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Monday, 20 October 2008.
The House met at half-past two: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.
Economy: Balance of Payments
Lord Sheldon asked Her Majesty’s Government:
Lord Davies of Oldham: My Lords, the Government will publish updated forecasts for the UK economy, including for the current account of the balance of payments, in the autumn Pre-Budget Report as normal.
Lord Sheldon: My Lords, I thank my noble friend for that reply. The latest figures show that so far in this financial year the Government’s borrowing is £37 billion. Will my noble friend confirm that, in quoting John Maynard Keynes, the Chancellor of the Exchequer has said that Governments should spend their way out of a recession and that he is set to pour some billions of pounds into major public works to fend off the economic downturn? Some public works will take some time to organise. Will my noble friend indicate the public works that are being considered, how much will be spent and when they will be put in place?
Lord Davies of Oldham: My Lords, that question appears to be a little above my pay grade. I am briefed on balance of payments issues, which is the subject of my noble friend’s original Question. As regards investment in the economy and necessary public help in circumstances where we all recognise there is a difficult year ahead for the British economy, those announcements will be made in the very near future. My noble friend is absolutely right; they are not the kind of investments that are likely to produce immediate and early results. However, my right honourable friend the Chancellor has indicated that this investment is necessary in circumstances where otherwise demand in the economy could drop significantly.
Lord Forsyth of Drumlean: My Lords, given that we are experiencing the worst financial crisis in my lifetime, and I think even in most of your Lordships’ lifetimes, is it not extraordinary that we have not had an opportunity to debate what is going on? Our banks are being nationalised and the debt is growing out of control. Last Tuesday the noble Lord, Lord Peston, asked when we would have an opportunity to debate this. So far, nothing has happened. Surely if Parliament means anything at all, it should be discussing the issues which are on everyone’s mind throughout the country.
Lord Davies of Oldham: My Lords, as the noble Lord will recognise, that point was made at least as forcefully last week from my own Benches. I scurried off to the usual channels to see what the prospects for such a debate were against a background where, as the
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Lord Newby: My Lords, the Government are talking about reprioritising expenditure in terms of capital projects. Could they at the same time give greater priority to skills training, from apprenticeships to high-level skills, so that British firms can compete more effectively in the global export markets? Do they accept that that could have a quicker effect than directing expenditure at capital projects, which might take a long time to produce results?
Lord Davies of Oldham: My Lords, that is a constructive proposal, although there are certain aspects of the skills agenda that take rather a long time to come to fruition. We are encouraged that international judgments on the British labour market indicate how competitive we are and how flexible our labour market is with regard to its ability to adjust to demands made on it. I agree with the noble Lord that one of the issues that needs constant attention is the uprating of the skills and abilities of our people to meet the opportunities that are presented to them.
Lord Peston: My Lords, having spent my life flogging dead horses, I will not say again that we ought to have a debate; except that we ought to. Will my noble friend allow me, especially as he has a whole file full of answers, to return to the balance of payments, which is the subject of the Question? Is it not interesting that the balance of payments has been in deficit for a considerable period, and yet that has not led to a financial crisis? That suggests two things to me. It partly reflects what I gather is known in the technical literature as the Lawson doctrine, named after the previous Chancellor, that if the deficit is the outcome of rational decisions in competitive markets by the private sector, ipso facto it cannot possibly be a problem. It is a perfectly rational event to occur. Apart from that, is there not an indication that our ability to borrow to cover that deficit is strong evidence of the strength of the economy and the faith that the rest of the world has in us?
Lord Davies of Oldham: My Lords, I am grateful to my noble friend for drawing attention to the fact that, in the teeth of the difficulties that obviously obtain with regard to the economy, we are better placed than almost any other advanced economy to cope with the vicissitudes that we undoubtedly will face over the next year. As for my noble friend suggesting that his plea last week represented the flogging of a dead horse; far from it. The horse is alive and frisky. The question is whether it gets to the winning post.
Baroness Noakes: My Lords, the current account has been in deficit for a very long time, as the noble Lord, Lord Peston, pointed out. More recently, that has been matched by equally negative statistics. For
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Lord Davies of Oldham: My Lords, there is the reduction in interest rates and, if the noble Baroness wants to shift from the here and now to the longer term, the prediction that by the end of next year the inflation rate will have dropped to the target set by the Bank of England and the Government. Those are two dimensions of the economy for which the noble Baroness might show some approval.
Lord Howarth of Newport: My Lords, has my noble friend considered whether a further substantial cut in interest rates might be a timely boost to domestic demand, while the fiscal boost takes a considerable time to provide its benefits? At the same time, it might cause the pound to weaken against the euro, the currency of our major trading partners, and therefore be helpful in stimulating demand for our exports, and, of course, assist the balance of payments.
