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With the growing number of dependent elderly people and worries about residential care, I would hope that we would see partnerships emerging with central government, local government and reputable companies linking pensions, direct care payments and equity release into a financial care package, allowing older people to do as they wish and to remain in their

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own homes, comfortable and confident, which after all is the whole point of saving in the first place. If we could think outside the boxes and put those packages together, we could do something really rather special for many people.

8.37 pm

Lord Razzall: My Lords, when the Prime Minister postponed the election date, his spin doctors said that it was to give him time to create his vision for Britain. Those parts of the gracious Speech that we are debating today, which deal with consumer affairs, industry, energy and economic affairs, are characterised by three things: first, a serious timidity; secondly, a remarkable lack of vision; and thirdly, a significant failure to tackle a number of the structural issues that bedevil the management by the Government of economic and business issues.

If noble Lords doubt the timidity in this area of the gracious Speech, I direct them to the proposals on work/life balance. The Government have announced that they will set up a review to determine how to extend the right to flexible working not just to parents of younger children but those of older children as well. Well, this has been Liberal Democrat policy for a number of years; indeed, we would go further and extend the right to request flexible working to all employees, not just parents. I am sure noble Lords will accept that, as the whole culture of work changes, flexible working should become more available. For many, the nine-to-five routine is no longer necessary or relevant. In March 2007, my colleague in another place, Lorely Burt, proposed a Private Member’s Bill using the 10-minute rule to extend the right to request to work flexibly to parents of children up to age 18. Our party has extended this to a proposal that this right should extend to all people in the workplace. The Government should stop talking about the benefits of flexible working and start acting.

A further example of timidity lies in the Regulatory Enforcement and Sanctions Bill, the Second Reading of which will be debated in this House next week. As a number of noble Lords have indicated, since Labour came to power the cost to business of new regulations is estimated at £50 billion—that is the figure from the British Chamber of Commerce review. The BCC’s study in February 2007 reported that both Conservative and Labour Administrations approached deregulation with apparent enthusiasm but learnt little or nothing from previous efforts and have little, if anything, to show for each initiative. The Bill coming before your Lordships’ House next week barely scratches the surface of what needs to be done to reduce the regulatory burden. I notice that the noble Lord, Lord Jones, is laughing at that.

A number of things are needed to slash the red tape, bureaucracy and over-regulation holding British business back, especially small businesses: first, an impact assessment of any new regulation before it is implemented and post-implementation reviews; secondly, as noble Lords on these Benches have said, we would incorporate a sunset clause into each new business regulation so that it has to come back to

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Parliament for review and renewal; and thirdly, each small business should have a single point of regulatory contact to act as an adviser and ensure that all inspections are joined up and, wherever possible, take place at the same time.

For lack of vision there is no better example than the Energy Bill, which has the hallmarks of a monumental let-down for the United Kingdom. I am sure we all accept that the Government should commit Britain to a carbon-neutral future with renewable energy playing a significant role. Unfortunately, the fixation of this Government on nuclear power means that we do not get a proper debate on anything in the Energy Bill. Nuclear consultation has always been a sham. Ministers claim to have an open mind on nuclear power but were obviously committed to building new nuclear power stations before the consultation even began. These Benches remain opposed to nuclear power, not in principle but on judgment. For example, the Government have still not addressed the legacy they leave to future generations: radioactive waste that will remain dangerous for thousands of years. We are concerned that the Government are promising to improve the lot of renewables, but look at the track record. It is doubtful we will meet the 10 per cent renewables target by 2010, a direct consequence of the Government not being sufficiently supportive of renewables. The Government are looking to set a framework for carbon capture and storage, but that should already have happened. We should be looking to be market leaders in low-carbon technologies. This Bill constitutes a minor step towards the zero-carbon Britain essential for our future.

On the need to tackle structural issues, two recent events highlight the problems. First, our party—this is no secret as it has been in the previous two party manifestos—has long argued for the break-up of what used to be called the Department of Trade and Industry; it is now called the Department for Business, Enterprise and Regulatory Reform; the DTI without science. The main driver for our argument there was that there has always been a dichotomy between the interests of consumers and those of business. If you put the interests of consumers and business in the same department you inevitably have a conflict between them. What better example of the problem can there be than the European Union attempt to reduce mobile telephone roaming charges? It is clear that lower charges for those of us who travel to Europe are massively in the interest of the consumer, yet leaked reports from the Department of Trade and Industry—I apologise, the Department for Business, Enterprise and Regulatory Reform—indicate that the Government and civil servants were lobbying for higher charges in order to ensure that the interests of mobile phone operators were protected. What better example could there be that consumer protection and the interests of business should not be looked after by the same ministry?

