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Let us consider some causes of the economic crisis that we are all suffering. Over past decades there was a basic shift in the idea of wealth creation, which we now know was misguided. Individuals, financial institutions and Governments accepted a false idea that simply by adding inflated values to property we were creating real wealth. We came to believe that simply adding numbers-whether to derivatives on the financial markets, to property values or to the creation of service industries-was enough to create national wealth. People working in banks were led by sheer greed and lured by the attraction of earning huge bonuses for uncontrolled and unsafe lending.

We also encouraged uncontrolled consumerism, based on exploiting poor people in the developing world who were paid near starvation wages for producing goods for developed countries. We created an economic system based on inequality, injustice and exploitation. We tried-and failed disastrously-to build a modern economy based on financial services, property values and speculation. We now know that this model is not sustainable; it leads to boom and bust cycles.

I am not opposed to property as a means of creating wealth, but it is not enough to generate national wealth. We must shift our focus back to strengthening manufacturing as the primary generator of wealth and economic well-being. We need a more balanced approach to economic development that embraces manufacturing, service industries, banking, financial services, and IT and knowledge-based industries. The Government should focus on developing initiatives and incentives that will stimulate our manufacturing base.

We live in a global village where manufacturing skills are being transferred to developing nations at an alarmingly fast rate. We need to ponder how we can maintain a long-term wage differential when a worker in a developing country earns less than one-tenth of what is earned by his counterpart with a similar skill living in the UK. We continue to demand that workers in these nations provide us with the products that we need at ever cheaper prices. As a result, the gulf between the rich and the poor, and between nations, grows fast. People who toil to produce agricultural or industrial products, especially in the developing world, are not paid a fair wage.

We talk about global warming but we pay only lip service to addressing the problem, although we know that the real cause of global warming is uncontrolled consumerism, overconsumption and the sheer waste

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that people living in rich countries have got used to. Twenty per cent of the world's population in the highest-income countries account for 86 per cent of total private consumption, while the poorest 20 per cent account for a minuscule 1.3 per cent; the richest fifth consume 45 per cent of all meat and fish, while the poorest fifth consume just 5 per cent. The United States, for instance, with about only 5 per cent of the world's population, consumes 25 per cent of the world's commercial energy and natural resources. The richest consume 58 per cent of total energy; the poorest fifth consume less than 4 per cent. Two billion people exist on less than $2 a day. Finite resources are being sucked from low-income countries with little benefit to them, further accelerating environmental degradation in those countries and removing the resources that the people there need to live on.

This situation is not sustainable. Society should be encouraged to be thrifty, with people eliminating wastefulness from their lifestyles and using only what is absolutely necessary for sustainable living. We should help to create a system whereby the 2 billion poor who receive less than a subsistence wage for their labour are paid a fair living wage. Multinational corporations that buy goods from suppliers in the developing world should press those suppliers to pay a fair wage to the workers whom they employ. By such actions, we will enable them to afford manufactured goods and have better food, better living conditions and better education for their children. By taking these measures, we will be increasing the global consumer base rather than asking the western consumer to spend more to regenerate the economy.

The economic downturn is a rude awakening for us. It should stir us to reassess our lifestyles in order to develop a society in which we respect nature and evolve a more caring and sharing world. We should partner developing countries to help them to grow out of the present recession. The future economic global planning strategy has to be to work together with the developing countries of Asia, Africa and South America to create a more balanced and sustainable economic order that will benefit all. We need a more balanced strategy-one underpinned by a fairer, more equitable, more measured approach, with equal opportunities for wealth generation and sustainable economic development.

9.53 pm

Lord James of Blackheath: My Lords, by this hour of the evening I had confidently been expecting to rip up my speech on the grounds that everything that I had to say would have been said already. However, the only thing to which that applies is the congratulations to my noble friends Lady Wilcox and Lord Henley and, as that has been said so often, I hope that they will take it on the nod.

Unfortunately for your Lordships, my subject is going to be renewable energy, about which a great deal has already been heard, but it will come from a direction that no one has touched on at all so far. I should like an assurance from members of the previous Government that the undertakings given to this House in the last address on renewable energy before the election hold good and that the target of a 20 per cent reduction in

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carbon by 2020 is on course to be met. I have very serious doubts about it. I remind your Lordships that at that time we were told that between 8 and 9 percentage points of the target had been achieved from existing technology and that there was every expectation of the other 12 percentage points being reached between now and 2020. However, we were then told separately that, in order to achieve that, the Government had acquired control of five former estates from the Crown Estate and, in a report on the Crown Estate handing over the land, we were told by the Prime Minister, no less, that he was making available £75 billion for the completion of the wind farms to be placed on those estates.

