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Lord Judd: My Lords, while it is encouraging to hear the significance of 2010, as seen by the Government, and the hopes for it, does my noble friend agree that any international regime that we have so far on the control of nuclear weapons was originally based very clearly on the firm undertakings that the existing nuclear powers would work seriously and effectively

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for the reduction of their own nuclear capabilities? Can my noble friend assure the House that this will be a priority with the Russians, who have not been helpful of late in this respect, and with the new US Administration?

Lord Malloch-Brown: My Lords, on the latter point we believe that the United States in the statements of eminent former Secretaries of State and Secretaries of Defense has committed itself unofficially, through that defence and foreign policy establishment, to seek a final objective of a nuclear-free world. How that new thinking reflects itself in the position of the new Administration will have to be seen, but we have heard comment on the testimony yesterday of the incoming Secretary of State. Her rumoured appointment of the Under-Secretary in charge of that portfolio is deeply encouraging. There is much to be hopeful for. On the broader question of the P5, one reason that we are trying to get a P5 meeting this year on verification is to make sure that there are no laggards and that all the P5 are moving similarly towards the vision of very sharp reductions with the ultimate goal of a nuclear weapons-free world.



3.30 pm

Asked By Lord Avebury

The Minister of State, Foreign and Commonwealth Office (Lord Malloch-Brown): My Lords, we fully expect the efforts of the UN Secretary-General’s special representative to Somalia to advance the political process in that country as envisaged in the Djibouti agreement. The Security Council has reviewed the situation in the country on a regular basis. A current draft Security Council resolution is under discussion which envisages a UN peacekeeping deployment in future if there is sufficient progress on the political and security fronts.

Lord Avebury: My Lords, considering that the Djibouti process involves the expansion of the TFG Parliament to include the 275 members of the ARS, what arrangements will the Security Council make to bring the two factions of the Parliament together and to provide logistical and security arrangements that will permit them to hold their meeting peacefully in the absence of the Ethiopian troops who are departing at this moment? Secondly, will the UN engage with the authorities in Puntland to eradicate the pirate base on their territory and persuade them to give up their claims to part of Somaliland?

Lord Malloch-Brown: My Lords, on the noble Lord’s first point, the meeting of the Parliament, if that provision of the Djibouti agreement is confirmed and made operable, is a little way down the road. We first have to get the Djibouti agreement fully accepted by

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the different parties and everyone to come in. Obviously, security will be a problem in holding a large meeting of parliamentarians, but I give the noble Lord some reassurance. In these first days of Ethiopian withdrawal, the level of insecurity in Mogadishu appears to have fallen.

Lord Alton of Liverpool: My Lords, in the light of events at the presidential palace in Mogadishu and the humanitarian disaster, with the International Medical Corps estimating 1 million people now displaced in Somalia, can the Minister share with the House something about the humanitarian problems that face the people of Somalia and also his reflections on peacekeeping in Africa generally? After his recent experiences in Darfur, in the east of the Congo, and now in Somalia, does he not think that there needs to be a more fundamental debate about how we go about peacekeeping and conflict resolution in Africa?

Lord Malloch-Brown: My Lords, the noble Lord will forgive me, but I do not want to overburden the patience of the House, so to his latter question I had better just say yes. There is need for a fundamental discussion of humanitarianism in the current context, especially in the very weak states of Africa. On the humanitarian situation in Somalia itself, we are the second largest bilateral donor. We planned and are well into an annual programme for 2008-09 of £30 million. We are trying to find effective ways to deliver humanitarian assistance into what the noble Lord is quite correct to describe as a situation of great insecurity and difficulty.

Lord Anderson of Swansea: My Lords, within the failed state of Somalia is the former British protectorate of Somaliland, based on Hargeisa, which is a haven of relative peace and stability and is seeking to regain its independence. Does my noble friend agree that it should be supported by discreet British diplomacy and that we should seek to persuade members of the AU in that regard? To what extent is the aid he described going to Somaliland, where it can be used effectively, rather than to the anarchic state of Somalia?

