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A fat chunk of the current mergers and acquisitions boom in the City of London is private-equity driven. The buyout bonanza is paying for plenty of multi-million pound mansions in Notting Hill and agreeable country estates across southern England. When the noble Lord replies for the Government, can he tell us what estimates the Treasury has made of the loss of corporation tax from major British companies being taken privately into these highly geared tax-deductible vehicles, and can he assure us that that will be taken fully into account in the Treasury’s review of how these funds are taxed? Like the noble Lord, Lord Rowe-Beddoe, the Liberal Democrats want a straight cut in corporation tax for all businesses, not favourable tax treatment for a few.
This Government are not straight in accounting for their own debt. I have tried from these Benches over the past five years to help to expose the worst examples of their off-balance-sheet accounting. It misleads Parliament and the public and they hand out billions of pounds of public money to private financiers in unnecessary consultancy fees and long-term liabilities on uncommercial terms.
Two particular examples stand out in my memory. The first is the public/private partnership deal for London Underground. The noble Baroness, Lady Valentine, in her businesslike speech, called for more investment in transport in London, but on the Tube
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The noble Baroness, Lady Noakes, the noble Lord, Lord Jenkin, and the noble Lord, Lord Moser, in his excellent speech, have all already stressed the significance of the Statistics and Registration Service Bill, which will in due course come to this House. On this, I am delighted to say that we are on the same side as the angels, as is the noble Lord, Lord Peston. We are telling the Government today that we will scrutinise and amend that Bill as rigorously as we can when it comes to this House to make public accounting open and honest once again. National statistics must be truly independent in future. Statisticians who are embedded in separate departments must also report directly to the National Statistician, and I see no need at all for the pre-release of sensitive statistics to government Ministers. Playing fast and loose with statistics is second nature to new Labour. The words “Iraq” and “peerages” will feature on the front of Tony Blair’s political tombstone, but “spin” will certainly be there on the back.
The other vast unquantified debt on the Government's balance sheet is in respect of public sector pensions. When historians judge this Government's record in 10 or 20 years’ time, their harshest criticism may well be on their total surrender to the public sector unions over pension ages, paid for by tax and council tax payers in the private sector who have far worse pensions or none. Two nations in pensions are simply not sustainable.
If you get a grip on public sector pension costs, that helps to pay for a non-means-tested decent state pension for all. That is the only way to give women a fair pensions deal and to ensure that savers keep every extra pound they save for a pension. Neither the Government's nor the Conservatives' pension proposals face up to the scale of the problem. But, as with PFIs and PPPs, Gordon Brown prefers to spend the taxpayers' money now and leave someone else to pay the bill later. That is not prudence; it is just putting off the evil day.
These debts are cunningly concealed for now in the public sector, and millions of ordinary families in the private sector are just making ends meet with debt looming over them. But if the Chancellor is in No. 10 after the next election, both the private and public sector debt monsters will come back to get him.
Returning to today’s subject, I am afraid that this Queen’s Speech is just a flat swansong from a lame-duck Prime Minister.
8.15 pm
Baroness Wilcox: My Lords, we have had an excellent insight into the broad remit of the debate this afternoon. We have had two wonderful maiden speeches. In the noble Lord, Lord Bilimoria, I welcome our first Parsi. He is an entrepreneur—how terrific—and, better than that, he makes Cobra beer, which is the only beer I have ever been able to drink. It is absolutely delicious, and I am delighted that he is here. The noble Lord, Lord Rowe-Beddoe, who comes
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Today I have the opportunity to stand up for the first time with my DTI hat on and to greet the noble Lord, Lord Truscott, who has taken the DTI portfolio for the Government. We are both from Devon—we are only half an hour away from each other—so we will at least understand each other’s language, even if we do not always agree with each other on what we say.
I thank my noble friend Lady Noakes for her superb overview of the state of the economy and her insight into the workings of the Treasury. The gracious Speech has given noble Lords the opportunity to reflect on an eventful 18 months in your Lordships’ House. It seems a long time since the noble Lord, Lord Giddens, moved this Motion with his witty speech at State Opening. Since then, we have been debating the many and varied Bills that the Government are putting before us this Session.
