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House of Lords

Monday, 15 June 2009.

2.30 pm

Prayers—read by the Lord Bishop of Bradford.

Finance: Balance of Payments


2.37 pm

Asked By Lord Sheldon

Lord Davies of Oldham: My Lords, the Government forecast for each calendar rather than financial year. The forecast for the balance of payments deficit for 2009 is 3.5 per cent of GDP, or £48.5 billion: up from a deficit of 1.7 per cent of GDP in 2008, or £24.5 billion.

Lord Sheldon: My Lords, I thank my noble friend for that reply. Although the Treasury does not officially forecast the balance of payments other than at Budget time and on pre-Budget occasions in the autumn, I understand that the Chancellor of the Exchequer may not publish the usual spending review this autumn. Can my noble friend confirm whether this is so? The assessment of the borrowing of £175 billion this year and the next is that it is large and continuing, with necessary expenditure cuts affecting our economic recovery. When does he expect the financial position to be restored, with no further borrowing?

Lord Davies of Oldham: My Lords, those are two fairly fundamental questions. Both are wider than and somewhat remote from the balance of payments issue, which was the basis of my noble friend’s original Question, although I had anticipated that it might go a little wider in this short exchange. He will have to wait for any commitment on the pre-spending position. I cannot comment at this stage, but he will appreciate from the figures that we have on the balance of payments deficit that the United Kingdom’s economy remains one of the most competitive. We are actually benefiting at present. Repatriated income from investments is in fact less than earnings, so our balance of payments figures are better in those terms, but my noble friend will recognise that we are addressing the whole question of economic recovery and that developments in the balance of payments are a factor in that.

Lord Forsyth of Drumlean: My Lords, does the Minister agree that the Government’s plans to borrow an additional £900 billion through the gilts market can be achieved only by a substantial increase in interest rates? What does each percentage increase in interest cost the Government?

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Lord Davies of Oldham: My Lords, they are significant figures, which are unparalleled in recent decades, as the noble Lord will appreciate. But he also knows that they are reflective of a strategy of investment in this economy which is being pursued by every advanced economy in the world, including, most importantly, the United States and, to a great extent, China. In so far as public deficits occur from this, those are a price which has to be paid in order to minimise the sharpness of the recession and to keep the level of unemployment as low as we can. I am sure that the whole House applauds those developments.

Lord Peston: My Lords, I think that I may have to congratulate my noble friend. Apart from being Deputy Chief Whip, he is also now a Parliamentary Under-Secretary at Defra. Just to cheer him up a bit, Defra is an area that does not interest me at all.

There are two interesting questions about the balance of payments. We have been in deficit in this country since, I think, 1985, which means that even though economists always say, “This can’t go on”, it always seems to go on. Specifically on the present state of affairs, bearing in mind that it is a duty of an economist never to look on the bright side, otherwise we would cease to be the dismal science, would one be accused of being complacent by saying that the remarkable thing about the balance of payments at present is that we do not seem to have the slightest sign of an emergency or crisis on the horizon? Am I being complacent in suggesting that possibility?

Lord Davies of Oldham: My Lords, if my noble friend is to introduce complacency to our discussion, I hope that he will concentrate on Defra in due course and make life a little easier for me. On the issue that he raises, it is obvious: our balance of payments forecast for our worst year is below the balance of payments deficit in the mid-1980s under a previous Administration. Therefore, this does not feature as a factor which should concern us over much, save for the obvious fact that the country has to earn its way. It is important that we move from deficit with regard to growth. The forecast for the end of 2009 is of deficit, but we look forward to a resumption of growth next year.

Baroness Noakes: My Lords, in 1997 we had a surplus on trade in goods and services of £4 billion. Last year, we had a deficit of 10 times that amount. If you look behind those figures, last year we had a deficit on goods alone of £93 billion. Does the Minister think that these are signs of good economic management?

Lord Davies of Oldham: My Lords, it is a sign of economic management in difficult times. I notice that the noble Baroness did not take the opportunity of defending past strategies of her party that led to balance of payments deficits greater than we are facing in the middle of this worldwide crisis, which everyone recognises is of a severity unique since the 1930s. She will accept that these deficits have to be accounted for. They are part of the necessary recovery with regard to the economy. She will delight in the fact that we see improvements in the position in due course.

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Lord Lea of Crondall: My Lords, my noble friend mentioned China and the United States. Last night on Radio 4, the deputy governor of the Bank of China said that the investment and trade relationship with the United States would decline and that that with the European Union would increase substantially. Does my noble friend agree therefore that talk in this House and elsewhere about China and globalisation versus the European Union is wrong and that we must do everything possible to be fully integrated into the European economy and everything that goes with it?

Lord Davies of Oldham: My Lords, China has certainly indicated how significant the European economy is in the demand for its products, which are, of course, part of its strategy for recovery. As for the United States, China will also, of course, be concerned about the progress of President Obama’s strategy of reinvestment in the economy. Significant though China is—along with India and other emerging economies—it is still the case that, until the United States economy makes a significant recovery, none of us can anticipate recoveries elsewhere.

