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21 Jan 2010 : Column 1098

Baroness Kinnock of Holyhead: I thank the noble Baroness, whose great expertise on Iran I acknowledge. Sanctions are not currently under consideration, as we discussed in the previous Question on Iran to which I responded. However, the rights that the Iranian people are demanding are universal rights. They must know that calls for their rights to be respected are being echoed internationally. We work closely to maximise impact. For instance, the Foreign Secretary writes blogs and tweets on Iran that are read and followed in Iran. That is proving to be a satisfactory and effective way of communicating our concerns.

Baroness Falkner of Margravine: My Lords, we on this side are pleased that the noble Baroness will lead the delegation to the Human Rights Council. To broaden out the scope of human rights abuses in Iran beyond the Baha'i community, although that is a serious case, is she also aware of the Liberal Student and Alumni Association members who have been arrested and held under a charge that is as vaguely drafted as being at enmity with God? These people have been tortured in Evin prison and have no prospects of legal representation whatever. Will she use the opportunity to stress that the use of the death penalty for cases of peaceful demonstration against the regime will not endear Iran to the world?

Baroness Kinnock of Holyhead: I thank the noble Baroness and agree very much with what she says about all the individuals who are currently held in deplorable conditions in Iran. Indeed, as far as the death penalty is concerned, Iran is second only to China in the number of executions that take place: 318 people were executed in 2009.

National Insurance Contributions


11.29 am

Asked By Lord Hunt of Wirral

The First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council (Lord Mandelson): My Lords, the Chancellor announced in the Pre-Budget Report a number of tax changes to tackle the public deficit. The increases in national insurance contributions in 2011 will enable the Government to protect spending on front-line priorities in health, schools and policing, at the same time as paying down debt. The Government have many discussions with small and medium-sized enterprises. Business organisations support the Government's programme to halve the deficit over four years.

Lord Hunt of Wirral: But is the First Secretary of State listening? Rather than making contradictory statements about inward investment from the touch line, would he get on the pitch and just urge his

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colleagues in Cabinet to stop imposing a tax on jobs at a time when individual insolvencies have reached record levels-five times higher in Labour's recession than in all previous recessions combined since records began? That is 180,000 cases of individual misery. After 13 wasted years, we cannot go on like this.

Lord Mandelson: My Lords, I am never knowingly off the pitch in fighting for the interests of British industry and British jobs. Previous experience indicates that rises in national insurance contributions need not choke off employment: contributions rose in 2003, also by 1 per cent, but employment went on rising. This increase is timed for 2011, when the UK economy is expected to be growing steadily and can afford it. But at least we on this side of the House are absolutely clear on the tax measures needed to cut the deficit. The noble Lord's party says that it wants to cut the deficit further and faster than us. I think it would be of interest to the House to know whether the noble Lord's party supports this measure. Its position on tax, with the knots into which it is tying itself on the married couple's allowance, seems to change with every hour of the day. It is now not far off from midday. Perhaps it could say what the latest position is on its tax measures.

Lord Newby: My Lords, the Minister has just said that the Government's position on cutting public expenditure is clear. I am glad that it is clear to him, because it is not clear to the rest of the country. Can he possibly enlighten the House by telling us what the Government's plans are on public expenditure levels for all those departments other than health, education and international development, where we understand there are to be no changes?

Lord Mandelson: My Lords, restoring the public finances to a sustainable position without wrecking the economy or damaging essential front-line services means restoring growth in the economy. Growth is the best antidote to debt and will be the principal means by which we can reduce the public deficit without resorting to the draconian tax increases or the draconian reductions in spending that we expect to see from the party opposite should there be a change of Administration after the next general election. The imperative now is to focus on equipping people and business to return the economy to growth, to increase employment and to raise incomes. That is exactly what the Government are doing.

Lord Brooke of Alverthorpe: Can my noble friend the Minister say what the estimated loss of jobs would be if instead of increasing national insurance contributions the Government increased VAT to 20 per cent right across the board? If he cannot give the figures immediately, can he let me know in due course and perhaps also give us calculations on the number of jobs that would be lost in the economy if VAT went as high as 22.5 per cent?

Lord Mandelson: My Lords, my noble friend is absolutely right to raise these questions. The party opposite suggests that it wants to reduce the deficit further and faster. If it were simply to advance by one year the deficit reduction plans that the Government

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have put in place, it would cost in the region of £26 billion. That amounts to the elimination of half the schools budget, or increasing VAT to 23 per cent. The entire country is entitled to know what the consequences would be of its policies, whenever it is in a position to let us know what they are.

The Lord Bishop of Exeter: My Lords, will the Minister say what assessment has been made of the impact of this rise on charities large and small, which have already seen a heavy and negative impact as a result of the current economic recession?

