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House of Lords

Monday, 7 June 2010.

2.30 pm

Prayers-read by the Lord Bishop of Guildford.

Several noble Lords took the oath or affirmed.

Economy

Question

2.38 pm

Asked by Lord Haskel

To ask Her Majesty's Government what steps they are taking to bring more balance between different sectors of the economy.

Lord De Mauley: My Lords, our economy is indeed too narrowly focused on just a few industries and a few regions. Growth must be spread across the country, making full use of talent across the United Kingdom and across business sectors. The Government's central task is in fostering the right conditions for business and innovation to succeed. In specific answer to the noble Lord's Question, we are carefully considering the recommendations made in the Dyson review: improving the current system of financial regulation, halting the rise of red tape, supporting apprenticeships and creating a green investment bank.

Lord Haskel: I thank the Minister for that response. Is he aware that, three days after I put this Question down, the Prime Minister rushed off to Yorkshire and made a speech exactly on this topic? Does that demonstrate the power of Question Time in the House of Lords or the urgency of the issue? In his speech in Yorkshire, the Prime Minister used many fine words such as "supporting growing industries" and providing the,

"long-term ... support our economy needs".

Can the Minister explain exactly what those words mean in terms of government action?

Lord De Mauley: My Lords, I congratulate the noble Lord on being so prescient. As he identified, the Government believe that we need to reduce our reliance on one or a small number of sectors, particularly the financial sector. The most important element will be to foster and encourage technology, especially high-tech manufacturing, an area in which I know the noble Lord takes a special interest. That is why we commissioned the Dyson report, which identified five key challenges for government, including the education of scientists, engineers and technicians, exploiting knowledge better and financing and supporting high-tech businesses, which the Government are examining closely. No one suggests that this is going to be easy. We have already announced a number of reforms to simplify business taxes and to reduce red tape, which are critical to encouraging and helping business.

Lord Razzall: My Lords, does the Minister accept that when the noble Lord, Lord Mandelson-whom I understand we now have to refer to as the third

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man-held office before the election, he produced a huge number of initiatives aimed at many of the things to which the Question asked by the noble Lord, Lord Haskel, directs itself? Would he think it helpful if the Government could quite soon indicate which of those initiatives they propose to cancel or retain?

Lord De Mauley: My noble friend is quite right. On 17 May, the Government announced that a separate review process is under way to examine spending commitments made since 1 January. It includes some of the projects to which my noble friend referred. Where projects are good value for money and consistent with the Government's priorities, they will go ahead. Where they are not, it would be irresponsible to waste money on them. The Treasury has been asked to fast-track a decision to give clarity as soon as possible to the companies and the work on which they are focusing. A decision is expected soon.

Lord Kinnock: My Lords, can the Minister tell us whom we should believe, especially in view of the impact on the economy and employment of government policy on public expenditure? Should we believe Mr Clegg, who says that there will be no going back to the days-as he put it-of Thatcher, or Mr Cameron, who tells us that the cuts are going to be so savage that they will change the way in which we all live? Which of them is telling the truth, because they are opposites?

Lord De Mauley: My Lords, the noble Lord, Lord Kinnock, will not be surprised to hear that I do not necessarily agree with him. I respectfully suggest to him that his line of questioning on job losses, in particular, is somewhat flawed in that it ignores the near certainty that job losses on a massive scale will occur if cuts are not made because of the danger of rising interest rates and their effect on business.

Lord Lang of Monkton:My Lords, as the Minister addresses the difficult inheritance that he has to deal with, will he bear in mind the fact that the greatest imbalance in our economy is between the public sector and the private sector and that without a healthy and diverse private sector there can be no effective public sector? Will he ensure that this thought is kept at the forefront of his deliberations and those of his colleagues?

Lord De Mauley: My Lords, I could not agree more with my noble friend.

Lord Myners: Does the Minister expect to see the banking industry's economic contribution grow or contract in importance?

Lord De Mauley: My Lords, the noble Lord, Lord Myners, has put his finger on a very important point. He is right to point out that it is important that the banking sector does not contract. We need to rebalance by bringing up manufacturing and other sectors.

Lord Ryder of Wensum: My Lords, further to the question posed by the noble Lord, Lord Kinnock, will my noble friend please clarify whether Portugal, Spain, France, Germany, Italy and Ireland have already announced or undertaken public expenditure reductions

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on a greater scale than we have here in the United Kingdom in order to address the public and the private sectors and to reduce our massive deficit?

