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As regards transport, the decision to scrap the third runway at Heathrow and an additional runway at Stansted will not reduce the number of flights or make a contribution to a greener environment. All it will do is hand the business advantage to Schiphol Airport in Amsterdam, Charles de Gaulle Airport in Paris and Madrid Airport. There will not be fewer flights. The business will be handed to our competitors.
I welcome some assurance on the future of Crossrail, which many people agree is a vital contribution to transport. We welcome the commitment to high-speed rail, but I return to my previous point on the scrapping of the Infrastructure Planning Commission. Will we be able to deliver Crossrail?
As to comments on Royal Mail and the injection of private sector capital, far be it from me to deny previous government policy on this. However, we still believe in a publicly owned Royal Mail. Before making a judgment, our view will be based on whether proposals will deliver reliable and high-quality postal services, which are underpinned by a strong universal service for households and businesses in Britain. Our vision is of a Royal Mail with a secure future and in good health, which provides customers with an excellent service and provides employers with rewarding employment. We want to protect the universal service. The British people rightly cherish the principle of letters collected and delivered anywhere in the UK, six days a week, for a single affordable price. Finally on this issue, as we know, the history of employment relations in Royal Mail has been fraught with difficulty. We have arrived at a situation where the modernisation programme has been agreed. Disturbing that situation needs careful thought.
Given the number of speakers, I will pick out only one or two points; nor would I want to deprive the noble Lord, Lord Henley, the sheer pleasure of answering the range of questions. The noble Baroness, Lady Wilcox, said that the cuts would improve efficiency and spoke about reckless borrowing. A number of comments were made about the extent of government investment. Perhaps we should remind ourselves that some of that investment will have a good return. The investment put into Lloyds and RBS would be capable of achieving a significant return for the Government should they wish to take that opportunity.
I welcome my noble friend Lord Bhattacharyya's reference to the importance of the minimum wage and the extra money put into the science budget, as well as his analysis of the importance of manufacturing and the role of the RDA in the West Midlands. My noble friend Lord Haskel pointed out that Britain has become more prosperous and greener, and is a better place to live. He also pointed out the difficulty that the Government will have in their attempt to cut red tape and at the same time say that sometimes there is a need for more regulation. Surely we should go not for an approach which says that if we bring in one piece of regulation we will remove another, but for an approach which says that we are looking for better regulations.
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I also welcome the appreciation expressed by the noble Baroness, Lady Garden, of the progress that was made on apprenticeships, and I welcome the Government's initiative to increase them. However, I am concerned that that is going to remove money from Train to Gain. We should not forget that we need to address the skills deficit that exists in this country, and the fact that the Leitch report is still relevant. I utter a word of caution in that area.
The noble Lord, Lord Oakeshott, suggested that my noble friend Lord Myners supports the Government's proposals on capital gains tax. I should also utter a word of caution on my noble friend's behalf that that is not his position; I went to the horse's mouth and he assures me that that is not what he said.
My noble friend Lord Whitty and I will have to disagree on one or two issues, such as on the question of Royal Mail and on a third runway at Heathrow. I take this opportunity to congratulate the noble Lord, Lord Low, on his balanced analysis of the way to deal with the deficit and the importance of the pace of any reduction. My noble friend Lady Kennedy made a strong plea for fairness when finding our way through the deficit problem, and that this should be dealt with through strong growth and high employment.
Given the number of economists we have in the Chamber, it is not surprising that there was some difference of opinion. I cannot help reflecting on the old cliché that if they were laid end to end, they still would not reach a conclusion. However, I must admit that I was captured by the analysis made by the noble Lord, Lord Skidelsky, of the way forward and the relevant point he made about cutting the deficit now: how will that actually promote the recovery? On that note, I shall leave it to the noble Lord, Lord Henley, to answer the questions.
