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Identity Documents Bill

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Coy of the Bill
Commons Disagreement and Reason

Consideration of Commons Reason (Continued)

5.31 pm

Debate on Motion A resumed.

21 Dec 2010 : Column 1030

The Minister of State, Home Office (Baroness Neville-Jones): My Lords, I acknowledge that Members of your Lordships' House sought earlier to determine whether I had, following Report, sought to obtain further legal advice. At the risk of repeating myself, let me say that the House will be aware that, by long-standing convention observed by successive Administrations and embodied in the Ministerial Code, the fact that law officers have or have not advised on a particular issue and the content of any advice are not disclosable outside the Government.

I have consulted Hansard and spoken to officials during the adjournment. I did say on Report that I would confirm the advice that we had received on legal aspects. I am able to confirm that I did just that, that the contents of the Bill are compatible with ECHR requirements and that I have given that commitment based on legal advice. I have taken appropriate legal advice at all stages of the Bill, including Report. I hope that noble Lords will appreciate that the convention of the House, which I have tried to follow, does not enable me to disclose the source of that advice, but I am satisfied that I have taken it.

Lord Howarth of Newport: My Lords-

Baroness Anelay of St Johns: My Lords, the Minister is fulfilling a commitment to the House. I think that the noble Lord is now graciously allowing her to do so.

Baroness Neville-Jones: My Lords, my main intent during the debate has been to fulfil my duty to your Lordships' House and I have done everything that I can to do that.

Lord Hunt of Kings Heath: My Lords, we are grateful to the noble Baroness for coming back to the House and to the noble Lord, Lord Newby, for entertaining us for so many minutes before she was able to do so. I will be very clear. The Minister has answered one specific point that was raised on Report. However, I remind her that she was asked whether advice was received from the law officers. The noble Baroness said, "I will confirm the advice that I have received". She has now answered that point. However, she was also asked by my noble and learned friend, Lord Morris of Aberavon, who is a former law officer, whether the advice was from the law officers. The noble Baroness said:

"I am not sure that I can confirm that. I will seek to do so before Third Reading".-[Official Report, 17/11/10; col. 792.]

She has not answered that point, nor has she given an assurance to the House that, following Report, she did anything at all in relation to the commitments that she gave.

I hear what the noble Baroness says about the disclosure of the law officers' advice. That is a separate point to the one asked by my noble and learned friend, who asked whether advice had been sought from the law officers. That is a different issue. On the issue of the availability of advice from the law officers, would the noble Baroness be prepared to let me see that advice on Privy Council terms? The substantive issue

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that this raises is about Ministers making commitments to the House and then following them up. It is a matter that I will return to in the fullness of time.

The further substantive issue is one of fairness. Thousands of people bought ID cards on the basis that they were for a 10-year period. The Government have decided to withdraw those cards and this Bill enables them to do so. That is parliamentary democracy. We did not oppose the Bill, because we recognised that commitments were made in the manifestos of both parties in the coalition Government. However, as the noble Lord, Lord Phillips of Sudbury, said, the issue is one of fairness. How can it possibly be fair, when a person has bought a card for 10 years, for it to be withdrawn after a matter of months and for no compensation to be given? It is an absolute disgrace.

Lord Howarth of Newport: My Lords, I will speak briefly about two issues. We certainly accept the convention that the noble Baroness is under no obligation to tell the House what the advice of the law officers was. However, I am surprised, not least in the light of the earlier observations by my noble and learned friend Lord Morris of Aberavon, to hear her assert that she is under no obligation to tell the House whether she received advice from the law officers. I wonder whether part of the reason for her difficulty earlier in the afternoon was that the advice of the law officers was not consistent. Perhaps they disagreed among themselves, which put her in an embarrassing and difficult position. Perhaps she would be willing to cast any light on that; if she would, I think that the House would be interested.

The second issue is the one that I raised earlier. I am genuinely unclear, from what the Minister said this afternoon, whether the Government are asserting financial privilege and hiding behind a ruling of the Speaker and whether they are content that this extension of the doctrine of financial privilege to cover matters of expenditure as well as measures concerned with revenue raising is an appropriate new doctrine for them to espouse and to use for their political convenience. As I suggested earlier, if that is the case, there are large implications for this House, which we should ponder and take seriously. Will the Minister tell us in plain terms whether the Government consider that this is a matter of financial privilege and therefore outside the authority and competence of this House to vote on?

Lord Pannick: My Lords-

Baroness Anelay of St Johns: My Lords, perhaps I might remind the House that we have in a sense invented procedure this afternoon to assist the Minister to make a statement of explanation. Noble Lords will understand that of course we expect a noble Lord on the opposition Front Bench to be able to put the opposition view. Other noble Lords might wish to put very brief questions. We allowed a little latitude to the noble Lord, Lord Howarth. Perhaps we might now return to the normal convention of making brief interventions so that my noble friend can return to the assurance, which she has given very clearly to the House, that at all times she has taken the appropriate legal advice and, as she has tried to assure the House, that the Government have acted properly. Of course I understand that matters of parliamentary procedure

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and privilege, and constitutional issues, have been raised by the opposition Front and Back Benches. I also understand that these will be debated on another day. Our minds today are concentrated on one Bill and one or two Motions.

Lord Pannick: I am grateful to the noble Baroness. I shall confine myself to brief questions. First, the Minister indicated that legal advice had been taken. Will she accept that there is a difference, which concerns noble Lords, between taking legal advice on these matters and taking legal advice from the law officers?

The second matter arises out of the noble Baroness's statement that it is a convention that Ministers do not confirm whether or not legal advice has been sought from the law officers. Does she accept that it is a different matter if she has given a specific assurance to the House that legal advice will be sought from the law officers and that it is entirely appropriate that she should confirm to the House whether her own assurance has been fulfilled?

My third and final question is: will she also accept that it is not a universal rule that the Government do not tell the House whether legal advice has been sought from the law officers? There are many, many examples of the Government telling this House and the other place that legal advice has been sought from the law officers. Professor Edwards's book, Law Officers of the Crown, gives many examples, the most recent of which, of course, relates to the legality of the invasion of Iraq.

Baroness Neville-Jones: My Lords, it is not clear to me how much more help I can be to the House. I have tried very hard to be of help. Perhaps I can take up the points that have been made. I was asked in the House-I am looking at Hansard-whether the advice was from the law officers. I said that I was not sure but would seek to confirm it. That is indeed what I undertook to do. I am advised that I am not in a position to disclose either the fact of seeking that legal advice or its contents. That is why I am not able to take what I have said to the House this afternoon any further. The only way that I could do that would be-

Lord Hunt of Kings Heath: My Lords, the noble Baroness may find this disagreeable, but we are fully entitled to ask these questions. She says that she is not in a position to do so but, first, why did she not write to noble Lords following Report? Why does she treat this House with such disrespect? This is not the first time that she has not followed up debates by writing to noble Lords. Secondly, as the noble Lord, Lord Pannick, made clear, when she says that she is not in a position to disclose, I think that she is saying that, as a Minister, she is not prepared to do so, whereas in fact she could very easily do so.

Baroness Neville-Jones: My Lords, I do not accept what the noble Lord has just said. I treat this House with the greatest possible respect and I hope that I command it. I am acting on advice. I am not in a position to comment any further on whether advice was sought from the law officers. I have confirmed to the House that appropriate legal advice was sought at all stages of this legislation.

Motion A agreed.

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Loans to Ireland Bill

Bill Main Page
Coy of the Bill

Second Reading (and remaining stages) (Continued)

5.43 pm

Lord Bew: My Lords, I thank the Minister for the skilful way in which he introduced the Bill. I approach this subject from a slightly different angle. Both in this House this afternoon and in the other place the main focus of the discussion on the Bill has been, for entirely excellent reasons, economic matters. A case has to be made for the British taxpayer supporting such a loan and it has been very well made in terms of the interdependence of the two economies, particularly the fragility of the Irish banking system and the possible negative knock-on effects within the United Kingdom. Indeed, if I may put it even more bluntly, so far as concerns Northern Ireland there is a great deal to be feared from an implosion of the Irish economy. Therefore, the steps that have been taken on Treasury advice with respect to the Bill seem entirely reasonable and entirely worthy of support.

Although I accept the economic argument that was put so effectively today by the noble Lord, Lord Sassoon, I suggest that we should look at the Bill in a wider and more historical context. The fact is that historically there has been a traditional Irish suspicion of Britain and its role, which has been reflected in Irish support for whoever the enemy of the United Kingdom has been at a given time, going back to Philip II of Spain and Napoleon of France. In 1916 at the time of the Easter Rising, the insurrectionists made an appeal to their gallant allies in Germany. Therefore, at different points in Irish history, there has been an explicable yearning for an alliance with major continental powers against Britain.

In February 1920, Eamonn de Valera said that if Ireland became independent, it would become the closest possible ally of Britain,

The fact is that Ireland did become independent shortly thereafter but, for much of the time since then, that has not been true. It is hard to say that in the summer of 1940, for example, Ireland acted as the closest possible ally at a moment of real national danger, and there are many other such instances.

However, in recent years there have been attempts to bring about better relations between the two countries. Following what, in the end, turned out to be a false start with the Anglo-Irish agreement of 1985 and the Good Friday agreement of 1998, we have moved to a new and better place. Not the least of the reasons why it is right for the British Government to take the step that they are now taking is that we are, when faced with dissident terrorism, now dependent to an unusual degree on the excellent security support that we receive from the Irish Government. That is one of many reasons why it is indeed in our national self-interest to behave in the way that the Government now propose.

So we are now in a somewhat better place and we are in a moment when we can, on our side, try to fulfil de Valera's promise to be the closest possible ally in a moment of real national danger. To make it absolutely clear, this is a moment of real national danger for

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Ireland and the Irish people. There are moments of great political and economic uncertainty ahead. It is also an interesting moment in that in Irish public debate over the past month there has been much criticism of things that have been said by the German Chancellor, the governor of the Portuguese bank and the governor of the Spanish central bank, but there has been no criticism of substance of anything said by senior politicians in London. In fact, there has been a recognition that the British Government have behaved well in this matter. The noble Lord, Lord Cope, who will speak after me, is the co-chairman of the British-Irish Parliamentary Assembly and he will recall the warmth with which the Irish Members of Parliament responded to the initiative taken by the Chancellor of the Exchequer.

Therefore, we are in a new moment-a potentially more benign moment-and I want to talk about politics and history, as well as economics, because I think that it is very important that we build on the politics of this moment, as well as fulfil the economic commitments into which we are about to enter. It is very important that we now try to achieve a new relationship between Britain and Ireland-often promised but often illusory following agreement after agreement. That relationship has not been delivered in the way that it was supposed to be. However, since 1998 we have been steadily getting to understand each other better and this is an important moment. At present, I offer my support for the Bill, but I ask the Government not simply to confine their actions here to the narrow economic sphere but to build on all the other political options that are open to them in order to strengthen the association with Dublin and to turn a new page in the history of the relationship between Ireland and Britain.

5.49 pm

Lord Cope of Berkeley: My Lords, first, I should perhaps confirm that I am indeed the British co-chairman of the British-Irish Parliamentary Assembly, although in what I say this afternoon I am speaking entirely for myself and not in any way for the assembly. I do not think that this is an interest in the strict sense that your Lordships' House understands, but for that matter, a lot of the interests that are declared in the course of your Lordships' debates are not, in the strict sense, interests either. The House is quite right to err on the side of disclosure in that matter.

As the noble Lord, Lord Bew, has just indicated, as it happened, our last joint meeting as representatives of the legislatures of these islands occurred on 20 and 21 November, at exactly the time that the crisis which is the reason for the Bill was coming to a head. Our Irish colleagues were, indeed, somewhat distracted during our meetings over those days, as your Lordships will guess. It certainly gave us all a greater insight into the stresses that they were under and the political as well as the economic effects of the crisis. I can confirm, as the noble Lord, Lord Bew, has just said, that a great deal of gratitude was expressed by our Irish colleagues for the attitude of UK Ministers and, in particular, for some of the Chancellor's remarks at that time. That has a political importance quite separate from the economic importance of the Bill and the loans it allows.

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I strongly support the Bill. As my noble friend the Commercial Secretary has explained, the Bill and the loans it permits are part of the underpinning of the economy and banking system of the Irish Republic. It is important, as other noble Lords have said, for our economy and particularly for the economy of Northern Ireland. It is difficult to express that aspect of this too strongly.

I go along with the noble Lord, Lord Liddle, to the extent that this is not, of course, the end of such matters. We must expect further strains within the eurozone and, clearly, EU Finance Ministers, including our own, are right to seek agreement on a debt restructuring mechanism, and so on. We in Britain are necessarily involved because our banks are involved, as has been said, but that does not make the Bill wrong. On the contrary, it is right and I support it.

