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There can be no doubt that the EU has an indispensable task to fulfil in global affairs. Moulding an answer to the credit crunch crisis cannot be achieved unless there is a concerted approach, led by the United States and the EU together. That is surely the message of Barack Obama. The same is true of climate change. The hopes engendered by the election of a democratic president and congress in the United States, alongside an EU determined to promote effective change, provide real hope for the peoples of one world, far too many of whom are vulnerable to the challenges posed by global warming.

Britain must be, and I believe is, alive to such challenges. With others of similar inclination, it is prepared to do what is necessary to overcome those challenges. It follows that Britain must demonstrate its good faith by what it does at home. In this respect, the Turner report is highly significant. It is the first time that any developed country has addressed this topic in so positive a way. The report establishes detailed and exacting targets for cutting down greenhouse gas emissions, and the Prime Minister and his Government are to be congratulated on accepting it. To move to a reduction of 80 per cent by 2050, as against the 1990 level, and to achieve the reductions contemplated by 2020, is immensely demanding. I hope and pray that this will be achieved, although it will not happen in my lifetime.

What the Government have to show is how they will tackle the problem of fuel poverty which, without government help, so many will suffer.

The report has been criticised for not taking a tougher line on aviation, but new, quieter airplanes will certainly come on-stream fairly soon, accompanied

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by more stringent and different landing and take-off techniques. The adoption of flight paths that will affect fewer people on the ground is also highly relevant. Already the aviation world is undertaking more ameliorative measures, and the number of people disturbed by flights has declined by almost three-quarters in the past 20 years.

I have sought to describe how imperative it is to embrace the EU much more positively than has been the case in the past—for there really is no other choice—and to recognise that, given the right leadership and policies, the world can confront the challenges of the future with optimism.

5.44 pm

Lord Selsdon: My Lords, it is extraordinarily difficult for me to speak today, because I feel that I am something of an interloper. Normally, the subjects of foreign affairs and defence would be in the first part of the Queen’s Speech and that was why this day was chosen. I am not quite sure what I am going to say, and if I cause offence it is not intentional. I had intended to speak on identity cards, and was going to point out that that 12 noble Lords here are “of”s, and that if we follow the identity card rule, only the first part of the name will be on the card. The noble Lord, Lord Wright of Richmond, would become “Lord Wright of”.

Identity cards are a complete waste of time, so I turn more to the question of what is missing. I had intended to speak on trade, so in the list of Ministers on 8 October and in the list today there is no mention of trade—which seems to be the lifeblood of the nation. I tried to ring the Department of Trade, but could not get through; so I rang someone who I knew there and asked if they could put me through. There was no one there who dealt with trade. Someone politely said, “No, we’re called BERR now. It rhymes with something beginning with F, almost”. We are not interested in trade.

I thought of an initiative; I was told that in life you had better be careful when you show initiative, you must be even more careful if you take initiative, but you must never initiate unless you can give someone else the credit. My noble friend Lady Park dropped me in it—she has a capability in life of dropping you in it and getting you out of it—by suddenly announcing that I was to speak at the big maritime dinner with 220 people with all the gold braid. I know that all my life I have been the Snopake speaker—you go to a dinner and you scratch the menu to see which chap you are replacing at the last minute. I could not find out who it was, but I gave certain undertakings to the audience that I would restore trade. I am going to take up those undertakings.

I was so pleased when we had the President of the Board of Trade here the other day; I hope that he comes often. I told him afterwards that I would get him the flag that he could put on the front starboard mudguard—I have a copy of the flag that he is entitled to have. I thought that I would introduce a Private Member’s Bill to reconstitute the Board of Trade—I wanted to go into the Navy all my life. I had a short

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period of time in it, and was told then that we would never be east of Suez and that I should not join a declining industry. I then hoped that I might become First Lord of the Admiralty.

I thought that I would introduce a Green Paper. I was going to call it a “blue paper” about the maritime industry, but the noble Lord, Lord Wakeham, a trustee of HMS “Warrior”, said, “No, it’s a Green Paper”. I take noble Lords back to the year 1621, when King James gave an instruction to the Privy Council to,

That is very appropriate today. It was later written that the economic confusion of the last three months of 1721 had perhaps no parallel in the history of England. I am sure that in January I will be able to write about the economy of the past three months. Later, in 1922, my grandfather was Parliamentary Secretary to the Board of Trade. Your Lordships will know that all great political leaders were either Parliamentary Secretary to the Board of Trade or President of the Board of Trade—that included the Liberals. At that time, after the war, it was announced that the Department of Commerce would be concerned with the development of trade,

This year, we will have a balance of payments deficit of £100 billion on manufactures. They say that you can make that up with what we used to call invisibles, which were later called financial services. That is going to pot, too. So we will have major balance of trade problems. Does it matter? My economist friends say, “No, as long as we have the revenue coming in, it does not matter”. I made a terrible mistake. I kept thinking of trade as being exports. I forgot that throughout history we have been an importing nation and that in order to protect our imports we rely upon the Royal Navy. Hence, most of my contribution will be related to the Navy.