10.28 pm
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley): My Lords, it has been quite a long time since my noble friend Lady Wilcox opened the debate, since when we have heard from some 52 or 53 speakers. As the noble Baroness, Lady Kingsmill, said, we have seen the House of Lords possibly at its best and certainly at its widest in terms of the number of subjects we have covered. It is now my job to try to respond to the wide range of subjects before us, covering a whole array of different departments: the Treasury, transport, energy and climate change, business and my own department, Defra, which I shall get on to in due course.
I shall start by offering my commiserations to the noble Lord, Lord Myners, because he told us that this was his swansong on the Front Bench. As many other noble Lords have said, we will miss him and we look forward to seeing him on the Back Benches. I think it was his noble friend Lady McIntosh who suggested that possibly it was the first of many swansongs and that he was going to become the veritable Frank Sinatra of the Opposition Front Bench by making repeated final speeches. I look forward to those. I also offer my thanks to the noble Lord, Lord Whitty, who offered me some very useful advice from Defra, the
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I shall start by saying a word or two about my own department. As my noble friend Lady Wilcox emphasised in her opening speech, it is the Prime Minister's ambition that this Government should be the greenest Government ever. Reducing greenhouse gas emissions, care for the environment and understanding the value of our natural resources should inform all that we do, and it is the responsibility of Defra to ensure that this imperative is understood by government and all others. We are there to explain and promote the economic value of natural resources so that they are managed better and so that those who come after us do not face hardship and disaster through their growing scarcity. We work to ensure a thriving biodiversity and wildlife by preventing habitat loss and degradation; we act to prevent deforestation and to protect the marine environment; we help businesses and communities to adapt to the effects of a changing climate; and we help those sectors for which we are responsible to reduce their greenhouse gas emissions and to contribute to the fight against climate change.
However, Defra is not only concerned with the environment; it is also an economic department. In fact, our departmental remit shows that you cannot separate the two. Therefore perhaps our most important job is to show just how the economics and the environment are intertwined.
During the course of the debate I heard repeatedly from this or that noble Lord that they hoped the Minister would in due course comment on their own particular issue. However, that will simply not be possible. I jotted down a range of different subjects, some of which were raised repeatedly, and I hope I will be able to comment on some of the bigger issues. I think noble Lords will understand that I shall not be able to answer every question that was put to me but, as the noble Lord, Lord Myners, put it, I shall do my best to write to all noble Lords-as I did in my previous incarnation as a Minister and as I am sure all Ministers do-in due course when I have collated all the responses from the different departments. However, as I said, I shall try to deal with one or two of the concerns that have been raised today.
I shall start with the Office for Budget Responsibility because that is where the noble Lord, Lord Myners, started. He asked a number of detailed questions which he would not expect me to answer at this stage and which I shall deal with by correspondence. However, I can give him the assurance that it will be independent-that is important-and that independence will derive from it having complete control over the forecasts it will produce. I was grateful that the noble Lord, Lord Bilimoria, saw that that was a positive step. On the detailed questions, as I said, I shall write to the noble Lord.
Turning to the deficit, the subject most mentioned by noble Lords-indeed, so many noble Lords raised the subject that I cannot list all their names-there were varied views on what to do about it but everyone accepted that it had to be tackled. Even the noble
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"The bigger risk at present would be for a new Government not to put in place clear and credible measures to deal with the deficit".
We are currently running one of the largest deficits in the world. That is simply not sustainable and the longer we delay action the greater the risk of a loss of market confidence, which would mean higher interest rates for all.
I will give way to the noble Lord, Lord Lea of Crondall, just this once, but it is his third intervention in the course of the debate.
Lord Lea of Crondall: It is an important question. Perhaps the Minister could write to me and put his reply in the Library. Is he talking about the complete deficit or about a recession-adjusted deficit? How has it suddenly become a recession-related deficit of 11.1 per cent when it was only 2.5 per cent 18 months ago?
Lord Henley: That is a question that the noble Lord will have to put to the previous Government, who saw it rise to that level. I shall of course write to him in due course and, as I always do, put a copy of the letter in the Library.
The longer that we delay action on the deficit, the greater is the risk of that loss of market confidence. As I said, that would mean higher interest rates for all, stifling recovery and making challenges ahead even harder.