The second and most fundamental issue with regard to the structure of the way that these things are dealt with is the Northern Rock débâcle, to which a number of noble Lords have referred. The Government presided over the largest run on a UK

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bank since prehistory. We can go into the history of it, but in modern times this is the most significant run on a British bank, and who would have thought that it would have occurred in 2007? Do the Government believe that the relationship between the Treasury, the Financial Services Authority and the Bank of England worked satisfactorily? If the answer is yes, surely the Government are being complacent. If it is no, where are their proposals to ensure that the structure works better next time?

8.45 pm

Baroness Wilcox: My Lords, I thank the Minister and all noble Lords who have spoken in today’s interesting debate on the humble Address. I especially thank my noble friend Lady Noakes for opening this debate for the Conservatives with some pointed analysis of our economy. I shall add my concerns to hers. She is right to throw cold water on the rose-tinted picture that the Government insist upon. The Chancellor of the Exchequer has had to revise his growth forecast downwards for 2008 and blames international uncertainty for the half-point revision. As a customer of Northern Rock, I wonder whether he was ever tempted to march up and down those lines of desperately worried people, chanting the Prime Minister’s old line, which we do not seem to hear very much these days, “No more boom and bust”. Perhaps he should have followed the advice of the right reverend Prelate the Bishop of St Albans and read Isaiah. My noble friend Lord Eccles eloquently described his interpretation of those sad events, as did my noble friend Lord Northbrook.

It is perhaps not surprising that we hear about the international climate only when it provides a convenient excuse for the Government. The Prime Minister, when he was Chancellor, did not share the credit for the period of economic growth that followed the 1992 recession with anyone, least of all the international economy, despite the 10 golden years of low inflation and low interest rates that many other countries have also enjoyed. The United Kingdom's GDP increase of 49 per cent between 1992 and 2006 must be compared to the United States’s 60 per cent, Canada's 59 per cent, New Zealand's 62 per cent, Australia's 73 per cent and the Republic of Ireland's 167 per cent.

What is worse, this Government have also failed to prepare our economy for the inevitable end of this good luck. Instead of ensuring that the UK economy is capable of weathering a less favourable international climate, the opportunity of the past 10 years has been wasted. To see proof of this, we need look no further than the government borrowing figures: projected government borrowing for the next five years is now £16 billion above what was stated in the 2007 Budget. The principle that one should save for a rainy day seems to have passed the Prime Minister by. It is tragic that, from the first raid on private pensions to the imprudent levels of public borrowing, this Prime Minister's fixed purpose has been to plunder the savings and income of the future to squander it today. Never in our peacetime history has so much been taxed, so much been wasted and, sadly, so much hard-earned, irreplaceable money simply been thrown away.

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Unfortunately, the Government's lack of foresight has affected the private as well as the public sector. The UK is falling in the global competitiveness index, it is lagging behind the G7 in productivity and has had a lower rate of business investment than the US, France and Germany since 2000. The World Bank's research identifies the United Kingdom as the best place to do business in only one respect: as a place to get credit. On all other criteria, we are convincingly beaten by other countries, especially on the matter of licences, where this Government's approach to regulation ensures that we are in 54th place. Yet in 1997, the Prime Minister stated:

When we look at energy policy, we hear the creak of the stable door and the thunder of hooves receding into the distance. In energy, as in finance, we have spent the fruit of the good years and failed to plan adequately for tomorrow. To provide security is the first task of any Government, and what we have now is growing insecurity on energy. Because of the dithering of Mr Blair and Mr Brown in the years of plenty, our children and grandchildren may pay heavily in locust years to come, as they go cap in hand to OPEC or whatever worse may come in its wake.

The current Prime Minister appears to be doing no better than his predecessor in following through on his commitments. The Energy Bill that we have been promised was set to address several important needs: the looming energy gap as 30 per cent of our capacity shuts over the next 20 years, our country's commitment to renewable energy and low carbon emissions, and the provision of guidance and a clear framework for the debate over the future role of nuclear power. The Bill will not do any of those things. DBERR itself admits that it would be too expensive and difficult to meet existing renewables targets; it seems to be beyond the capabilities of this Government, who have already failed to meet the 2003 target of 5 per cent. This is simply unacceptable; the targets were set at that level for a reason, and we on these Benches will strongly oppose any attempts by this Government to water down their commitment to meeting them.