What initiatives can we actually take? We import almost all of our manufactures. Our main trading partners are the United States and south-east Asia. As a noble Lord pointed out earlier, we have to be worldwide. In considering that I wondered what seven points I could make, rather like the noble Lord, Lord Jay. First, we should get together with the Commonwealth. That is perfectly easy. If one takes a map of the Commonwealth, you will find that the 53 nations called independent states have the bulk of the world’s raw materials. The Commonwealth has the longest coastline in the world. At 44,000 kilometres, it is 720 kilometres longer than the former Soviet Union territories. That is the first initiative.

We then declare a 200 or 300-mile limit from all our Commonwealth territories and claim the seabed and all the rights therein. We then claim a limit of 50 per cent between our islands and the mainland. You will now see that very quickly we have dominated the sea, because the sea is perhaps two-thirds of the world.

If we think further and ask how we are going to protect our trade, we really do need the strength of the Navy. As regards piracy and the seas as a whole, you

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then say that the United Kingdom has certain advantages. We have the best possible maritime surveillance with hydrographics and so on. I should explain that I am the secretary to the Parliamentary Space Committee, which means that I can tell you that we have the ability to survey everything to do with piracy and to control things. My next suggestion is for the Minister to give the Navy responsibility for space and everything above the oceans of the earth.

Trade means exports and imports, and it used to be investment. Winston Churchill formed an organisation called the Export Credit Guarantees Department to guarantee the financing of trade. That has almost disappeared into oblivion. Last year it financed only 1 per cent of British exports. One of our great advantages was to finance development in other countries, which had raw materials and natural assets, where there was the combination of finance and, you could call it, “take and pay”. If you look at the natural resources of all the Commonwealth countries and of Africa and other parts of the world, often the poorest countries have the greatest natural resources.

I got involved in building a railway in Gabon. We were worried that we might be overrun. The suggestion was that we would ask the Grenadier Guards if they would guard the railway line. Out of that comes the feeling that when we are developing, one of the most important things is the defence of the environment in which the development is undertaken.

Sudan was pronounced the bread-basket of the Middle East. I spent a long time out there and it could be the bread-basket of the Middle East. The climate is perfect for growing dohra, and anybody would buy the end product. I have quite a lot of concern in these areas. The opportunities are still there.

I turn again to the map of the world; I put our territories, as I call them—this was 1911, the time of the British Empire—and the French Empire together and found that actually they covered over 50 per cent of the coastlines of the world. You ask why this is important. Is the sea with its oceans important? Of course the oceans are important—they carry our trade and the interruption of our trade. We are currently the biggest importing nation of the industrialised world. We are more reliant on imports than anybody else is. However, we always were—and that is where I had made a mistake.

Therefore, you look at the sort of thing that could happen when a Russian submarine surfaces in the Antarctic. Forty-six people are claiming territory there. Before it was only those who played rugby, such as Papua New Guinea. Actually, all the rugby-playing countries had claims there.

One of the worries is whether there will be wars about natural resources. I am not sure. In the new year, I shall be publishing my Green Paper, called Shipping it Green. It will have the help of the various bodies. I will circulate it to your Lordships. Then I shall introduce a Bill suggesting that the Department of Trade should be reconstituted as the Board of Trade. That has a First Lord of the Admiralty, every Secretary of State and virtually everybody—the Archbishop of Canterbury —and all the ingredients we need. If we also bring in the Commonwealth, it would be worthier of our future.

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I propose that we should reconstitute the Board of Trade, and I should be grateful if the Minister would ask the noble Lord, Lord Mandelson, if he would give his approval.

Lord Gilbert: My Lords, I first apologise to your Lordships’ House, particularly to my noble friend Lady Taylor and even to the noble and learned Lord, Lord Howe, for not being present for their speeches. It is a sin upon me, and I trust I will never repeat it in your Lordships’ House.

Secondly, I found two encouraging things in today’s debate. One was a reference to the new President-elect of the United States. His national security team is of the highest quality, and we can all take great encouragement from that. The other encouraging thing I heard today fell from the lips of the noble Lord, Lord Wright, but I shall not tell you what it was now; I shall save that right until the end and tantalise the noble Lord a little.