Lord De Mauley: My noble friend is, of course, absolutely right.

Lord Eatwell: My Lords, does the Minister recall that the Prime Minister referred in his speech to the need to expand manufacturing industry? Does he agree with the Financial Times that the recent recovery in manufacturing industry-it is now growing faster than at any time since 1987-has been aided by the significant fall in the pound? Does he also agree that this illustrates the importance of maintaining demand to stimulate investment and growth?

Lord De Mauley: My Lords, I cannot find fault with the noble Lord's argument that the fall in the pound has helped our exports. It is important that we maintain all efforts to promote our manufacturing industries and, indeed, exports.

Baroness Howarth of Breckland: By accepting that a great deal of effort needs to be made with the deficit, does the Minister not believe that there is some danger in setting the public and the private sectors against each other? There are many in the public sector whom the Government, and certainly their Liberal Democrat colleagues, depend on to deliver services to our most vulnerable people. What are the Government going to do to maintain that balance?

Lord De Mauley: My Lords, the noble Baroness is right that there is a balance. The public sector performs an extremely important function and nothing that the Government are doing should be taken to undermine that.

Universities: Funding

Question

2.47 pm

Asked by Baroness Sharp of Guildford

To ask Her Majesty's Government how much university funding has been cut from the academic year 2010-11.

Lord Wallace of Saltaire: My Lords, in December last year, the previous Administration made a higher education funding reduction of £449 million on their original plans. By focusing the previously announced university modernisation fund on only high-quality proposals, we were able to support both 10,000 extra student places for 2010-11 and to make available an additional £50 million to fund these. The overall effect of changes in university funding in England in 2010-11 will therefore be a reduction of some £379 million on original plans.

Baroness Sharp of Guildford: My Lords, is the Minister aware of what a rollercoaster the previous Government and this Government have put universities on? The funding was down by £400 million in November last year, was up again in March and is now down

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again. Given that the universities are only one part of the BIS budget and the only non-ring-fenced part of the education budget, they are taking a quite disproportionate cut in funding as a result of the changes that have been announced. Is this wise, given that it is widely acknowledged that the new jobs will have to come from the knowledge economy? He may wish to reply as his predecessor on the other Benches did-that the university sector has benefitted enormously from increases in the first 10 years of this century-but is he aware that these made good the neglect of the previous 20 years and that we have only just caught up with the position that we were in earlier?

Lord Wallace of Saltaire: My Lords, universities are not taking a disproportionate cut. One has to remember that direct public funding is not the only source of university funding in this country. It will be tough for all those receiving public spending in the next few years, but we are conscious that the science budget has to be protected as an essential part of rebuilding our manufacturing base, and that university education and technical education feed directly into regaining economic growth.

Lord Bilimoria: My Lords, does the Minister agree that the United Kingdom has four or five of the top 10 universities in the world, despite our spending as a proportion of GDP on higher education being less than half that of the United States and less than 13 OECD countries? Surely, to cut funding to universities would be shooting ourselves in the foot.

Lord Wallace of Saltaire: We have a highly diverse university sector in the United Kingdom. There are now some 150 higher education institutions, which range from Oxford University, Cambridge University and Imperial College, all of which are world-class and within the top 10 Shanghai rankings, to Cumbria University, Northampton University and others, which provide equally valuable but very different education foundation degrees and part-time education for others. We are conscious that we are dealing with a complex sector, which has expanded by 25 per cent in terms of the number of students in the past 15 years.

Lord Faulkner of Worcester: My Lords, what is the Government's response to the lobbying by the Russell group to lift the cap on university fees? How does that square with the commitment of the Liberal Democrats at the election to abolish tuition fees?

Lord Wallace of Saltaire: The noble Lord will be aware that the previous Administration kicked this into the long grass, as previous Governments have often done, by establishing the Browne review-The Independent Review of Higher Education Funding and Student Finance-which is well under way and due to report later this year. When we have that report, which deals with full-time and part-time funding-this Government pay a lot of attention to the importance of part-time students-we will consider those proposals and will respond.

Baroness O'Neill of Bengarve: My Lords, what steps will the Government take to ensure that the pattern of cuts imposed by different institutions in

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response to falling resources does not endanger strategically important subjects-for example, Arabic, other languages and even chemistry?