The Government have also failed effectively to manage the nuclear issue. This year, the High Court found the former DTI's consultation “manifestly inadequate”, “misleading” and “seriously flawed”, and another legal challenge by Greenpeace is in the offing. The Government must pull themselves together and start taking our country’s energy policy seriously.

Nowhere is the Government's failure to keep their promises clearer than in the matter of regulation. My noble friend Lord MacGregor shared with us his Select Committee work on the economic regulators here. The British Chambers of Commerce shows that the cost of regulation in 2007 was £55 billion, yet the Government are failing to do anything meaningful to reduce it. Despite the Government's two previous deregulatory Acts, they are continuing to add to it. In the four years after the 2001 manifesto commitment to cut red tape, the Government abolished 27 regulations but created 600 more.

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In the Queen's Speech, we have yet another regulatory Bill to add to those two previous Acts. This Bill deals with the burden of enforcement rather than of regulation itself, which is understandable. After all, what further legislative powers can be given to encourage the Government to deregulate? The answer is not in more legislation but in a cultural shift within Whitehall, something that this Government seem absolutely unable to implement.

But in the dark, dreary tale of regulation—the bitter squeezing of enterprise, enthusiasm and endeavour by regulation, rule and code of practice that goes on day by day in our country—I wonder as I look across the Chamber whether we have come to that moment in the history of the DTI, DBERR or whatever the image consultants have decided to rename it next when Clark Kent takes off his specs, dons his cloak and starts booting the bad men to kingdom come. For the first time in a decade, we have a Deregulation Minister who is not a member of the Labour Party, who is not in hock to the trade unions who pay Labour, who has not been on the first-class train to Warwick to patch up an agreement with the unions to saddle business with new burdens, and who will not be afraid to face up to the regulation maniacs who infest the home, education, environment and other departments, not just his own. This surely is a sign of immense hope. A huge dent will be made in the noble Lord’s considerable reputation if he does not use this opportunity to tilt the balance back towards enterprise, small and large. I know that the CBI and the Federation of Small Businesses see the fact that he will not take a Labour whip as a sign of real independence of mind. If it is, we on this side look forward to working with him, but I suspect it is on the Benches behind him that he may have to watch out for the kryptonite.

This enormous regulatory burden clearly is having an awful effect on business. I can hope only that the Employment Bill will do what the Prime Minister has said it will. Simplification, clarification and cost saving are needed and it would make a refreshing change for government policy to head in that direction for once. Heartened was I by the call made by the noble Lord, Lord Pendry, for vocational education and for his emphasis on employers. I was delighted to listen to that.

My noble friend Lord Higgins reminded us that the Government had ruined our occupational pensions through their stealth taxes. The noble Baroness, Lady Hollis, who had to wait until the end to speak, gave a master class on the special issues of pension treatment, especially for women. The Queen’s Speech also mentioned the second Pensions Bill that will finish what the Pensions Act 2007 started. I am afraid that it failed to mention the £2 billion stealth tax that the Government are levying on retirement by moving the UAP introduction date to 2009. The previous raid on pensions had disastrous results, and I would like to take this opportunity to restate my party’s commitment to those pensioners still suffering the consequences.

It is clear that the Government will soon be unable to hide the consequences of their economic policies. My noble friends Lord MacGregor, Lord Higgins and

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Lord Marlesford fear for the Chancellor, for whom the question remains about how he will handle the more uncertain times ahead, especially in light of the speculation that he does not have the full confidence of even the Prime Minister, let alone the country. My noble friend Lady Noakes and I look forward to watching how he handles the current financial instability. I also look forward very much to working more closely than was possible last Session with the noble Lord, Lord Jones of Birmingham. He has said a great deal in the past with which I wholeheartedly agree and I hope that we will have much to agree on in future.

On these Benches, we support unreservedly the Motion moved by the noble Baroness, Lady Corston, and seconded by the noble Lord, Lord Hart of Chilton.

8.58 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, this wide-ranging debate was led with an inspirational speech made by my noble friend Lord Jones. I should like to thank all noble Lords who have participated and I shall try to deal with as many of the points raised as possible.

