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House of Lords

Wednesday, 18 March 2009.

3 pm

Prayers—read earlier at the Judicial Sitting by the Lord Bishop of Ripon and Leeds.



Asked By Lord Sheikh

Lord Davies of Oldham: My Lords, I reinforce the comments made by my noble friend Lord Malloch-Brown that we take allegations of breaches of international law very seriously. The UN is investigating a number of specific incidents that occurred in Gaza during the conflict. The Israeli authorities have also said that they are investigating specific incidents raised by the aid agencies. We shall consider very carefully the results of investigations once they are available.

Lord Sheikh: My Lords, I thank the Minister for that response. Will our Government press for the establishment of a prompt, impartial and independent investigation which will make public its findings and provide recommendations as to how the people who are responsible should be held to account?

Lord Davies of Oldham: My Lords, as I indicated in my original Answer, the United Nations is investigating damage to its property and injuries and death to its personnel in Gaza. The Israeli Government, too, have undertaken to examine the conduct of their forces in Gaza. The House will appreciate that Israel is a signatory to the Geneva Convention and therefore has obligations. Those investigations will go on. We will of course monitor the situation carefully and take any action which is necessary as a result of the outcome of those investigations.

Lord Janner of Braunstone: My Lords, is my noble friend aware that the Israel Defence Force is currently conducting seven internal investigations into alleged incidents during the Gaza conflict which, if determined to be in breach of humanitarian law, will lead to those responsible being prosecuted? Does he not agree that this demonstrates Israel’s willingness as a vibrant democracy to hold itself accountable for any breaches that may have occurred? What steps are being taken to ensure that similar inquiries are conducted into alleged violations by Hamas?

Lord Davies of Oldham: My Lords, the British Government expect the Israeli authorities to carry out investigations where there are allegations of breaches of humanitarian law in the conduct of conflict, and,

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as I mentioned earlier, Israel is a signatory to the Geneva Convention. That is not the case with those on the other side, although there is no doubt that, where evidence is available, the United Nations will be very concerned about the matter. We wish to ensure that any breaches are identified and people held to account.

Lord Wallace of Saltaire: My Lords, now that the International Criminal Court has for the first time issued a warrant against a serving head of state, in the case of Sudan, and that a number of Governments in the Arab world and Africa, including the Saudis, are saying that this is a perfect example of the way in which the West uses international law against the developing world but does not apply standards against its own friends and allies participating in conflict, is it not important that we are all seen to judge actions not only of other Governments but also of our own Government against the standards of international law that we wish to insist on?

Lord Davies of Oldham: My Lords, of course, that is an unimpeachable principle, but the noble Lord will also recognise the fact that these are very different circumstances in which conflict occurs. Of course, there are higher priorities than these issues, important though they are. The world is mostly interested in securing a fair and peaceful arrangement for the development of the relationships between Israel and the people of Palestine and Gaza. Those matters need to be taken into account. It is not always the case that a threatening challenge to those who have been responsible for reprehensible conduct is necessarily the next stage forward in advancing the cause of peace.

Lord Elystan-Morgan: My Lords, what is the approximate number of missiles fired by Hamas into southern Israel since the ceasefire? Will the Minister confirm that it is not the case that Israel and Hamas stand on exactly the same ground in international law? Israel is a fully constituted democratic sovereign state, while Hamas is a proscribed terrorist organisation, so labelled by the United States of America, the European Union, Australia and Canada.

Lord Davies of Oldham: My Lords, of course, the noble Lord is right on the latter point. There is a difference between a sovereign state and the Hamas rule in Gaza. That means, therefore, that the expectations, obligations and any sanctions are different in the two cases. That does not alter the fact that, when conflict of this kind has occurred, it is important that as far as possible the truth of the incidence of atrocities is identified. I do not have the figures for the numbers of rockets; I imagine the noble Lord has put it forward as being a lesser force than was wielded by the Israeli armed forces in Gaza, which is certainly so.

Lord Anderson of Swansea: My Lords, my noble friend is aware that if any breaches of international humanitarian law are found by the internal Israeli inquiry they will be referred for prosecution to the independent judiciary in Israel. Is he aware of any similar inquiry by Hamas into, for example, allegations

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of using civilians as human shields or using the opportunity of killing Fatah opponents and firing from civilian houses? Does he have any confidence in the equivalent judicial system in Hamas?

Lord Davies of Oldham: My Lords, as we have just discussed, the exercise of power in the two territories is very different. As my noble friend is aware, Israel is a sovereign state with its obligations. It has signed up to the Geneva Convention and has indicated that it intends to carry out those inquiries consistent with those obligations. That is not the case with regard to Hamas, which does not fit at all into the same category of being an international authority.

Baroness Tonge: 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 now into the ninth minute.