I also support the use of the fast-track procedure, which was devised, after all, by our Constitution Committee and which has proved its worth in this case, although it was questioned in debates in another place. Her Majesty's Government are to be congratulated on seeking specific legislative authority before signing up to the loans, rather than relying on so-called common-law powers and coming to Parliament afterwards for ratification, which is something that they could have done. The previous Government were accused of having breached the spirit and, arguably, the letter of the Public Accounts Committee Concordat of 1932 which governs these matters. This Government were right not to have risked such condemnation in this case. At the same time, if the Bill had followed normal timings through Parliament, it would have been delayed until well after the loan agreements were likely to be agreed. That is the first reason for the fast-tracking.

The Government also say in the Explanatory Memorandum that fast-tracking is necessary to give confidence to our international partners. I understand that, but it is only part of the matter. The important fact which underlies all this is that markets these days move very swiftly and fast, firm decisions are required to deal with that. I was a Treasury Minister at the time we left the ERM-although I was not involved with that side of the department-so I need no convincing about the power of the markets and the speed with which they can influence events.

Incidentally, there is a tendency to dismiss currency market operations as purely speculators speculating. Of course, there are some operators within those markets who are pure speculators, but the foundation of currency markets-the size of them reflects this-is legitimate traders trying to offset potential currency fluctuations. A board deciding to invest in a new major plant whose operations and building will extend over decades to come needs to insure itself as much as it can against possible currency fluctuations during the time taken to bring it to fruition. Similarly, someone buying or selling large items which take time to deliver can easily find that the profit or loss on the exchange rate can be greater than the profit on the goods themselves. They need to ensure that they are not penalised by currency fluctuations by buying or selling forward. Which of us planning a holiday overseas has

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not thought about buying some local currency in advance if rates are likely to change? That is not speculation; it is prudent foresight.

I make one further point before I sit down. My right honourable friend the Chancellor of the Exchequer was not quite accurate when, in debates in another place, he compared the affirmative procedure in Clause 1(4) for agreeing any increase of these loans to new primary legislation. He said that the effect is exactly the same, but it is not; certainly not in this House, which is not involved in the affirmative procedure in Clause 1(5)-quite rightly, given the nature of the Bill. The effect of affirmative orders and primary legislation is not the same, and certainly was not when I was a Member of another place a decade and a half ago. I realise that the timetabling of Bills in another place has made things rather different from when I was there. It means that there is less distinction between affirmative orders and Bills in another place, but what a commentary that is on the way in which primary legislation is now scrutinised there.

However, that is by the way. I support the making of these loans to our friends and neighbours in the Republic and I support the mechanism by which it is being accomplished; namely, this fast-tracked Bill.

5.57 pm

Lord Davies of Stamford: My Lords, I begin by asking the Minister a question. I would have intervened on him earlier, but since I was hoping to speak in the debate I did not want to interrupt him unnecessarily. I think I heard him say that this potential transaction by which we lend three point something billion pounds to the state of Ireland will not increase our borrowing, because the Irish have an obligation to repay. I see the Minister shaking his head, so perhaps I misheard him. If I misheard him, I apologise. Clearly it may not increase net borrowing, because we have a corresponding asset-the Irish obligation to repay-but government borrowing figures are always stated on a gross basis, otherwise they would not be positive at all, because we always have substantial net assets. I thought that there was some confusion about that one phrase that the Minister used, but perhaps he will deal with that in his response. I am grateful to him.

I am very much in favour of the Bill. It seems to me to be absolutely the right measure for two reasons. One reason, which the Government seem rather to dismiss, is that Ireland is a neighbour, a great friend for all the reasons that the noble Lord, Lord Bew, set out, and a member of the European Union. I believe in the notion and the value of solidarity among nations, as in other branches of human affairs. I believe in soft power as well as hard power, in friendship and in good will. I believe in the value of these things, in the value of creating and maintaining them and that it is a mistake if you throw them away. That is an important consideration and I shall come, in a moment, to what I think of the Government's attitude on that subject.

Secondly, I approve for the reasons that the Government appear to approve of it, which is that we have a very specific, practical and concrete interest in avoiding the kind of systemic crisis which could well be generated by a default by the Irish Government on

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their bond and other financial obligations, or, indeed, a default by the Irish banks, which are currently being guaranteed by the Irish Government. One default could well trigger another. Clearly, that would create a very difficult situation for us.

My regret about the Bill, how it has been brought before the two Houses of Parliament and the way in which the whole issue has been conducted by the Government is that the Government have given away a lot of the good will that might have been achieved by this gesture by an extremely grudging approach to this transaction. As my noble friend Lord Liddle pointed out, we deliberately decided that we do not want to be part of a collective solution; we want to do these things individually and bilaterally. The Government's is a rather strange gesture to make, a rather strange signal to send. The Chancellor has been at pains to make clear that he was not responsible for Alistair Darling's agreement that we should join the stability mechanism back in May. Indeed, the Chancellor said in another place:

"I am doing everything I can to ensure that the UK is extricated from the commitment that was entered into, and we are making good progress".-[Official Report, Commons, 15/12/10; col. 944.]

He said elsewhere in that debate that we will certainly not be part of the permanent mechanism when that is established.

I regret all those things for two reasons. The first is the practical and concrete reason of hard financial national interest; the other relates to my point about good will. In the first instance, there may well be other crises in future. It would be idiotic to exclude the possibility of our need to take part in such support operations in future to avoid some systemic crisis. It is always foolish in life to give up any flexibility. You want to maintain flexibility to respond in different ways. Excluding the idea of being part of a collective mechanism in the EU makes no sense. The other reason, as I said, is that it sends quite the wrong signal, and to my mind reduces the good will created by our decision to support Ireland in this way.

All that reflects an uneasy compromise in the coalition Government. I suspect that the Lib Dems in the Government very much take the view that I take and would have been in favour of this whole operation instinctively on principle in the first place, would then have wanted to negotiate details with our EU partners jointly, and would have had no inhibitions about doing that because they are European partners or members of the eurozone.

I suspect that the advice that the Government received from officials in the Foreign Office was that it would be disastrous, particularly after the centuries of Anglo-Irish history to which my colleague, the noble Lord, Lord Bew, referred-many incidents that are very much to the shame of this country. If we were the only major EU country that declined to take part in the support operation, it would have the most appalling effects on our relationship with Ireland. I imagine that the Foreign Office took that line-at the official level, at least. I imagine that the Treasury and the Bank of England were concerned with the potential systemic crisis and therefore urged the Government to take part.

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I suspect that, against that, there were the Tories who, for Eurosceptic and chauvinistic ideological reasons, were reluctant to become party to this transaction and were certainly very keen to ensure that it had nothing to do with our European Union membership or the existence of the eurozone.

That uneasy compromise is reflected in the very grudging way in which the money has been advanced and the very grudging statement that I have just cited from the Chancellor, which I very much regret. I am sorry that I cannot come up with entirely effusive, uncompromising congratulations for the Government on this move, but I am glad that they have taken the right decision, however grudgingly, and I shall be delighted to support them if there is a vote on the subject, which I doubt that there will be.

I have a couple of remarks to make about the general context. So much complete nonsense, and dangerous nonsense, has been talked about the relationship between the euro, the banking crisis and the sovereign debt crisis that we have faced over the past year or two that I feel inspired to comment on it in this debate. It has been said openly and frequently in the Eurosceptic press in this country and by a number of Conservatives in the House of Commons that it shows the weakness of the euro system. It has also been suggested that the solution would be the break-up of the euro and that the countries with substantial debt should leave the eurozone. I regard both those comments as either completely incompetent, if people really do not understand what the logical consequences would be of the actions that they are urging, or frankly irresponsible and unpatriotic, because they do not take into account the interests of this country or are willing to sacrifice the interests of the people of this country for purely ideological, emotional or symbolic reasons.

Of course, the euro had nothing whatever to do with the banking crisis or the sovereign debt crisis. In fact, the sovereign debt crisis would almost certainly have been worse if the euro had not existed. I should be the first to admit that the fiscal rules in the Maastricht treaty-the maximum 3 per cent fiscal deficit unless there was the consent of the Union, and so forth-have not been enforced sufficiently strictly. We all know that now, and we need a tougher and tighter regime with proper monitoring and sanctions in future. Nevertheless, if that regime had not existed at all, people would have had even greater deficits. There is no doubt about that.

There was possibly some accounting fraud in the case of Greece, but if there had been no rules, constraints or restrictions at all, the situation would have been a great deal worse. The euro, far from contributing to the crisis, might-albeit too modestly to have greatly affected the outcome-have had a benign influence. As for the idea that the solution lies in breaking up the euro, my noble friend Lord Liddle has already commented on that. I thoroughly agree with him that that would be an astonishingly self-destructive, and therefore I say advisedly irresponsible and unpatriotic, view.

Undoubtedly, if the countries that are affected by the sovereign debt crisis-Spain, Ireland, Portugal or Greece- were to leave the euro, their currencies, whatever they might be, the successor drachma or punt No. 2, would

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suffer the most tremendous devaluation. As their liabilities are largely denominated in euros, they would find it completely impossible even to begin to meet the burden of that indebtedness. The result would be defaults or a massive restructuring that was far greater than any restructuring that might take place in an orderly fashion in the context of agreement within the EU or the eurozone. That would mean that our banks would have to write off substantial assets, reduce the size of their balance sheets and reduce their credit creation in this country; that the economy would suffer; that jobs would be lost; and so forth. That would be a deeply regrettable state of affairs and it is thoroughly irresponsible to wish that to happen.

I trust that people will be guided by a rational assessment of the national interest rather than by an emotional desire to see the eurozone collapse irrespective of the consequence for either our partners in the eurozone or us. There is no doubt that the euro is not a part of this crisis. It is not a part of the problem and it is not a contributor to the problem. It has been at least a minor reducer of the scale of the problem. It must be an essential part of the solution.

Lord Lamont of Lerwick: I do not disagree with much of what the noble Lord has said, but I think he is slightly overstating his case. It reminds me of when I went to Brussels and the European Commission told me that absolute disaster was going to follow when the rouble broke up into individual countries. The Commission sounded just like the noble Lord. However, let us leave that aside.

The noble Lord slightly overstated his case. Does he not think that the convergence of bond yields within the eurozone was a contributor to what happened, because the bond markets ceased to look at countries individually and the convergence of yields encouraged countries to spend too much and to borrow too much? The failure of the markets to distinguish between countries and that convergence of bond yields, which came from the view that Germany would ultimately bail out the other countries, was a contributing factor.

Lord Davies of Stamford: I agree entirely with the noble Lord's indictment of the financial markets and a lot of lenders. I should say that I was a banker myself and sat on the board of a bank, Morgan Grenfell, which had a considerable lending book as well as being an investment bank at the time, and frequently sat on the credit committee meetings we had. I am appalled by the mistakes made by professional bankers in not wanting to look at the nature and unravel the packages of a class of asset-securitised debt packages, essentially, which were becoming very important as a class of their assets. I equally quite agree with the noble Lord that the bond markets were failing to price risk correctly in exactly the way that he describes. The rating agencies bear a tremendous part of the failings, the fault and the guilt for creating this crisis. Many bankers' excuse is, "We thought we were buying paper with an AAA credit rating and in fact the credit agencies weren't doing their job properly in unravelling these packages and seeing that what was in them was absolutely rubbish".

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I agree totally with-I think of calling him "my right honourable friend"-the noble Lord in what he said in indictment of the financial markets. I think that is the problem. It is not an indictment of the currency in existence at the time any more than you can say that the enormous failings of the American banking markets, the American bond markets or the American rating agencies were the fault of the fact that they have a currency called the dollar.

Lord Lamont of Lerwick: I hesitate to remind the noble Lord, but I remember him making speeches telling us that if only we were in the euro, we, too, could enjoy these very low bond rates.

Lord Davies of Stamford: Undoubtedly had we been in the euro-and I totally agree with the noble Lord that I was, and remain, a partisan of our joining the euro-as a result we would have had to adopt tighter fiscal policies. The noble Lord may feel that the result of that might not have been entirely unfortunate for the future history of the country. Nevertheless, we would have done, and the counterpart to that would have been that we would have had lower nominal and real interest rates throughout that period. I happen to think that that would have been a good thing as well.

Lord Pearson of Rannoch: My Lords, I am sorry to press the noble Lord, but is he really saying that the predicaments in which economies such as Ireland or Greece, which would have kept their own currency, which would have over a period of years-in Greece's case, 10 years-floated down on the international markets and which would have their own interest rates and exchange rates, find themselves now have nothing to do with their participation in the euro?