Lord Wallace of Saltaire: That is a very complex question. I am conscious that discussions are under way in the British Academy on the teaching of unusual foreign languages, which is rather different from the future of chemistry and STEM subjects. We are conscious of the need to protect those specialist subjects, but, as I have emphasised, the interests of the top 10 universities in Britain and those providing very worthwhile foundation degrees are part of a highly diverse sector and we need to consider all those interests.

Baroness Walmsley: My Lords, do the Government intend to adhere to the Leitch target that by 2020 more than 40 per cent of adults will have a university degree? In the light of the inevitability of belt-tightening, and given the mess that the previous Administration have left us in, how do the Government intend to adhere to that target?

Lord Wallace of Saltaire: As the noble Baroness will be aware, this Government are less committed to targets for everything than their predecessor and are much concerned about improving the quality of technical education, apprenticeships and the like. We are not so worried about the target of 40 per cent. However, since the number of people reaching the age of 18 will fall in the next 10 years, without further expansion of university education the proportion of 18 year-olds going to university may increase.

Lord Young of Norwood Green: My Lords, there has been a 16 per cent increase in demand for university places. The previous Government pledged an additional 20,000 places. The Conservative manifesto promised 10,000 extra. But now we see a cut of 10,000. Does that make sense, given the previous Minister's response about the need for high-tech manufacturing? As another speaker has said, we need more people with more high qualifications in a knowledge economy.

Lord Wallace of Saltaire: The noble Lord's use of statistics reminds me of the use made by the Daily Mail. Looking at the cuts and proposals, it appears that last December the previous Government proposed a cut of 6,000 places, and then later an increase of 20,000. The new Government have come up with an increase of 10,000. I make that a net increase of 4,000 places on the original proposed cut of 6,000, not a reduction.

Special Advisers

Question

2.55 pm

Asked By Lord Sheldon

To ask Her Majesty's Government how many special advisers have been selected who have been approved by the Prime Minister.

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, a list of special adviser appointments will be published shortly and will be

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available in the Library of the House. In accordance with the requirements of the Ministerial Code, all special adviser appointments are approved by the Prime Minister.

Lord Sheldon: My Lords, I thank the noble Lord for that response. Many parliamentary advisers who have been employed have had none of the background of civil servants, and in some cases the Government created special advisers whose role was superior to those in the Civil Service. Has this practice now come to an end?

Lord Strathclyde: My Lords, I very much regret that I was not in a position to give the noble Lord a clearer answer in my first response because he put his Question down slightly before the Government were ready to answer it. However, we will do so very shortly. I can confirm that, under this Government, the hideous regime of special advisers telling permanent civil servants what to do will come to an end.

Lord Maclennan of Rogart: Since the watchword of the two parties in this coalition is "fairness" and the role of special advisers is essentially a political one-liaising with outside opinion and Members of Parliament-will the Government exercise fairness in their appointments of special advisers as between departments and as between Ministers in the different parties of the coalition?

Lord Strathclyde: Yes, my Lords, and naturally that is subject to the coalition agreement. However, clear rules are set out in the Ministerial Code on the number of special advisers and who is entitled to them. That, of course, speaks for itself.

Lord Campbell-Savours: My Lords, perhaps we could have this issue clarified at the beginning of the term of this Government. If a special adviser to a coalition Cabinet Member breached the code, who would be responsible for disciplining that adviser? Would it be the Prime Minister?

Lord Strathclyde: My Lords, discipline is up to the Minister who appoints the special adviser. The Prime Minister agrees the appointment, but it is the Minister who appoints the adviser who is responsible for discipline.

Lord Glenarthur: My Lords, is my noble friend able to give the figure for the number of special advisers in early 1997 compared with those who were in position before the general election this year?

Lord Strathclyde: My Lords, in 1997 there were 38 special advisers, while in March this year there were 78. When we make our announcement, I think that the House will find that there are fewer than that under this Government.

Lord Harris of Haringey: My Lords, can the Leader of the House tell us whether any of the special advisers being appointed will be on salaries higher than that of the Prime Minister? As a comparator, perhaps he could also tell us how many of the special advisers who have been appointed will be earning salaries higher than that of a Lords Minister. What does that tell us about their relative importance in government?

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