Lord Malloch-Brown: My Lords, it has been a continuing feature of the situation, as my noble friend says, that Somaliland has been a relative haven of stability, although it too has been subject to tragic terrorist attack recently. The British Government’s position has always been to be sympathetic to Somaliland’s demand for independence but we feel, first and foremost, that this is a matter for the different components of Somalia to negotiate between themselves; and, secondly, that it is for the AU, which has shown a deep suspicion of any redrawing of African boundaries, to move on this and that any overt British support for this goal would actually set it back. We have to let Africa sort out this problem.

Lord Howell of Guildford: My Lords, as the Ethiopian troops began withdrawing only the day before yesterday—on Tuesday—does the Minister agree that it is possibly a little early to judge the security situation and the power vacuum that they leave? However, is it not clear that the al-Shabab Islamic extremists will have a much freer run for the moment, and that action

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internationally is required? Are we, the British, supporting the American draft resolution for a UN force to be in place by 1 June, if that is not too late?

Lord Malloch-Brown: My Lords, I take a very important correction from the noble Lord; it is too soon to say with any confidence that the security situation has improved. There has been a fundamental debate about the Ethiopian forces, whose intervention into the country we certainly understood the reasons for, and whether they have become more of a source of the conflict than a solution to it. Certainly, al-Shabab and the other hard-line Muslim elements in the country have essentially mobilised themselves against the Ethiopian presence, and if you read the language in which they have cast the Ethiopians as a proxy of the United States in Somalia, you can see that they have in some ways become part of the problem, not just part of the solution. We have to wait and see what impact the Ethiopian withdrawal will have on the security situation.

On the second point, we are working very closely with the Americans to secure a resolution. We are, however, taking care to make sure that there is no open-ended commitment of a UN peacekeeping force without political progress and sufficient conditions of security to ensure that that force could be effective.

Borders, Citizenship and Immigration Bill [HL]

First Reading

3.37 pm

A Bill to provide for customs functions to be exercisable by the Secretary of State, the Director of Border Revenue and officials designated by them; to make provision about the use and disclosure of customs information; to make provision for and in connection with the exercise of customs functions and functions relating to immigration, asylum or nationality; to make provision about citizenship and other nationality matters; to make further provision about immigration and asylum; and for connected purposes.

The Bill was introduced by Lord West of Spithead, read a first time and ordered to be printed.

Online Purchasing of Goods and Services (Age Verification) Bill [HL]

First Reading

3.38 pm

A Bill to make it a requirement for the providers of goods and services and the providers of specified facilities enabling the purchase of such goods and services to take reasonable steps, in certain circumstances, to establish the age of customers making such purchases remotely; and for connected purposes.

The Bill was introduced by Baroness Massey of Darwen, read a first time and ordered to be printed.

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Torture (Damages) Bill [HL]

First Reading

3.39 pm

A Bill to make provision for actions for damages for torture; and for connected purposes.

The Bill was introduced by Lord Archer of Sandwell, read a first time and ordered to be printed.

Local Democracy, Economic Development and Construction Bill [HL]

Order of Consideration Motion

3.39 pm

Moved By Baroness Andrews

Motion agreed.

Business Support


3.40 pm

The Secretary of State for Business, Enterprise and Regulatory Reform (Lord Mandelson): My Lords, my honourable friend the Economic and Business Minister answered an Urgent Question earlier in the other place. With the agreement of the usual channels it is being repeated in this place as a Statement, as is the practice. The Statement is as follows:

“I would like to provide the House with the details on the business support measures that the Chancellor announced in the Pre-Budget Report in November, which are going live today.

The crisis in the global economy is above all a credit crisis. Many companies are struggling to finance themselves because of the crisis in the banks. Their business models are not flawed, but the credit crunch has drastically reduced the amount of capital available and banks have tightened their lending criteria. Today’s package is designed to address the problem directly.