Lord Davies of Stamford: I am very happy to give, I hope, a very unambiguous answer to that as well. I do not believe that there is any virtue in the fluctuation of exchange rates. I believe that exchange rate markets, like other asset markets, fluctuate quite irrationally. They swing far too far, an enormous amount of damage is created, they are never at the theoretical point of equilibrium which some people read about in their textbooks 50 years ago and enormous economic costs are caused by these fluctuations. If you can replace them with a stable currency system, as we did before 1914 with gold, as the eurozone has done, as the United States has done with the dollar and so forth, that is a very good idea, all other things being equal. We can get into the "all other things being equal" on another occasion perhaps. I think that if you take the long 20-year view, Greece, Ireland and Spain have all benefited enormously from their membership of the European Union and the eurozone, and that will continue to be the case. We now have a momentary crisis, which looks very grim at present, but we should not throw the baby out with the bath-water.

6.13 pm

Lord Tugendhat: My Lords, like other noble Lords who have spoken, I applaud the Government's decision to offer Ireland a loan, and I also applaud the manner

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in which it was done. I do not agree with the noble Lord, Lord Davies of Stamford, that it was grudging or anything of that nature. I rather agree with the noble Lord, Lord Bew, that the Irish reaction has shown that they recognise that this was done in a full-hearted and generous fashion, and I am very pleased about that. It was done without strings, it was done quickly and the Chancellor of the Exchequer was quite right to emphasise that it was done in the British interest. Britain and Ireland are two neighbouring countries, their economies are very much bound up with each other, what is good for Ireland in terms of prosperity is good for Britain, and it is right that this should be recognised. Others have spoken of the extent to which Ireland is a major export market, of the way that the economies of Northern Ireland and the Republic are very much bound together, of the number of British companies that operate in the Republic and, of course, of the exposure of British banks, especially the Royal Bank of Scotland, to the Irish financial sector. In helping Ireland, the Government are not diverting money from worthy causes in the United Kingdom, but are acting to safeguard British jobs, British interests and British taxpayers' money. The sooner Ireland can return to prosperity, the better for us that will be.

I got the impression, but perhaps I am wrong, that the Minister felt that the measures that have been taken would secure that. I hope he is right, but I have to say that I am not so sure. I feel that further pain may be on the way and that some of the pain may be felt by private lenders. That remains to be seen, and I certainly hope that the measures taken by us and by the other participants in the rescue operation have the desired effect. Like the noble Lord, Lord Bew, I see this very much in the context of the Anglo-Irish relationship, both present day and historical.

There are some who suggest-it may even be that the noble Lord, Lord Pearson of Rannoch, will express this view-that because Ireland is a member of the eurozone, and we are not, we should somehow stand aloof from it. I think that is absurd. The Prime Minister and the Chancellor of the Exchequer, as well as the Minister this evening, have repeatedly said that it is in Britain's interest that the eurozone should be a success. Of course, that does not mean that we have the same responsibilities towards each other as the members of the eurozone, but it does mean that we should recognise the nature of our links with it and the existence of our exposure to it. We are not an offshore island in that sense with a financial system separate and distinct from that of our European neighbours. The whole apparatus of British financial services and the City of London as a great international centre are intimately bound up in the wider European financial system. They are, of course, intimately bound up in the global financial system, but most intimately and most directly they are bound up within the European, and through the European, in the global financial system. The two are not mutually inconsistent. This has been a great source of profit to the United Kingdom. It continues to be so, and Mayor Boris Johnson never ceases to point out the benefits that accrue to London as well as to the United Kingdom.

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It is very much in our interest that we should participate, but I part company from the noble Lord, Lord Liddle, so far as the permanent mechanism is concerned, and I find myself much closer to the position of the Minister. As I said, we do not have the same obligations and responsibilities to the members of the eurozone as they have to each other, so I feel it is right for us not to sign up to something that would involve us in a permanent obligation. I do not mean by that that we would necessarily wish to stand apart on some future occasion. We might, or we might not. I felt that the noble Lord, Lord Liddle, drew too much on the Irish example. Our relationship with Ireland is quite different from our relationship with any other European country. However, I can well imagine that circumstances might arise-

Lord Davies of Stamford:It is not surprising that as a man of the world and a former European commissioner, the noble Lord is not someone who is so foolish as to want to exclude any possibility in the future and lose flexibility, but does he not agree that if we are not part of the permanent mechanism, we will not be part of the conversations, we will not be part of the analysis and we will not be part of the decision-making mechanism? We might have the opportunity to come in later on to a deal that has already been put together by others or to try to find some bilateral solution in the face of a much bigger multinational arrangement, but surely that is not a very sensible way of conducting our country's affairs.

Lord Tugendhat: No, I do not agree with the noble Lord. He draws too clear a distinction between membership and non-membership. I do not want to get diverted, as others have, from the main theme of my speech, but I think that Britain is a substantial member of the European Union. Therefore, conversations do not take place in one room with Britain being excluded entirely. People need to know what Britain is thinking and there has to be a certain interchange.

There are people who thought that if we did not join the euro, we would somehow be excluded from a lot of discussions. There are certainly discussions in which we do not take part and it may be that Ministers are rather relieved sometimes that they do not have to. But Britain is too big an entity to be entirely excluded and only brought in at the end of the discussion when everything has been decided. If Britain is to play a role in a future crisis, people will want to know beforehand what our attitude is likely to be, how far we might be able to go and under what terms we might be able to participate.

That brings me back to my line of march. When perhaps future problems arise, we should look at each of them and take a decision on their merits-certainly recognising our considerable interests in the eurozone; certainly recognising the importance of our membership of the European Union; and certainly recognising our interests in the political stability of different countries. But we should look at these things on their merits, decide our position on each one as it comes along and ensure that the decisions we take are subject to parliamentary approval. We are much more likely to carry confidence in the country and have support from

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the electorate if we are seen to do it on the merits, rather than if we are seen to have signed up to a certain automaticity.

Lord Liddle: My Lords, I have a great deal of respect for what I have described as the pro-European pragmatism of the noble Lord, Lord Tugendhat. He has shown that over the years in many of his contributions to the European debate. But what is being ignored is the point that came out in the Bank of England report from which I quoted; that is, the interconnectedness of our banking systems. Although it may not be the case that British banks have a lot of sovereign debt in Greece, Portugal and Spain, they have a lot of relationships with French and German banks, which have those obligations. Therefore, we would be inextricably bound up if there was a crisis. We should be trying to take a lead in sorting this out, not waiting for the telephone call from Mrs Merkel.

Lord Tugendhat: Again I am grateful for the kind words of the noble Lord, but I do not think that the world works that way. Perhaps I might refer to his former distinguished leader, Gordon Brown. We were not of course part of the eurozone, but, as the noble Lord says, our financial centre is intimately bound up with the rest of Europe. It is a considerable interest of ours. It is a source of profit and a great many things.

When the crisis hit, and the Lehmann Brothers went down in the September, the fact that we were not part of the eurozone did not stop President Sarkozy calling Gordon Brown over to Paris or stop Gordon Brown playing a considerable role in the decisions which were taken. We are not going to have a situation in the European Union where a country as big as this, and as significant as this, is in one place and everyone else is huddled in another, and they do not talk until they have made up their mind. They need to know what we think, they need to know what terms we would come in on and they need to know whether we would be willing to help at one level or at another level.

Of course, I recognise our interconnectedness. Like the noble Lord, I have devoted a good deal of my life to trying to make the interconnectedness greater. But I do not think that if we are not members of the eurozone, we ought to sign up to something which carries with it the automaticity of the permanent mechanism.

I do not entirely expect the Minister to make a comment on my final point. What goes around comes around. I am delighted that the Chancellor of the Exchequer can claim that on this occasion we are not part of the problem, but that we are part of the solution. He is right. On this occasion, we are part of the solution.

All of us in this House have long memories. All of us know that there have been many times when the United Kingdom has needed support from its friends. All of us know that there have been moments when the United Kingdom has run into difficulty and has looked to others for help. It would be a brave man or woman who would assert that such a situation could never occur again. I am sure that under the stewardship of the Chancellor of the Exchequer and my noble friend Lord Sassoon, it will not occur under this

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regime. But who knows when it might and it certainly behoves us in dealing with others to do as thou wouldst be done by.

6.26 pm

Lord Pearson of Rannoch: My Lords, I start by confirming the clear illegality of bailing out the eurozone, which includes these loans to Ireland. I do so by quoting the French Finance Minister, Christine Lagarde, from two days ago. She said:

"We violated all the rules because we wanted to close ranks and really rescue the euro zone. The Treaty of Lisbon was very straight-forward. No bailout".

She went on to add that the Greek and Irish rescues, as well as the creation of the bailout funds, are,

Perhaps I may ask Her Majesty's Government whether they agree with her.

The fact that what it is doing is illegal has never stopped or troubled the EU juggernaut. I have previously regaled your Lordships with its illegal use of Article 308 of the treaty of Nice. Students of the history of the eventual collapse of the European Union may care to look up a summary of that abuse in our debates on the Lisbon treaty at col. 1073 on 18 June 2008. More recently, we have the EU's legislation on hedge funds-the alternative investment fund managers directive-which is designed to do much damage to the City of London and hence our tax base. That directive depends for its legal base on Article 53.1 of Lisbon, which is about the mutual recognition of diplomas. Can you believe it?

There is no point in appealing to the Luxembourg Court about any of this because it is not a court of law at all. It is merely the engine of the treaties, as it has often proved in the past. Even so, history suggests that trouble lies ahead when a regime is free to break its own laws with impunity; when it is supported by a puppet court and Parliament; and when its people are powerless to remove it.

I have a couple of questions that were not answered by the Government yesterday in our debate on last week's European Council. The first came somewhat surprisingly and most welcomely from the noble Lord, Lord Hunt, on the opposition Front Bench. He reminded the Prime Minister of his promise that, if he got any chance of reopening the Lisbon treaty and having a referendum on it, he would take it. The Prime Minister also promised that we would take the first opportunity to repatriate powers to this country, especially social and labour policy, but he has broken that promise, too. Will the noble Lord explain that behaviour today?

The second unanswered question yesterday came from me. It was on whether the Government have made any estimation of the cost for Ireland and in due course, no doubt, for Portugal, Greece, Spain, Italy and Belgium to return to their national currencies. What would the cost be? The Government tried to say that this would not be a decision that would affect the United Kingdom, so they refused to answer the question, as they have done in their response to a Written Question. But of course such a decision would affect us, because Ireland and the other countries could devalue their currencies and fix their own interest rates and then have a sporting chance of trading their way out of their present impossible situation. That would

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mean that we would no longer have to go on pouring billions down the hopeless euro drain, so we are interested in at least knowing the cost involved. Perhaps we could even help them with it. That might be a tremendous bargain, especially as the Government made it clear yesterday and again today that they do not at all rule out sending even more colossal sums to the other countries that I have mentioned. Therefore, I look forward to hearing the answer today.

The Government keep making great play of our trade with the eurozone and with Ireland in particular. It is to safeguard this trade, they say, that we have to borrow such huge sums, which we probably will not get back, when we are cutting our own services at home in an attempt to reduce our deficit and debt. The Minister said in his opening remarks that 5 per cent of our total exports go to Ireland, but do the Government realise that only about 1 per cent of our GDP-of our total economy-goes in trade with Ireland? That is because only 9 per cent of our GDP goes in trade, in deficit, with the EU overall, of which Ireland accounts for about 10 per cent, so that makes 10 per cent of 9 per cent, or 1 per cent to be generous. Then 11 per cent of our GDP goes to the rest of the world, in surplus, and 80 per cent stays right here in the domestic economy. Yet the wonderful deal that we have done as a member of the EU means that Brussels diktats apply to and strangle the whole 100 per cent of our economy. Would the Government care to justify this position? Why is it worth borrowing so much money to safeguard only 1 per cent of our GDP, which would not be lost if we did not? Are we really saying that we would lose all that trade if we did not do this? It is not realistic.

The Government and the Martians in Brussels talk much about growth, how they are stimulating growth and how their bailouts and loans will help it along. Every now and again, I read the Government's Written Statements about the meetings of the so-called Competition Council in Brussels and I must say that they make me weep. I have yet to detect any bureaucrat or council member contributing to those meetings who has the slightest experience of international competition in the real world. That is no doubt why they and their colleagues in the vast bureaucracy of Brussels have lumbered us with perhaps the most overregulated and least competitive regime in the world. Indeed, even their own Competition Commissioner, Mr Gunter Verheugen, said a couple of years ago that EU overregulation was costing all EU economies some 6 per cent of GDP, or over £60 billion per annum in our case. Just to be jolly, the demographic trend is moving against the continent of Europe as well, so I do not see much hope for growth. I fear that we are on the "Titanic".

