7 May 2008 : Column 555

House of Lords

Wednesday, 7 May 2008.

The House met at three o'clock: the LORD SPEAKER on the Woolsack.

Prayers—Read by the Lord Bishop of Norwich.

Death of a Member

The Lord Speaker (Baroness Hayman): My Lords, I regret to inform the House of the death of Lady Michie of Gallanach on 6 May. On behalf of the House, I extend our condolences to her family and friends.


3.06 pm

Lord Barnett asked Her Majesty’s Government:

Lord Davies of Oldham: My Lords, the Government have put in place statutory regulation of mortgages to help to ensure responsible lending and they provide support, through the provision of debt advice, for those experiencing problems. The Government are working with the lending industry to see what more the industry could be doing to support borrowers. Sir James Crosby is leading a working group to consider market-led initiatives to strengthen the mortgage funding market, initially reporting in the summer and presenting proposals at Pre-Budget Report.

Lord Barnett: My Lords, I thank my noble friend for that Answer. Does he accept that much of the problem has been created by the banks themselves, who were overgreedy and falling over themselves to lend? As the Governor of the Bank of England has said, they have now got into a situation where they are refusing to lend even to good borrowers, thus creating more of a problem. While the Bank of England scheme will certainly help to improve liquidity, can my noble friend tell me how many of the banks and other institutions have now applied under the stringent conditions that apply to those loans and how many are likely to receive such loans? Will the figure be anywhere near the £50 billion that has been spoken of?

Lord Davies of Oldham: My Lords, on the general point, the House and the country are aware of the problems of an unfortunate extension of lending in an unwise way in the recent past. We know the consequences of the credit crunch, but the Government have taken action to relieve aspects of that and the Bank of England is making resources worth £50 billion available to the banks. I cannot give my noble friend any details on the extent of the take-up of those

7 May 2008 : Column 556

moneys yet. As he will appreciate, the issue is one for the Bank of England, which is carrying out the operation and, as yet, the Treasury does not have figures on the rate of the take-up. I think that the House will appreciate that aspects of the credit crunch are easing somewhat.

Lord Marlesford: My Lords, do the Government recognise that, while all Governments have a responsibility to see that their citizens are decently housed, it does no one any good to encourage or facilitate people who simply cannot afford to become home owners to burden themselves with debt by doing so? In this country, 72 per cent of people are already home owners, which is a very healthy percentage. A fall in property prices could be wholly beneficial in the sense that it would bring houses closer to the living price rather than the speculative price which they are at the moment.

Lord Davies of Oldham: My Lords, some correction of the market in which prices fall to a limited extent may have that effect, but it is a proper aspiration of our fellow citizens to take out a mortgage on their own homes. By definition, that is taking out a loan. The important thing is that the ability to repay should be carefully assessed and the banks should not lend unwisely. That is a lesson that the banks have assuredly learnt as a consequence of the past six to nine months of financial affairs.

Lord Newby: My Lords, the Chancellor said that one of the effects and benefits of the £50 billion Bank of England facility would be that it would lead to lower borrowing costs for home owners and on mortgages. In his recent discussions with the banks, what representations has the Chancellor made to encourage them to ensure that just that happens?

Lord Davies of Oldham: My Lords, we all recognise that the price of borrowing has increased because of the difficulties concerning the credit crunch, but I am pleased to report that the average effective mortgage rate was 5.72 per cent in March, down from 5.9 per cent in December. Those figures are a very long way from the 1990 crash with regard to mortgages and the level of repossessions that took place because people could not afford to keep up their mortgage repayments. Although there is absolutely no room for complacency and none of us should underestimate the pressures on family budgets at present, effective mortgage rates do not seem to be escalating wildly.

Lord Best: My Lords, bearing in mind that the number of repossessions is likely to rise to about 50,000 a year, or 1,000 families a week, with all the homelessness that goes with that, will the Minister prevail on his colleagues to improve the safety net that helps people through a difficult patch? In 1995, the period after which ISMI, income support for mortgage interest, kicked in was reduced from nine months to just two months. Could that be reconsidered, as the level of repossessions seems likely to rise a good deal further in the months ahead?

7 May 2008 : Column 557

Lord Davies of Oldham: My Lords, of course the noble Lord is right to anticipate some increase in the rate of repossessions. That is why the Chancellor met the Council of Mortgage Lenders and others to press on them the necessity of ensuring that, as far as possible, measures are taken to ease the pressures on households, perhaps by delaying interest rate increases over time or by spreading the period over which repayment has to be made. I hear what the noble Lord says about the safety scheme, which is a limited scheme that applies to those who are out of work. All that will be under consideration.

Lord Bilimoria: My Lords, last year, the Government injected £25 billion into Northern Rock, more than has been put into any other company or organisation anywhere in the world by a Government, to avoid financial meltdown. Further, the Government have helped by a further £50 billion the whole of the banking community, yet, as we are seeing, the banks are not passing on mortgage cuts to the borrowers. Unless there is something wrong with my maths, the fall from 5.9 per cent to 5.72 per cent means that the average reduction in mortgage rates is about a quarter of a per cent at a time. The banks are not passing on the cuts. What can the Government do to encourage the banks to pass on those benefits?

