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Employer participation has been built into many parts of the education system. At school, work experience is part of the curriculum. Diplomas and apprenticeships require input from employers although, as we heard from my noble friend Lady Sharp, a diploma is not quite enough input from employers. Accreditation for vocational qualifications is possible only with on-the-job evidence. Yet more than ever businesses, especially SMEs, need to concentrate on developing trade, making a living and—we hope—a profit. The time and resources for training can get squeezed out. Government actions are not always helpful. Noble Lords have already referred this evening to the announcement of reducing VAT from 17.5 per cent to 15 per cent. It made good headlines, but at what short-term cost to business? I heard last week from a major DIY chain of the daunting task of changing labels and prices on every VAT-able widget on every VAT-able shelf. Of course, the tills all had to be changed too. An additional concern was that customers had been led to expect lower prices and would be the first to complain if any apparent savings were not immediately passed on. Yet the new prices, which were 46-47ths of the old prices, were hardly a startling budget.

What about SMEs in the run-up to Christmas, with catalogues printed and stores hoping to be at their busiest? My noble friends Lord Smith and Lord Cotter have already referred to the excellent reports from the Association of Chartered Certified Accountants, which records that barely a quarter of SMEs have any managers with financial qualifications. How much more time-consuming is it for them to implement short-notice changes to pricing? Will the Minister say what consultation took place with businesses large and small before making the VAT announcement?

The country has a regrettably poor record of financial literacy, a theme propitiously chosen by the current Lord Mayor of London during his year of office. He will know as well as anyone that the City of London's position as a world finance centre can be sustained only by replenishing our population of those financially literate. He holds an ancient office; by contrast, the Mayor of London holds a modern office, and today we read that he, too, is bringing his influence to bear on promoting the City and financial services. That should be a powerful duo.

We have had some positive feedback from the manufacturers' organisation, the EEF, which reported that 60 per cent of large companies intend to expand apprenticeships in the future. Many already contribute to training in smaller enterprises in their supply chain, and that is to be encouraged but, with the best of intentions, training budgets are likely to be tightened.

Another government plan affecting apprenticeships is the increase in weekly wages from £80 to £95 a week from August 2009. This will be welcomed, but may well cause employers to think even more carefully before taking on apprentices. More funding has been promised, and we should like to see a greater proportion of it available for adults, who make up a critical part of the workforce seeking new skills.

Whatever the response of employers, we can be sure that further education colleges will have a key part to play in training for work. Their commitment and care

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have been demonstrated recently towards students whose grants have not come through. The breakdown in the educational maintenance allowance system resulted in some colleges making funding available from their own resources to encourage those most disadvantaged not to drop out.

The FE sector is being tasked by Ministers and the Learning and Skills Council to come up with innovative and imaginative schemes to respond to the heavy job losses anticipated. Its involvement will need to be through services of career information, advice and guidance, as well as in its provision to reskill and retrain. Colleges have a fine record in managing their curriculum offer to meet employment growth. They have been responsive to the demands for higher skills in sectors such as construction, engineering, health and social care. They deserve the public recognition and resource to match the demands made of them. The Association of Colleges has recently declared:

“Our main concern is that funding of colleges should be sufficiently flexible to allow them to respond to local economic circumstances”.

It also points out:

“Programmes must be sufficiently flexible to allow apprentices to participate when not directly employed. In sectors like construction is has always been necessary to help people acquire skills before they start on site. In other sectors affected by the recession it is necessary to support apprentices to complete their course”.

Will the Minister offer reassurances that government measures will include appropriate funding for off-the-job training, a lighter touch in regulation and documents expressed in plain English? The simpler it is for industry and education, employers and trainers to work together, the better they will be able to respond to these difficult times and create a skilled workforce for the future.

8.33 pm

Lord Hunt of Chesterton: My Lords, it is with some trepidation that I join this economics debate, but since Chancellors of the Exchequer now pronounce on climate science, I think it is okay for anyone to join in. I join other noble Lords in welcoming the gracious Speech. I particularly endorse the Government’s commitment to economic development, improving the environment and ensuring security in the short and long terms by working to combat climate change. It is because of the link between those policies that I am speaking in this debate. I declare an interest as chairman of Cambridge Environmental Research Consultants, a small company in Cambridge, and as vice-president of Environmental Protection UK.

I am an itinerant academic. This has enabled me to see that the UK is a good place to do business, particularly by comparison with other European countries. Last week, a German professor from Berlin commented that the Germans are now copying the British approach and enabling people to form small companies without the penalising initial down payment that used to be required, although that is still not quite the case in France.

