in the West Country at 9 per cent down and now at 3.4 per cent, while the London region showed 8.4 per cent jobless. I was glad that the noble Baroness, Lady Noakes, reminded the House that the real unemployment figure is well over 5 million, adding back those on long-term benefit who the Government are trying to persuade to get out of that situation as fast as possible.

While house prices are fuelling inflation pressures, things like transport costs are exerting downward pressure, especially for personal transport costs. It is sad to note that the biggest upward boost to the annual inflation figures came from the rise in university tuition fees. I am sure there will be many future cases of students in financial difficulty because of that.

I hope the Minister will have time today to deal with a number of queries. Can he clarify the Government’s future intentions on the further penalising of the anti-social, polluting, gas-guzzling 4x4s hinted at by the Chancellor? That follows the excellent example in Liberal Democrat-controlled Richmond, and Mayor Livingstone’s commitment to deal with Chelsea tractors outside Chelsea as well. A sharp fall in second-hand prices of these obnoxious vehicles, particularly the civilian version of the American Hummer—I do not know how many Lords have seen the civilian Hummer, but it is grotesque and right in your face—will concentrate the minds of these selfish motorists. Indeed, it should be happening already.

Secondly, will the Government help the EU Commission in its battles to control outrageous

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mobile phone roaming costs and excessive bank and credit card transfer charges across national borders from 1 January 2007? This is an important matter for the Government to watch carefully, ensuring that the Commission succeeds in reducing those excessive costs. They should now be single market transactions, rather than across national frontiers. Consumers also need to be helped to get out of the debt I referred to earlier, when a chronic case of family disutility arises.

Finally, can the Minister confirm that the programme of reform in the public services—here we usually mean mainly hospitals, other NHS entities and schools—will of course continue, but on a rational basis? Will it have heed to the urgent necessity of restoring morale to the operatives at all levels in both sectors, who feel increasingly battered after so much government spin and tampering in recent years? Although the debt figures of some NHS trusts need tackling, the deficit figure remains minuscule in relation to the total of NHS activity, and no hysteria engendered in the media about this is necessary. Economic achievements have to be tempered with social well-being and the avoidance of gratuitous alienation.

5.54 pm

Lord Barnett: My Lords, I want to say a few words on the economy. I start by referring to the commission of the noble Lord, Lord Forsyth. I mentioned this to the noble Lord, who said that he is sorry he cannot be here today due to an important engagement outside. Of course, we all understand.

The report is rather more serious than some of the comments about it have been. In particular, I refer to what it said about the level of taxation and its effect on the economy. Although I doubt whether the noble Lord, Lord Forsyth, was too upset about the headlines he received—he probably welcomed them—he did not talk about a £20 billion tax cut next year, but rather over the whole of a Parliament. One would not have gleaned that from reading the media headlines. I should complain on the noble Lord’s behalf that the media got it so wrong but, as I say, he will not mind.

Of course, I still disagree with what the noble Lord said, not only about the economic aspect to which I shall refer in a moment, but also about the unfairness of his tax proposals, which I hope to refer to on another occasion. His economic points were important. One, which is made constantly, is that tax cuts improve economic growth and tax increases, of course, reduce it. In his report, the noble Lord quoted in aid some serious surveys and reports by the OECD. He did not, in citing four small countries with successful economic growth, choose any large countries to talk about, for one good reason: many large countries have not had the level of economic growth that he—and I—would have liked to see.

I was surprised that the noble Lord did not tell us how well the OECD countries had done until I checked and found that the OECD average economic growth over the past 10 years was 2.4 per cent. In the UK, with its high levels of taxation, it averages 2.5 per cent. I find that 2.5 per cent too low; I would like it see it much higher. To put it kindly to the noble Lord, Lord Forsyth, of whom I am fond, the case for tax cuts bringing about economic growth is, shall I

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say, not proven. Tax increases may be a factor, but they are not the main one. We have had lower growth than we could have achieved for another reason, to which I shall come in a moment.

I do not often speak kindly of government policy, but in four successive quarters the Government have achieved an unchanged UK GDP growth record of 0.7 per cent per quarter: 2.8 per cent annually. That is a considerable record and achievement, for which the next Prime Minister, Gordon Brown, deserves our congratulations. The noble Baroness, Lady Noakes, could not find it in her to congratulate the Chancellor—which I understand perfectly well—because she thought it better to refer to the level of public debt, taxes being too high and the £100 billion that had gone from pension funds. She spoke for only 12 minutes but could not find an extra few minutes to explain precisely what she would do to improve that situation. No doubt she will on another occasion. By international standards, economic growth of 2.5 per cent deserves congratulations, but what did the 2.8 per cent increase of the past four quarters achieve? It achieved the decision of the MPC—the Monetary Policy Committee of the Bank of England—that it was much too high and to increase interest rates.

