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Lord Addington: My Lords, to return to the current or at least the last decade, as the noble Lord has already pointed out, there has been a considerable rise

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in the cost of basic commodities. What are the Government doing to make sure that those on benefits or very low pay do not suffer as a result of this inflation?

Lord Davies of Oldham: My Lords, we are increasing pensions and benefits in line with the RPI rate in order that those benefits match the higher rate of inflation represented by the RPI, which measures the expenditure of pensioners and those on benefits more than the CPI. The advantage of the CPI is that it is internationally recognised as a comparator. On the more general matter, the noble Lord will appreciate that we have delayed, for instance, the increase in fuel duty by six months against a background of clearly rising fuel prices.

Baroness Oppenheim-Barnes: My Lords, the noble Lord has claimed on many occasions that under the last Conservative Government inflation rose by 15 per cent. Will he acknowledge on this occasion that we inherited from the previous Government a rate of inflation that had been running at 18 per cent? He said that he expects inflation to eventually come down. When is it likely to come down and why should it?

Lord Davies of Oldham: My Lords, it will come down because this Government have control over factors of inflation.

Noble Lords: Oh!

Lord Davies of Oldham: My Lords, when I say control, let us bear in mind that the previous Administration said that they had inherited inflation rates against rapidly rising oil prices, which doubled in the 1970s. However, they have more than doubled in the past few years, yet we are still talking about a rate of inflation which the previous Administration never really aspired to.

Lord Skelmersdale: My Lords, in his penultimate answer, the Minister talked about fuel. Now that in many parts of the country the cost of petrol and diesel is up to 130p per litre, what has the extra revenue to the Treasury been in the past two months?

Lord Davies of Oldham: My Lords, I have not got those figures, but of course the Treasury gains from the increased price. As I stated a moment ago, we have forgone the increase in fuel duty out of regard for the increase of prices at the pumps. But, before the Opposition wax too strongly on motoring prices, I should say that the cost of motoring has reduced since 1999, even taking into account the very rapid rise in fuel prices that we have had in the past two or three years.

Lord Howard of Rising: My Lords, does the Minister agree that the large supermarket chains, which receive so much criticism and an almost weekly investigation by the monopolies commission, have made a significant and major contribution to keeping the rate of inflation down?

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Lord Davies of Oldham: My Lords, they play their part but they could do better. It is the commission’s job to make sure that competition is sustained vigorously between the supermarkets. They do not always act in perfect amity on the issue of pursuing competition but engage in other practices too. Nevertheless, I accept part of what the noble Lord had to say.

Iran: Baha'i Community

11.30 am

Lord Avebury asked Her Majesty’s Government:

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, the Government are deeply concerned by the arrest of the Baha’i leadership in Tehran last week and the ongoing persecution of the Baha’i community in Iran. Following a recommendation by the United Kingdom the EU issued a statement on 21 May, which expressed,

and called for the release of those detained individuals.

Lord Avebury: My Lords, while I am grateful to the EU presidency for its statement, in view of the fact that Iran accounts for the largest number of urgent appeals by the Working Group on Arbitrary Detention and that the working group, the special rapporteur on freedom of religion and the independent expert on minorities have jointly and separately drawn attention to the serious concerns felt about the treatment of Baha’is over the past two years, does the Minister agree that the situation warrants an emergency resolution at the forthcoming eighth Session of the Human Rights Council, which is to be held in the first half of June this year?

Lord Malloch-Brown: My Lords, I agree that it warrants one; we will have to consider whether we can achieve it. It is possible to ask for a special session of an emergency resolution at the Human Rights Council, but to date the way that we have had most success on Iran, including on the Baha’is issue, has been through the third committee of the UN General Assembly. We have used the Human Rights Council to raise issues of the treatment of the Baha’is, using the thematic special rapporteurs to which the noble Lord referred.

The Lord Bishop of Chelmsford: My Lords, the Minister may or may not be aware that we on these Benches have been mourning the death of Bishop Dehqani-Tafti, a former bishop in Iran, whose son was murdered in the early years of the ayatollahs. Will he accept that in states where there is a strong and predominant religious and political tradition there is a particular duty to protect the liberties, beliefs and styles of life of those whose beliefs are in strong contrast? Will he also accept that the Government in Iran do not have a good record in these matters?

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Lord Malloch-Brown: My Lords, the right reverend Prelate is correct. A draft penal code is being considered by the Iranian Parliament, which makes apostasy, heresy and witchcraft punishable by death. We are concerned about the impact that those provisions would have on religious minorities in Iran. On 1 April my colleague, Dr Howells, called in the Iranian ambassador to express our concerns.

