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Lord Brett: I understand, although I do not necessarily accept, all that my noble friend says. It has to be appreciated that we are assisting China in dealing with its problems relating to poverty. For example, we have brought it into contact with the National Health Service in terms of national health reform in China, particularly clinical assistance, and we have done the same in relation to agriculture. Whether we like it or not, China is a major player on the world stage and will
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Baroness Rawlings: My Lords, I am sure the Minister agrees that we all want to alleviate the stresses of poverty, wherever it may be found. Does he agree that our international development aid-that is, British taxpayers' money-should be directed to the poorest in the world? We heard from my noble friend Lady Morris that China spent more than £20 billion on the Beijing Olympics; it spent several billions on its ambitious space programme; it has its own aid programme, too; and it is sitting on exchange reserves of more than £2 trillion. Can the Minister explain the workings of the present system that is used to calculate this aid, resulting in British taxpayers giving more than £40 million a year to China?
Lord Brett: My Lords, the development of a country plan is the DfID mode of dealing with activities in a country. The last one for China was developed in 2006 and it comes to an end in 2011. As I said, a review will take place at the Comprehensive Spending Review. Also, in praising DfID's endeavours in China, the Select Committee on International Development in another place said that there should be a continuing, smaller programme until 2015. Therefore, not everyone seems to see China in the way that some noble Lords do. It must be remembered that ultimately we are seeking to achieve the MDGs, which are about halving poverty by 2015. China has brought 476 million people out of poverty in the past 20 years, and that is assisted by what we do in that country. It is not about helping the Chinese Government; it is about helping poor Chinese people.
To ask Her Majesty's Government whether they plan to assist savers, following the analysis by the Office for National Statistics that savers lost out on £18 billion last year because of cuts in interest rates.
The Financial Services Secretary to the Treasury (Lord Myners): My Lords, low interest rates benefit many people with mortgages and employers using bank finance. However, they also mean that savers see their returns fall, which has a particular impact on older savers, so last autumn the Government increased the ISA subscription limit for the over-50s, increased the capital disregard in pensions credit, and encouraged pensioners to claim back any overpaid tax on their savings. ISA limits were increased for everyone earlier this week and will increase with indexation in future years.
Baroness Turner of Camden: My Lords, I thank my noble friend for that response. In particular, I am grateful for the steps taken by the Government to try to mitigate the impact on elderly savers. That is to everyone's advantage. Does he not agree with me that the rate cut has been of enormous benefit to numbers of people, including, of course, business leaders in this country and to people who had mortgage problems? It means that those who might otherwise have been worried about their home security do not have that worry any more. For that I suggest that the Government are to be thanked.
Lord Myners: My Lords, I thank my noble friend for that observation. She is, of course, correct: low interest rates have played an important role in supporting the economy and, in particular, have been of real benefit to those with mortgages. The Halifax building society has estimated that, compared with 2008, the impact of lower interest rates has had the same effect as an 11 per cent increase in real disposable income. The Bank of England has also referred to the fact that reduced interest rates have had an important impact on business and consumer confidence. I think the lower interest rates have been helpful to the economy, helpful to asset values, and, therefore, helpful to the value of people's pensions and other savings.
Lord Peston: My Lords, I declare an interest as a small saver who is not getting any calculable interest on most of his nominal assets. None the less, I well understand the need for lower interest rates as a central part of our macroeconomic strategy to produce the kind of excellent growth we are about to see. Will my noble friend consider the fact that when quite a lot of businesses, particularly small businesses, try to borrow, they are quoted enormously high interest rates, despite reading in the Financial Times and other newspapers that interest rates are low? Is there not a chance of a failing somewhere in the financial system, which means that people cannot borrow at the interest rates at which the rest of us are lending money?
Baroness Noakes: My Lords, the Minister will be aware that nearly a quarter of the assets held in child trust funds are held in cash accounts. Can he explain why HMRC's material on child trust funds, including the information on its website, contains no warning of the danger of negative real returns?
Lord Myners: I do not think it would be appropriate for HMRC to be giving what would, effectively, be guidance on investment decisions. Nor do I think it is right that Government should seek to direct people. Given the appropriate information available on other websites, including the FSA's, we believe that people will reach their own determinations on the best form of disposition for their child trust funds, ISAs and other forms of saving.
Lord Oakeshott of Seagrove Bay: My Lords, with the deficit that will be running over the next few years, under any Government, interest rates are bound to go up. Is not the right way to help savers to take them out of paying income tax on the first £10,000 that they get? There is only one party offering that. The Minister did not seem this time to be talking about his friend Gordon Brown as the friend of savers or pensioners because, if, for the next five years, anyone were to believe that, that would be a monumental triumph of hope over experience.