It is not just wild-eyed Eurosceptics like me who are saying that the euro cannot survive and that the sooner it goes, the better. Just yesterday, the head of the world's largest bond fund called on Greece, Ireland and Portugal to leave the euro and restructure their debts, unless the eurozone is to submit to complete fiscal union, which seems unlikely. He went on to say that EU leaders were too quick to congratulate themselves on saving the euro last week, with a permanent bailout

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fund from 2013, which in his view comes far too late. But the EU strategy of forcing heavily indebted countries to undergo draconian fiscal austerity without offsetting stimulus is unworkable. The austerity policies are stifling the growth that is needed to stabilise debt levels. He is not alone in that. The chief European economist at RBS says that last week's Europe summit failed to grasp the nettle:

"None of the policy responses put in place in Europe since the start of the crisis provides a credible backstop to prevent further contagion".

Those policy responses include our loans to Ireland. We should not be making them.

It is not just the euro that was designed for disaster; so was the whole project of European integration, for which the euro was supposed to be the cement to hold it together. The idea behind the great project was honourable enough, but it has turned out to be misguided. That idea was that the nation states had been responsible for the bloodshed of two world wars and the long history of carnage in Europe. Those nation states therefore had to be emasculated and diluted into a new form of supranational government, run by bureaucrats. That is the big idea. That is why the Commission still has the monopoly of proposing and enforcing EU laws, which I remind noble Lords are made in secret. It is why there is a sham Parliament and a sham court, with all of their denizens interested only in the gravy train which rolls on without the consent of the people.

If there is one small candle of light in all this gloom, I hope that it is that more of the people of Europe will come to see that the whole EU project is also misguided. Those who are suffering from the euro are already getting very angry. The riots and strikes in Greece, Portugal, Ireland and Spain are entirely caused by the project of European integration and its misguided currency and, alas, there is more to come.

In conclusion, I invite your Lordships to stand back for just a moment and consider a Europe without the European Union, without Brussels and Strasbourg, without the Luxembourg Court of so-called Justice. Consider a Europe of 27 national democracies trading freely among themselves and with the other 190 or so countries of the world, none of which has been foolish to join anything like the EU or the euro. What benefit does the EU bring that we could not have through genuine democracy, free trade and friendly collaboration? None, I submit. I hope that none of your Lordships will suggest peace, which was secured by NATO, and for which the EU gets no credit at all. So the EU emperor has no clothes and the quicker the people of Europe realise it, the better for all of us. If the collapse of the euro helps them to do so, that may yet prove to be a blessing in disguise. In the mean time, we should not be helping to prop it up.

6.37 pm

Lord McFall of Alcluith: My Lords, I commend the Government for this loan to Ireland initiative and I commend in particular the speech of the noble Lord, Lord Bew, which emphasised the social relationships. I come from Dumbarton, which has a very big Irish population. Indeed, my own family is part of the Irish diaspora. For many years, we have had very solid social contacts, and there is a part of my former

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constituency that is known as "Little Donegal". When the 2001 election was put off until June due to the foot and mouth outbreak, I was advised to go and knock on a number of doors in Donegal to shore up my support, but I felt that my majority was big enough that I did not have to cross the Irish Sea, which proved to be the case. So these social contacts are very important. There have been many fine Irish men and women living in my community for many years, a lot of whom fought with the British Army in the Second World War. They adapted to and assimilated the culture of the UK, notwithstanding the problems existing at a wider level between Ireland and the United Kingdom.

In its latest manifestation, we see the concept of a private debt crisis being transferred to a sovereign debt crisis. To repeat a phrase that has been used a lot in the other place, we are all in this together. That is because what is happening in Ireland affects every other country in the EU, including ourselves here in the UK. The situation is that the banks in Ireland have brought that country to the verge of bankruptcy. The tensions in Ireland that were mentioned earlier have been experienced in other countries. Ireland itself is contributing €17.5 billion from its pension funds to the very important €67 billion bailout, so the people of Ireland are already saying, "It is our money. We are contributing to this. The problem started off in the banks, but as a result of that situation, it has ended up on the streets".

We all have a responsibility to ensure that we manage this economic process well, taking account of the social instabilities, so that we end up with a sound economic system and a stable social system. As was said earlier, there are good reasons for the UK to provide the loan, not least of which is the fact that Ireland is a major trading partner and that UK banks are exposed in Ireland. Only last week, Lloyds and HBOS declared a £4.3 billion loss on the banking group's Irish loans. Lloyds said that it had sufficient capital to withstand the loss, but that situation is an illustration of the interdependence that exists between the UK and the Republic of Ireland.

As a former Minister for Northern Ireland, I am very much aware of the border between Northern Ireland and the Republic-it is so porous that it really is not a border. I well remember chairing an inquiry into the euro in 2002, when I chaired the Treasury Select Committee. One of our visits was to Newry, where the currency in use included the euro because people were travelling there from across the border. That interlink between Northern Ireland and the Republic should make certain that we provide a friend in need with a loan.

If instead of doing that we were to sit on our hands, economic stagnation would take place. We need a strong Europe if we are to make the most of our competitive exchange rate. That is what the Bank of England said. The loan makes historical, economic and social sense, so I commend the Bill to the House.

6.41 pm

Lord Davies of Oldham: My Lords, I suppose that, as it is almost the last day before the Christmas Recess, it is right that the Minister should have a good day. He got the Consolidated Fund Bill through the House in

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four minutes and here he has another Bill that has produced consensual responses from all parts of the House. Indeed, Her Majesty's Opposition support the measure that the Minister has introduced, which means that he can bask in the general approval of the House for doing so.

However, the Minister would not expect to sit through an hour and a half's debate without having to reply to a few questions. He would not expect an entirely straightforward ride. I am glad that tonight's debate has ranged so widely and that we have heard so many expert and considered opinions. The Minister will have a tough job in responding to it. The debate has put the Bill and the Irish loan into context, and for that we should be grateful.

Indeed, I was grateful to the noble Lord, Lord Bew, who put our relationship with Ireland into an historic context. Other noble Lords, including my noble friend Lord McFall, emphasised the ties between the United Kingdom and Ireland. It is right that we should come to the aid of a nation in great need with which we have close ties and, as the Minister said in his opening remarks, that is also in the British national self-interest. It is important that we put a stop to the catastrophic developments that have set the world back during the past two to three years. Unless those are tackled in a forthright and effective fashion, they will adversely affect our own people in the years to come.

I am grateful to my noble friend Lord Liddle for emphasising that there are no easy solutions to the situation-and certainly not for Ireland. We see the price that has to be paid for the loan. It is also important to recognise that, given the degree of interconnectedness of our economies, the British response to the situation needs to be one of concern for our neighbours. We have already heard of the significant role that the Irish economy plays in relation to the British economy, but, in terms of a wider Europe, we recognise that without growth in Europe there is no possibility of the British economy developing on an export-led basis out of the present position and into a degree of prosperity and security. We should recognise just how much this Government have invested in such a strategy and that, without growth in Europe, there is no possibility of the British people being able to enjoy the fruits of the sacrifices that we can see are being made on all sides following the Government's fiscal tightening, of which we have seen only the first stages.

The Minister must also respond to the wider debate reflected in the points made by my noble friend Lord Liddle and, from a different perspective, by my noble friend Lord Davies of Stamford. As regards the different issues that the noble Lord, Lord Tugendhat, mentioned, we recognise that there was a sophisticated debate about the nature in which Britain should relate to Europe-two somewhat different perspectives about future possibilities. I must say that Her Majesty's Opposition are more in favour of the analysis put forward by the noble Lord, Lord Tugendhat-namely, that of course Britain must be close to Europe and integrate with Europe in crucial economic decisions. That is bound to be the case as a result of the sheer size of the British economy in relation to the European position and the levels of trade that we carry on.

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However, there is a strong case for a degree of independence that gives us a position in relation to Europe and also enables us to pursue our own strategies.

The noble Lord, Lord Pearson of Rannoch, takes that point to the outer extreme by calling for withdrawal from the EU. We are all familiar with the onslaught on the European Community that he has presented tonight with his usual fervour. It is as though he does not recognise that the American economy, which is bigger than Europe's, has been in colossal trouble over the past couple of years. It is as though only Europe is being faced by these challenges. Of course, that is not so. Another big, major continental economy-the United States-has been suffering the most acute strains. One does not have to go anywhere near Detroit or any of the other major cities-

Lord Pearson of Rannoch: My Lords, the noble Lord makes an interesting point. However, can he tell us who bailed out the United States?

Lord Davies of Oldham: Well, who has bailed out Europe? We are talking about an economy in Europe that is receiving some assistance-that is the Irish economy. I hope that the noble Lord, Lord Pearson, is not forecasting that it will not be long before the British are bailing out the German economy, or anything as ridiculous as that.

Given that many great economies have suffered serious difficulties in the past few years, we should recognise that this Irish crisis is reflective of a global crisis. The problem means that we have to have solutions wider than the national perspective. It also means that the solution proposed for Ireland is not in fact a solution but a bailout. The bailout creates time for the Irish economy and prevents it from descending into the abyss that it had faced. However, let us not pretend that the package is a solution to the needs of the Irish economy and the Irish people or that we will see health in European economies without more obvious programmes and developments on a more extensive scale than we have seen thus far.

I hope that the Minister will recognise that, in the early days of the crisis when Lehman Brothers was in collapse and when the British banks were under tremendous pressure, the previous Administration adopted a global process in response. The then Prime Minister, Gordon Brown, was concerned to obtain a degree of consensus that would enable the world economies to come to each other's aid and to present a development that gave some security about growth. We are still looking for that. The Bill is important to one beleaguered economy in Europe but-as the strength of the debate on all sides has shown-it has to be put in the context that we need wider solutions to the issues than bailouts. We are faced with a global crisis.

It is also quite clear that, despite the myth which the Opposition seeks to perpetrate about the British economy, the crisis was not caused by government overspending but by the banks, which had got their structures and investment wrong. That is a common feature across all the significant world economies, and that needs to be recognised.

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The Irish are of course to be involved in some degree of austerity, as are the British people under this Government's perspective-excessive austerity in the view of Her Majesty's Opposition in comparison to what is needed. The Government have set a limited time in which fiscal balance has to be achieved, but it must surely be recognised that austerity alone is not the answer. After all, the Irish have been through several years of austerity and for 17 continuous months their economy showed negative growth, but they have not been able to avoid the need for a bailout despite the fact that they have been subjected to exactly the fiscal solutions that this Government suggest are the answer for this economy.

I have one or two key questions for the Minister, who I know will enjoy himself before Christmas only if there is sufficient challenge in the debate. He has already been blessed by the consensual approach, on which the whole House is to be congratulated, but I should like to ask him one or two questions. First, is he aware that the size of the UK's contribution to the rescue package will, over the spending review period, more than outweigh the debt interest savings of which the Chancellor made such play in the spending review Statement? On the basis of the Chancellor's approach, we are loaning that which we have saved. Secondly, why are we able to find billions for Ireland but could not afford £90 million of strategic investment for Sheffield Forgemasters and the role that it could play in the future of our economy? Thirdly, when will the Government accept the obvious point that, unless we have an approach to the broader issues faced by Europe, we will not get the growth necessary because the markets will not be there to purchase the goods that we hope to produce?

Finally, does not the crisis in Ireland remind us all that the economic crisis was global and that the Government, with their full responsibility for the economy and the welfare of the British people, must recognise that the solutions lie only within a global framework and not in one pursued alone?

6.54 pm

Lord Sassoon: My Lords, it has been an interesting debate and I am grateful for the contributions. The noble Lord, Lord Davies, referred to the range of contributions made by noble Lords but I think that there has been some polarisation: on one pole, a noble Lord stands in rather lonely isolation, whereas most of the rest of the speakers have been closer to a dramatically different pole.

Lord Pearson of Rannoch: The Minister is very generous, but is he aware that the majority of the British people now wish to leave the European Union?

Lord Sassoon: My Lords, I was talking about where Members of the House stood on the Bill, which is where I ought to concentrate if the noble Lord will permit me.

I began to feel grateful to the noble Lord, Lord Davies of Oldham, when he started his response to the debate; I thought that he was going to relieve me of some of my responsibilities. However, his comments then turned in a different direction. He went into an

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analysis of the UK's economic challenges-an essay that I do not quite share with him-and then he asked some questions. I shall attempt to respond to his questions and to those of other noble Lords.

The starting point, clearly, is that over the past two years Ireland has faced a series of extraordinarily difficult economic and financial challenges which have resulted in the country having debts of more than 90 per cent of its national income, high unemployment and low levels of growth-and the Irish economy, of course, remains on the brink.