The Lisbon declaration was a really important development for Europe, but this needs to be made a reality, particularly by ensuring that the other EU countries have the kind of flexible arrangements that

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we have in the UK. This is in our interests, because, as I know from my own experience, working with companion companies in Europe means that we all need to work at the same level.

The Labour Government have assisted small high-tech companies considerably by not taxing company profits where they are reinvested in research and development, which used to happen. They have also helped women in small companies with maternity leave, and women’s careers have been greatly helped.

I welcome the speech of the noble Lord, Lord Mandelson, last week on how Governments can help business with smarter policies. I emphasise the crucial need for more open and decisive policies on all kinds of data and information. This is the new age in which new business is being formed, and we certainly need new approaches.

There is no point in expanding research and development unless its products are available and can support UK business. I welcome the way in which the Department for Business, Enterprise and Regulatory Reform under its present leadership—and, if I may say so, under its former leadership, now sitting on the Cross Benches—is now taking this issue more seriously. Competitiveness is an essential element in running UK business in this globalised world. If you are not free and open with information, other countries will clearly begin to dominate.

In some respects, the UK, with its centralised health, social and security data, not only enables government to operate more effectively—just compare our low health costs with those in the United States—but enables many IT companies to provide highly beneficial services based on these data, which could greatly expand in the future. I am disappointed by the unconstructive tone taken by some parties and the judiciary about data storage. We need to know more about our society, not less, although we need to use this knowledge in the most beneficial way. Clearly there are teething problems but, as with the Tory reforms of governmental processes, bold action by the UK will doubtless give business to the UK and enable other countries to follow us.

However, in some important fields of science, technology and the environment, the UK and other European countries are lagging significantly behind the United States in providing scientific and other data readily and at an economic price. The insurance industry in London has frequently commented, as have many other small companies, that it uses global environmental data directly from the United States, although it would like to obtain them from UK government agencies, which have to charge much more.

European Governments and their agencies are now recognising that more data need to be supplied more readily and cheaply if environmental businesses are to provide the services that the public need to safeguard and improve environmental quality and security, such as flood warnings and protection, as well as to contribute to national and international environmental goals. Some statistics indicate that the environmental industry is now as large as the pharmaceutical and aerospace industries, and needs to be taken very seriously. The Government should be able to take a more strategic

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role in policies about the data for this industry through their ownership of agencies such as Ordnance Survey, the Met Office and many others, and through their use of purchasing powers when they buy services. The report of the Department for Business, Enterprise and Regulatory Reform in March showed how a business-oriented policy might well be introduced. However, the Government are still in a muddle about whether their agencies are supporting the private sector or competing with them, as the recent speculation about selling off certain agencies indicates.

It is clear that the United States policy, under which government agencies provide data very freely and it is the government agencies’ job to support the private sector, is effective. Thirty-nine per cent of the global environmental business is in the United States, 8 per cent is the UK’s and 17 per cent is Japan’s. The United States Environmental Protection Agency helps US business internationally. Our Environment Agency, as I learnt from previous managers, is not encouraged to do that, and UK agencies—I used to run the Met Office—are not mandated to spend their time in any way helping UK business. It is not part of their job description.

Furthermore, as foreigners have commented, the websites of UK agencies and government departments are poor advertisements for the services provided to UK government by UK businesses. They would naturally expect to see them on our websites. This could easily be fixed with immediate and substantial benefits at minimal cost. There are also opportunities through environmental action, data process, communication and feedback for the Government—working with the environmental business to stimulate the economy, as the Prime Minister has emphasised—to move in new directions to meet the environmental objectives, such as resilience against extreme adaptation, climate change and mitigation.

In the downturn people will spend money, not for luxuries, but as investment. I believe if people had more information—about how they could spend their money on their house and so on—they would be in a position to invest and this would help our economy. In the United States, as a delegation which I lead found, this approach is very strong. A lot of information is provided through museums and big DIY centres, to encourage people as to how they should invest in their house and property. There, there is a particular problem with hurricanes, but also climate change. I have spoken to my noble friend Lord Hunt—one of many “Lord Hunt”s—about introducing this decision for the UK. There are ways in which the smart approach could well be adopted and I commend the gracious Speech to this House.

8.41 pm

Lord Bates: My Lords, in a debate on economics and business, there is necessarily a huge number of statistics bandied around. Probably the most staggering and disturbing, for all Members of the House, would be the statistic that last year there were 27,000 people whose homes were repossessed. This year that figure will probably rise to 45,000. Next year that is likely to rise to 75,000 repossessions. Another statistic is that

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more than 1 million homes are currently in negative equity. Another statistic is that when those people’s homes are repossessed, they join a list of some 4 million who are currently on the social housing waiting list.