The support package that we are launching today builds on the commitments that we made in November’s Pre-Budget Report. It addresses the cash flow, credit and capital needs of businesses. We are offering specific solutions, not a blanket subsidy. We are delivering real help and targeting real needs. This will make a real difference to business, while preserving value for money for the taxpayer.

First, the working capital scheme is a direct response to the constraint on bank credit available for lending to ordinary-risk businesses with a turnover of up to £500 million a year. The Government will provide

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banks with guarantees covering 50 per cent of the risk on existing and new working capital portfolios worth up to £20 billion. The guarantee will secure £20 billion worth of working capital credit lines for companies, ensuring that they are safe from reduction or withdrawal.

In addition, the guarantee will free up capital which the banks must use for new lending as a condition of this scheme. This is lending that would otherwise not have been provided. No other proposed scheme of this kind would free up such additional capital or create new lending specifically for the use of UK companies. A charge will be made for the Government guarantee and, although the risk will be relatively low, the Government will make prudent financial provision of £225 million in case of loan defaults.

Secondly, through a new enterprise finance guarantee, we will support up to £1.3 billion of bank loans to companies with a turnover of up to £25 million. These will be smaller, viable, credit-worthy firms that are struggling to access the finance they need because of the additional risk created by the downturn. Under the scheme, businesses will be able to borrow a maximum of £1 million—of which the Government will guarantee 75 per cent—to cover working capital or investment. They will also be able to convert their overdrafts into loans to free up their existing facilities. Banks will have to certify that each loan is additional to what they would otherwise have offered. The scheme will operate on a first-come, first-served basis within the allocated portion of the sum for each participating bank.

Thirdly, we are establishing a new £75 million fund to help viable small businesses with high levels of existing debt to raise long-term finance. The capital for enterprise fund brings together £50 million of government funding with £25 million from major banks. Run by professional fund managers, the fund will provide equity investment to companies with viable business models that have exhausted traditional forms of finance. They will be able to use the capital to restructure their balance sheets and invest for growth.

Lastly, the Government want, if possible, to address concerns about the operation of credit insurance which have emerged since the Pre-Budget Report. This insures suppliers of goods to other companies against payment default by those companies for the goods provided. The Government are discussing with trade credit insurance providers a government scheme to help companies affected by reductions in their credit insurance. There will be a further announcement on this as we progress.

This overall package of measures offers not slogans but real targeted help from today to those firms that need it most, while ensuring that the banks are not insulated from normal commercial risk. It addresses the problem at the heart of the credit crunch; that is, credit for viable businesses. UK businesses are the backbone of our economy, so it is vital that the Government act now. We are absolutely determined to do everything we can to support viable companies through this global downturn and I commend this Statement to the House”.

My Lords, that concludes the Statement.

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3.45 pm

Lord Hunt of Wirral: My Lords, there are two issues that we ought to consider. First, in welcoming the Secretary of State to the Dispatch Box, I feel bound to raise the important matter of the responsibility of Ministers to account to Parliament first. Not for the first time, after two days of briefings to the press and a number of television and radio appearances starring the noble Lord, in which he lobbed bombs at the opposition parties without their having any right of reply, the Secretary of State was not proposing to make any Oral Statement in this House. It was only after representations in the usual channels by my noble friends and by the Liberal Democrats, and after the granting in another place of an urgent Question by Mr Speaker to my honourable friend Mr Alan Duncan, that the noble Lord, just over two hours ago, signified that he would agree to come here today.

The current edition of the Ministerial Code states clearly:

“When Parliament is in session ... the most important announcements of Government policy should be made in the first instance, in Parliament”.

Why, yet again, was this not done? Why is it that his colleagues observe the code and he does not? I remember that, in his maiden speech of 16 October, the noble Lord said:

“I will take very seriously the accountability that I have to Parliament through this House ... at this Dispatch Box, I know where my duty lies”.—[Official Report, 16/10/08; col. 861.]