The noble Lord, Lord McFall of Alcluith, reminded us of the centrality of the Irish banking situation to the Irish crisis and how the Irish banks became increasingly reliant on central bank funding. In his analysis, the noble Lord, Lord Pearson of Rannoch, referred to trading but made no mention of the interconnectedness of our two banking systems, which is central to the Irish problem and to why it is so important to the UK that we should contribute to finding a solution.

In contrast to Britain's situation, Ireland's credit rating remains under threat and its economy continues to struggle. The package we are discussing today is designed to contribute towards Ireland's solution to its problem. It starts by contributing to the recapitalisation of Ireland's banks; sets up a contingency reserve to deal with any future problems; and covers the current shortfall in the Irish budget. My noble friend Lord Tugendhat quite rightly questioned whether Ireland will grow sufficiently out of its problems. However, I remind noble Lords that the IMF has been central to the construction of the package and, from its wide experience of similar situations, it understands the importance of growth in an economy such as Ireland's. I recommend to noble Lords the IMF's interesting, well written and cogent analysis of the reasons for Ireland getting into this situation, and the logic for the construction of the package which is central to putting the Irish economy back on its feet.

The Bill gives the Treasury the statutory authority to deliver the UK's bilateral contribution to the package. In this way, the UK will be ready in the new year to help one of our closest international partners in its hour of need. I was particularly grateful to the noble Lord, Lord Bew, and to my noble friends Lord Cope of Berkeley and Lord Tugendhat for pointing out the good will that has been created in Ireland by our response. We are doing this because it is in the economic interests of the UK to do so; nevertheless, it is good that we are doing it for a close friend. The noble Lord, Lord Bew, succinctly put the matter into its Irish historical context. I very much take his point that we need to think about how we build on the good will that has now been created. That point was indirectly touched on by the noble Lord, Lord McFall. It sits somewhat at odds with the stance taken by the noble Lord, Lord Liddle, who painted a picture that I do not recognise. He tried to paint us into an "our problems, their problems" situation. I thought that my noble friend Lord Tugendhat, who has deep and distinguished European experience and contributions to draw on, painted a much more nuanced and balanced picture. Of course, we are at the centre of the European debate. We are engaged with our European partners,

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not least for the reason that my noble friend gave: that we are one of the largest economies in Europe. Whether it is leading the way on bank stress tests and getting Europe to follow where the UK started on short-term stabilisation, or looking at the other end of the range of issues that needs now to be considered-for example, questions about structural reform programmes, the Europe 2020 vision and the lessons of this crisis-the UK is absolutely at the centre of the discussions.

Lord Liddle: What plan have the British Government and the Prime Minister put forward for the eurozone? Why does the Prime Minister keep saying that it is for the eurozone to sort out its problems, while knowing that so much of the growth that is being forecast, which is absolutely essential to British interests and his own prospects of re-election, requires there to be robust export growth to the eurozone?

Lord Sassoon: These are all factors that mean that we need, with the EU 27, to make sure that the structural reforms are driven through and that we get the benefits of completing the single market project and so on. However, my noble friend Lord Tugendhat again got it exactly right-I would not agree with every nuance of his analysis, but he got the essential point right-in saying that just because we are very positively engaged at the centre of all those other issues does not mean that there are not critical differences, because we are not part of the eurozone and this Government will not take us into it. It is therefore for the eurozone to sort out its own permanent mechanism for dealing with any other issues that arise out of membership of the euro. That is the fundamental difference between the UK's position and that of other of our partners in Europe. I genuinely fail to see why the noble Lord, Lord Liddle, seeks to paint the position in such stark colours. The fact is that we are in a different position from that of a number of the largest trading partners in Europe, which needs to be reflected in the permanent arrangements that will be put in place. My noble friend Lord Tugendhat explained that in much more masterly terms than I will ever be able to do.

Some questions were asked about the economic and market analysis of the situation, not only of how we got here but how we go forward. I listened with interest to the exchange between the noble Lord, Lord Davies of Stamford, and my noble friend Lord Lamont of Lerwick. The rather succinct and pithy remarks of my noble friend better encapsulated the situation in which Europe finds itself and in which it is clear that the fact of the euro cannot be ignored. That takes us back to why the eurozone needs to think about the consequences and the lessons of this crisis for a permanent mechanism.

In answer to the specific question of the noble Lord, Lord Davies of Stamford, I restate that the loan to Ireland does not add to our deficit. It increases the borrowing on one side of the UK's balance sheet, but we have an asset in terms of the money that will be owed to us by Ireland. There will be an increment to the fiscal position by the net interest margin, estimated at current interest rates to be some £440 million. That is the only element that should go through the current balance.

21 Dec 2010 : Column 1053

One or two comments were made on the process of the Bill. I am grateful to my noble friends Lord Cope of Berkeley and Lord Tugendhat for their endorsement and recognition of the fast-track approach that we have taken. It is necessary that we give confidence to our European partners and the IMF in putting this package together that the UK is ready at the earliest time to deliver on our commitments. I accept my noble friend Lord Cope's analysis of the constitutional position in another place.

Lord Davies of Stamford: Perhaps may I press the Minister a little more on what he said about this Irish loan not adding to the fiscal deficit. I understand that he is saying that it does not add to the fiscal deficit because he is setting off one financial asset against a financial liability. Will he confirm, however, that it will add to the public sector borrowing requirement? Some £2.5 billion will have to be borrowed on the financial markets and be accounted for as part of the public sector borrowing requirement which otherwise would not.

Lord Sassoon: Indeed, my Lords, the money advanced to Ireland needs to be funded, but it is precisely because we have stabilised the fiscal position and secured the UK's AAA credit rating that this matter is not a cause for particular concern.

I have already said why the Government believe that it is right that we should not be part of a permanent bailout mechanism-indeed, this is recognised in the recent Council conclusions. My noble friend Lord Newby asked about the process for adopting the treaty amendment that will be necessary. Parliament must of course give its approval to any treaty change that is agreed by member states, and ratification in the UK will be subject to the terms of the EU Bill that we are bringing forward. A treaty change will be subject to primary legislation. Since there is no question of transfer of competences in this case, the question of a referendum does not arise.

Lord Pearson of Rannoch: I do not know whether the Minister will come to some of my questions later, but this might be a convenient point to remind him that the amendment in fact gives the Prime Minister the opportunity to fulfil his promise that, if there were to be any treaty changes, he would use them to repatriate powers, particularly social and labour policy. Why does he not do that?

Lord Sassoon: The position is as I have explained it. There is no question of change of competencies in this case and therefore no referendum is required, but it will be the subject of primary legislation. This is not the time, if the noble Lord will permit me to say so, to start talking about other things that may or not may not be done in our relationship with Europe. We are talking about the Loans to Ireland Bill and its consequences and the position is completely clear. If the noble Lord would like me to give way, it will only eat into the time to answer his questions and other points that noble Lords have made. I am grateful to him.

I will come to his points immediately. The noble Lord, Lord Pearson, questioned the legality of this operation. The first thing that I hope we are completely

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clear about is that the bilateral loan is being made under domestic UK legislation. That is why we are here today. Provided that your Lordships see fit to give this Bill a clean passage, the question of the legality of this loan will not arise.

If the noble Lord was also, as I suspect he was, harking back to the question of the so-called no-bailout provision in Article 122(2) and the creation of the €60 billion fund, that was agreed by the previous Government. We said at the time that we did not approve of the use of this provision, which was originally intended for natural disasters, to create this mechanism. But it was, and we are where we are. The critical thing is that the current coalition Government have a clear commitment that when in 2013 the new mechanism is put in place this will fall away and not be used again. The question of illegality does not arise. It may be regrettable, but the position is legal.

Lord Pearson of Rannoch: My Lords, the noble Lord is being a little unfair to the previous Government. Surely, the decision was taken under Article 122(2) which is by qualified majority vote. That is the very reason the Eurocrats chose the clause that allows mutual support in the event of natural disasters to pass this Act. Through our membership of the European Union and the terms of the treaties that we have signed, there was nothing that the previous Government could do about it. I asked the Minister whether he agreed with the French Finance Minister who said that the whole bailout process is illegal.

Lord Sassoon: The noble Lord is possibly putting a spin on Madame Lagarde's words that she would not entirely accept. If he wished to correspond with her I am sure she would explain her position. All I can do is explain the Government's position. I was not trying to be unfair to the previous Government but merely stating the facts of the situation as to when the €60 billion bailout fund was agreed. Yes, I accept that if the UK had opposed it, it would have been a matter dealt with under qualified majority voting.

I will spend one minute responding to points made by the noble Lord, Lord Davies of Oldham. I am grateful to him for being clear about the Official Opposition's support for the Bill. He asked about the amount of the loan and why, if we could devote this amount of money to Ireland, we could not devote it to other causes. He quoted one possible use of funds. As I explained, the loan to Ireland does not affect the fiscal position. We are able to make it without in any way affecting the fiscal position. If it did affect it, we might need to look for other savings, but we are in a position that that is fortunately not required.

The noble Lord mentioned the global dimension. We have talked a lot about the need for the UK to be at the heart of the European debate on this. I completely agree that the global dimension is an important one. We have heard about the importance of global growth and we will continue to engage with the G20 and the other international forums which will reinforce the ongoing drive to make sure that we learn all the lessons on fiscal and financial stability.

It has been an interesting debate and it is understandable, given the size of the proposed package, that the importance of what we are discussing to

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Ireland, to our economy and to the wider European context has been fully debated. The financial crisis has shown just how closely linked the economies of Europe and the world have become. In times of prosperity we reap the rewards but in times of hardship, one nation's problems can quickly extend beyond its own borders. That is why we must act now and early to restore stability to Ireland's economy. That is why we must be prepared and have been prepared to take the necessary steps including through the Bill. It is good for the recovery and good for growth and I ask the House to give the Bill a Second Reading.

Lord Pearson of Rannoch: Before the noble Lord sits down, there was one other important question that I asked him and I have asked it also in a Question for Written Answer. Have the Government made any estimation of the cost of Ireland going back to the punt, and if not will they do so?

Lord Sassoon: No and no.

Bill read a second time. Committee negatived. Standing Order 46 having been dispensed with, the Bill was read a third time and passed.

Public Bodies Bill [HL]

Committee (5th Day)

7.16 pm

Schedule 1 : Power to abolish: bodies and offices

Amendment 27

Moved by Lord McKenzie of Luton

27: Schedule 1, page 16, line 19, leave out "Child Maintenance and Enforcement Commission."

Lord McKenzie of Luton: My Lords, the purpose of this amendment is to seek fully to understand and evaluate the rationale for including the Child Maintenance and Enforcement Commission in Schedule 1 and the reason for its conversion announced on 14 October back to an executive agency of the DWP.

Noble Lords will be aware that CMEC is a relatively new body-a crown non-departmental public body-created by primary legislation in the Child Maintenance and Other Payments Act just two years ago. It was then the subject of considerable debate. Accepting its demise via the process in this Bill therefore needs considerable justification.

CMEC was charged with completing the operational improvement plan and to carry out a fundamental redesign of the child maintenance system. The operational improvement plan was part of a twin-track approach to radically improve the performance of the Child Support Agency.

The CSA was established in 1993 to assess, collect and enforce child maintenance payments from non-resident parents. It was set up because the system of collecting maintenance through the courts was perceived as failing to establish fair and consistent awards which

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were not necessarily kept up to date or indeed enforced. Despite the best efforts of CSA staff, the complicated calculation process, IT failures and inadequate enforcement contributed to poor performance and unacceptable outcomes for children.

The CSA struggled to administer the complex rules in the child maintenance system and to handle the difficult and emotional circumstances that often surround parents when child maintenance becomes an issue. It was widely seen as a means of clawing back benefit rather than providing additional resources for children. Reforms in 2000 brought some simplification to the maintenance calculation. The introduction of a child maintenance premium where those in receipt of benefit kept some of the maintenance payments was a positive development. However, the changes still did not deliver the improvements expected. In particular, there were chronic problems with the IT and operational systems, which meant that old scheme cases could not be transferred to the new, simplified system.

Again, the result was that too many children did not receive the benefit of maintenance, which led to the approach of a three-year operational improvement plan, and the call for a longer term redesign of the child maintenance system. The latter was the subject of a report commissioned by the noble Lord, Lord Hutton, when he was Secretary of State at the DWP, from Sir David Henshaw. Sir David argued that the system's failings reflected both policy and operational problems, and recommended a break with the past to create a new start for child maintenance arrangements. CMEC was to be that new start. It was established with the primary statutory objective of maximising the number of effective maintenance arrangements. This was bolstered by subsidiary objectives of encouraging and supporting voluntary maintenance arrangements and the operation of a statutory scheme.