The main remit of the MPC is inflation. In that, it has achieved great success and I congratulate it. However, as it regularly states in its inflation report, it has another remit. It is told in those famous three words that, “subject to that”, it should consider the Government’s economic policy for higher and stable growth and higher employment. I guess—well, it is more than a guess, it is a certainty—that the MPC gives very little consideration to anything other than inflation. The Governor of the Bank of the England, like successive Governors of the Bank of England, has a horror of sending a letter to the Chancellor of the Exchequer saying that the committee has gone 1 per cent above its remit of 2 per cent inflation. I would rather have 1 per cent more inflation and an average rate of economic growth of more than 2.5 per cent, but that is not the view of the Governor of the Bank of England and a majority of the members of the Monetary Policy Committee. The MPC has a greater impact on economic growth than any of the tax increases we have seen or any tax cuts that might be recommended by the Forsyth commission, or, eventually, by any Government formed by the Opposition.

The front page of the summary of the Stern report states that there is a unique challenge for economics. The noble Lord, Lord Newby, who I am sorry is not in his place, said that there is a consensus about the Stern report. That consensus must be that hardly anybody has read its 700 pages, which is perfectly understandable. I am not sure how many people have read the 30-page summary. The plain fact is, as the Stern report initially states:

“No one can predict the consequences of climate change with complete certainty”.

Of course, we then get headlines about the economic forecasts in the Stern report. Stern can be critical of the media because the headlines were not exactly what the report stated, although he should have known better about what he was likely to get from media

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headlines. However, it is worth quoting what the summary on page 10 states:

“Economic forecasting over just a few years is a difficult and imprecise task”.

The report goes on to state that analysis requires us to look over 50, 100 or 200 years and that economic forecasting “requires caution and humility”. But it then proceeds to make a forecast. The media took that forecast and gave it as a certainty. The report gives the average expected cost of climate change as 1 per cent of GDP, not next year, but in 50 years’ time, and tells us to be cautious and have some humility about economic forecasts. It then goes on to state that, by 2100, we shall see some rise and some fall in growth but has already stated that we should not look at forecasts for more than a year or so ahead.

When we reach 2100—and I am sure that many of us will—we will know how right the Stern report was. It refers to the greater uncertainty because of the costs of seeking more innovative methods of mitigation. We all know how much technological innovation we have seen in the past 50 years. Are we to suppose that there will be none in the next 50? That is what makes me sceptical, to put it mildly, of the Stern report. The report very fairly and clearly sets out the problems that will be created, but says nothing about what will happen because, as it tells us, it cannot.

I sum up by saying that we need to do as much as possible relating to the dangers of climate change, of which the Stern report speaks so eloquently. We must do everything we can here in the UK, although if we were all as good as David Cameron and put windmills on our roofs, it would not make a blind bit of difference because we need the rest of the world to do the same, in spades.

Future levels of UK economic growth will not be affected by climate change or tax. They will be affected by sensible and serious government policies and by not having an MPC that sees its remit too narrowly. Indeed, my recommendation, which I hope my noble friend Lord McKenzie will pass on, is that the Chancellor of Exchequer thinks again about the remit of the Monetary Policy Committee and thinks about changing it a bit.

6.06 pm

Lord Moser: My Lords, it is a particular pleasure to follow the noble Lord, Lord Barnett, who was a model user of statistics in his ministerial days and has been ever since. I wish the same could be said of all Ministers. I am also grateful to the noble Baroness, Lady Noakes, and the noble Lord, Lord Jenkin, for their remarks on statistics, which is the subject that I shall talk about.

This is the first time for 60 years that we are facing legislation dealing specifically with official statistics. To some people—I am sure not to your Lordships—it may seem a marginal, perhaps even unnecessary, subject. However, as we all know, that is not so. Over the years, I have learnt how enormously important and influential official statistics are, not just because they are needed by Ministers and officials as a basis for policy-making and strategy, but also because of the role they play in business decisions, for the City,

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for the academic world, for all of us as citizens and, not least, for Parliament. I hope it will not seem rude in any sense if I say that I regard Government as not the most important client for official statistics. It is society at large that matters.

Virtually every subject debated in this House or the other place is liable to depend on official statistics at some point. Almost all the legislation before us this Session will call on government statistics. I think of migration, crime, pensions, further education, social services, climate change and all the obvious economic issues. It follows that any legislation to reform our statistical system, especially if, as now, it promises to introduce degrees of independence from Ministers, will be of lasting importance to society and to all of us.

The Statistics and Registration Services Bill originated in the decision the Chancellor of the Exchequer announced about a year ago and repeated in his Budget speech. He was right to be concerned about the poor state of public trust in government statistics. That led him to propose that a new level of independence from Ministers should be entrenched in legislation. Let me say straight away that I warmly welcome the Chancellor's initiative. If we get the legislation right in detail there will be every chance that his initiative will not only give our high-level government statistical service the independence it deserves, but will also improve public confidence and trust in official data.

The essence of the reforms, outlined in the final document from the Treasury issued only a week or two ago, is to create in statute a new independent statistics board, which will replace Ministers as the top layer of governance for the Office for National Statistics but with a wider remit, in that the board will have responsibility for promoting and safeguarding all official statistics. The board will be independent of ministerial control and be a so-called non-ministerial department.

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