Lord Davies of Oldham: My Lords, part of that process has been in existence over recent months, as my noble friend will recognise, but, as he knows only too well, the setting of interest rates is the responsibility of the Monetary Policy Committee of the Bank of England, which takes a rounded view of the needs of the economy and inflation projections. Experts expect inflation rates in the British economy to decline with considerable rapidity in the coming year.
Baroness Oppenheim-Barnes: My Lords—
The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, we are in the ninth minute, I am afraid.
Iran: Uranium Enrichment
2.45 pm
Lord Janner of Braunstone asked Her Majesty’s Government:
What is their assessment of recent diplomatic efforts regarding Iran’s uranium enrichment programme.
The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, the UK and our partners in the E3+3 are determined to achieve a diplomatic solution to the challenge of Iran’s nuclear programme. The unanimous adoption of UN Security Council Resolution 1835 last month showed that international resolve remains firm. It calls for Iran to comply fully and without delay with the requirements of previous resolutions and suspend its nuclear programme. The resolution also expresses clear support for the IAEA in its efforts to establish the true nature of Iran’s programme.
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Lord Janner of Braunstone: My Lords, I thank my noble friend for his response. Does he agree that we should have deep alarm at Iran’s ongoing enrichment of uranium, against the will of the international community, especially as there have been further increases in that enrichment capacity and a continuing failure by Iran to provide acceptable reasons for that activity? Does he agree that current sanctions are clearly not working, because Iran has been able to trade with other countries in the region? Does he recognise that sanctions are not having the required effect and must be extended to enforce Iran’s co-operation with the International Atomic Energy Agency?
Lord Malloch-Brown: My Lords, my noble friend is quite correct to express alarm; I share it with him. The IAEA’s most recent report in September reported a continuing pattern of non-co-operation with, and non-disclosure of the enrichment programme to, that agency. That left us to speculate on exactly how far advanced that programme is, but the core point is correct—we do not have the co-operation we would expect. However, sanctions are taking their toll on Iran. They are isolating the country, which ran last week to the Security Council and failed dismally; they have restricted Iran’s ability to source nuclear parts; and financial restrictions are having a very severe effect on its economy.
Lord Mawhinney: My Lords, I am sure that the whole House is grateful to the Minister for listing the activities in his Answer. Is it the Government’s view that progress is being made through all of those activities, or is the deadlock just as it was many months ago?
Lord Malloch-Brown: My Lords, the noble Lord is right. We have not forced compliance with the IAEA programme or the end to enrichment. However, discussions are continuing and we hope that Iran will engage. It is suffering from greater and greater isolation and, through the E3+3 dual-track approach, we have made it clear that we will take further steps, if necessary.
Lord Hannay of Chiswick: My Lords—
Lord Wedderburn of Charlton: My Lords—
Baroness Williams of Crosby: My Lords—
The Minister of State, Department of Energy and Climate Change & Department for Environment, Food and Rural Affairs (Lord Hunt of Kings Heath): My Lords, there is time for everyone. Shall we hear from this side and then the noble Baroness?
Lord Wedderburn of Charlton: My Lords, could my noble friend say a little more about the extreme success that financial sanctions could have if they were pressed upon this extraordinary Iranian regime? Will he give a little more detail on what further financial sanctions could be imposed?
Lord Malloch-Brown: My Lords, existing financial sanctions have limited Iran’s abilities to move funds abroad and have made its proliferation-sensitive activities a lot more difficult. They have also contributed to a political debate within Iran about the appropriateness
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Baroness Williams of Crosby: My Lords, does the Minister agree that, up to now, Iran has not been in breach of the nuclear proliferation treaty? Does he also agree that a very substantial regime of inspection has been mounted by the IAEA—probably the most intense of any country in the world? In the light of the remarkable approach, last Tuesday, by Mr Larijani, the Speaker of the Iranian Majlis, and the former chief nuclear negotiator for Iran, would Her Majesty’s Government now consider the proposals he put forward for high-level, diplomatic discussions, including with the United States, at least one of whose presidential candidates has indicated that that would be an important way forward without precondition?
Lord Malloch-Brown: My Lords, as the noble Baroness knows, there was a meeting in Geneva with the Iranian nuclear negotiator which included a very senior US representative. That demonstrates that we—the US included—have sought to do everything we can to find a diplomatic way forward. The latest Iranian offer is made with an eye to the American elections and, in a sense, it is for America to indicate whether it is willing to comply with that. Our difficulty is that there is a continuous offer of talks from Iran but very little recent evidence of compliance with the IAEA, which, despite the regime to which the noble Baroness refers, feels that at this stage it is not receiving the information it requires to verify the nature of Iran’s programme.