Money Supply


3.09 pm

Asked By The Earl of Caithness

Lord Davies of Oldham: My Lords, Her Majesty’s Government do not publish projections for future growth in the United Kingdom money supply.

The Earl of Caithness: My Lords, in that case, could the noble Lord kindly tell the House what criteria the Government are using to measure the success or failure of the current calculated gamble by the Bank of England and how much money they expect the Bank to lose when they have to withdraw money out of the wider economy to stop rampant inflation?

Lord Davies of Oldham: My Lords, I take exception to the notion that the Bank of England, of all institutions, is involved in a gamble. The Bank of England is involved in creating a degree of money expansion in order that the crucial functioning parts of our economy have access to resources which alone will get us through the present recession as rapidly as possible. The result of our emergence from that will be that, in the fullness of time, the Bank of England will be able to reap the rewards of the money that it has transferred.

Lord Barnett: My Lords, will my noble friend confirm that the Government aim to positively increase the supply of money and increase inflation? However, is not the main issue still to get the banks to use that extra money and lend it as the economy needs? Does he accept that there is a danger that the FSA’s statement today about stronger regulation, which I imagine we

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would all support, could be an opportunity for the banks to say yet again that they would rather sit on the cash than lend it? What will the Government do, and when, to persuade the banks to lend?

Lord Davies of Oldham: My Lords, with his usual unerring accuracy, my noble friend has identified the issue. He is right that the crucial aspect is not only that resources are made available as far as the banks are concerned but that they then spread to the wider economy. He knows that this exercise is not like flicking on an electric switch. It is a complex process. It is one that the Americans are pursuing for the same objectives. They, too, are finding it difficult to guarantee that the resources flow as fast as they would wish and as fast as we as the Government of the United Kingdom would wish.

Lord Newby: My Lords, is the Minister aware of concerns that a large proportion of the first tranche of gilts that were bought by the Bank of England under the quantitative easing process were from overseas institutions? Are the Government and the Bank therefore preparing to take any steps to ensure that future purchases will be from UK institutions to ensure that the increased liquidity that this process provides feeds through to the maximum possible extent to the benefit of the UK economy?

Lord Davies of Oldham: My Lords, that is an important point. We will do our best to ensure that, but the noble Lord will recognise that the purchase from foreign institutions can be of great benefit in increasing the demand factor of those economies, which are also in recession. That helps to get world trade flowing again at levels that are absolutely essential to an economy such as ours, which depends so much on it.

Lord Peston: My Lords, will my noble friend remind their Lordships that economists have been arguing about the relationship between the money supply and inflation since David Hume in the 18th century? The only trouble is that the economists whom I know, first, cannot agree on what they mean by the money supply, secondly, cannot agree on what they mean by the inflation rate and, thirdly, cannot make up their minds which causes which.

Lord Davies of Oldham: My Lords, my noble friend has many friends who are economists and I am always amazed at that because he misses few opportunities to identify the weaknesses of the profession in its work in certain crucial areas. We all recognise not only that the world was taken financially and economically unaware by the rapid development of the credit crunch and the recession, but that most professionals operating in the area, including economists, have seemed to offer us limited guidance.

Baroness Noakes: My Lords, the Minister did not like the word “gamble”, but I think that he would agree that the Bank of England is undertaking a great experiment with quantitative easing. One of the dangers of this experiment is that it will feed through into

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growth of the money supply, which will then feed through into unconstrained inflation. Are the Government really saying that they are not monitoring the growth of the money supply? Are they sitting by idly letting this experiment take whatever course it will?

Lord Davies of Oldham: My Lords, I did not say that the Government do not monitor the growth of money supply; I said that we do not publish the statistics, which is somewhat different. If the Opposition are disavowing the Government’s strategy in circumstances where interest rates can scarcely be cut further, one is at a loss to think what on earth they would do to increase demand in the economy.

Baroness O'Cathain: My Lords, at least we have the advantage of being able to increase the money supply, which we hope is a short-term measure and will be monitored closely. Does the Minister agree that, if we were a member of the euro group of countries, we would not be able to do that?

Lord Davies of Oldham: My Lords, there is an invitation to engage in a debate. Let us take what advantages we have.



3.15 pm

Asked By Lord Roberts of Conwy

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord McKenzie of Luton): My Lords, in the quarter to January 2009, 2,029,000 people were ILO unemployed. In February 2009, there were 1,391,100 people claiming jobseeker’s allowance.

Lord Roberts of Conwy: My Lords, those figures show a very substantial and rapid increase in unemployment. What priority are the Government really giving to reducing unemployment? Are their counter-measures adequate and fully operational? When can we expect more positive results, or must we believe the somewhat dismal reports coming from the IMF and others that there is a prolonged and severe slump ahead?