It is clear that it will be another busy Session; already, noble Lords have taken a day out from the debate to pass the first Bill, on Northern Ireland. Today, we have heard not only from my noble friend Lady Noakes but also from the noble Lord, Lord Oakeshott, my noble friend Lord Jenkin of Roding, and the noble Lords, Lord Peston and Lord Moser, on the new “enhanced confidence” statistics Bill. From these Benches we will listen with great care to what the noble Lord, Lord Moser, has to say, with all his wisdom and experience. My noble friend Lord De Mauley is the new Cabinet Office Minister, and I am sure that he will be particularly interested to hear everyone support the idea that this should all be going to the Cabinet Office instead of to the Treasury.
In the following months we look forward to debating Conservative Bills. We can expect a Climate Change Bill, which is a Conservative proposal. The Treasury has been forced to make the provision of statistics independent—again a Conservative proposal. What is more, the Government have seen the sense of a Conservative manifesto commitment to link the basic state pension to earnings and have even borrowed the idea for their own policy. I am delighted to see those proposals on the timetable for the coming year. I sincerely hope that they will be proper Bills and not watered-down versions of what might have been.
The House defeated the Government no fewer than 62 times in the past year. That is a sad state of affairs. It is not really what should happen. Legislation that we can support should be proposed. I am delighted to say that there is some that we certainly shall be able to support in the coming months. I add my support for the Government spending transparency Bill that my noble friend Lady Noakes will introduce in your Lordships’ House. It will allow taxpayers to Google their tax through a powerful search engine.
The Consumers, Estate Agents and Redress Bill has the potential to be a very welcome step towards improving consumer information. As a former chairman of the National Consumer Council and now president of the
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That is why I am extremely concerned that the National Consumer Council is to be quangoised. Its great strength has been that it is a market leader in consumer affairs and now it is set to become yet another government mouthpiece. Consumer Voice, as the NCC will come to be known, will be nothing more than a signposting organisation. I have heard the noble Lord, Lord Whitty, speak today. He is the new chairman of the National Consumer Council and he seems more confident of the proposal so far than I am. I shall listen to him carefully because in the midst of what he was saying I could hear him going as native as I did when I took that post at the National Consumer Council. Who knows what he may decide at the end of the day.
These matters may not arouse as much passion in your Lordships' House as foreign affairs did, but they are crucial to the great majority of consumers—we are all consumers. Buying a house is the biggest financial commitment that most people make, so I welcome the redress scheme for homebuyers yet I fear that we have before us a watered-down version of what might have been. I am concerned that redress will not provide an incentive strong enough to discourage rogue trading. I hope that the Minister can explain how effective a deterrent he expects the redress scheme to be, how many redress schemes there will be and whether redress will be available for those who did not buy their property through an estate agent. I recognise the importance of strengthening the position of the consumer and I wholly support the deregulatory principle of the Bill based on the Hamilton review. The Minister said today that the Government seek to reduce costs for and pressures on consumers, but consumers are picking up the tab for this Government’s crippling burdens on business.
This Government just cannot stop issuing regulations. We can see at a glance the impact that that has had on business. Regulations are costing businesses more than £50 billion, with more than 14 new regulations issued every day. Business investment is at the lowest point on record, at a mere 9.5 per cent of GDP. Since 2000, we have consistently averaged lower than France, Germany and the United States. Even the deputy governor of the Bank of England has said that he is “puzzled” by the lack of investment. I was disappointed, but not surprised, to read the CBI's report this morning stating that burdens on businesses are higher than ever before; 95 per cent of business people have said that the tax system is just too complex and should be simplified. What is more, over one fifth of firms, 22 per cent, have been forced to relocate activities overseas.
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It is not only business that is suffering. Before 1997, Britain enjoyed a surplus on trade and goods but has suffered a deficit since January 1998, with a record high in 2005 of £44 billion. This does not just affect us at home; we have heard often today that Britain has dropped from being the seventh most competitive economy in the world in 1997 right down to 13th in 2005. The Minister mentioned a £3.5 billion spend on science and technology, so I hope he will explain why, according to the Institution of Engineering and Technology, 40 per cent of British businesses are unable to recruit enough engineering graduates and apprentices.