CMEC is specifically charged with the promotion of raising awareness among parents of the importance of taking responsibility for and making arrangements for child maintenance. It also has a duty to provide information and guidance to parents for the purpose of helping to secure effective maintenance arrangements. Its role is to seek to ensure that all parents who live apart put in place effective arrangements to maintain their children, whether they do this privately, through the courts, or through the statutory service. This is much different from the old CSA, run directly by the DWP, which had only one function-the statutory maintenance service. The enhanced role with a new focus was considered at the time to be best undertaken by a new body, an NDPB, to be led by a commissioner for child maintenance. For certain very practical reasons, the NDPB was set up as a crown body. It was intended to operate at arm's length from government and through its commissioning powers to be able to develop a high-quality and efficient service. Its board would be focused entirely on delivering a successful child maintenance system, not distracted at the top from the shared responsibilities which the very senior managers would have as an executive agency of the DWP.

The timeline for change was planned to span from the launch of CMEC in October 2008 until 2014, when the new unified child maintenance system is

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planned to be fully in place. Major steps have already been completed and these include the setting up of the options service, fulfilling the information and guidance obligation for all parents, the removal of the compulsion for parents with care claiming benefits to use the CSA, implementation from April 2010 of a full maintenance disregard, and the deployment of at least some the new debt and enforcement powers. However, CMEC has just completed its first full year of operation, and the forward programme still shows much to do. In fact, 2011 is the year in which the new basis of calculation is due for introduction with a gradual migration of old cases to the new system until in 2014 when there will be a closure of all existing CSA cases and a unified system in place.

CMEC's business plan for 2010-11 is clear that the current year will be a critical year for CMEC as it moves to the launch of the new system. The options service has, seemingly, made a good start. In its evidence to the DWP Select Committee, CMEC set out its focus on promoting the service to new and separating lone parents. It records how Jobcentre Plus and HMRC refer parents to the service when they claim relevant benefits and tax credits.

There can be little doubt that over the period of the operational improvement plan and since, performance of the CSA has improved despite continuing problems with the CS2 system. Currently, its performance under CMEC is the best it has ever been. The number of children benefiting from statutory maintenance has exceeded 850,000, with more than £1.14 million collected. Uncleared applications, a particular bugbear of the past, have declined by over 90 per cent to under 20,000. Telephony has improved out of all recognition. Running costs have reduced from £600 million to under £500 million a year. Nevertheless, the Select Committee report shows that more remains to be done in terms of collection of arrears and maintenance outcomes.

Unlike most of the other bodies included in this schedule, CMEC is not yet in steady state. It is part way through a programme which will finally lead to the clean break recommended by Sir David Henshaw. As the Work and Pensions Select Committee reported, it will be a challenging phase with the continuing problems with the CS2 IT programme, and the operation of three different maintenance systems through to 2014 when it was planned for there to finally be just one simplified statutory system. So in seeking to understand the decision for CMEC to become an agency of the DWP, I should be grateful if the Minister could answer the following questions.

First, what are the type of clear policy and decision-making responsibilities which Ministers consider they are precluded from taking at present in respect of child maintenance, which drives this approach? Secondly, is there any basic change in policy for the child maintenance system? Is it still planned to proceed with the new system, starting at 2011, with the gradual migration of the old and current systems? Is it envisaged that this process will be completed before the operation becomes an executive agency? Thirdly, will the full disregard for benefits remain and will this apply also for the purposes of the universal credit? Fourthly,

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given that CMEC is currently a crown NDPB, what will its changed status as an agency mean for the staff? Fifthly, given that the decision has already been taken for a transfer to an executive agency, is it considered that being run by DWP will bring operational efficiencies not available to CMEC? If so, what are these, and what evidence base is available to support such a conclusion?

Sixthly, what analysis has been undertaken of the costs involved in any transfer back to the DWP, including novation of supplier contracts, changes to enforcement notifications, et cetera? Are there any VAT ramifications of a transfer, and how does this differ from transfers from non-crown NDPB's? Seventhly, on what grounds is it considered that CMEC fails all the three tests set out by the Minister for the Cabinet Office in October: does it perform a technical function; do its activities require political impartiality; and does it act independently to establish facts? Eighthly, what is the future for the options service under any changed arrangements? Is it not right that considerable effort has gone into branding this service as being at arm's length from government? What assessment has been undertaken of how parents would react to this becoming an executive agency of the DWP? Would any different requirements apply in respect of information sharing-say, income details of non-resident parents for the DWP, in contrast to CMEC as an NDPB?

Fundamentally, on what basis can we be reassured that the switch to an executive agency will neither disrupt the vital work of getting the new maintenance system up and running as quickly as possible? Moreover, will there continue to be a clear focus on improving child maintenance outcomes as an integral part of the challenge of tackling child poverty?

Our anxiety over this issue has been heightened by the most recent briefing note from the IFS covering child and working age poverty. Clearly, progress in improving child maintenance outcomes should contribute positively to reducing child poverty and any disruption to current arrangements need to be examined from this perspective, especially given the IFS report. This analysis makes grim reading. The conclusion is that the coalition Government's reforms have no discernable impact on absolute and relative child poverty in 2011-12, but for 2012-13, the IFS estimates that the Government's reforms will increase relative poverty for children by 100,000 and absolute poverty by 200,000. For 2013-14, it is considered that the reforms will increase relative poverty by about 200,000 children and absolute poverty by 300,000 children. So much for the claim that the Government's reforms will not have a measurable impact on child poverty. They clearly will. What role does the Minister see, therefore, for the child maintenance system in combating child poverty, especially given the shocking figures in the IFS report? I beg to move.

7.30 pm

The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud): My Lords, this seems to be a relatively short debate, which has shown evidence of the great knowledge and experience that the noble Lord, Lord McKenzie, has in this field. There was a debate recently on the Child Maintenance

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and Other Payments Act 2008, which informs a lot of his questions and points. However, I have not heard anything in those arguments that undermines the primary objective of the coalition Government to restore ministerial accountability for child maintenance.

The amendment would remove the Child Maintenance and Enforcement Commission from the list of bodies to which the Public Bodies Bill applies. The Government's intention is to increase the accountability of Ministers for public services. This amendment would go directly against that intention.

The change of status for CMEC from a non-departmental public body to an executive agency within the DWP is driven by the coalition Government's desire to have greater accountability for the hugely important issue of child maintenance. We feel that it is important to strengthen ministerial accountability when the Government are considering the role that the child maintenance system can play in their overall commitment to support shared parenting and promote parental responsibility.

We acknowledge that CMEC has built a stable base, following on from the success of the operational improvement plan to which the noble Lord referred. As it currently stands, however, with CMEC operating at arm's length from the Government, the Government feel that it does not have the right level of responsibility and ministerial accountability. In order to regain that control, this change in status will make that happen. Removing the commission from Schedule 1 to the Bill would adversely impact on that intention.

There is a long and often painful history of poor performance within the child support system, as the noble Lord pointed out. A simple picture could suggest that the Child Support Agency was a failure and that only the introduction of the Child Maintenance and Enforcement Commission turned performance around. I would like to point out that that is not entirely the case. From 2006 to 2009, the Child Support Agency's operational improvement plan significantly improved the performance of the administration of child maintenance. That was because of the activity taken forward by the Child Support Agency, at that point an agency of the Department for Work and Pensions. Responsibility for child support functions transferred to the Child Maintenance and Enforcement Commission in November 2008, near the end of the period covered by the operational improvement plan.

Since its formation in 2008, CMEC has taken these improvements much further. It has also been given a much broader remit than the CSA ever had. Most notably, it has developed a very effective information and support service, Child Maintenance Options, which has received much praise in dealing sensitively with separating and separated parents. Indeed, the noble Lord endorsed it a few minutes ago. The Government want to maintain and build on the progress that CMEC has already delivered. In response to the noble Lord's question, that is one of the areas where we want to see further progress.

Let me be clear: this is not about scrapping the commission, nor is it about undoing the progress that the commission has made through the hard work and dedication of its people. I can confirm, in answer to

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the noble Lord's question in this area, that we are looking to see the progress made and the plans that it has. We are looking closely at our own plans for improving the position in this area.

As the noble Lord said, however, the major reforms that were set out in the Child Maintenance and Other Payments Act 2008 are still to come. The improvements that the Child Maintenance and Enforcement Commission has made to date have been despite the inadequacies of its IT infrastructure. The legacy of past problems still casts a long shadow over the administration of the child maintenance system.

The Government believe that it is right-indeed, essential-that Ministers are directly accountable for the significant changes that still need to happen within the child maintenance system, not least the introduction of a new scheme for calculating child maintenance and the associated new IT platform. This Government, in including CMEC in the Bill, are clear that we must avoid reintroducing the well catalogued problems of the past.

To avoid destabilising the organisation at such a critical time, the new executive agency would essentially have the structure and functions of CMEC. The key difference, and the key purpose of this reform, would be the direct accountability and governance lines to Ministers. Many of the questions that the noble Lord raised are answered in that assurance about what will be happening.

I recognise that noble Lords have a keen interest in this matter, given their involvement in the redesign of the child maintenance system in 2006. I am referring, of course, to the noble Lords, Lord Hunt and Lord Kirkwood, who, alongside the noble Lord, Lord McKenzie, have proposed the amendment.

The independent review undertaken by Sir David Henshaw made some strong recommendations about the steps required to reform child maintenance. However, the review recognised that the issue of whether or not that should be administered in a body positioned at arm's length from the Government was a finely balanced debate. The key argument on which the Government rest our position was the need for a clean break, as it was then called-I think that it was referred to today as some other kind of break, but anyway those are the essential grounds on which the argument was made, in response to the well publicised problems that the CSA had been enduring.

I reiterate that this reform is not about dismantling the Child Maintenance and Enforcement Commission in its current form. Neither is it about jeopardising the performance improvements that have been made in recent years. It is fundamentally about restoring ministerial leadership and accountability at a time when child maintenance reforms are reaching a critical stage.

I shall pick up one or two of the questions that I have not already dealt with. The implications for staff are relatively few, given the nature of the transfer. What we are trying to do in the universal credit, in terms of information, may become highly relevant here. We still need to look at that; obviously, it is at a very early stage.

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We have looked at costs overall as part of SR10. We are determined that, in undertaking the transfer, we do not divert attention away from the need to get systems up and running. Clearly, this area is vital in tackling child poverty. Family breakdown is one of the main drivers of child poverty. We are determined to move forward on this and maintain targets. As the noble Lord will know, the introduction of the universal credit will have a powerful impact on child poverty. That is not yet included in the IFS calculations, although I imagine that it is working on that. We will be looking closely at other ways of ensuring that we stem the problems arising from family breakdown. Given all this, I ask the noble Lord to withdraw his amendment.

Lord McKenzie of Luton: My Lords, I am most grateful to the Minister for that very full reply. I have no intention of pressing this amendment, as I tabled it in order to seek information. I am comforted by what he said about the progress and planned progress of the child maintenance system and that it is still the objective to try to introduce the new basis of calculation next year and the systems that will support that. I understand that it is intended that all the CSA cases will eventually migrate to the new system by 2014.

However, I am still a little mystified by this issue of ministerial accountability, as there is accountability to Parliament through the Secretary of State. I am a little curious as to what difference the measure would make for Ministers in practice, as for most, if not all, NDPBs there is a way for Ministers to engage and influence. A framework agreement defines not only the financing of NDPBs but their governance arrangements and their relationship with Ministers, so the argument that the Government are switching just to achieve that purpose is a little thin.

I wish to make it clear that I certainly do not contend that improvements came about only once CMEC came into being. Improvements were made under the operational improvement plan before CMEC came into being. I certainly assert-I think that the Minister agreed with this-that CMEC has carried that on and has made continuing progress, although matters still remain to be resolved. I am comforted by the fact that this will not be done in a way that would disrupt the progress that has been made and disrupt the introduction of the new systems.

Baroness Hollis of Heigham: Before my noble friend decides what to do with his amendment, as he may be drawing his remarks to a close, I wish to ask the Minister a question through him, so to speak. Do I understand that what the Minister is doing is maintaining the policy drive of CMEC while reinventing the structure of the old CSA? As he may know from his briefing, that structure was that there was a chief executive, who reported quarterly or at six-month intervals to the Minister, supported by an advisory board and shadowed, so to speak, by a policy directorate within the department-a grade 5 and above that a grade 3-who would, so to speak, act as the interface between the policy development and the operational work done by the CSA, headed by its chief executive. Is that the proposed structure that the Minister seeks to reinvent or has he a different version in mind? It would be

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helpful to know how he thinks the organisation will function at the top level and what independent advice-research advice and expertise-he can expect to draw on, which obviously CMEC has taken further and developed in a far more effective way than under the old CSA.