I shall start with some views on the economy, because the economy that I see does not seem to fit with the description we have had from Members opposite. Our economy has now experienced an unprecedented 60 consecutive quarters of positive growth. One of the keys to what has happened over the past 10 years is that we have not allowed the slide back into recession that happened under the previous Government. We are on course to be the fastest growing G7 economy this year. Employment is at record levels. So far this decade, the UK has had the second-highest growth rate in the G7 and the second-lowest inflation rate. Before 1997, the UK was bottom of the G7 in terms of income per head; now it is second behind only the US. Manufacturing output has grown and, this year, export growth is expected to rise between 4.5 per cent and 5 per cent. The current account deficit is down to 2.6 per cent. As my noble friend Lord Haskel pointed out in a typically insightful contribution, the UK’s strong economic position derives from the fact that we have maintained a free and open economy, which is supported by a clear fiscal and monetary framework. He urged that in times of challenge we should not capitulate to protectionism. I agree with him absolutely on that point.

The issue of the impact on the economy of foreign nationals and immigration was touched on by my noble friend Lord Haskel, the noble Baroness, Lady Noakes, and the noble Lord, Lord Stevens of Ludgate. We should be clear that foreign nationals and migrant workers have made an important and welcome contribution to the success and growth of the UK. It is wrong to say that they are taking opportunities away from British citizens. The UK labour market remains very buoyant. There are more than 660,000 vacancies at any given time, but this is net of much higher flows around the dynamic labour

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market. In fact, Jobcentre Plus has something like 10,000 vacancies every working day. The challenge for us is to help those individuals on benefit and who find it difficult to get into work. This is at the heart of our proposals for further reform in welfare and securing full employment, including local employment partnerships. Indeed, the noble Lord, Lord Kirkwood, acknowledged that.

The noble Baroness, Lady Noakes, challenged me on capital gains tax and I shall come to that point in a moment. She asked what happens when consumers stop spending. What happens is what is already happening: there is a rebalancing of the economy whereby business investment comes more to the fore as consumer spending does not increase at its previous rate. She also asked about the unemployment figures. We have seen the latest figures today: from July to September we had 29.2 million people in work with an employment rate of 74.4 per cent. As for out-of-work benefits, the claimant count—

Baroness Noakes: My Lords, I was talking about unemployment rather than employment, but as the Minister has raised the issue of employment, perhaps he will enlighten the House on how the Government are going to achieve their target of 80 per cent employment, because at the moment they are going backwards.

Lord McKenzie of Luton: My Lords, that is right, but first I shall tell the noble Baroness what has happened to the claimant count. It too has reduced on the latest figures. Meeting the aspiration of an employment rate of 80 per cent is a key part of the welfare reform proposals and can be achieved by taking people off IB and using employment and support allowances back into work, helping more lone parents back into jobs and encouraging older people to remain in and move back into the workplace more quickly.

The tax position of the UK again came under challenge. The main corporation tax rate is the lowest rate among the G7 and below the EU 15 per cent average. The UK tax burden as a percentage of GDP is lower than the EU 15 per cent average, and the UK was ranked third in the OECD and second in the EU in a recent survey on the competitiveness of its tax system. The issue of capital gains tax was raised by the noble Baroness, Lady Noakes, and the noble Lords, Lord Bilimoria, Lord Higgins and Lord Northbrook. We should recognise, as did some of those contributors, that the change is a key simplification of the tax system. It does away with taper and indexation, a point acknowledged by the noble Lord, Lord Stevens. It has also been welcomed by the Institute for Fiscal Studies. It is right to say that the Treasury is working with representatives of the business community on the details of the reform, but I do not accept that the 18 per cent rate is particularly uncompetitive in comparison with other major economies. Nor do I accept that entrepreneurs, when thinking about setting up and driving a business, are worried because they will be able to keep only 82 per cent of the proceeds they make at the

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end of the day rather than 90 per cent. Relief for reinvestment into other businesses is still available, and of course for smaller gains the annual exemption remains in place.

We should acknowledge what the Government have done to support SMEs, and I think that the noble Lord would acknowledge that that has been significant. Between 1997 and 2006 the number of SMEs has risen by 760,000, an increase of 21 per cent. It is estimated that in 2006 there were 4.5 million SMEs in the UK employing around 59 per cent of the private sector workforce. There is a range of means by which the Government continue to support enterprise in general and SMEs in particular: further commitments to the Enterprise Capital Fund, the small loan guarantee scheme that was mentioned by the noble Lord, and other mechanisms. Next year we will introduce the annual investment allowance, which is another means of support for businesses and SMEs, as well as investment tax credits. So I believe that some of the challenges on capital gains tax are overstated.

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