The story of standstill goes on. As my noble friend Lady Noakes has already said, official unemployment is at its highest for seven years, with 1.71 million people out of a job. That does not account for the real unemployment, however. In real terms, almost 5 million people are out of work and on benefits in this country.
In the first three months of this year insolvency was greater than in the whole of 1997. I come back to a vital point raised by my noble friend Lady Noakes. My noble friend and my party held a summit on personal debt on 20 November. This issue affects every aspect of people’s lives, particularly the consumer, who is vulnerable to aggressive marketing from all sectors and to aggressive persuasion to accept a bankruptcy status. What sort of society is this for Britain? Between July and September this year, 27,644 people went bankrupt or entered into individual voluntary arrangements. These instruments are viable, but the problem lies in IVAs often being aggressively marketed. My party has called for a more vigorous enforcement of the rules governing the marketing of IVAs. I hope the Minister can tonight assure noble Lords that this is also a priority of his Government.
I look forward to examining in more detail the DTI’s simplification plan that the Minister so briefly described. If I understand it correctly, the DTI will seek to reduce the complexity of DTI regulations. I hope the Minister’s department will seek to reduce the amount of regulation as well, if possible.
We support those measures proposing what is for the common good. There are some important opportunities to look forward to in this Session. We will have the opportunity to change our impact on the environment. Energy and climate change is an issue close to the heart of your Lordships’ House. As my noble friend Lady Miller of Hendon, who so ably led from these Benches both as a government Whip for the DTI and opposition spokesperson, stated during the passing of the Energy Act 2004, that Act was a missed opportunity for the Government to take the bull by the horns.
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The Stern report was a wake-up call for us all, and not before time. Concern over energy increases and the record of Her Majesty’s Government over the past nine years is dispiriting. The Government promised to reduce emissions by 20 per cent by 2010, a target set independently by the Royal Commission on Environmental Pollution. Yet, three manifesto commitments later, Her Majesty’s Government have rewritten the rules. The target has been dropped. It was already in deficit, emissions having risen consistently since 1997. In spite of promises to tax the bads, not the goods, green taxation has fallen from 7.7 per cent of total tax in 1997 to 6.2 per cent this year. I await with bated breath the Government’s White Paper on energy in the spring and the proposals in the Climate Change Bill, but agree with many others that it is all taking too long.
The Minister mentioned increasing the use of renewables to a fifth of all energy by 2020. I hope noble Lords will forgive my scepticism in asking the Minister whether he can detail the plans for this reduction, and what safeguards will be in place to ensure that the targets are met. Without the safeguard of independent targets, the Government have shown a propensity for shifting the goalposts.
Can the Minister inform noble Lords whether energy provisions will be accounted for in the Climate Change Bill? Can he reassure us that his Government will bring in a Bill with real teeth and real ambition? I wonder whether he can give that commitment today.
I hope that the Minister will agree with me that it is essential that we focus on reducing carbon emissions and setting the right framework so that industry can develop a broad energy mix to guarantee security of affordable supply. Annual, independently set targets and stocktaking of emissions are essential to provide real accountability and progress with no rewriting of the rules. Decisions on future energy provision must be agreed by us all and must not be made on a political whim. Where the Government see nuclear power as the first choice, under our framework it would be a last resort. Where the Liberal Democrats rule out nuclear power, we rule out subsidies and special favours for nuclear power. Let us be responsible, not argumentative, about energy provision. We must view energy provision globally, in every sense of the word. Carbon reduction and security of energy supply are priorities, but hand in hand with green energy not to its detriment. We do not believe in special favours for nuclear power; we believe in a level playing field for all types of energy. We need to effect an entire culture change by deregulating business, simplifying taxes and revolutionising green energy.
This has been a long debate at the start of a busy Session. I welcome many of the opportunities and challenges that we face in the Session to come and can reassure the Minister that noble Lords on these Benches will ensure that those opportunities are realised to their fullest potential. My noble friends and I will do our best, as always, to scrutinise all the Bills promised in the gracious Speech. Some we will criticise and others we will support, as my noble friends have said over the past six days’ debate.