Lord Howell of Guildford: My Lords, is it not correct that as the right revered Prelate the Bishop of Chelmsford has reminded us, this persecution of the Baha’is has been going on a long time, ever since the ayatollahs took over? There have been horrific reports, even several years ago, of public executions of young teenagers for being part of the Baha’i community. While we are talking about Iran’s behaviour, did the Minister notice the comments made yesterday, or the day before, by the Russian ambassador to Israel, Mr Petr Stegniy, that Russia is just as concerned as we are about Iranian intolerance and aggression and about all Iranian nuclear ambitions, but that it believes that the containment of Iran should be approached in a different way? Bearing in mind the rather unsuccessful attempts we have had so far to bring Iran into line, will the Minister use his considerable diplomatic skills to bring the American thinkers and the Russian policy-makers together so that we have a more successful approach in the future to all these matters?

Lord Malloch-Brown: My Lords, the noble Lord is correct. The Russians, the Americans and everybody else are frustrated by the slow progress on bringing Iran into compliance with its obligations under the Nuclear Non-Proliferation Treaty. A meeting was held here in early May that included the Russian Foreign Minister in the so-called E3+3 which again agreed on a strategy, so there is no disagreement between us about using the Security Council and the IAEA as the channels through which to secure compliance. We are now seeking a further meeting in Tehran of the political directors, including the Russian political director, and along with Mr Solana, to present revised and refreshed proposals. However, we must recognise that if this channel does not bear adequate fruit, we need continuously to re-examine the ways in which we approach Iran diplomatically.

Lord Wallace of Saltaire: My Lords, I was proud to see at an official ceremony in Westminster Abbey some time ago that the Baha’i community in Britain is now treated as one of our many established faith communities. Can we not make it very clear to the Iranian Government, who see themselves as the protector of the global Shi’ite community, that if you want to be seen as the protector of your own community internationally, you have to recognise that others have some say in how you treat your religious minorities?

Lord Malloch-Brown: My Lords, the noble Lord makes a valid point. You cannot propose yourself on the one hand as a champion of religious freedoms and relations between civilisations, while on the other brutally abuse not just one but several minorities in your own country. Last year the European Union raised human rights concerns with the Iranian Government 28 times, and we did so on eight occasions. There is no doubt

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about the clarity of our message. The frustration arises from dealing with a regime which chooses not to hear.

Lord Roberts of Llandudno: My Lords, I want to express my appreciation of the Home Secretary’s action in giving asylum to Mehdi Kazemi, the young man who was to be forcibly removed to Iran. I am told that that happened yesterday. In view of what is going on in Iran and the possible treatment of those who are repatriated or forcibly removed from here, could there not be a total moratorium on the removal of failed asylum seekers to Iran?

Lord Malloch-Brown: My Lords, let me return the compliment to the noble Lord and to those in this House who have continuously raised the issue of Mehdi Kazemi. That was instrumental in the Home Secretary’s reconsideration of the case and the decision to grant him a five-year initial stay here in the UK. Equally, however, noble Lords will recognise that we must preserve the right to deal with these matters on a case-by case-basis. That is at the heart of our approach to asylum.

Hereditary Peers’ By-election

11.37 am

The Clerk of the Parliaments: My Lords, with the leave of the House, I am now able to announce the result of the by-election to elect a Cross-Bench Hereditary Peer in accordance with Standing Order 10.

Twenty-six Lords completed valid ballot papers. A paper setting out the complete results is being made available in the Printed Paper Office and the Library. That paper gives the number of votes cast for each candidate. The successful candidate was the Earl of Stair.

Business of the House: Debates Today

The Lord President of the Council (Baroness Ashton of Upholland): My Lords, I beg to move the Motion standing in my name on the Order Paper.

Moved, That the debate on the Motion in the name of Lord MacLaurin of Knebworth set down for today shall be limited to two hours and that in the name of Lord Freeman to three and a half hours.—(Baroness Ashton of Upholland.)

On Question, Motion agreed to.

Parliamentary Constituencies (Northern Ireland) Order 2008

Mutilations (Permitted Procedures) (England) (Amendment) Regulations 2008

11.38 am

Lord Davies of Oldham: My Lords, I beg to move the two Motions on the Order Paper standing in the name of my noble friend Lord Rooker.

Moved, That the draft order and regulations laid before the House on 31 March and 21 April be approved. 17th report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 20 May. —(Lord Davies of Oldham.)

On Question, Motions agreed to.

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Financial Assistance Scheme (Miscellaneous Provisions) Regulations 2008

Lord Davies of Oldham: My Lords, I beg to move the Motion on the Order Paper standing in the name of my noble friend Lord McKenzie of Luton.

