Lord Barnett: I am not too surprised. Does my noble friend accept that at the moment an unelected Governor of the Bank of England seems to have more economic powers than not only the unelected House here but the elected House down the corridor? Does he also agree that even an unamended Act means that the Bank's so-called independence is a myth in the sense that the governor is supposed to take account of the Government's economic policy, but does not seem to do so very often? It is now more important than ever, given that he has taken even greater powers, in relation to quantitative easing, for example. Can the Minister assure us that he will not end that sooner than the Government want? Is he having serious discussions with him on the matter?
Lord Myners: My Lords, we have regular discourse with the Governor of the Bank of England, including at the new Council for Financial Stability, which had its first meeting in shadow form last week. The governor and the Monetary Policy Committee have steered a very sound course through the economic difficulties, not only reducing interest rates to provide a strong monetary stimulus but also addressing the quantity of money in the economy through quantitative easing. The judgment on when is the right time to begin to increase the cost of money and reduce the supply of money through withdrawing quantitative easing is a matter for the Monetary Policy Committee. We allow it to do so in respect of the independence that we granted the Bank of England in respect of monetary policy, which it has handled with considerable aplomb.
Lord Lamont of Lerwick: My Lords, does the Minister recall that when the Bank of England was made independent the inflation target for the bank was redefined and based on a narrow, consumer price definition of inflation that excluded housing costs and that, at the same time, the monitoring ranges for the growth of money were abolished from the remit of the bank? Is it not clear that this aspect ought to be reconsidered? While I would not say that this is the sole cause of our present predicament, is it not clear that monetary policy, both here and in the United
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Lord Myners: The targeting of inflation at 2 per cent per annum has been consistent since the Bank of England was given its independence, but the definition of inflation was adjusted to come into line with the definition used elsewhere in Europe. It has been notoriously difficult to capture the cost of housing in inflation. Indeed, some would argue that it is an asset price rather than an expenditure price and therefore should not be in that definition. However, Eurostat is currently reviewing the matter, and no doubt when it has replied we will reflect on the implications for RPI targeting. Monetary authorities throughout the world now generally acknowledge that, when targeting cost inflation, they failed to address correctly the impact of asset inflation as a consequence of monetary policy being easier than it should have been. That applies, as I said, to monetary authorities throughout the world, including the United States of America and Europe.
Lord Newby: My Lords, does the Minister agree that, in view of the Bank's existing wide range of powers, it would be a serious mistake to confuse the role of the Bank by giving it additional powers to regulate the financial services sector as a whole, from the largest bank to the smallest building society?
Lord Myners: It would be a massive distraction, and totally unsuited to the culture and resourcing of the Bank of England, to conflate financial regulation with monetary policy, overall financial regulation and stability. It would create an even more powerful institution than the one described by my noble friend Lord Barnett, disrupt existing processes and place financial stability at risk, when we need to focus on rebuilding confidence and strengthening the financial system in the way that we have done so successfully over the past 12 months.
Lord Forsyth of Drumlean: My Lords, does not the noble Lord, Lord Barnett, have historical precedent on his side? When we have had quantitative easing in the past, additional measures have been put into place to ensure proper parliamentary scrutiny: the best example being the Bullion Committee in the 19th century. Exactly how much in mark-to-market terms has now been lost as a result of the Bank of England's quantitative easing activities in the market?
Lord Myners: I find it somewhat extraordinary that those on the opposition Benches should ask about mark to market, given the general criticism that mark to market as a methodology was one of the things that contributed to the procyclicality that has so badly affected the economy over the past three or four years. It is absolutely critical to isolate the impact of quantitative easing from simple reference to mark to market and to see its beneficial effect on creating and protecting jobs. The noble Lord asks a question that fails to grasp the core issue, but the answer is about £3 billion.
Lord Peston: My Lords, is my noble friend aware how puzzled one is about the criticism of the Monetary Policy Committee? One of the present Government's greatest achievements was setting up the Monetary
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Lord Myners: I can only echo what my noble friend has said and what I said in response to my noble friend Lord Barnett's supplementary question. The Monetary Policy Committee has undoubtedly been a great success and we want to keep it independent. I was horrified to read in the Times on Saturday that the opposition party is apparently contemplating a change in the governor to find someone politically more acceptable. That sort of interference would do so much damage to the British economy and the British financial system. I hope that someone from the opposition Benches will rebut the story in the Times.