These are staggering and depressing statistics because, in the midst of the economics, a huge cost in human suffering comes as a result. We know that debt and issues such as home repossessions are prime causes of family breakdown in our society. At this time of year, I want to restrict my remarks to focusing in on the measures which have been proposed to tackle that because they leave me with a certain amount of confusion.

On the first point of confusion, I want to speak about the home owner mortgage rescue scheme and the support scheme, which was not actually in the gracious Speech. I was present and I did not hear it. However, as it was mentioned in the other place by the Prime Minister, I take it that it is legitimate to raise this and that I am not out of order. It comes on the back of a number of mortgage rescue initiatives. The mortgage rescue initiative announced on 2 September, leaked to the press a few days earlier, proposed a whole series of initiatives.

Before I turn to those, I want to say a few words about Northern Rock. I say this as someone from the north-east. Northern Rock has been mentioned for the many good things that it has been doing in the region, but I am afraid that repossessions are certainly not one of them. Its performance has been appalling. Up until the end of September, 4,201 homes had been repossessed by Northern Rock, which was 0.56 per cent of the housing stock on its book. That represents four times the industry average of repossessions. Forgive me if this sticks in the craw a little bit. I get a little angry when I see an institution, whose doors would not actually be open were it not for the fact that the taxpayer bailed it out to the tune of £35 billion, behaving in such an uncharitable way towards people who have fallen on hard times and are in debt to much lower amounts. I would expect more.

I am sure we will hear that the problem is solved. After pressure from, I believe, the noble Lord, Lord Mandelson, Northern Rock has come up with a scheme. It says that it will not repossess any home with arrears of less than six months. We read the headlines, which get us very excited, and we think, “There we go: problem solved”. However, when you look at the detail, only 1 per cent of cases where Northern Rock has repossessed so far this year have involved such arrears. Therefore, 99 per cent of the homes that have been repossessed—four times the national average—would continue to be repossessed under the proposed scheme. That is very disappointing and concerning. I certainly would expect better of Northern Rock as it moves forward.

We were told that the home owner mortgage scheme would bring under its ambit 90 per cent of the 11.7 million mortgage holders in the United Kingdom and that their homes would be protected from being repossessed. There was a wonderful, glorious headline in the Sun, with which I know that the noble Lord, Lord Mandelson, will be thrilled. It was about the thousands of home owners who were “Saved by the loan arranger”. But

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after reading the headline, you look for the detail. On Radio Five Live, the Housing Minister, Margaret Beckett, was asked how many people this scheme might help. The answer was that it could help up to 9,000 people over two years. We have been talking about 75,000 people next year having their homes repossessed and potentially the same number the year after that. The scheme would help fewer than one in 10 people: more likely, one in 15 people could potentially be helped.

But who is signed up to this scheme? Eight banks were declared as signed up to it. Some of them said that they received the phone call to tell them about the scheme only the night before the speech. The only indication that they are committed to doing anything is the extent to which they have said that, in principle, they would be willing to work with Her Majesty’s Government on a scheme of this nature. We do not know who would be eligible for the scheme or what help would be available.

My key point is that, crucially, the scheme has a basic flaw; namely, it proposes to help people who are in debt by guaranteeing a system whereby they can accumulate more debt. How can a problem of debt be solved by more debt? I do not understand that. The fact that the Government are underwriting it does not make any difference. I would argue that two things are required. First, mortgage holders need to make basic interest repayments. It is essential that they make some repayment on their mortgage. They are party to it and they have to take on that responsibility. We are told that the age of irresponsibility is over. The age of responsibility is to begin. Some repayments have to be made.

Secondly, people should seek debt counselling. There are some excellent organisations. Shelter, citizens advice bureaux and Care for the Family do amazing work to help people through counselling. If these things are done, it should not be possible for a possession order to be granted. No possession order should be granted if someone is making their payments. That would be a very simple solution. The fact that the eight banks quoted do not include the sub-prime lenders—the secondary lenders, which have been at the heart of much of this problem—is another reason why we need a more simple, more honest and more direct approach to save this wave of unhappiness and tragedy which will spread across this country if it is unchecked.