Lord Davies of Oldham: My Lords, the noble Lord is of course right to say that the Government took salutary action in order to protect the financial system from what could have been catastrophic meltdown, with consequences for everyone. On passing on the advantages derived from the increase in capital made available, let me say that these are still early days. The banks have real problems with some of the debts that they have already incurred, but the Government will continue to press on the banks the necessity of keeping mortgage interest rates as low as possible.

Transport: London Underground

3.14 pm

Viscount Montgomery of Alamein asked Her Majesty’s Government:

Lord Bassam of Brighton: My Lords, the Comprehensive Spending Review 2007 settlement sets out the expected levels of Transport for London grant and borrowing to 2017-18 and makes provision for the continued modernisation of the Underground. It is now for Transport for London to manage its costs and priorities within its overall financial settlement.

Viscount Montgomery of Alamein: My Lords, that is an extremely encouraging response, but given that the new and very able chief executive of London Underground has laid out such a comprehensive plan over these years, will the noble Lord be able to transmit to the new mayor his new enthusiasm and that of the Government for the whole scheme?

7 May 2008 : Column 558

Lord Bassam of Brighton: My Lords, I am sure that the newly elected mayor will be very well aware of his responsibility for ensuring that the money that we have set aside for the next 10 years is well spent and spent on the continuation of the refurbishment programme. I pay particular tribute to the Transport Commissioner for London, Peter Hendy. He has done a fantastic job, as has Tim O’Toole. They are to be congratulated on ensuring that the refurbishment programme is very much on track.

Lord Hanningfield: My Lords, I think that everyone acknowledges—certainly the Select Committee did—the financial disaster of the Metronet experiment with the Tube. Rosie Winterton announced a few weeks ago a working party to try to rectify some of that. To follow on from the supplementary question asked by the noble Viscount, Lord Montgomery, surely now that we have a new Mayor of London we can have a new staff, and I hope that those discussions start straightaway with the new mayor to improve both the safety and the quality of our Tube.

Lord Bassam of Brighton: My Lords, this Government have a record and a reputation for working well with directly elected mayors. I am sure that Mayor Boris will fit neatly within that. It is in no one’s interests that we fail on these projects, because obviously we all share as a common objective the safety, security and continued improvement of London Underground and transport generally in London.

Lord Bradshaw: My Lords, will the noble Lord reassure us that the Government will not force Transport for London or the mayor down the expensive and complicated PFI route that was behind the collapse of Metronet, that they will cease to force fixed-price contracts on people, and that they will encourage partnership and the target contracts that are used by Docklands Light Railway and the London Overground where the contractors and the people buying enter into a partnership which in the end has delivered on time and on budget and has left a surplus to be shared by the two investors?

Lord Bassam of Brighton: My Lords, I hear what the noble Lord has to say on the subject of PFIs, PPPs and so on, but Tube Lines, which is the other major provider of services on the network, has worked extremely well by and large. I think most people would argue that it has delivered satisfactorily and that it demonstrates that PPPs work. I understand that the new mayor is a fan of PPPs, so that will obviously inform his approach. It is perhaps worth recording that last July Tim O’Toole said about Metronet:

—the failure, that is—

We have to take a longer-term and more balanced view. PPP has delivered some significant improvements to our Underground network.

7 May 2008 : Column 559

Lord Bridges: My Lords, as a member of the All-Party Parliamentary Group on Crossrail, it would intrigue me very much to know whether the financial future of Crossrail is now in place. Hitherto the impression that we have received from the Government is that they give moral exhortation but no money. This is a vital improvement to the London transport system, and I hope that the Government will take it in hand.

Lord Bassam of Brighton: My Lords, we made an announcement towards the end of last year. The Prime Minister himself made it very clear that we are not only committed to Crossrail but that we have committed the money for Crossrail. We agreed a package with the London mayor and the City that we will deliver Crossrail. Crossrail is an extremely exciting and important project. I would not want to see anyone get in the way of ensuring that that project works properly.

Lord Berkeley: My Lords, as the new mayor’s only policy statement on transport is to get rid of the bendy bus and to replace it with a new Routemaster at so far unspecified cost, how can the Government ensure that the money allocated to the Tube will stay there and not be moved by the new mayor to a new type of bus?

Lord Bassam of Brighton: My Lords, the new mayor’s views on bendy buses are well known. I happen to take a completely different view, but that is as it is. Last week, people voted for Boris Johnson to be the mayor and we have to respect that. No doubt, he will take into account very carefully the views expressed to him by the transport professionals. They have enabled buses in London on every weekday to carry some 6 million passengers on more than 700 routes. The problem with taking away the bendy bus is that you will require two buses to replace the capacity that the bendy bus has in order to deliver on the major arterial routes. There is a very interesting argument to be had, is there not, on that issue? But I am sure that Mayor Boris will swiftly move from being a jester politician to someone who takes these issues more seriously.