Lord Mandelson: My Lords, the best solution for businesses and charities is to restore our economy to its previous growth rate. Among the other measures that we must take are measures to reduce the deficit, and I am afraid that that includes making fair but targeted tax increases in the way that the Chancellor has set out. The increase in national insurance contributions will be introduced in 2011, when everyone expects the economy to be growing. That will lift all the boats in our economy, including the boats of our most important charities.

Lord Craig of Radley: My Lords-

Lord Davies of Oldham: Sorry, my Lords, time is up.

Universities: STEM Subjects


11.36 am

Tabled By Baroness Wall of New Barnet

Baroness Prosser: My Lords, on behalf of my noble friend Lady Wall, and at her request, I beg leave to ask the Question standing in her name on the Order Paper.

The First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council (Lord Mandelson): My Lords, science, technology, engineering and mathematics skills are crucial in securing future prosperity. Last summer, I asked universities to provide an additional 10,000 places on courses that contribute most to our high-level skills needs, including STEM subjects. All of these places have been filled. Higher Ambitions, the Government's higher education framework,will deliver further skills needed for new industry and new jobs, notably in STEM subjects.

Baroness Prosser: My Lords, I trust that my noble friend is aware that there is considerable support, particularly on these Benches, for the views that he expressed yesterday in his article in the Guardian about the future of university funding. Will he reassure the House that the Government will continue to work to encourage young people, and more women, to take

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science, technology, engineering and mathematics courses at colleges and universities? We know that such courses open the door to STEM-related careers. Will he further tell the House what he is doing to strengthen the ties between research and business?

Lord Mandelson: My Lords, the Government are investing in encouraging more young people to take up and study science. We are working with schools to promote interest in, and the study of, STEM subjects; and we are opening up opportunities in universities and beyond. I am glad to say that the uptake of STEM subjects at GCSE and A-level has been rising steadily since 2005. The Government announced a £140 million strategy in January 2008 to secure the next generation of scientists and mathematicians, and provide more and better STEM teachers. This is exactly the sort of investment that we must sustain, and exactly the sort of investment that would be in peril should those in the party opposite have the opportunity to make the swingeing cuts that they are already alluding to.

Lord Baker of Dorking: My Lords, is the Minister aware that the number of applications by young people to go to universities this year is already 12 per cent higher than last year? Few of those extra people will go to universities. Every vice-chancellor now agrees that there will be a fall in numbers as a result of his cuts. Sarkozy increases higher education expenditure, Mandelson cuts it. How does he reconcile that with the theme of the election, which is investment in the future, and hope and aspiration for the young?

Lord Mandelson: My Lords, this is pure hyperbole. In reality, the savings that we have set out amount to a reduction of under 5 per cent over the next three years. The Government have made it clear that higher education needs to shoulder its fair share of the burden of reductions in public spending-but not more than its fair share. I will make sure that that remains the case.

Baroness Garden of Frognal: My Lords, the recent HEFCE grant letter showed a reduction in unit funding for teaching of around £200 per student, with a figure of £3,950 for 2010-11. Would the Secretary of State indicate whether that is a one-off measure linked to the current economic climate and the need to rebalance the books, following the overspend in student support, or is that rebalancing likely to continue next year? Also, is the cut across the board and will it therefore impact on those students studying STEM subjects and other subjects?

Lord Mandelson: My Lords, universities are aware of the Government's requirement for that rebalancing, and for them to grow their intake at a pace and on a scale for which the resources exist to support it. We have always made that clear. However, tighter budgets right across the public sector, including in higher education, can be a spur to further diversifying British universities' funding. That can also focus minds on teaching and research excellence, and on new ways of delivering higher education. Those trends are already part of the picture in higher education; both trends need to become more so in the coming years.

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Enterprise Finance Guarantee Scheme


11.41 am

Asked By Lord Harrison

The First Secretary of State, Secretary of State for Business, Innovation and Skills and Lord President of the Council (Lord Mandelson): My Lords, 6,200 businesses have accessed loans totalling more than £620 million under the enterprise finance guarantee over the past year. The scheme has been a real success, which is why the Chancellor announced an extension in the Pre-Budget Report to allow a further £500 million of loans to be made available to small and medium-sized enterprises.

Lord Harrison: I thank my noble friend for that Answer. First, given the good news this week of the fall in unemployment, has he made any estimate of how many jobs are attributable to the introduction of the enterprise finance guarantee scheme? Secondly, as with Professor David Blanchflower, is he concerned that any precipitate withdrawal of this scheme or, indeed, of other schemes designed to stimulate the economy would undermine the progress that has already been made by the schemes?