8.50 pm

Lord Davies of Coity: My Lords, addressing the question of benefits and economic affairs is always very important, but now that we are faced with a global economic downturn, it has become crucial for the stability of the British economy. Everyone has been affected by the credit crunch in one way or another, as acknowledged by David Cameron when he wrote to Conservative Party donors recently. But some are more affected than others: those who lose their jobs and cannot pay their mortgages are among the most adversely affected. It is therefore the responsibility of the Government to do all in their power to safeguard the most vulnerable in our society, yet there are those who still argue that everything would be all right if the Government did nothing and allowed the markets to determine the outcome. I emphatically reject that view,

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but I observe that those who express it usually consider themselves financially fireproof. I take the view that a Government elected by the people have a clear and unequivocal responsibility to act. They must do all they can to protect the nation’s people from the worst effects of the global economic downturn, people who are in no way responsible for the critical economic situation.

It is all very well for the rich not to want the Government to intervene because they lose only money, but I am far more concerned about the hundreds of thousands who will lose their jobs, those who are unable to pay their mortgages and will lose their homes, and those who will experience considerable hardship. These are the people whose plight we should all be addressing. We have been here before, not perhaps with the international economic circumstances being quite so severe, but we have been here before. What did it mean? It meant mass unemployment and widespread poverty. This Government, my Government, are doing all in their power to protect our people and stave off the evils of mass unemployment and widespread poverty, and they deserve the fullest of support. The work being carried out by this Government to tackle the effects of our difficult economic circumstances is as much moral as it is political and deserves support from all quarters. It is not necessary for me to catalogue the measures being taken by the Government to deal with the economic crisis; we all know them, and they have already been highlighted in the debate.

Earlier I said that we have been here before. In the 1920s and 1930s, south Wales, like many other parts of Britain, experienced mass unemployment and widespread poverty. It was a time when wages were cut and pits were closed. It was a time when my grandfather, a former miner, could not find work for more than a decade, and only secured work in 1939 at the outbreak of the Second World War. It was a time when my mother, her sister and my mother-in-law, all teenagers, along with thousands of others, came to London to work in service for the gentry in order to send money home. The rich gentry whom these girls worked for were well cushioned from the deepening recession at the time, as no doubt they will be now.

Last week I received a Christmas card from my noble friend Lord Lofthouse of Pontefract. Apart from containing the biblical verse of Christ removing the moneylenders from the temple, my noble friend stated in his own words, “People are more important than wealth”. Those words not only rang true but reminded me that the concept is the foundation on which the Labour Party was formed in 1906. The Labour Party, the democratic socialist party that is in government now, having won three consecutive general elections in the past 11 and a half years, is a Government who have enabled considerable wealth to be provided over the past 10 years for the benefit of all our people. The Labour Government, led by Gordon Brown, are recognised by the people of this nation as a Government doing their level best to safeguard their interests in this time of difficulty.

Of course, we do not know the extent to which the measures taken will succeed. We will have to wait a while for that. But we do know that the Government

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are acting in a very positive way, whereas it clearly appears that the Opposition want to do nothing or do not have a clue what to do. At the very least, today we are not experiencing 17 per cent interest rates as was the case with their last Administration.

We are all aware of our Prime Minister roaming the world to persuade leaders of other countries to act together to tackle the unique global economic crisis, and I believe that he is succeeding. I have known Gordon Brown for more than 20 years. He is serious, sincere and passionate; he is far from shallow and came into politics through conviction, not ambition. He does not have the characteristics of a spin doctor, he is not a one-liner politician and he is not a superficial political point-scoring person. If anyone can get us out of this worldwide economic crisis it will not be the banks, it will not be the building societies and it will not be the insurance companies—it will be Gordon Brown and the Labour Government.

Her Majesty’s gracious Speech last week contained four direct references to people. If you add families, victims, men, women, patients, staff, children and parents, the references amount to 14—but there were no references to wealth, clearly reflecting that the Government are acting in accordance with the concept that people are more important than wealth.

Finally, last week I, like many others, saw the Conservative leader on television commenting on the Baby P case. He said that he did not believe that Sharon Shoesmith, suspended for failing in her duty to protect Baby P, should receive her £100,000 a year salary. I agree with him—but I also believe that the chief executives who, through negligence, caused businesses to collapse should not have walked away with exorbitant golden handshakes. They were the cause of large numbers of workers losing their jobs and, in some cases, their pensions. Unless I have missed something, I do not recall David Cameron and the like expressing the same view then as they do now. Is not the height of hypocrisy being displayed by the Opposition, particularly in the time of our great difficulty?

8.57 pm

Lord Jones of Birmingham: My Lords, I thank the noble Lord, Lord Hunt of Chesterton, for his kind words. I also join him in saying to the new Secretary of State: it was a good start. However, perhaps I may lay two issues at his door.

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