Seventy-five billion pounds is a lot of money. It is nearly three times the amount that was originally estimated by the Select Committee, which suggested that wind could achieve the 2020 target had we started three years earlier. I would like to know where the £75 billion is today. I suspect that the previous Government have left this country in the position of one of those awful Twenty20 cricket matches with 70 runs to score off 10 balls, which is impossible. I do not think that we can get there by 2020, even with £75 billion. I hope that someone remembered to ask the outgoing Prime Minister, before he went back to Kirkcaldy, for the key to the safe holding the £75 billion. If we cannot spend it on the wind farms, can we please have it for reducing the national debt, as it would be very welcome indeed? Where is it?

If what I suspect is the case, what will we do about meeting the 2020 target? It matters financially. Apart from the need for a cheap source of sustainable energy, which is much more important at the moment than the issue of global warming-I confidently expect to die of hypothermia long before I am dead of carbon poisoning-is there an alternative fallback plan, which can be picked up by the new Government, for how to meet the 2020 target? If we do not meet it, Europe will crucify us with carbon penalty charges after 2020 and we shall have no defence against that if we do not hit the target. What will we do? There is a squeak of a chance of an alternative strategy. I hope that the new Government will make an urgent audit of the viability of the present 2020 programme and assess any alternative.

The previous Government ran a competition for clean coal among four possible contenders for a major government contract and each of them was ready to go with its final bid. My suggestion to the present Government would be to forget immediately the competition and to put all four of those contenders on to a contract, subject to the understanding that they must go for pre-combustion carbon extraction, not post-combustion, and that the contracts are paid on a commercially viable economic basis, with the eventual winner-the one producing the best result-having control of that project.

Some interesting and helpful data on this have come from Durham University and were provided to the ministerial advisory panel, the ACCAT. Had the Government started in 2009, which they clearly did not, they would have achieved 10 per cent of the entire 2020 target simply on pre-combustion coal cleaning. In the event, we are one year behind that. However, there is good news. Professor Gluyas of Durham University has undertaken an assessment-from my

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days leading survey work on the North Sea, I am not surprised about this-showing that there are 3 billion barrels of oil waiting to be extracted from the North Sea which are not included in any of the current reserves. Unfortunately, that is carbon-intensive, but if we follow the American example from Great Plains, North Dakota, it would be possible to take that technology, which is now ready to roll in Teesside, and to use the extraction of those 3 billion barrels, which would be a huge contribution, if cleaned, towards meeting the 2020 target. We could extract carbon on a clean-coal basis for three years to come, say, and then use the carbon extracted from that coal to wash through the high-carbon-intensive oil taken from the North Sea with the result that we would then have 3 billion clean barrels of oil, which would effectively close the gap in meeting our 2020 target. The technique has worked for 10 years in North Dakota-it is proven and it is good.

There are other things that we could do. We could easily devote more time and effort to the one renewable energy strategy where we are unarguably the world leader: seabed tidal work. Forget the waves-the waves do not work, but tidal does. We absolutely have to have a vigorous defence of the growing threats that Europe is bringing to our dominance of the Dogger Bank, which has the biggest concentration of tidal flows in the world. If we could find a way of linking it properly to the grid, it would be sufficient to provide the entire carbon-free energy needs of the United Kingdom. If the Government would give proper stimulation to a competition among universities and researchers as to how we could create the link between the grid and the tidal power, we would have a ready-made winner.

It is all doable, but not if we continue to believe that the old strategy left behind by the old Government is workable and will be delivered. It will not. We have to have a new strategy and it has to start now.

10.01 pm

Baroness Kingsmill: My Lords, the hour is late and the debate has been long. I am the 52nd speaker, so I am not kidding myself that I shall say anything original. The debate has been an example of the House of Lords at its best. We may have a coalition Government-no one won the election-but it has been interesting to see tonight how much common ground there is between all three parties. That is a constructive approach. It is not to say, however, that we will not be a forceful and effective Opposition when we think it is appropriate.

I do not mind that lots of other speakers have congratulated the noble Baroness, Lady Wilcox. I want to add my congratulations. I have known her for a very long time. We spoke on similar platforms many times before either of us were Members of this place. I am delighted to see her where she deserves to be. I am grateful to her for her opening speech, even though I did not agree with everything she said.

I shall be brief because, as I said, I am the 52nd speaker. I have only four points to raise tonight. First, we have a very uncompetitive banking system, which

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might be the source of many of our problems. I say what the Americans have said; that if a bank is too big to fail, it is probably too big to exist. We need to sit and think about a review of the competitiveness of our banking system generally. We have the means to do that: we could ask the Competition Commission to do it. It is a good idea for the Government to consider that carefully at an early stage. It is interesting to note the recent significant increase in complaints from the public to the financial ombudsman. It is pretty obvious that the uncompetitive nature of our banking system means that it is not serving its customers appropriately.