Lord McKenzie of Luton: My Lords, of course, this is a huge priority for the Government. In contrast to the noble Lord’s party, we will not give up on anyone who loses their job and we shall continue to provide real help to people who need it to get back to work as quickly as possible. That is why we have not only taken a raft of measures, some of which were just debated on previous Questions, but we have invested £2 billion through Jobcentre Plus to ensure that support is available,

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so that Jobcentre Plus can continue to offer all its customers a first-class service. Next month, people who have been claiming for six months will be able to access an enhanced package of support, which we announced in January.

Lord Oakeshott of Seagrove Bay: My Lords, has the Minister noticed the chilling redundancy figures announced today? There have been 266,000 over the past quarter, up by a half over the previous quarter and by more than double over a year. The reason is simple: companies are running out of cash. Is not the jobcentre network now suffering chronic overstretch and is not closing down jobcentres over the past year like sacking your mountain rescue teams just before an avalanche?

Lord McKenzie of Luton: My Lords, on Jobcentre Plus and its capacity to deal with the current challenges, I can advise the House that we have been taking action and £1.3 billion extra has been made available. Jobcentre Plus is still clearing JSA claims in 10 days, which is ahead of the 11.5 day target; in January 2009, over 75 per cent of customers were seen within three days of making their JSA claims; call volumes are 60 per cent higher than last year but still 87.8 per cent of calls are answered in the first attempt; and every working day Jobcentre Plus records around 5,200 customers moving into work, receives around 10,000 jobs from employers and conducts 45,000 adviser interviews. I think it is up to the task and the challenge.

Lord Skelmersdale: My Lords, does the Minister accept that the reason unemployment is rising at the fastest rate ever recorded is that businesses are being squeezed from both ends, as the noble Lord, Lord Barnett, pointed out on the previous Question? On the one hand, many firms are finding that bank loans are rarer than hen’s teeth, despite the Government’s unsuccessfully, as yet, pouring billions of taxpayers’ money into the banks; and, on the other hand, very few people are buying their products. Clearly, the reduction in the rate of VAT by the maximum rate allowed under the VAT directives is not doing enough to encourage people to start buying again. Is the time not overdue for the Government to turn their attention, as my party has, to reductions in personal taxation?

Lord McKenzie of Luton: My Lords, issues of taxation are always matters for the Chancellor at Budget time. The noble Lord will be aware that, for the banking system, measures have been taken to secure deposits, to give the banks stability through capitalisation and to move through a raft of measures to try to get lending flowing again. It cannot be switched on overnight. On tax measures, there will be increases in household incomes next year, starting in April. That has not yet impacted on the arrangements. Every basic rate taxpayer will get £145 extra from measures already announced. The impact of the VAT reduction is to put something like £12.4 billion into the economy. Again, this will not all come at once. It will, effectively, accrue over a 13-month period. That makes a real difference of, on average, around £145 per household to people’s disposable income.

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Lord Kilclooney: My Lords, bad as the increase in unemployment is, would it be correct to suggest that the percentage rate of unemployment in the United Kingdom is less than that in the United States, Germany, France and the average throughout the European Union? Should we not get this into context?

Lord McKenzie of Luton: My Lords, I am very grateful to the noble Lord for his question. I am bound to agree with him. We need to be careful in some of the comparisons, because the basis is not always consistent. Whatever our challenges here, there are severe challenges elsewhere in the world and we stand well in comparison not only of unemployment rates, but employment rates. We should not lose sight of the fact that employment in the UK is still significantly above 1997 levels. In fact, I think it increased over the last month.

Lord Haskel: My Lords, in normal times there are around 250,000 people between jobs. Sometimes they are included in the unemployment numbers and sometimes they are not. What is the position? Are these people included in the unemployment figures? Are the figures being distorted in that way?

Lord McKenzie of Luton: My Lords, it depends on which figures you look at. The ILO basis and the claimant count measure different things. The claimant count looks at particular points in time. The noble Lord raises an important point. Sometimes we miss the fact that jobs appear through Jobcentre Plus and are taken up very quickly; therefore, they do not feature in the count. We should also recognise the dynamics that are still in the labour market, and not only in the current level of vacancies. Notwithstanding the increase in claimant-count unemployment, in February 250,000 people moved off JSA.

Lord Swinfen: My Lords, what are the Government doing to reduce the costs of employing someone, bearing in mind that when someone loses a job they stop paying tax and normally go on to benefits, so there is a double cost to the Government?

Lord McKenzie of Luton: My Lords, the challenge is to help people back to work as quickly as possible. It is not only an issue of making sure that they therefore contribute to government revenue. We talk about statistics, but there are human lives—individuals, their aspirations and families—behind all these data. We also know that being in work is overwhelmingly the best route out of poverty.

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