I say to the noble Lord, for whom I have a great deal of respect, that it is time he made serious efforts to live up to those sentiments. He is the Secretary of State; he is a Minister in your Lordships’ House; he must do his constitutional duty in your Lordships’ House first, without having to have his arm twisted. I am grateful for the efforts made by my noble friends and the usual channels to ensure that this Statement was made.

I turn to the detail of the Statement. The announcement is, of course, very important. However, as my honourable friend Mr Alan Duncan pointed out in the other place earlier, it is also a pale imitation of a policy put forward by my party just a few weeks ago. At that time, the Chancellor of the Exchequer said in another place that a loan guarantee scheme would be “an empty promise” and,

Our national loans guarantee scheme would have guaranteed up to £50,000 million of new loans to British business. It was endorsed and supported by numerous commentators and trade bodies. All Ministers did at that stage was rubbish the policy, yet here they are today, proudly announcing a wan imitation of it.

The Prime Minister and his colleagues have been merrily taking over banks for the past few months, and now they seem to be taking over policies as well. At the heart of this recession is the collapse of credit. Companies of all sizes are struggling as banks seek to protect their balance sheets and credit insurers withdraw from the marketplace, breaking the payment chain. The CBI says that businesses face the daunting prospect of refinancing to the tune of £100,000 million during this year. What number does the Minister put on the

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collapse in the volume of credit over the past year? How does this compare in scale with the scheme that he has announced today?

In more detail, how will the Government select the firms eligible for the £1,000 million of longer-term loan guarantees? Secondly, will the guarantees be available to foreign firms or just to UK companies? Thirdly, on what basis will the Government decide whether to buy the shares of any company? Fourthly, will the Secretary of State confirm reports in today’s Guardian claiming that the £10 billion of guarantees for working capital will be self-financing? Fifthly, what, if anything, does this package offer to larger businesses?

Earlier today, the noble Baroness, Lady Vadera, was on television speaking of green shoots in the economy. I did not know that spectacles could ever be that rose-tinted. Ministers have spent months showboating and burnishing publicity stunts—toiling on spin, one might say—during which time they have done nothing of substance to save the 6,000 small firms which, according to the Federation of Small Businesses, have gone under while we have been waiting. While the Government dithered, thousands of jobs have been lost.

When this Labour Government came into office in 1997, they inherited what they said at the time was a golden economic legacy. Sadly, we have had more than a decade of fiscal, economic and regulatory irresponsibility. Sadly, today’s announcement is simply too little, too late. This country deserves better.

3.51 pm

Lord Razzall: My Lords, I welcome the Statement made by the Minister. To take the first point of the noble Lord, Lord Hunt of Wirral, the cycle seems to be that we see something on television or read it in the newspapers and then the two Opposition parties put down a Question to try and get the Minister to the House, whereupon he gives in and makes a Statement. I never had any doubt that the noble Lord would make a Statement—he clearly loves it so much here. Perhaps in future we need not go through that cycle to get him here.

I should like to raise two matters of detail before going on to the more general points of the Statement. The noble Lord, Lord Hunt, referred to CBI indications, coupled with comments in the press, that tens—indeed, hundreds—of billions’ worth of credit for major companies will have to be refinanced in the course of this year. Is the Minister saying that he believes that the working capital scheme will be sufficient to provide the finance to replace loans that will otherwise not be renewed or reduced, with the consequent effect on employment? Is that the Government’s solution to that problem, as highlighted by the CBI?

The second point of detail relates to the working capital scheme, the enterprise finance guarantee and, probably, the capital for enterprise fund, although not to the same extent. Those of us who have had experience over the years with the small firm bank guarantee which was in place for a considerable number of years will recognise that the banks have often proved extremely difficult to deal with through the bureaucratic systems that are in place. Certainly, up until the credit crunch,

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despite the Government guaranteeing a significant proportion of the loans, a number of clearers did not really want to lend money. Many small and medium-sized enterprises became mired in bureaucracy and eventually gave up and did not take the loan. What steps will the Minister and his Treasury colleagues take to ensure that that does not happen when these well meaning schemes are introduced?

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