Armed Forces: Human Rights Act


2.45 pm

Asked By Lord Astor of Hever

The Minister for International Defence and Security (Baroness Taylor of Bolton): My Lords, first, I am sure that the whole House will wish to join me in offering sincere condolences to the family and friends of Private Robert McLaren from the Black Watch, 3rd Battalion The Royal Regiment of Scotland, and Lieutenant Paul Mervis from the 2nd Battalion The Rifles, who were killed in operations in Afghanistan this past week, and to the families of the RAF reservist and the air cadet who died in the accident at the weekend.

Turning to the Question, as my right honourable friend, the former Secretary of State, said in the other place on 1 June:

“We are strongly committed to protecting the human rights of our armed forces. However, the implications of the recent Court of Appeal judgment in the case arising from the tragic death of Private Jason Smith could open the door to routine legal challenges against the Ministry of Defence to decisions made by service personnel entrusted with the conduct of operations. The Chief of the Defence Staff has made these concerns clear in his own message to the armed forces. I am urgently considering the matter, and will decide shortly whether we need to appeal the decision to the House of Lords”.—[Official Report, Commons, 1/6/09; col. 1.]

Lord Astor of Hever: My Lords, 10 soldiers have been killed in Afghanistan in less than a month, all but one from explosions, and we on these Benches send our condolences to all their families and to the families of those killed in the jet accident.

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I thank the Minister for her Answer. We welcome the fact that the MoD has offered commanding officers indemnity from prosecution under human rights law. Will the Minister put the Chief of the Defence Staff’s letter to commanding officers in the Library?

This judgment results from a conflict between English common law, which recognises that the duties of the Armed Forces include putting one’s own life in peril and ordering others to do so, and European human rights law, which emphasises protection of life as a priority. If the Government do not appeal, or an appeal fails, will the Government undertake to include in primary legislation provisions that human rights cannot prevail in combat zones, as this judgment is causing serious operational problems for the Armed Forces?

Baroness Taylor of Bolton: My Lords, first, I am very happy to provide a copy of the CDS’s statement to the chain of command. It is an important one, setting out very clearly that he wants to assure commanders at all levels that the judgment does not alter the situation in respect of their authority to make operational decisions. That is extremely important and something that we must ensure continues. This is a very difficult and complex area; we support human rights, both in general and in the case of our armed services. The Ministry of Defence accepted that the Human Rights Act applied in the tragic case of Private Smith, but we also believe that operations must go ahead effectively and that every split-second decision that is taken in the field should not be revisited in a court of law later. We do want clarity and that is what we will seek, but we are still taking advice on the situation and we will make a decision in due course.

Lord Campbell of Alloway: My Lords, is the Minister aware that an amendment was tabled to the Human Rights Act to exclude the Armed Forces on grounds of practicability? It was spoken to; it was supported by noble and gallant Lords. Consultation between certain noble and gallant Lords and the Government ensued, and certain assurances were given. The amendment was then withdrawn. The noble Baroness who gave those assurances happens to be present in the House. What were those assurances? Were they that they would not affect operational activity?

Baroness Taylor of Bolton: My Lords, we do not believe that there has to be a conflict in that way, which is why we are exploring the situation carefully. I am not a lawyer, and I was not in this House at the time of that debate, but it seems to me that we need some clarity to back up the assurances which the CDS has given. It is not a simple question of indemnity, because action would be taken against the Ministry of Defence and not an individual commander. We want a clear legal framework for the avoidance of doubt, because, as I said earlier, operations have to go ahead effectively. The CDS’s statement was aimed at assuring those commanders in the field that that was the case.

Lord Lester of Herne Hill: My Lords, I join in the expression of condolence towards the loved ones of our great soldiers who have died heroically in combat. I fully agree with the way in which the balance has

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been expressed by the Minister. Does she know that, during the Court of Appeal hearing, the Government rightly conceded that the Human Rights Act applies to protect soldiers’ human rights at military bases, and that the Court of Appeal said that it did not seem very logical for it not to apply when they were in an ambulance or in the desert? Does the Minister also know that the court made very sensible recommendations as to what the coroner should do? I can find nothing in the judgment which suggests a conflict between the vital need for the military to be under direct control in operational matters and at the same time their having their human rights protected. Is that the view that she provisionally accepts?

Baroness Taylor of Bolton: My Lords, as I said, I am no lawyer and I would be very cautious about what I said on any matter. We accept that human rights legislation applies on military bases and, as I said, we acknowledged that in the case of Private Jason Smith in terms of the situation that arose. We accept that we should be very cautious about human rights overall and have a big responsibility. We take our duty of care very seriously. We spend a lot of money improving equipment and in training and tactics, all to minimise risk. However, it is impossible in a difficult, operational situation to rule out risk entirely. Our commanders have a difficult responsibility which they exercise with every care. Therefore, we must have clarity so that operations can go ahead effectively and that every decision made on operations is not gone through in great detail by a court at some later stage.