7.45 pm

Lord McKenzie of Luton: That is probably a belated intervention on the Minister if he wishes to answer it. One of my questions concerned what would happen to the board and whether and how it would be reconstituted.

Lord Knight of Weymouth: My Lords, specifically on that question on the board, if the Minister is minded to comment further, it would be interesting to know, if the board is to continue, what sort of remuneration it would have for what purpose, if the Minister is now to be much more accountable and have that proper oversight.

Lord McKenzie of Luton: If the Minister wants to pick up those points now, perhaps I can come back to my points later.

Lord Freud: We want to move to the new arrangements as soon as we can. The details of the arrangements for the agency will be elaborated on, but our intention is basically to leave the CMEC structure unaffected. The accountability point is much more political. I imagine that it would delight any Opposition, and slightly worry any Minister, to be directly responsible for what this very important agency does. That is the key difference. There is direct accountability for what is happening across these Dispatch Boxes and, of course, those in another place. We think that that is right, given the very many millions of parents and children affected. The figure is not quite 10 million on my count but it is getting on for that. For that reason, it is vital that there is direct political responsibility.

Lord Knight of Weymouth: My Lords-

Baroness Anelay of St Johns: I wonder if I might assist the Committee. We are in Committee and we try to enable as much discussion and latitude as possible. I appreciate that the noble Lord, Lord Knight, may not be aware that the procedure is that, once the Minister has concluded his answer, and then the person moving the amendment seeks to sum up and decide what to do with the amendment, the Minister should not then be subject to further questioning. Naturally, the Minister has wanted to assist the Committee as much as possible but the noble Lord has trespassed a little far on our usual procedures. I invite the Minister not to comment further. However, I am sure that, like all Ministers-as the noble Baroness, Lady Hollis of Heigham, used to do when she was a Minister-he will be pleased to consider constructive discussions between now and Report.

Lord McKenzie of Luton: I am grateful to the Minister for participating in the additional exchanges. However, we still need clarity over what the structure will look like in the future and what in practice enhanced

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ministerial responsibility and accountability will come from that. Having heard the Minister's comments, I cannot see a great difference from current practice.

I return to the options service, which was not a responsibility of the DWP or the CSA before the creation of the commission. It has been heavily, and properly, marketed as offering support for parents and information and guidance that is independent of government. I have not heard the Minister address my next point directly, but it seems to me that we need to think through the consequences of putting at risk the status that that service has achieved, where parents with care and non-resident parents can feel that they can genuinely and confidentially engage with the service and get impartial advice. I remember that during the passage of the Bill we had interesting discussions about the obligations on that service in terms of reporting its findings if it became aware of information that was inconsistent with other information in the system on benefits and income. One of my questions is whether that will change with the service no longer being conducted by an NDPB but directly by an executive agency of the DWP. It would be good to have clarity on those sorts of issues.

We have probably had a useful starting exchange on this. We would now like to read the record and reflect. If there is an opportunity, perhaps we can get some clarity on these issues even before we reach Report stage. My colleagues and I would greatly appreciate that. For the time being, I beg leave to withdraw the amendment.

Amendment 27 withdrawn.

The Deputy Chairman of Committees (Viscount Simon): We come to Amendment 28. I call the noble Lord, Lord Greaves.

Lord Greaves: My Lords, I expected that we were breaking for dinner. Do we not break for dinner in Committee?

Lord Hunt of Kings Heath: No.

Lord Greaves: No? I thought that we were. All right. It is a good job I did not go and have my dinner, isn't it?

Amendment 28

Moved by Lord Greaves

28: Schedule 1, page 16, line 20, leave out "Commission for Rural Communities."

Lord Greaves: This amendment would leave out the Commission for Rural Communities from the list of organisations in Schedule 1. This amendment, like the previous one, is a probing amendment to ask questions of the Government and, one hopes, to get the Government to set out clearly on the record how they see the CRC's functions being carried out in future, which of those functions will be carried out in future, and which are to be abandoned.

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The Commission for Rural Communities was created by Section 17 of the Natural Environment and Rural Communities Act 2006-which many noble Lords, and perhaps refugees from the House of Commons as well, will remember took up a considerable amount of discussion at the time. The Commission for Rural Communities, which was created by primary legislation, was therefore thoroughly discussed and thrashed out in your Lordships' House.

The Commission for Rural Communities sets out its purpose and functions as follows. It is a statutory body,

In essence, it has,

That is a summary of what it does.

The commission's work since it was set up has been widely praised. Much of it consists of research, and the work of the chairman, Dr Stuart Burgess, as advocate for rural areas-particularly disadvantaged rural areas-has been notable. On 29 June 2010, Caroline Spelman, the Secretary of State, announced that the CRC will be abolished and partly replaced with a strengthened rural communities policy unit within Defra.

This amendment, like the previous one, goes to the heart of the way in which the new Government intend to carry out many of the functions that are currently carried out by autonomous bodies. In her statement on 29 June, Caroline Spelman said:

"With an urgent need to drive down debt and reduce Government spending we will have to make some tough decisions".

Secondly, she said:

"We are committed to improving the quality of life for those living in rural areas and we will put the fair treatment of rural communities at the centre of Government".

Thirdly, she said:

"Focusing rural policy making within the department will give rural communities and interest groups a direct link to central policymakers and a stronger champion for rural issues at the heart of Government".

I think that that is what, a few years ago, used to be called rural proofing-the attempt to make sure that government policies across the patch were all checked for their effect in rural areas.

So there are really two main reasons for this policy, and they are both clearly set out in the statement-the first is to save money, and the other is to have a more effective service. The underlying promise is that it will not prejudice government actions for rural areas. Those are the issues that we need to probe, and the first is cost.

There are some questions that I should like to ask the Minister. What is the transitional cost? The Government briefing suggests that it is £2.5 million. Can he tell us what makes up that figure? What is the extra cost of taking on this work within Defra, and

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therefore what is the net saving? The suggestion, again from the government briefing, is that the existing cost of the CRC is £5.8 million;, that there will be a saving of £4.5 million once the transitional costs have been paid; and that the spend within Defra will therefore be only £1.3 million compared with £5.8 million at the moment. I can believe that efficiencies might be gained by doing this within Defra, and that it might be possible to do it more cheaply; but, nevertheless, that difference is so great-£5.8 million to £1.3 million-that one has to ask what things are being done at the moment that will not be done in the future.

Can the Minister tell us something about the transitional period? My understanding is that the intention is that the CRC should cease on 31 March 2011, but there may be transitional things to be done after that. How will that be managed?

How many staff does the CRC have at the moment? How many have transferred into Defra, and are any more expected to do so? What will be the size of the new unit within Defra which will carry out the work that the CRC has been carrying out?

The second broad area of questions has to be about the effectiveness of the new system. The proposal is to strengthen the rural team in Defra, to improve existing policy work, and to carry out the following functions. The first is to support Ministers, who will have much more direct accountability in future for the rural work. The second is to act as a centre of rural expertise. The third is to champion,

and the fourth is to work,

The last one is a quote and I do not understand what it means. Perhaps the Minister can tell me.

The Secretary of State also said:

"Ministers will lead rural policy from within my Department ... The Government believe policy advice should be carried out by Departments, not arm's-length bodies".-[Official Report, Commons, 29/6/10; col. 36WS.]

That is okay as far as it goes, but there are questions to be asked. The Campaign to Protect Rural England suggests that the advice to Ministers should be,

That is what the CRC has been doing. For example, its report on uplands, published in June, called High Ground, High Potential-A Future for England's Upland Communities, was a model of its kind. It was well researched, evidence-based and put forward a series of proposals on behalf of the rural areas of England that are most disadvantaged. It is difficult to see how a unit within Defra could do that with the style and commitment that was evident in that report.

8 pm

Perhaps more important is the annual State of the Countryside report that-again according to the CPRE- provides a key yardstick of the social, economic and environmental trends in rural England. The report for 2010 is divided into three main sections. One is on living in the countryside and population services; one is on the economy of rural England; and one is on

21 Dec 2010 : Column 1066

land and environment, including farming. This is a substantial, evidential report that is published and available to everybody. Will that report be produced in future by Defra with the same thoroughness and evidential base? I hope that the Minister will be able to satisfy me that that will be the case.

In summary, I will ask first about the strength of research in the new unit. What resources will be given to it? Will the research be on a par with that which now takes place in the arm's-length body? How will the system work of having a rural champion in the department? At the moment the Rural Affairs Minister is Richard Benyon, who is energetic, keen and capable. However, the problem with Ministers is that they come and go. Who knows whether a future Minister will take on this work with the same enthusiasm? Will a Minister who is not a Secretary of State but is more junior have the clout across government to do the advocacy, the work and the rural proofing that is required?

How transparent will the new processes be? Government departments are notoriously secretive. Advice to Ministers is supposed to be confidential, as we heard earlier. When my younger daughter got a temporary job in the Government Office for the North West, she said: "I've got to sign this thing called the Official Secrets Act. Is that all right, Dad?". I said: "You'd better do it if your job depends on it". When junior staff such as her have to sign the Official Secrets Act, the prospect of transparency and openness of the kind that one gets with an arm's-length body seems remote. Will the policy advice that Ministers get be genuinely independent and evidence-based? How will ministerial accountability to Parliament differ from how it is now? We know that the system exists, but we also know that it is imperfect.

This is a typical example of a body that was set up by a substantial piece of primary legislation. The proposal is to create a system whereby it can and will be abolished by ministerial order. If the Bill goes through in its present form, this is the best opportunity that we will have before the order is made to scrutinise the proposal. I hope that the Minister will be able to provide a great deal of the information that I am asking for today. If he cannot answer all the questions this evening, I hope that he will be able to answer them between now and Report, whenever that may be.

My final question is the one that I started with. Is this just about doing the same thing in a different, perhaps better, way: and will the Minister tell us which of the existing functions of the Commission for Rural Communities will not be performed in future? That is the crunch point. I beg to move.

Lord Knight of Weymouth: My Lords, I was very pleased to put my name to the amendment of the noble Lord, Lord Greaves. I pay tribute to him for the way in which he is scrutinising this Bill, and in particular the arm's-length bodies in the Defra family, as we lovingly call it. My interest in this is as the midwife of the Commission for Rural Communities. I was the Rural Affairs Minister responsible for the Natural Environment and Rural Communities Bill, and for the creation of the Commission for Rural Communities in 2005.

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For noble Lords who are not familiar with the subject, I will give a potted history. In 1999, the Countryside Agency was established out of the Rural Development Commission and the Countryside Commission. It was ably headed by the noble Lord, Lord Cameron of Dillington, who also served as the rural advocate. Just prior to my taking over from Alun Michael as Rural Affairs Minister, Stuart Burgess was asked to take over the rural advocate's responsibilities. At the same time, the recommendations of the review carried out in 2003 by the noble Lord, Lord Haskins, were being implemented through the Natural Environment and Rural Communities Bill that I was pleased to steward through Parliament. The Bill took English Nature, a rural development service within Defra and the Countryside Agency, and created from those three bodies Natural England. A small element around rural advocacy was retained as the Commission for Rural Communities.

After some searching around the real estate of government, it found a home in Cheltenham, which was where the Countryside Agency had been. On the longest day of 2005-23 June-we debated at length in Committee primary legislation that would create the Commission for Rural Communities. It is ironic that five years later, on the shortest day of the year, we are now debating its demise. Currently it has just over 60 staff based in Cheltenham, and a budget just shy of £6 million. As we have heard, its closure was announced in June. Looking through the local press cuttings, it is notable that the Member of Parliament for Cheltenham, Martin Horwood, said back in June:

"There hasn't been any obvious consultation and I think it leaves questions unanswered about how important independent roles are going to be fulfilled".

I think that the Liberal Democrat Member for Cheltenham puts his finger on the need for independent advocacy and independent rural-proofing, and the noble Lord, Lord Greaves, echoes his questions about how those functions will now be performed if the Commission for Rural Communities is allowed to go.

When I was thinking about this debate today, I also noticed a fine article in the Daily Telegraph-not a paper that I normally peruse with great interest-of 2 July this year by Geoffrey Lean, who is easily the longest-serving environment correspondent writing in any of our national newspapers. He has been following these issues for a considerable number of years. I think it is worth quoting some of the things that he said in that article. I know that it may not be the most popular newspaper today among the government Front Benches but in an article headed "The countryside will be the poorer" Geoffrey Lean says:

"Think about poverty in Britain, and the mind jumps to grim inner-city estates. But deprivation can be just as great amid some of the loveliest landscapes. About one in five rural families live beneath the poverty line, a rate increasing three times as fast as in the cities".