I am afraid that I am on my feet for one purpose and one purpose only: to discuss a procurement situation in the Ministry of Defence relevant to its strategic airlift capability. As your Lordships will know, the Royal Air Force currently has, basically, two types of lift aircraft. We currently have four C17s, and hope to be getting six. We have the C130 in two configurations: the C130K and the C130J, the old Hercules. For reasons that have never been clear to me, the C130K came before the C130J, but that is how Lockheed decided its business.

We have a problem with both C130s. When the C130J first came into service, my boss then, my noble friend Lord Robertson, had great difficulties. He had to summon the head of Lockheed and give him a right dressing down before certain problems were sorted. They were sorted, and the C130J is now an extremely good piece of kit. The C130K is very old, and we are currently suffering seriously in Afghanistan because we have lost four of them there. Because of the additional burden placed upon them, the wear and tear on the surviving ones is now becoming very serious indeed. The Ministry of Defence has identified our shortage of airlift capability if Afghanistan—I am glad to see the Minister nodding in agreement—as one of the most serious problems facing the Royal Air Force in that area.

The solution until now, of course, has been that we do not have to wait long before we are granted the use of an aeroplane called the A400M. I have spoken briefly about the A400M in your Lordships’ House before. It is a pernicious waste of money. I will not weary your Lordships with a detailed description of quite how delayed it is. I know we have delays in the introductions of all sorts of new aeroplanes or equipment; that is quite understandable. However, we have just had an announcement from the EADS—the European Aeronautic Defence and Space Company—that it can give no date at all for when the A400M will be delivered—or even when it will first fly. This is down to the inability of the engine consortium—in which I am afraid Rolls-Royce takes a lead, but also involves Snecma and MTU—to deliver engines that can carry the relatively puny load required of them.

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There is now considerable tension between Airbus and the engine consortium as to where the blame lies. However, the fact is that although the engine consortium claims to have delivered four engines on time, those responsible for building the plane have made it absolutely clear that not one of these engines is up to operating requirements. Nobody knows when the first one will be. There is not only the problem of marrying these huge new engines, the biggest turboprops ever to have been built, to the wings of the A400M, but considerable problems with the FADEC system, controlling how the engines operate, are yet to be solved at an unspecified time.

Noble Lords who have attended sessions of the defence group upstairs may think that this is purely a personal obsession of mine, but I assure your Lordships that it is not. I am well aware of other British Ministers for defence procurement who have wanted to cancel the A400M. Of course, my noble friend cannot possibly say that at the moment because she is committed to it. However, I well recall that when I was at the MoD and I tried to get this wretched plane stopped—I left the MoD for the last time nine years ago in 1999—officials said to me, “Don’t worry, Minister, you won’t have to cancel it. You won’t have to bear the obloquy of cancelling it. The Germans are going to cancel it for you because the German defence budget is so tight that they can’t possibly continue with all the defence procurement programmes they have at the moment. Don’t worry, you won’t have to take any of the obloquy”. We were already very unpopular because we had found out, unsurprisingly, that our programme for a NATO frigate was a disaster. On land, the FADEC system was another disaster and we did not want to get ourselves labelled as the bad boys who were always cancelling everything.

I have a solution. I was delighted to see in the Financial Times of 16 November that a Monsieur Gallois, the head of the EADS, said that,

I found that an extremely encouraging piece of news because here is a solution: we go to Monsieur Gallois and say, “Don’t worry. We won’t impose any penalty payments on you for failure to deliver if you won’t impose any penalty payments on us for stopping the order”. It seems to me that the solution is self-evident and absolutely cost-free. I do not say that as a joke; I hope very much that I will get a serious ministerial reply to that point.

I should tell your Lordships why I am so enamoured of the C17, having had an opportunity to fly in one some time ago down in South Carolina. First, it will carry, at 77,000 kilograms, more than twice the projected load of the A400M. Secondly, it will carry it farther. Thirdly, it will carry it faster. Fourthly, it has a marvellous short-field capability. Fifthly, it is extremely manoeuvrable on the ground. Sixthly, it is very good at handling dirt runways. Seventhly, it has an ability to be converted into a medevac aircraft in a matter of minutes. It is an extraordinary sight to see the crew converting a transport aircraft, in part or in whole, to a medevac aircraft.

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This can be done with an aircrew of only three. I am delighted that we already have six C17s. I was also delighted to read that the Ministry of Defence is considering getting some more. In my view it has the flexibility to be used for tactical airlift requirements of the sort that we need in Afghanistan.