To ask Her Majesty's Government whether, following the Human Rights Watch report published on 12 December 2009, they will seek information from the government of Libya about (a) the whereabouts of Jaballa Hamed Matar, and (b) the circumstances in which Hamed Said Khanfoor and others have been detained since March 1990 and their expected dates of release.
The Minister of State, Foreign and Commonwealth Office (Baroness Kinnock of Holyhead): My Lords, last week, the Foreign Secretary issued a statement expressing support for the efforts of Hisham Matar to ascertain the whereabouts of his father. The Foreign Secretary said:
Our embassy in Tripoli has raised this with the Libyans and has asked them to investigate further. We take all allegations of human rights abuses seriously and have urged the Libyan Government to address the specific cases highlighted in the Human Rights Watch report, which include that of Mr Hamed Said Khanfoor.
Lord Lester of Herne Hill: My Lords, I am grateful for that welcome reply from the Minister, which I am sure will be greeted with great gratitude by Hisham and his family, who will no doubt wish to come and discuss the matter. Will the Minister give an assurance that no EU framework agreement will be entered into with Libya until it can be demonstrated that Libya, which has made only small progress so far in human rights, will comply fully with its international human rights obligations?
Baroness Kinnock of Holyhead: I thank the noble Lord for making that important point. The UK is a strong supporter of the EU's attempts to negotiate
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Baroness Kennedy of The Shaws: My Lords, I, too, welcome the Minister's response in relation to Jaballa Matar, but I would be grateful for a response in relation to Izzat al-Megaryef and Mansur al-Kikhya, dissidents who have also disappeared. I would also be grateful if the Minister could tell us whether the Government have sought an investigation into the massacre that took place in Abu Salim prison in 1996, when 1,200 political prisoners were slaughtered. The recent report from Human Rights Watch has raised the fact that, despite the warmth of our relationship with Libya since 2003, when it came in from the cold, there continue to be the stifling of free speech, reports of journalists being arrested when they are simply reporting human rights abuses and reports of Jamal al-Haji, a political and human rights activist, being rearrested. There are also concerns about the incarceration of children with adults. To what extent are the Government muting criticism of human rights abuses in Libya to establish trade relations, particularly on oil?
Baroness Kinnock of Holyhead: My noble friend asks for information on two people about whom I do not have clear information, although we have been following closely the cases of Jaballa Matar, Hamed Khanfoor and Mahmoud Boushima. Our embassy is monitoring the situation on all those people and the circumstances of their detention. We remain concerned by many aspects of the human rights situation in Libya. Reports continue to draw attention to the restrictions on freedom of expression. Libya's media are one of the least free in the world. Our concerns include freedom of assembly, political prisoners, arbitrary detention, the mistreatment of migrants and the death penalty. I can reassure my noble friend that we are rigorous in our approaches in Tripoli and the assurances that we seek from the authorities on these matters. While we remain concerned and raise our concerns about many aspects of human rights in Libya, we refute the suggestion that business interests motivate our actions.
Baroness Kinnock of Holyhead: In fact I can tell the noble Baroness that the last discussions on Jaballa Matar's case took place this weekend. We have of course responded quickly and sympathetically to the situation of his son and family, who for 20 years have not known his whereabouts.
Lord Hunt of Wirral: Would the Minister answer this simple question: does she agree that the EU/Libya framework agreement must be based on meaningful progress in the areas of political and human rights reform? If she does, can we just hear an affirmative answer? Will she go on to say what action the Government themselves are taking to encourage this?
Baroness Kinnock of Holyhead: The answer is yes. As the noble Lord might expect, the action that we are taking is to work closely with European Union negotiators to ensure that the objectives that we and others have in relation to Libya are fulfilled.
Lord Avebury: My Lords, we, too, are grateful to the Foreign Secretary for his statement on Jaballa Matar, which has been published on the FCO website. Could the Foreign Secretary now publish a complete list of all the individual representations that have been made to the Libyan Government together with the text of any replies that have been received? Will the Foreign Office also consult our partners in the European Union so that a consolidated list of the human rights violations that we have taken up with the Libyan Government can be put together for presentation to the universal periodic review of Libya next year?
Lord Foulkes of Cumnock: Would my noble friend care to contrast the repressive action of the Libyan Government with that of the Scottish Government six months ago when they released the mass murderer al-Megrahi on the basis that he had only three months to live?
Baroness Kinnock of Holyhead: My noble friend has raised the issue of Mr al-Megrahi. On 12 October, the Foreign Secretary's Statement to the UK Parliament clearly set out the Government's position on the release of al-Megrahi. We were scrupulously clear in all our contacts with the United States and Libyan Governments about the fact that, under the devolution arrangements in place within the United Kingdom, this was exclusively a matter for Scottish Ministers in the Scottish judicial system.