The Government should also consider how they can lower the barriers to entry for new entrants to the banking system in order to make it more competitive. There are emerging banks, such as Virgin Money, and it would be sensible to create more competitiveness in the banking system by encouraging such banks to develop and grow. It would also be helpful if we expanded financial education for people generally so that they better understand some of the products and issues that they are getting themselves into when they engage with banks. Personally, I would like the banks to undertake an audit of all their products for customers to ascertain the fairness and reasonableness of their pricing.

My second point relates to small businesses. This is related to my point about banking. Since the beginning of the banking crisis, we have lost more than 30,000 small firms, and the drying up of bank credit is largely to blame. Despite the large sums of public money that have been poured into the banks, there are still many stories of profitable businesses with solid credit records being refused loans or offered them on such punitive terms as to be usurious. Good businesses are going to the wall unnecessarily as their cash reserves dwindle and the banks withhold vital credit. I do not want to appear to be attacking the City or banks. The City is and will remain a global centre of excellence not only in financial services, but in the law, accountancy, management consultancy and insurance. However, the banks must recognise the social and economic contract that they have struck in accepting bailout money. They need to fulfil their part in meeting their responsibilities to society and the wider economy. To paraphrase Luke 12:48, "From those to whom much is given, much is required". It is important that we remember that.

Thirdly, we must look at issues relating to takeovers. I do not want to turn on protectionism or anything like that, but the furore around the takeover by Kraft of Cadbury's drew everyone's attention to the fact that we do not give sufficient consideration in this country to takeovers by foreign corporations. It is all too easy for that to happen. We should also give some thought to who is entitled to vote in those circumstances because, as everyone is aware, there was a great piling-in of speculators after Cadbury became a target. We should reflect on and consider exactly how we should approach such takeovers.

Fourthly-I am grateful to the noble Lord, Lord Smith of Clifton, for raising the issue-we should consider the huge and offensive waste of female talent in business. As we look around the Chamber today,

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very few women are represented here as spokespeople for business. We need to address that. The issue of equal pay was mentioned in the Queen's Speech. I am very pleased that it was, because it is disgraceful that, about 40 years after the introduction of the Equal Pay Act, we still face a huge pay gap. I caution the Government. When they are thinking about public sector pay cuts, they must remember that there are a large number of women working in the public sector. They are the people who will suffer most from cuts in public sector expenditure and public sector pay. I hope that those points will be taken on board by those sitting opposite.

10.08 pm

Lord Newby: My Lords, like all other noble Lords, I begin by congratulating the noble Baroness, Lady Wilcox, and the noble Lord, Lord Henley, on their new appointments and wish them every success. I have to say that I am extremely sorry that the noble Lord, Lord Myners, has decided to go to the Back Benches-a new experience for him. It has been a great pleasure taking part in debates with him over the past 18 months. Whether I have agreed or disagreed with him, his tremendous knowledge of the subject and willingness to engage genuinely in the issues will be sorely missed.

The noble Lord, Lord Myners, will recall that we supported the previous Government in their fiscal stimulus over the past 18 months, and he helpfully pointed out to the House that I argued against precipitate cuts in public expenditure now. I still believe that deep cuts in public expenditure this year would be a mistake, but the cuts that were announced last week could hardly be described as deep or severe. In some cases, such as abolishing child trust funds, the useless Connexions service and some of the RDAs-though not the northern ones, to reassure the right reverend Prelate-they were desirable in any event. Switching some expenditure into additional apprenticeships surely makes sense at this stage.

Given the crisis in Greece and elsewhere in Europe caused by excessive government borrowing, it would have been completely incredible for a new Government in the UK to come in without making any proposals about reductions in public expenditure. However, the £6 billion of cuts this year is a small fraction of the cuts that will be necessary over the course of this Parliament and a small fraction of the cuts that the previous Government foreshadowed in the Fiscal Responsibility Act. Nothing that we heard today from the noble Lord, Lord Myners, told us how the Labour Party would approach making those cuts to which they are legally committed. There was not a scintilla of a suggestion about how the first pound might be saved. The key questions for all of us is how the cuts, which we all agree will have to be made, can be made to protect the poor and the vulnerable and how we create the strong economy and fair society to which the noble Lord, Lord Haskel, referred.

This is difficult because the poor and the vulnerable are necessarily the principal consumers of many public expenditure programmes. The challenges and opportunities in this area were eloquently set out by the noble Lord, Lord Bichard, in his notable maiden speech last week. With his knowledge of government,

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he argued that many vulnerable people, households and communities received services that did not meet their needs, and that it was not simply a question of resources because often the services were more expensive than they needed to be. He suggested three ways of reducing costs, improving the efficiency of government services and, therefore, getting more for less: reducing silo thinking in Whitehall; improving the co-ordination between public local bodies; and better co-ordination of purchasing across the public sector. He argued that we should be shaping services around clients, not providers. Surely these must be the benchmarks against which we judge public expenditure cuts over the lifetime of this Parliament.