Lord Myners: I am grateful to the Minister for allowing me to ask just one small question. It is clear that the size of the deficit will be a function of the expected rate of economic recovery and growth; the two interplay. I believe that the Minister said that the OBR would make independent forecasts. Will he confirm that it will make economic forecasts as opposed to auditing or commenting on Treasury forecasts?
Lord Henley: The forecasts of the OBR, as I made clear, will be independent. It is for it to make those independent forecasts. I was trying to stress its independence. I shall write to the noble Lord on that in greater detail, but its independence was his principal concern. He will have a chance to see the first of those forecasts quite soon, as I understand that the first of them will be out before the Budget. If I am wrong about that, I shall let him know in due course.
One should also refer to the OECD's recent economic report, which argues that a more rapid fiscal consolidation would help the recovery by leaving room for interest rates to remain lower for longer. That will support spending by households and by business. The importance of taking action this year is underlined by recent events in the eurozone. Failure to take action would put that recovery at risk.
I turn to questions asked about tax. Noble Lords mentioned CGT, income tax and tax avoidance-that was the noble Lord, Lord Oakeshott. We heard confessions from the noble Lord, Lord Desai, about
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Lord Henley: I remind the House for its amusement that the second occasion on which the noble Lord was sacked, or it might have been the first, was the result of his having informed the House, or perhaps the world more generally, that his then leader-we shall not mention which leader it was-was no economist. That struck me as a statement of the obvious, but he was sacked nevertheless.
Many noble Lords have raised CGT, VAT, income tax and tax generally. The noble Lord, Lord Myners, pressed me to give an explanation of what was going on. I have to remind him, first, that I am not a Treasury Minister and, secondly, that I think he knows the date of the Budget. Neither the noble Lord nor any other noble Lord expects me to second-guess my right honourable friend. It is very tempting to do so, but it is one of those occasions where one has to say that it is beyond my pay grade. The noble Lord will have to wait three weeks until the Budget to hear answers on those matters.
I appreciate that time is moving on, so I shall say a little about policy on climate change, which was another subject that attracted a great many speakers. I was grateful for the support that came from many noble Lords, but I noticed the concern expressed by two sceptics-I think that that is the right word-on my own Benches, my noble friends Lord Lawson and Lord Reay. As the noble Lords, Lord Whitty and Lord Hunt of Chesterton, and my noble friend Lord Jenkin put it, there is a need to convince the public on this issue. It might be more than just the public that we have to convince; it might be some of my noble friends. Certainly, there are matters that we need to look at here, and a great number of matters on which I shall have to write to noble Lords in due course to deal with their concerns. For example, the noble Lord, Lord Whitty, raised the question of the Government's commitment to the renewable heat initiative. That is something that we are committed to supporting, but we still need to consider the various options for promoting it most efficiently.
We will look at all the other renewables that noble Lords mentioned-and my noble friend Lord James referred to the possibility of tidal power on Dogger Bank. As my noble friend himself admitted, some pretty great technological challenges face us in an area such as that. I also give an assurance to my noble friend Lord Teverson that we will certainly push the EU to demonstrate leadership by tackling the levels of international climate change and supporting the increase in the EU emission reduction target to 30 per cent by 2020.
There were some fairly technical questions from my noble friend Lord Jenkin and the noble Lord, Lord Giddens, on the carbon floor price-questions that are slightly beyond my level at the moment. That is something for other departments, but I can give an
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I turn to the question of whether nuclear power needs subsidy, a point raised by the noble Lord, Lord Giddens. We believe that it does not need public subsidy and, on that basis, energy companies have already come forward with plans to build and stand up to 16 gigawatts of new nuclear energy. Certainly, we are keen on new nuclear energy, and I can give that assurance to the noble Lord, Lord O'Neill of Clackmannan. On his more detailed question about the funding for Sheffield Forgemasters, as he will be aware, the Treasury has asked all departments to look at all spending approvals since 1 January this year, which would include that project. Due diligence is required because of the budgetary position that this Government inherited from the Government of whom the noble Lord was such a supporter, to see whether those plans are affordable and consistent with government priorities. If they are consistent with that, they will go ahead-but that is all that I can assure him of at the moment.