Lord Mandelson: My noble friend is right to draw attention to the very real risk of wrecking what is a fragile economic recovery if the Government's stimulus measures were to be withdrawn prematurely. On employment, the enterprise finance guarantee has in fact made a significant impact. Before Christmas, we published an early-stage assessment of its impact on 385 small and medium-sized enterprises. The findings showed that, as a result of the finance guarantee, approximately 60 per cent of firms reported the creation of new jobs and 57 per cent reported that they had saved jobs. Estimates suggest that the guarantee could have been responsible already for saving and creating around 31,600 jobs, with a further 8,000 expected to be saved or created in the future. Government measures of this kind have led directly to the fall in unemployment that we were able to announce yesterday which I would hope would be welcomed by everyone in this House.

Lord Bates: My Lords, can the Minister confirm that, as in a Written Answer which he provided for me last year, only 3.7 per cent of those loans that had been offered were to firms in the north-east of England? Is he aware that in the figures that were announced yesterday, to which he referred, unemployment in the north-east of England is now the highest in the country, with one in 10 people out of work and youth unemployment having risen 122 per cent year on year? That is before the devastating impact of the Corus Teesside plant closure and its 3,000 job losses. What efforts will his department take to make sure that scarce resources are targeted where the need is greatest?

21 Jan 2010 : Column 1103

Lord Mandelson: My Lords, on the subject of scarce resources, I hope that the noble Lord will direct his advice to those sitting in front of him. What we have seen in the north-east of England is indeed a reduction of unemployment-as has occurred across the country-but not on the same scale and not at the same rate as in other regions in the country. That is precisely why we have to maintain our targeted measures of support for industry, of support for science and skills and support for universities and other educational sectors in the north-east of England-including the excellent regional development agency, whose future of course would be severely threatened and put at risk were there to be a change of government after the election.

Lord Razzall: My Lords, I recognise the success of the enterprise finance guarantee scheme, but do Her Majesty's Government and the Secretary of State accept that there is now significant evidence that a number of other government initiatives are being blocked and frustrated by bureaucracy in the banks? What do the Government propose to do about it?

Lord Mandelson: My Lords, I am permanently concerned about the rate of lending by our banks to the corporate sector. Evidence on the availability of bank loans suggests that the vast majority of businesses are able to obtain credit and at a price which is actually below that of two years ago. However, we are aware that demand remains subdued and is possibly masking issues in supply. As demand for lending rises, as it will do as the economy and growth pick up, the banks' responsiveness to SMEs in the corporate sector as a whole must also pick up and the supply of lending and its price must respond more to market needs.

Economy: Growth


11.47 am

Asked By Lord Forsyth of Drumlean

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 last week set out in Going for Growth: Our Future Prosperity the public support for the economic capabilities that will underpin future growth in the UK as we emerge from the global recession. That growth will be based on a combination of targeted government investment which supports our competitive strengths in new technologies and innovation and continued investment in the educational talents and skills of our people.

Lord Forsyth of Drumlean: My Lords, why should we have any confidence in the Government's prediction about the future given their record over the past 10 years? Have not the past 10 years seen the lowest growth and the highest decline in manufacturing output of any decade since the Second World War? Why is that? Can the Secretary of State explain to us how this has happened?

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Lord Mandelson: As it happens, although employment in the manufacturing sector has fallen, in terms of value and volume over the past 10 years, the manufacturing sector has maintained its strength and presence in the UK economy as a whole. But I would ask the noble Lord in return what he thinks his own ideas and approach would do for manufacturing in this country. I see from the newspapers this morning that he is calling for annual cuts of £75 billion a year from public expenditure. He has inadvertently or otherwise lifted the lid on what his party is really thinking. Cuts on this scale-

Noble Lords: Oh!

Lord Mandelson: Noble Lords may not like this debate but I am afraid that they have to listen to the facts. Cuts on this scale could not be achieved without eating deeply into front-line services. They would also virtually remove at a stroke all government capital spending and support for industry, including the manufacturing sector. In other words, the ideas that come from the noble Lord would strangle our restoration of growth at its birth.

Lord Hoyle: Can my noble friend say what effect on growth the Kraft takeover of Cadbury's will have? What discussions is he having with Kraft in relation to investment in this country and securing British jobs?

Lord Mandelson: I strongly share my noble friend's concern about the future, a concern that seems to be shared by none other than Mr Warren Buffett, according to remarks of his which are cited in the Financial Times today. All that I can say is that I have received a written assurance, an undertaking, from the chief executive of Kraft making clear Kraft's intentions towards Cadbury, which are to respect its production, its legacy and its workforce. I have asked to meet the chief executive as soon as possible in order to get further detail about those undertakings.

Lord Hunt of Wirral: I warmly welcome the First Secretary of State's conversion to the value of inward investment, but instead of trying to talk out this experiment in Question Time, could he provide some answers and explain to this House why it is that 3,000 more companies have gone bust or become insolvent in Labour's recession than, say, the recession in the 1990s? What answers is he going to provide? Can he just tell us when the next general election is, as he seems to think that it has started? Is it true that he proposes that the campaign will start on Maundy Thursday? Is he aware that that is April Fools' Day, and that in view of his answers today, it would be highly appropriate?

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