There are many measures in the Queen's Speech that we welcome: the proposal on capital gains tax, the green investment bank and the Equitable Life Bill, which is a shameful legacy of the previous Government who steadfastly refused to deal with people who were suffering as a result of the Equitable Life scandal. We welcome the Hutton review of public sector pay and the proposals on mutuals and co-operatives. The economic challenge facing the country remains the greatest in our lifetime. This election result has given us the chance to play a major part in meeting this challenge. We intend to seize it with both hands.

10.13 pm

Lord Young of Norwood Green: My Lords, I, too, rise, after some time, to congratulate the noble Baroness, Lady Wilcox, on her appointment and the noble Lord, Lord Henley, on his reappointment. I also congratulate the noble Baroness on her opening speech. I pay tribute to my noble friend Lord Myners for his valedictory speech from the Front Bench. I, like other noble Lords, lament his passing to the Back Benches.

There is no doubt that the country faces the serious challenge of reducing our deficit, and the country needs to know how the Government will do that. Will it be cut fairly without damaging front-line services or hurting the poorest families and-this vital point has been made again and again in a variety of ways-without putting the recovery or future growth at risk? These are the criteria that we will apply when judging the coalition Government's plans.

On this basis, the recent announcement fails on four counts. On efficiency savings and cuts, cutting now before the recovery is secured risks having higher not lower borrowing. The removal of growth-supporting measures such as university places and RDA business support this year, when they are needed most, cuts away at the investment that will deliver the rebalanced growth that we will need in the years to come. Scrapping the child trust fund even for the poorest families and families with disabled children is a breach of the Conservative manifesto commitment and will make it harder for families to help their children to get a good financial start in life. The Conservatives have broken their promise that the entire £6 billion will be made up of efficiency savings rather than cuts to services and benefits.

The new Government inherit an economy in which the worst of the recession has ended and the recovery is under way, but that recovery cannot be taken for

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granted, as many contributors have said. The challenge now is to embed and to secure the recovery, not to put it at risk. Where the Government take steps to do that, we will support them, but taking money out of the economy now while the recovery is still fragile is a risk that we should not be taking. As Vince Cable in another place used to argue, damaging the economy now while the private sector was still weak would lead to higher not lower borrowing, to people out of work and to firms not paying tax, and would cost us all more. Does this coalition believe that unemployment is a price worth paying?

Before the election, the Conservatives explicitly stated that they would protect front-line services, but that promise is not being honoured in the light of recent announcements. In fact, the Government's savings are not just in bureaucracy and back-office staff; they are real cuts to real services and will affect people. Children, even the poorest and the disabled, whom the Conservatives originally promised to protect from cuts, as I have said, will stop receiving child trust fund payments. Business support through regional development agencies is being cut. The rollout of the future jobs fund, which offers work experience or training to 18 to 24 year-olds who have been unemployed for more than six months, is being cancelled. The number of new university places, which the Labour Government announced for this year, is being cut by 10,000. That, again, goes against the Conservative manifesto promise of an extra 10,000 places.

Energy has been the subject of a lot of debate all through today. We welcome measures that we believe will help to lower emissions, increase energy efficiency and encourage growth in low-carbon energy, and which would have appeared in our own legislative programme. These include help for home energy efficiency that would be paid for by energy savings, additional funding for carbon capture and storage, a smart grid, feed-in tariffs and an expanded offshore grid. However, it is clear that the Government cannot offer a coherent and long-term agenda for creating a secure low-carbon energy mix and reducing our domestic emissions. Nor can they provide leadership on tackling climate change in the international arena. The Prime Minister has failed to demonstrate leadership on the low-carbon agenda, having tried and failed to turn the Conservative Party green. Many senior Conservative politicians and a majority of general election candidates, many of whom are now MPs, refused to back action on climate change and low-carbon energy, while across the country Conservative councils block the majority of wind-farm proposals.

The new Government still need to answer many questions about their energy and climate change agenda. How can they claim the credibility to deliver a new generation of nuclear power stations as long as the Secretary of State is an avowed opponent of nuclear power? How will they deliver on renewables and on action to reduce emissions while many Conservative MPs and councillors remain sceptical about climate change and the need for low-carbon energy? How will the targeting of industrial subsidies for cuts help our transition to a secure low-carbon economy? Surely

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scrapping the Infrastructure Planning Commission is likely to prove a charter for delay on vital infrastructure projects and for nimbyism.

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