Lord Myners: The noble Lord asked two quite separate questions. The tax policies being proposed by the Liberal Democrats are well known and, no doubt, we shall all watch with great interest to see what the nation thinks of those plans when they come to cast their votes in the election. Low interest rates have played an important role in supporting the economy and in supporting asset values, although undoubtedly interest rates have played a major role in correcting the fall in house prices and keeping companies operating in an effective way in the challenging economic environment.
Baroness Gardner of Parkes: Like the noble Lord, Lord Peston, I declare myself as a small saver. Does the Minister not agree that a lot of elderly people find it very confusing that on some accounts the reasonable interest rate suddenly drops overnight to 0.01 per cent or something of that type and the good ISAs that are on offer will not take transfers from other ISAs? Elderly people are being asked to make extremely difficult financial decisions, particularly as many of them rely upon their savings and the interest on them to help their ordinary standard of living.
Lord Myners: I am very conscious of the importance of interest income to many people in retirement. However, interest rates are set by the Bank of England and reflect the economic circumstances of the country. We are talking about not only short-term interest rates but long-term interest rates. The House should not forget that investing institutions here and overseas continue to be very attracted by investing in gilts at yields of less than 4 per cent. There are good investment opportunities available. I have checked the FSA's website this morning. It gives guidance on finding the best interest rates available, and there are several products offering interest rates of more than 4 per cent. The implied longer-term trend in interest rates will see an increase in interest rates in due course, but I am aware that some people's patience is being stretched by waiting for that increase to take place.
The Financial Services Secretary to the Treasury (Lord Myners): My Lords, I shall speak also to Amendments 2 to 6. These amendments remove from the Bill the clauses relating to the Council for Financial Stability. As I set out in Committee yesterday, given the limited amount of time remaining in this Parliament, the Government have agreed with the Official Opposition through the usual channels and in the usual way which parts of the Bill should be enacted. The Council for Financial Stability was a casualty of this process, as were Clauses 8 and 18 to 25 on the FSA's international remit and collective proceedings respectively, as I set out yesterday. In order to secure the passage of the remainder of the Bill, the Government have agreed to withdraw these provisions. That is why I have tabled amendments to remove all clauses relating to the CFS. As I said yesterday, the Government continue to believe that these provisions are necessary, sensible and desirable. However, in the interests of securing other important elements of the Bill, on which greater consensus exists, the Government have agreed to withdraw them.
Alongside removing Clauses 1 to 4, it is logical that the amendment tabled by the noble Lord, Lord Hamilton, that relates to the council should also be removed, and we have tabled an amendment that achieves that outcome. The Government have also tabled an amendment to remove Clause 6 in the new print of the Bill, which was introduced by the noble Baroness, Lady Noakes, and concerns financial assistance. Given that it largely duplicates a pre-existing requirement, and following agreement with the Official Opposition through the usual channels, I have also tabled an amendment to remove this clause. I urge noble Lords to support these amendments and beg to move.
Baroness Noakes: My Lords, I shall weep no tears for the removal of Clauses 1, 3, 4 and 5. We spent most of our first two days in Committee talking about these clauses, and I think our views on the Council for Financial Stability were made clear during our discussions. However, I am less happy about losing Clauses 2 and 6. As the Minister said, Clause 2 came from an amendment tabled by my noble friend Lord Hamilton that was agreed to on a Division in your Lordships' House. It asks for a report on the structure of the UK financial system, which we believe is a topic that cannot be ducked. My noble friend's amendment was phrased in terms of the Council for Financial Stability and therefore does not sit easily in the Bill, but the idea behind it remains valid. I say to my noble friend and all noble Lords who supported the amendment that if my party forms the next Government, that topic will not be ignored.
I was disappointed to hear that the Government wished to remove Clause 6 as part of the wash-up procedures. When I moved the amendment to insert that clause, the Minister, and the noble Lord, Lord Davies of Oldham, whom I see in his place, sat mute and the amendment was accepted into the Bill. The amendment addresses a real issue about informing Parliament in a timely way about financial assistance to the Bank of England. It is not met by any other provisions. My amendment was designed to ensure that the Government-any Government-could not keep Parliament in the dark again, as happened last year in relation to more than £60 billion of support for RBS and HBOS. I am saddened to see it go, but accept it as part of the wash-up arrangements.