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We wholeheartedly support the Motion moved by the noble Lord, Lord Giddens, and seconded by the noble Baroness, Lady Morgan of Drefelin. Her Majesty deserves our thanks, not only for the gracious Speech, but for the way she continues to do her duty and set an example to us all.
8.32 pm
Lord McKenzie of Luton: My Lords, this has been a wide-ranging debate. Before I respond to it, like other noble Lords, I should like to place on record my admiration for the service given to this House and the Government by my noble friend Lord Sainsbury of Turville. He has a fine record, particularly in his promotion of science and innovation. I also add my welcome to the Front Bench to my noble friend and colleague Lord Truscott. He comes with impressive credentials, as will already be clear from the way he opened this debate. I also welcome the noble Baroness, Lady Wilcox, to her new role on the Conservative Front Bench.
Today, we have benefited from two first-class maiden speeches. The noble Lord, Lord Bilimoria, a fellow chartered accountant, spoke with the authority of somebody who has built and run a business, with a little help from me, and I warmed, in particular, to his ethos of putting something back into the community. The noble Lord, Lord Rowe-Beddoe, also brings a strong business background to your Lordships’ House, and he has already applied it in the service of the Welsh Development Agency. I was delighted that he spoke in particular about the importance of the creative industries. I look forward to both noble Lords continuing to swell the ranks of those who speak in this House on matters of business and the economy.
The Chancellor will present his Pre-Budget Report on 6 December. It will include a full update of the Government’s economic forecasts and fiscal projections. We will obviously discuss and debate those matters in due course. Before I take stock of some of the Government’s key economic achievements, I shall deal with some of the points raised in today’s debate.
The noble Baroness, Lady Noakes, talked about unemployment. Unemployment levels and rates are low by historic standards. The IMF noted that a flexible and dynamic labour market is one of the UK economy’s key strengths and that unemployment in the UK is significantly lower than in the euro area. The UK is enjoying the longest period of sustained low inflation since the 1960s. With regard to public debt, the Government are meeting their strict fiscal rules, even under cautious assumptions. The Budget 2006 projections show that both the golden rule and the sustainable investment rule will be met over the cycle.
The noble Baroness also asked about economic migration. The economic impact of migration from new EU member states has been modest but broadly positive, reflecting the flexibility and speed of adjustment of the UK labour market.
Competitiveness was raised by several noble Lords. We have a productivity gap with France, Germany
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The noble Lord, Lord Sanderson, queried whether the Government are friendly to business. I would assert that they certainly are. I point to the capital gains tax changes, the inheritance tax relief—a matter I think the noble Lord acknowledged—the reduced lower and basic corporation tax rates and of course the lower income tax rates than those we inherited. Noble Lords probed the OECD figures. The UK is a relatively lightly taxed economy. According to the latest information, in the UK the tax rate on corporate income is 8.1 per cent of GDP, the OECD average is 9.6 per cent, and in the EU 15 it is 8.2 per cent. So we compare favourably on those grounds.
On the approach of the Government, the DTI simplification plan is addressing industry’s concerns about complex rules, inconsistencies and other irritants, the frequency of the changes and the need for greater co-ordination between government departments.
My noble friend Lord Bhattacharyya spoke about the significance of the longer-term challenges that we face in the economy, in particularly the influence of China and India on the global economy. As he basically demonstrated, it is impossible to debate the domestic and global economy without reference to Asia, especially China and India. Indeed, they are in a league of their own. But, in the past two years UK exports of services to China have grown by 54 per cent, and the UK is the largest EU investor in China, with more than 5,000 investment projects. To put it all into context, India and China educate about 4 million graduates each year and the UK educates around 250,000. That shows the nature of the challenge we face.
I welcome the right reverend Prelate the Bishop of Manchester’s welcome of the Digital Switchover (Disclosure of Information) Bill. He pointed out the risks of data sharing. But the scope of the Bill is similar to the Television Licences (Disclosure of Information) Act 2000, which gave free licences to those aged over 75.
My noble friend Lady Kingsmill welcomed the Exchanges and Clearing Houses Bill. It is important that this preserves the light regulatory touch for our exchanges. I am pleased that this also has the support of the Conservative Benches.
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