Baroness Valentine: My Lords, given the unfortunate collapse of Metronet and the funding required for Crossrail, does there remain sufficient funding to deliver the Tube modernisation programme at the rate originally envisaged for phase 2 of the PPP?

Lord Bassam of Brighton: Yes, my Lords, that is the case. The funding is in place. As I said earlier, the settlement is for the 10-year period. The £1.7 billion that we have had to guarantee with regard to Metronet was money that Metronet had borrowed from the banks, which the Government would have had to pay over time in any event. That should not affect the programme for funding the continued improvements of the Tube network or Crossrail. Those refurbishments are very much on time and on budget.

7 May 2008 : Column 560


3.22 pm

Lord Blaker asked Her Majesty’s Government:

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, the Zimbabwe crisis must be resolved quickly and in accordance with the will of the Zimbabwean people. We are engaging with leaders in the region and the international community to promote a resolution, including the deployment of sufficient international observers if a second round takes place. We are pressing for a UN mission to investigate state-sponsored violence and intimidation. We are also supporting the call for a temporary arms moratorium until democracy is restored.

Lord Blaker: My Lords, is not the choice of the observers, and the question whether they serve both before the election and during the election, absolutely vital? Is it not doubtful whether SADC observers only should be recruited? They are likely to be biased in favour of Mugabe, as they have been, and they are briefed by the SADC Secretary-General, who is very strongly in favour of Mugabe. Do we not have a good opportunity, now that we are this month in the chair of the Security Council, to go wider in the appointment of members of the monitoring group? Should we not also think of the African Union as a suitable reservoir of people to act as observers? Lastly, should we not be having a debate on Zimbabwe in the present situation?

Lord Malloch-Brown: My Lords, the noble Lord’s points are very well taken. We want to internationalise the observer pool as much as possible within the constraints of time—one could, after all, face a second round as soon as 21 days from now. There were non-SADC observers in the first round; there were certain observers from the Caribbean. There are also other possibilities to broaden the pool and sharply increase the numbers. As I have also said, we are pressing the UN Secretary-General to send an envoy of some kind to look into both the human rights situation and the intimidation. The previous Secretary-General’s envoy played a critical role in stopping the violence around slum clearances.

Lord Lea of Crondall: My Lords, does my noble friend recognise the concern about South Africa’s silence on this question? Does he agree that the statements made in London last week by Mr Zuma, the newly elected ANC chairman, and the action of the stevedores and COSATU members in Durban, who, in solidarity with Morgan Tsvangirai, would not unload the small arms shipment, so that the ship had to go back to China, are very encouraging new voices in the southern Africa scene?

Lord Malloch-Brown: My Lords, I certainly would agree. There has been a lively debate in South Africa, less about the need for change in Zimbabwe and more

7 May 2008 : Column 561

about the means to achieve it, with voices more openly calling for more robust action. That is widely to be welcomed.

Lord Avebury: My Lords, no doubt the Minister will have noticed that the African Union currently has a mission in Harare reviewing the whole electoral process, and he will have seen the comment by Dumisani Muleya in this morning’s Business Day that the regime has neither the money nor the logistical capacity to run a second round. In these circumstances, does not the international community have some leverage to provide not only the management of the second round, if it takes place, but the protection needed in the form of security for the members of the opposition who have been subject to repeated violence so far?

Lord Malloch-Brown: My Lords, this is a critical moment where it appears that the regime is indeed considering its options and whether it can either afford a second round or win a second round. When we talk about observers, it is clear that it is not enough to protect just the sanctity of the ballot; human lives must be protected as well. I should add that those who seem most at risk are the ordinary party members and election observers. Therefore, there will need to be peace in the country at large. This is not an issue of supporting just a handful of the leaders; we must try to secure peaceful conditions across the country. The noble Lord is right to say that an African Union mission is in Zimbabwe, led by the new head of the AU, Jean Ping, who is looking at the election situation. I think that the AU will play a critical role between SADC at one end and the UN at the other.

Baroness Park of Monmouth: My Lords, what is the position on the arms shipment from China? Is there any truth in the claims being made by ZANU-PF that the arms have actually entered the country? If that is so, it is deeply important in the context of what the noble Lord has been saying. I know that the trade federation workers in Angola said that nothing had been landed and I am sure they meant it; they are very reliable. But it would be helpful to know the Government’s view on this. Have those arms entered Zimbabwe? They would only make the situation far more dangerous.

Lord Malloch-Brown: My Lords, the noble Baroness is right to be concerned. We have absolutely no evidence to suggest that the arms have entered the country. We believe that the boat is being refuelled and will return from Luanda to China, based on assurances given to us by the different Governments involved.

Lord Dubs: My Lords, does my noble friend agree that in the present situation it would be quite wrong to return Zimbabwean asylum seekers to that country? Will he confirm that none is being sent back? Moreover, in the mean time, would it not be humane to allow them to work while they are here?

Next Section Back to Table of Contents Lords Hansard Home Page