Lord Howell of Guildford: My Lords, interestingly, the Minister mentioned the concept of new thinking inside Iran. He is right to say that Iran is under grave economic pressures at the moment, partly from the financial sanctions, partly from the collapse in the oil price and partly due to a number of other developments. As a result and given, as my noble friend Lord Mawhinney says, that nothing much seems to be changing as a result of all the talk of sanctions—the mullahs are very obdurate—are we now reaching a time when the combination of the financial pressures from outside, which certainly should be maintained, the more co-operative move towards working with, or co-opting, the Iranian nuclear programme and whether it can be developed in a civil, constructive and a transparent way, as the noble Baroness, Lady Williams indicated, may be producing the new thinking needed to move the situation forward?
Lord Malloch-Brown: My Lords, the noble Lord knows that there is a very generous offer on the table to allow Iran to continue with the development of a peaceful nuclear programme. We shall need to continue to pay attention to that incentive and not just to the sanctions—not just the stick but the carrot as well.
Lord Wright of Richmond: My Lords, can the Minister report any progress in our attempts to persuade Israel to sign the non-proliferation treaty?
Lord Malloch-Brown: My Lords, in the time available to me, no.
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NHS: Specialist Drug Treatments
2.53 pm
Baroness Gardner of Parkes asked Her Majesty’s Government:
Whether they will introduce co-payments for specialist NHS drug treatments; and under what circumstances co-payment is now permitted in the National Health Service.
Baroness Thornton: My Lords, it is difficult to give a full answer to the Question now because Professor Richards, the National Cancer Director, is reviewing the issue. I can, however, tell the noble Baroness that he will report to the Secretary of State at the end of the month, and his findings will be published shortly thereafter.
Baroness Gardner of Parkes: My Lords, I thank the Minister for her reply, which was of course unsatisfactory, because everyone wants a solution. Does she agree that, although we would all like to see equity in the health service, such equity cannot and does not exist? We read today that new heart treatments will be available for those who live near a big hospital, and we know that one’s recovery from a stroke depends on whether there is a stroke unit in the local hospital. There already is great inequity. Enabling people to buy life-saving drugs would not add to the degree of inequity that already exists.
Baroness Thornton: My Lords, the noble Baroness points to the fact that there is variation in how individual trusts are applying current guidance. Some trusts are allowing patients to buy additional private drugs and retain their entitlement to NHS care while others are not. That is why the Secretary of State asked Professor Mike Richards to lead a review into that difficult issue. Since June, he has sought views from a wide range of people and organisations, including patients, clinicians, academics and NHS organisations. As I said, the results of that deliberation will be before us very soon.
Baroness Golding: My Lords, did not the British Medical Association suggest setting up a royal commission on this very subject? What is the Government's view of that idea?
Baroness Thornton: My Lords, the British Medical Association has indeed written to the Secretary of State asking for a royal commission on this issue. However, the Secretary of State has deliberately set a tight deadline for the review, while allowing time to consider what are difficult and complex issues. I am sure that the House will appreciate that we want to minimise the period of uncertainty for patients. That is why the review is not a royal commission and why we are asking for it to be completed within three months.
Lord Naseby: My Lords, is it not extraordinary that a year ago the Minister told the House that co-payments did not form part of the basic principles of the NHS? Now we discover that a number of NHS trusts have been carrying out co-payment, presumably without
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Baroness Thornton: My Lords, as he often does, the noble Lord asked many questions at the same time; I will try to answer them all. One of the recommendations of the review conducted by my noble friend Lord Darzi last year was that NICE should be asked to speed up the process; that is what is being considered and implemented at the moment. There is no suggestion that trusts are breaking the current national guidelines; the problem is the interpretation of that national guidance. That is why the review is taking place now. I think that I can assure the House that it will be reported to the Secretary of State before the end of this month and that, at the beginning of next month, a Statement will be made to the House.
Baroness Barker: My Lords, under the system of co-payment being worked on by the Department of Health, will the ability to pay mean that patients have quicker access to diagnosis and treatment?
Baroness Thornton: My Lords, the whole point of the review is that the principle of ability to pay is not taken into account in people's access to drugs. They should be able to get the appropriate drugs they need when they need them. The Government have increased the drugs budget enormously in the past 10 years or so. The question really is: how can we ensure that we do not have different things going on in different parts of the country? I am sorry that I keep repeating myself, but the review is taking place and it will be reported on very soon.
Lord Hamilton of Epsom: My Lords, the Minister has not answered the point made by my noble friend Lord Naseby: she told this House some time ago that the practice was to cease paying NHS costs when a patient went to get private drugs. This clearly has not been happening in certain areas. Why was that? Was she not aware of the fact that it was going on in certain parts of the country; or did she not know what was going on at all?
Baroness Thornton: My Lords, that may be slightly unfair of the noble Lord. The interpretation of the guidance is being implemented in different ways in different localities. I have said that three times; I shall say it again. That is why we are having the review: so that that interpretation can be made fairer across the country.
Lord Roberts of Llandudno: My Lords, will the devolved health administrations in Scotland, Wales and Northern Ireland be included in this review?
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