EU: Transport of Horses


2.53 pm

Asked By Lord Higgins

Lord Higgins: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. In doing so, I declare an interest as my daughter is an equine veterinary surgeon.

The Minister of State, Department for Environment, Food and Rural Affairs (Lord Davies of Oldham): My Lords, the European Commission has already indicated its wish to review regulation 1/2005, concentrating on journey times, stocking densities and satellite tracking. Official proposals are awaited and will be carefully assessed. Stakeholders will be fully engaged. The Government have supported this review and emphasise the importance of appropriate rest periods and feeding and watering breaks.

Lord Higgins: My Lords, I am most grateful to the Minister for that helpful reply. It is clear from the latest survey carried out by the charity World Horse Welfare that the existing regulations on the export of live animals—horses in particular—for slaughter are

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not being enforced. Will he urge the Commission to work on that aspect of it? As the Minister has just said, the Commission has brought forward its review of the regulations, which was due in 2011. Will he seek to ensure that it covers not only the items which he has just mentioned but fitness to travel and checks on fitness to travel, since the indications are that there are not only welfare issues here but a danger to health?

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for the points that he makes. We want to see the European Commission regulations improved and we have been pressing for that, not least because we operate our own rules, which are better than the European regulations. We are nevertheless worried that we could be tested in terms of our conflict over European regulations. Therefore, we want to ensure that our position is four-square with Europe on the basis that Europe approaches our welfare measures. As the noble Lord indicated, there are a number of issues to be raised with regard to Europe in terms of the nature of the rules; but, as he indicated in his supplementary question, one of the crucial things is enforcement, at which we in the United Kingdom are rigorous—which is not the case all over Europe.

Lord Lester of Herne Hill: My Lords, the figures produced by World Horse Welfare are horrific. If the Government are unable to persuade the EU to widen its review, will they consider asking the redoubtable Joanna Lumley to become their enforcer, preferably as a Member of this House, since she might be able to succeed where they may fail?

Lord Davies of Oldham: My Lords, I am certainly prepared to meet Joanna Lumley to discuss this issue further.

Noble Lords: Oh!

Lord Davies of Oldham: My Lords, I emphasise that we anticipate that the European Union’s commitment to review regulation 1/2005 indicates a significant step in the right direction. I hasten to add that all our organisations concerned with the welfare of animals have been putting in the strongest representations on this front, and the noble Lord can rest assured that we will pursue this issue with the utmost urgency.

Lord Lea of Crondall: My Lords, here is another role for the European Union. Is my noble friend aware that in 1959, I chaired a meeting at the Cambridge Union for Sean Lemass, the Taoiseach—the first time a Taoiseach had spoken in this country? Entry into the chamber was impeded by a demonstration about Irish horses being sent to knackers’ yards in Belgium. Is it not self-evident that we must work on a European basis—and take a little less than 50 years to get to a solution?

Lord Davies of Oldham: My Lords, my noble friend is right that I did not know about his activities in 1959. Of course, I entirely follow the point of his argument, namely that the higher standards in the United Kingdom

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are ones that we want translated into European regulation in the redrafting that will take place, and that we want then to see the regulation enforced.

Lord Taylor of Holbeach: My Lords, I join those who have congratulated the Minister on his appointment. If any doubt existed as to his status, it could not have been because he failed to pass the loyalty test—it could only have been because he is already fully stretched as the sweeper for the Government on so many portfolios. The figures referred to by my noble friend Lord Higgins—37 per cent of horses arriving in Italy were not fit to be transported—speak for themselves. Would the Minister not agree that differentials in standards of animal welfare across the board represent a serious distortion to the single market, as well as an affront to its values?

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord for his initial remarks. Loyalty is easy to a principled Government. I emphasise that I concur entirely with his illustration, and he is quite right about the Italian situation. Would that it were the only instance where the welfare of animals in transit was not satisfactory. The answer is certainly to have better rules and regulations; but I reiterate the point made by the noble Lord, Lord Higgins, that enforcement is also important.

Lord Pearson of Rannoch: My Lords, first, in that case, can the Minister be very daring, break the normal rules of secrecy over European legislation and share with us how the votes stacked up on this issue on the Council? Secondly, is it really acceptable that we in the United Kingdom, with our high standards of animal welfare, should be bossed around by Brussels on this issue?

Lord Davies of Oldham: My Lords, the second point is readily answered. On his first point about how the votes stacked up, the fact that a revision is being carried out is an indication that the nation states of Europe are all too well aware that present standards are not high enough.

Lord Dykes: My Lords—

The Minister of State, Department of Energy and Climate Change (Lord Hunt of Kings Heath): My Lords, we are now into the 24th minute.

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