The First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council (Lord Mandelson): My Lords, the Government support the free trade agreements being negotiated between the EU and Peru and Colombia. They help to open markets comprehensively, tackling a wide variety of barriers to trade beyond tariffs at the border. We
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Viscount Montgomery of Alamein: My Lords, that is extremely welcome news, but given the noble Lord's wide experience of these matters in Brussels in his previous occupation, can he say when he thinks that these agreements will be concluded? Obviously the sooner they are, the sooner that benefits will start to accrue in connection with investment and job creation.
Lord Mandelson: My Lords, my personal experience extends to the fact that I originally obtained the mandate and launched the negotiations for this free trade agreement. I am afraid that these agreements always take longer than was originally hoped. The central problem in this negotiation is that originally it was conducted on a region-to-region basis with all four members of the Andean community. However, Bolivia and Ecuador subsequently decided to come out of the negotiations. I hope that they can now make definitive progress. The next round starts in Lima either today or tomorrow, almost as we speak, and the European Union hopes to complete the full negotiation in the first half of this year.
Baroness Hooper: My Lords, is the noble Lord aware that we debated bilateral EU trade agreements in this House during the last Spanish presidency in 2002? Can the noble Lord give us a feel for how existing bilateral agreements are working, perhaps starting with Mexico and of course including Brazil and Chile, before we embark on the next round of negotiations?
Lord Mandelson: My Lords, I could go on an extended tour of Latin America. The EU's free-trade agreement with Mexico is working well but needs to be extended and deepened to embrace services trade; and with Chile it is working exceedingly well in all areas of trade. We do not have a bilateral agreement with Brazil. We have an outstanding negotiation between the EU and the Mercosur countries, which include Brazil, but that is being held up by the delays in the multilateral negotiations in the Doha round. My preference would be to see the EU-Mercosur negotiations restarted because to wait for the completion of the Doha round would be a little long.
Lord Grenfell: My Lords, obviously this free-trade agreement will deliver benefits to Peru and Colombia. My noble friend the Secretary of State alluded briefly to human rights: what importance, if any, should we attach to the fact that the European Federation of Public Service Unions and the European Trade Union Confederation have given solid backing to Colombia's unions in their call for the negotiations to be suspended or blocked until they are assured that the human rights abuses, which they claim are often directed at them, have been stopped? Is there a case that they should be suspended until we hear the results of the investigation which is being carried out into Colombia's human rights record under the current GSP Plus of the European Union; or is it the case that the social
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Lord Mandelson: My Lords, the Government are certainly not indifferent to any human rights questions arising in any Latin American country, including Colombia which has a long track record of civil violence, including killings. This is perhaps unsurprising when a portion of the country is in the control of the terrorist guerrilla organisation FARC. Most objective observers will note the democratic progress that has been made in Colombia under President Uribe's leadership and will welcome the growing stabilisation of the country and the decline in killings. However, that is not a reason for us to be anything other than entirely vigilant of what is going on and entirely supportive of those who are trying to combat these killings.
Baroness Garden of Frognal: My Lords, the Secretary of State mentioned the withdrawal of Bolivia and Ecuador from previous negotiations. In the light of his earlier comments about how helpful these free-trade agreements should be, what encouragement is being given to those countries to resume negotiations?
Lord Mandelson: My Lords, Ecuador is an observer of the negotiations and does not participate in them. Bolivia is a further step away from being an observer. This is very much a matter for the countries and the Governments concerned. It is not for us to put pressure on anyone who does not want to enter into a free-trade agreement with the European Union. I hope that, upon the satisfactory conclusion of an agreement with Colombia and Peru, the terms are such that it will be open to either Ecuador or Bolivia, or both, to join the agreement in due course.
Lord Hunt of Wirral: Will the First Secretary of State accept that on these Benches we strongly support the work of the European Union in negotiating this mutually beneficial trade deal with Peru and Colombia? However, can he explain how the human rights suspension clause will work in practice? Can he give an update on the strong chapter on sustainable development that we all would like to see?
Lord Mandelson: Once the agreement is negotiated, and assuming that it contains a clause pertaining to human rights which all the participant countries can invoke, it is up to either side if they are so minded, having entered-I hope-into a proper discussion about the questions beforehand, in extremis and as a last resort, to suspend the agreement. However, it is open to either side to do that, not just the EU.
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