I shall say a word or two about regional development agencies, which were raised by the noble Lord, Lord Bhattacharyya, and the right reverend Prelate the Bishop of Liverpool, who spoke about the regional development agency in my area and his area-the Northwest Regional Development Agency. My noble friend Lord Bates spoke of One North East, the RDA covering Newcastle. As my right honourable friend the Prime Minister stated last Friday, an early task of this Government will be to reform and refocus regional support and the RDAs. Therefore, we will be looking at all the RDAs. He stated that he will assign Ministers and senior MPs to some of our biggest cities with responsibility to work with local communities to help to drive forward economic development by ensuring that blockages in Whitehall are dealt with. We will certainly want to look at the RDAs-but I think that the RDAs in the north might be a special case.
With regard to electricity supply, the noble Lord, Lord Oxburgh, talked about a looming crisis. The noble Lord stressed that there had been, I believe, 17 Energy Ministers in the past 10 years. It seems, then, that while he rather politely put it as a looming crisis of our own making, it is possibly a crisis of the party opposite's making if it was changing Ministers that often and not making the necessary decisions. We recognise that there is a need for a systemic approach to developing a framework that will both deliver energy security and meet our climate change objectives. We have proposed a set of interventions, including an emissions performance standard, that aim to deliver a secure, low-carbon, cost-effective and competitive energy sector. Our electricity market reform project will ensure that we deploy the right mechanisms in the right way at the right time.
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A number of noble Lords talked about agriculture, principally in relation to problems that my noble friend Lady Byford raised about the Rural Payments Agency, which was also mentioned by the noble Lord, Lord Greaves, and others. I declare an interest as a recipient of funds from the RPA as a farmer. We are all aware of the problems within the agency, and the department will be seeing what it can do about dealing with them. We will also be looking at changes, as asked for by my noble friend the Duke of Montrose and others, in the common agricultural policy. I believe, and I think that everyone in this House would accept, that that means genuine reform of the policy. We will certainly push for that as and when we can.
Moving on to some of the issues raised about the Royal Mail and the postal services Bill by the noble Lord, Lord Whitty, we understand the concerns on all sides about the future of the Royal Mail and the real affection in which it is held. However, the Government are now looking at the detail of how to ensure that the Royal Mail can benefit from a degree of private sector capital and discipline and how it can modernise-possibly, as I think one of the right reverend Prelates suggested, in partnership with employees. We will announce details of our plans in due course, but I stress that we will seek to modernise the Royal Mail in conjunction with its employees.
I shall say a quick word about transport, the final department that was covered. We had a great many suggestions from the noble Lord, Lord Bradshaw, some more radical than others. I think that he suggested a purge of an entire division within the Department for Transport; I am not sure quite how brutal that purge would be, but no doubt he can let us know.
We also heard comments from my noble friend Lord Glasgow about high-speed rail being not purely a local English matter but a British matter. Like my noble friend, I have an interest in high-speed rail in that I live more than three and a half hours away from London under the current regime. I refer the noble Earl to the commitments that were made in the coalition document: this will be a truly British high-speed rail network. At this stage, one has to say that the timing is another matter. These things are very expensive but the commitment is there and it is a commitment to a high-speed railway that would be truly British, rather than taking us merely as far as Birmingham or Manchester.
I end by saying, again, that I will in due course write to all noble Lords. I hope that I can answer all the questions that have been put before me. As my noble friend Lady Wilcox said earlier today, any sensible family or business knows the dangers of too much debt. The debt is the first thing that we must concentrate on. We cannot recover without reducing it. That will be the Government's first aim. I was grateful for the endorsement of the noble Lord, Lord Myners, for that. We must do that while adhering to the values, as my right honourable friend the Prime Minister said, of freedom, fairness and responsibility, and of knowing and respecting the value of our natural environment.
Debate adjourned until tomorrow.
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