I promised your Lordships a final treat. When we have foreign affairs debates I always regret that the noble Lord, Lord Renwick of Clifton, is not present. But, then, today I was delighted to hear the noble Lord, Lord Wright of Richmond, describe the United States as our closest ally. I cannot tell your Lordships what pleasure that gave me. I do not know how many other of his former colleagues at the Foreign Office could deliver themselves of those sentiments, but I can see that some of them look as though they would be sucking on lemons if they had to do so. I would be delighted if the Minister could bring himself to say that, but I understand how difficult he might find it.

6.05 pm

Viscount Waverley: My Lords, I apologise to the House. Would the Minister kindly keep an eye on developments leading up to the May presidential election in Malawi? The election is expected to be contentious and possibly acrimonious.

6.05 pm

Lord Dykes: My Lords, apart from the extremely short intervention of the noble Viscount, Lord Waverley, in the gap, this has been a long and complicated debate, but it has been very rich in different contributions from many noble Lords. Congratulations to the right reverend Prelate the Bishop of Bath and Wells on a compelling maiden speech.

Listening to the noble Lord, Lord Howell of Guildford, on European matters reminded me vividly of the sombre expressions of lack of enthusiasm from the Conservative Front Bench on European matters. While that was sad, in contrast we on these Benches became agreeably engaged by the noble Lord’s enthusiasm for creating the rest of the new world order, perhaps not so much in the image of the domination of the United States. That is an important theme for the future when we consider all these problems.

The economic and financial crisis in the whole of the western world, but also in Asia and elsewhere, has helped us to restore the sensible equilibrium between Europe and other parts of the world eastwards and the United States. In that, we have been getting away from the awful hegemony of the United States of recent years and all the mistakes that were made in United States policy in the two terms of President Bush’s Administration. However, not everything is perfect. Our enthusiasm was very great when Barack Obama became the President-elect, to be inaugurated in January. The voting scenarios in the United States in some of the rural areas, particularly in the south, looked like the first South African elections in the way that people were joining long queues to vote, often for the first time. It was a very inspiring moment.

At the same time, we were reminded that not everything is so simple and straightforward. When Barack Obama went to the Middle East when he was still a candidate,

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close to the date of the election, he spent two hours in Palestine with the Palestinian Authority and 22 hours of the 24-hour visit in Israel. I hope that that will not be so in the future, because symbolically that represents to the struggling Palestinians an imbalance in the old American tradition of recent years, but not in the days immediately after the Second World War, when there was a much more sensible attitude of balance between different groups and emerging countries in the Middle East. America is still at the very early stages of the new Administration-elect, and we shall see how it plays out from January. They will have many difficult and urgent things to do in domestic policy, but overseas policy will be paramount.

In the mean time, Europe played a leading role operationally in the financial and economic crisis. I hope that the Minister will agree later, if he has the chance, how united Europe was. I know that there was a drastic, emergency financial and economic crisis, but it was striking how, at long last, after all those complaints of many years of Europe not being united enough in centralised policy—centralised in all senses of the word—this time that happened, and Britain led the way. We were rather proud of the way in which the British Government handled that crisis on behalf of the nation.

I move on from there to a number of areas where I will be deliberately brief, and I will only refer to several areas, with apologies to colleagues who might wish that I would mention others, for which there will not be time. I do not want to delay the House at this late hour.

First, there were the references by the noble Lord, Lord Howell of Guildford, and others, to Lisbon and all that now has gone beyond that. I have just come back from an interesting visit to the European Parliament on Monday and Tuesday. I spent a lot of time with people representing all groups, all provenances and all the main committees and Members, and I saw very senior figures. The European Parliament is now developing with the interesting addition of the new European member states. There is a very strong feeling that Europe must move ahead on all these fronts, with the member states working together, and that the operational texture of the Lisbon treaty and its provisions are needed to ensure that that can happen smoothly. It is not a matter of excessive institutional obsession, as the noble Lord, Lord Howell of Guildford, suggested; it is the practical way to go forward with such a large number of member states. Therefore, I am sad that in the European context the only section in that Parliament which is against moving forward in that way, apart from UKIP and one or two small right-wing minority nationalist groups in other member states, is the British Conservative sub-section of the EPP. Apparently it is still poised to leave the EPP but we are not sure when and how that will happen. That is very sad for this country. It makes us wish that the Government would assert themselves more and more on the European front.

I move on to the financial background and the interest rate. While this debate has been going on, the Bank of England has cut the interest rate from 3 to 2 per cent. One full percentage point is a dramatic cut,

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and it means that the central bank rate is now down to as low as its 1951 level. At the same time, the ECB rate has gone down from 3.25 to 2.5 per cent, a reduction of 0.75 per cent. Therefore, for the second time, it is higher than the Bank of England rate, which traditionally has always been higher in order to prop up the pound and ensure that people buy UK Treasury and government bonds.

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