Moved, That the draft regulations laid before the House on 29 April be approved. 18th report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 20 May.—(Lord Davies of Oldham.)

On Question, Motion agreed to.

Building Societies (Financial Assistance) Order 2008

Building Societies Act 1986 (Accounts, Audit and EEA State Amendments) Order 2008

Cash Ratio Deposits (Value Bands and Ratios) Order 2008

Lord Davies of Oldham: My Lords, I beg to move the three Motions standing in my name on the Order Paper.

Moved, That the draft orders laid before the House on 2, 3 and 21 April be approved. 17th report from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 20 May.—(Lord Davies of Oldham.)

On Question, Motions agreed to.

Land Registration (Network Access) Rules 2008

Compensation (Claims Management Services) (Amendment) Regulations 2008

The Parliamentary Under-Secretary of State, Ministry of Justice (Lord Hunt of Kings Heath): My Lords, I beg to move the two Motions standing in my name on the Order Paper.

Moved, That the draft rules and regulations laid before the House on 5 March and 22 April be approved. 13th and 17th reports from the Joint Committee on Statutory Instruments. Considered in Grand Committee on 20 May.—(Lord Hunt of Kings Heath.)

On Question, Motions agreed to.

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Economy: Enterprise, Taxation and Manufacturing

11.39 am

Lord MacLaurin of Knebworth rose to call attention to the role of enterprise in the United Kingdom economy, the effect of taxation on the competitiveness of small and large businesses, and the current situation and future direction of manufacturing; and to move for Papers.

The noble Lord said: My Lords, it is a great privilege to open this debate and to see so many of your Lordships here to take part.

The success of business and enterprise is fundamental to a free and prosperous society. Yet for too long we have heard too little about what industry and commerce contribute to the wealth of our country and too much about how much money is being spent. It seems to have become a badge of pride to spend while the need to earn it first is forgotten. More and more of the nation’s earnings, which are desperately needed for future investment, are being spent and wasted today—past earnings that are stored in pensions, present earnings that must be fought for every day in a harshly competitive world, and future earnings that are mortgaged increasingly by reckless government borrowings. This would worry me at the best of times, but now that the clouds of economic slow-down are gathering, even the Governor of the Bank of England says that the nice times are over. This makes today’s debate especially timely.

It would be easy to look back and be critical of the hubris that declared an end to boom and bust or that failed to prepare in the good times for the harsher days that inevitably come, but it is important that this nation should do what every good businessman must do—analyse and learn from past mistakes, look forward to ways in which we can first minimise the effects of the coming downturn, rebuild this country’s competitive edge in a rapidly changing world and strengthen our manufacturing base.

Our best companies still thrive on excellence, know-how and entrepreneurial drive, but they face difficult times. The credit crunch will obviously have an impact on business investment, but rising inflation poses other risks. If strikes in the public sector spark inflationary pay claims in the wider economy—fortunately there is little sign of this at present—even more jobs will be jeopardised. We are already seeing cutbacks in financial services, in retailing and in construction, and I have no doubt that other sectors such as distribution and transport will soon join them.

Ministers are right to say that some factors are beyond their control, but that makes it doubly important that we deal with the challenges that we can remedy. In my business career, I have been privileged to work for some of Britain’s finest and most innovative companies. My experience of large, medium and small start-up companies is that every business shares similar hopes. We all need a business environment that embraces stability, offers certainty, practises simplicity, rewards success and attracts the most talented. Far from there being simplicity, business at every level is being encased in complexity. Annual Finance Acts of around 600 pages

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are frankly shameful, and it is even worse when Ministers reverse financial rules that they have only just put into place. Constant changes to the tax system undermine certainty and are a disaster for long-term planning. We have to face an annual crop of new taxes, new revenue-raising regulations and new rules that affect the workplace. It is unpredictable, unsettling, and worst of all wholly unproductive for front-line managers trying to control costs, to improve services, to motivate staff, to win new orders and to develop new ideas. It is simply ludicrous when medium-sized companies complain that they are spending more on accountancy fees than they can afford to pay job-creating managers.

Companies are not experimental playgrounds for Ministers and civil servants. Where changes are wanted, they must be properly considered and consulted on. The bodged form of capital gains tax was another classic example of inadequate consultation triggering unforeseen consequences. While there was widespread acknowledgment for the need for reform and probably support for moving to a simple flat rate, without proper consultation the ship struck rocks that could so easily have been avoided. It was bad for business, bad for Britain and bad for Ministers, whose reputation suffered, probably irreversibly.

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