Lord Oakeshott of Seagrove Bay: My Lords, obviously we accept the deletion of the clauses; we are just sorry that so much time has been wasted discussing them and that so much uncertainty has been created for the City of London and for our regulated structure by these half-baked Conservative proposals which have been floating around. Let us hope that they never see the light of day after the election.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Davies of Oldham): My Lords, I am under the obligation, following last night, to be brief in my comments on the Bill, but I pay due respect to all those in Committee on the Bill and thank them for the
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I place on record my particular thanks to my noble friend Lord Faulkner for his support during Grand Committee, when I was unavoidably detained by business in the main Chamber. He stepped into the breach and more than made up for my absence; I was delighted to see the progress that the Bill made on that occasion. I also thank the noble Lord, Lord Taylor of Holbeach, and, if I may in his absence-I am sure that he is on some constructive work-the noble Lord, Lord Greaves, both of whom adopted an attitude of great understanding of how important the Bill is for the nation, while at the same time rightly identifying issues that need it to be fully considered. I pay my due regards to those noble Lords and their Back-Bench colleagues who supported them in their contributions. I pay tribute to the Minister for the natural and marine environment in the other place, Huw Irranca-Davies, who guided the Bill through the other place with considerable skill and determination. I also place on record my appreciation of stakeholders who, through their ongoing engagement throughout the Bill, have helped to develop it satisfactorily.
I also take this opportunity to remind the House of the changes made to the Bill as a result of agreements reached during its progress in Grand Committee. There were 25 amendments in total, the vast majority of which were a direct result of the very helpful points that were raised and the excellent work that was done by this House's Delegated Powers and Regulatory Reform Committee for its report, and I thank all members of that committee for that constructive work.
In summary, the amendments that were made in response to the committee's report constrain the power to specify new functions as risk-management functions to the functions that are already set out in statute, to provide for regulations on appeals to be subject to the affirmative procedure the first time they are made, to constrain future changes to the maximum civil penalty in Clause 15 to reflect inflation, to introduce the negative procedure for the national flood and coastal erosion risk management strategy in England and for national guidance on this issue in England and Wales, to introduce parliamentary and Welsh Assembly scrutiny as appropriate for subordinate legislation under the Reservoirs Act 1975, and to require a consolidation Bill to be laid before Parliament before the power to make pre-consolidation amendments by order can be used.
The Government also amended Clause 43, the provision on concessionary schemes for community groups, to protect them from unaffordable surface water drainage charges. The House will recognise that this was an important and significant measure. This amendment was made to put beyond any doubt that Ofwat had to have regard to the Secretary of State's guidance on the need for and structure of concessionary schemes in assessing any charging schemes that water companies propose. We believe that that was the effect of the provision as initially drafted, but we took the
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At Second Reading, I reflected on the impact of the terrible flooding in Cumbria and in other areas of the country on homes, businesses and communities, many of which, as we all appreciate, will take several years to recover properly. The Environment Agency has told us the costs of the 2007 floods-£3.2 billion-so this is a vital Bill that has received cross-party support and is eagerly awaited outside Westminster. We have all seen the havoc that floods have wrought in recent years. Conversely, we all remember the periods of drought, so we have to be ready for a future in which, regrettably, such events are likely to be more common. I am confident that this Bill will equip us to meet the challenges that lie ahead, and I commend it to the House.
Lord Taylor of Holbeach: My Lords, I join in the Minister's acknowledgements. This Bill will indeed be welcomed by communities up and down the land, and let us hope that it will form the foundation for greater security against the risks of flooding in the future.
I thank my colleagues in another place, Nick Herbert and Anne McIntosh. As we know, the Bill was introduced in the other place by the Minister, Mr Huw Irranca-Davies, and it was the other place that considered it, but much of the work that was done here built on the work of the Delegated Powers and Regulatory Reform Committee, which has been extremely useful. This Bill, with the strong consensus that has laid behind it at all stages, has provided an ideal opportunity for Parliament to work together to improve it.
I thank my colleagues the noble Duke, the Duke of Montrose, and the noble Earl, Lord Cathcart, for their support, and I am delighted to see the noble Lord, Lord Faulkner, in his place; the Minister rightly acknowledged the work that he did on this Bill the other day. I thank the Bill team, whose work has been exemplary on this Bill. We wish this Bill well.
Lord Addington: I apologise for missing the first part of the noble Lord's speech, but it is not a normal day and even I will occasionally take my eye off the monitor. Basically, we think that this Bill is a good thing. I particularly thank the Government for the attitude that they have taken. It is also nice to be able to congratulate the Commons on having done most of the legwork for us.
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