He goes on:

"The commission's job was to tackle this. It could, perhaps, have done so more dynamically-and it could have sold itself better-but it did make a difference ... It produced regular State of the Countryside reports-the last, as it happens, comes out next week"-

this was written in July-

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He finishes:

"This will save money-but not a great deal. The £3.5 million a year won't help much towards the £750 million reduction in the department's budget demanded by the Chancellor, and seems outweighed by the cost to the countryside ... So who will speak for the countryside? The Conservative and Lib Dem backbenches, perhaps? But many of the Tory knights of the shire have retired behind their moats, leaving the party more Bullingdon than bucolic, while their coalition partners seem cowed by power. The NFU, and the Country Land and Business Association, are effective, but represent sectional interests as, in a different way, does the Countryside Alliance. And the much diminished Campaign to Protect Rural England has disbanded its rural policy team".

Finally, there is a quotation in the article from Tim Farron:

"'The role of somebody outside government to look at rural policy and decisions taken by all departments is very, very important'".

I could not say that better. I apologise for reading to your Lordships from the Daily Telegraph at such length but I think that Geoffrey Lean makes a really good argument.

It is true that at times the Commission for Rural Communities has not pulled its punches-sometimes, I am afraid, at the expense of the Government of whom I was proud to be a member until May of this year. I found a cutting from the Times-this must have been before the paywall was invented because it is dated 6 June 2008-on the report by Stuart Burgess as the rural advocate. The report states bluntly:

"Rural issues are given little recognition in keynote speeches, only passing reference in policy papers, and rare places on platforms of major economic and regeneration conferences. Urban-based officials and organisations are rarely challenged to upgrade their understanding and commitment to the substantial rural part of the national economy".

Stuart Burgess and his lean team of staff based in Cheltenham did an admirable job in holding us to account. It is great to see the noble Lord, Lord Hill, in his place as a schools Minister. Stuart would regularly come to see me, encouraging me to ensure that the rural schools group established by the noble Baroness, Lady Ashton, was allowed to continue and to ensure that I attended it and listened to what it had to say. He was also keen to ensure that we properly rural-proofed what we were doing in education, that the presumption in favour of keeping rural schools would be retained, and that things such as the academic broadband network that schools are able to take advantage of could be piggy-backed to help to tackle the rural broadband issues that the Commission for Rural Communities was so keen to advocate.

I have a document from the commission dated 11 May 2010 which lists some of the successes of 2009-10 alone. They relate to areas such as affordable rural housing, fuel poverty, climate change, transport, digital communications, health, post offices, financial inclusion and market towns. There is a whole list of areas where the commission has been active, has been reporting and has been challenging the Government

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to do their job. That should be allowed to continue. I hope that the noble Lord, Lord Greaves, will be assertive and perhaps even put it to a vote and challenge the government on this, if not now, then at some future point. This is a commission that the Government can and should be proud of and should allow to continue.

8.15 pm

Will the Minister answer a couple of questions? The commission has oversight for the England Rural Development Programme; how will that continue? Will it be passed on to Natural England, or will it be dealt with in-house by Defra? It is an important source of European money for rural England and there will be some concern as to how it will continue. Similarly, I ask him to put his mind to what will happen to the rural affairs fora in the various regions. They provide a more localised form of rural-proofing. They were serviced by the Government Offices for the Regions, which are now to be disbanded, so I do not know how they are now to be serviced. If we are getting rid of the Commission for Rural Communities and, in turn, the rural affairs fora are not going to be allowed to function properly, I do not understand how there is to be any check or balance on what the Executive is up to in rural England.

Finally, or almost finally, I ask noble Lords to cast their eyes to the future and think about the need for rural-proofing as we go forward. There are real questions at the moment around the closure of the magistrates' courts and access to justice. Who is going to give a genuinely independent voice, free of any government interference, or any suspicion of government interference, as to whether people in rural areas are going to get access to justice? There are questions around police numbers as the fiscal constraints bite on police authorities. There are questions around school closures, the significant and radical reorganisation of the National Health Service, doing away with PCTs and strategic health authorities and how GPs in rural areas will continue to provide the full range of service to people in rural England. I have already mentioned broadband.

Dr Stuart Burgess has been interested for a number of years in migrant labour, trying to ensure that migrants working in agriculture, particularly in rural England, who are often very low paid with very poor conditions, are properly served in communities that are not used to dealing with people who do not have English as their first language. The jobcentre network, wind farms, housing, the impact of the Localism Bill, the impact of giving all this freedom in planning and whether that will deliver on the affordable housing needs of rural areas-these need an independent rural advocate.

I cannot speak highly enough of Dr Stuart Burgess, or of the job that Ewen Cameron, now the noble Lord, Lord Cameron, did before him. I would like to see that role continue independently of government, even if some of the other functions need to be brought in-house, in order to allow the independent rural advocate to continue. Having been a rural affairs Minister, I can tell the noble Lord, Lord Greaves, that we do not, as Parliamentary Under-Secretaries of State, or even as Secretaries of State, as Alun Michael was, have the clout across government that an independent

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person does. Such a person has the capacity to name and shame and the statutory right to go to see the Prime Minister and present his report.

I say finally to the Minister, listen to the voices that I have read out from newspapers and the media, listen to other Members of this House, listen to the countryside and at least retain an independent voice for rural-proofing. If at some point down the line the Minister wants to reorganise functions, it is set out in the Natural Environment and Rural Communities Act, in Part 8, "Flexible administrative arrangements", which allows Defra functions to be transferred between Defra and Defra bodies and gives the Government the legislative freedom to do what they want to do without rushing at it here and now.

Lord Newton of Braintree: My Lords, I shall join in briefly, even though I am far from being an expert on this commission like my noble friend Lord Greaves and, from what he has just said, the noble Lord, Lord Knight. What I do have is some 18 years' ministerial experience, man and boy, continuously from 1979 to 1997, at every level of government, including several years as a Parliamentary Under-Secretary, before becoming what was, in terms of nomenclature, rather more grand. In that, I share some experience with my noble friend on the Front Bench: we overlapped each other at the old DHSS, or was it by then the DSS? It might have had yet another title: they change more or less every week. I want to contribute a priori from that, picking up a couple of the points that have been made.

First, I just do not understand the general arguments that are being put forward for the proposition in the real world, as distinct from some hypothetical world. It is said that there should be greater direct accountability by Ministers within the department and that the department should be the champion. We all know that if the Ministry of Justice decides to abolish magistrates' courts, another department cannot act as the champion for anything. We all know that what happens is that, by and large, these matters are settled at meetings of relatively junior Ministers, where you may or may not carry the day, but you cannot then go round outside that Cabinet committee saying, "I championed this but the rest would not agree". You cannot say, "We lost on this, but we will now campaign to have it reversed or to make people think again".

Equally, when I was such a junior Minister faced with those difficulties, I welcomed having an authoritative external body to which I could point as a support for what I wanted to get my colleagues to agree to. Far more convincing than saying, "My unit in the department tells me that this is what we want", is to say, "We have this great and good body of external people who really know what they are talking about and who have done some research, and this is what they are advocating". Some of this thinking does not connect with the real world. I would be most grateful if my noble friend would comment, if he feels able. The only other thing that I would say is that I hope that the noble Lord, Lord Greaves, will not press his amendment, because I think we could have a much more productive argument when Ministers have had a chance to think about just what it is that they want to do.

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Lord Clark of Windermere: I am pleased to follow the noble Lord, Lord Newton, because I want to pick up some of the themes which he touched on which I thought were worthy of further reflection. I am also grateful to the noble Lord, Lord Greaves, for introducing the debate and for the manner in which he did so. It was very reasoned, trying to tease out answers. Indeed, he has probably posed most of the questions which I would pose.

I also want to take this opportunity to add my tribute to Stuart Burgess. I worked with him very closely in the days when I was chair of the Forestry Commission. We met regularly, and I found him a tower of strength. He was a most admirable individual, a very knowledgeable man and, above all, a real champion for the countryside-not for any particular vested interest in the countryside but for the people in the countryside, especially the disadvantaged. It is interesting that the report which is imminent, probably the last report from the commission, will be on that issue.

I am a little surprised that the coalition is proposing that action. I read the local papers, as does the noble Lord, Lord Henley. We probably read the same local papers, after we have read the back page, where we share a common interest. I am always finding the coalition partners, whether it is in Penrith and the Border, Westmorland, or wherever, appearing to champion the rural areas and saying that the Labour politicians from the west of the county-although they represent huge rural areas-have no concern for the rural areas. That could not be further wrong.

Indeed, as we have heard, it was the Labour Government who established the Commission for Rural Communities, which I believe did a great deal of good work. The great advantage was that I frequently met Stuart Burgess on the train going on a fact-finding visit, or going to hold a public meeting, a public consultation, in some village hall on housing, broadband, or whatever. Like the noble Lord, Lord Newton, as a Minister I certainly found it incredibly valuable to be able to call in experts, especially people who were as independent as the chair of the Commission for Rural Communities. It was very useful for a politician to be able to call these people in aid because one of the things I found was that-this is just a fact of life in a sense-any politician has a certain struggle, not only with his opponents across the Chamber but, inevitably, with his own department. His own civil servants may have slightly different interests in certain respects than he may have. Indeed, they may be right, because they are there for the long term and most politicians are there for the shorter term.

What I found interesting, and the issue that I would pose to the Minister, is this. I cannot imagine civil servants in a unit in Defra going out into rural communities on winter or even summer evenings, going to village halls, meeting ordinary people and listening to them, bearing in mind that, because of the nature of the occupation, the overwhelming majority of those civil servants, most of the policy people and the people with the real authority are based here in south-east England in the Greater London area. I simply do not believe that they will be going out and collecting the information for themselves. I believe that if the Government really want the big society notion to

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work, they are really going to have to engage with people and to communicate with them. Quite honestly, I believe that members of a commission are much better at doing that than civil servants in Defra or in any other department.

That brings me to the second point that the noble Lord, Lord Newton, made. It is a killing point. It is about who is the lead authority. Let us take broadband, which has been mentioned several times. Broadband in rural areas is difficult, but it can be piggybacked on the school network. In Cumbria, the Member for Penrith and The Border has led a campaign in the north of the county to try to get broadband, quite rightly, into these rural communities. Defra will actually have very little authority when the execution of this plan comes to the fore because, quite frankly, it is not Defra's responsibility. It is another government department's responsibility. We heard about the power of the Under-Secretary of State, but it is more than that, it is the power of the civil servants, with their pecking orders, as well. I believe that rural communities will lose out by this abolition.

I think it was my noble friend Lord Knight who made the point about listening. I hope that the Government will listen especially to people such as Geoffrey Lean, who for many years has been the finest environmental journalist in this country and for the past 40 years has been prepared to take unpopular stances against Governments of all political hues. I thought the quote that my noble friend used was most telling, and I hope the Minister will not dismiss this and will listen to some of these points of view.

8.30 pm

Lord Grantchester: I pay tribute to the noble Lord, Lord Greaves, for the excellent way that he has put forward his amendment tonight. I thank my noble friend for his parental advocacy of this body. I also thank other noble Lords who have spoken with great passion on this amendment, which goes to the heart of this Government's attitude to rural livelihoods and rural communities.

The Commission for Rural Communities was set up to promote awareness of the social and economic needs of people who live and work in rural areas, and to help decision makers across and beyond government to identify how these needs can best be addressed. It has given valuable independent advice to the Government and has produced a number of excellent reports, many of which have been referred to approvingly in recent rural affairs debates in your Lordships' House.

The arguments about the usefulness of outside, independent and impartial advice, rather than simply relying on departmental in-house sources of advice from civil servants, have been well aired in relation to a variety of bodies proposed to be scrapped in the Public Bodies Bill. In particular, the debate on the pesticides advisory committees and the remarks made by my noble friends Lord Whitty and Lady Quin, and others on 29 November, were very pertinent. The value of the report of the Commission for Rural Communities was mentioned in a debate on rural affairs initiated once again by the noble Lord, Lord Greaves, on 15 July. That then informed your Lordships' later debate on the Prince's Countryside Fund.

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The CRC focuses on practical outcomes for people who live and work in our rural areas. I pay tribute to Stuart Burgess who with his team accompanied a tour on the work being done in market towns, which was a strong initiative in my local area in Cheshire. The second round of the town centre initiative fund expanded excellent help towards 15 further rural local authorities; that is, 38 per cent of recipient authorities compared to only 6 per cent in the first round of that initiative. It has been involved in collaboration and partnerships through local areas, and in working to find the most effective solutions at the least cost. It has picked up on local challenges and strengths, and has been part of local economic assessments, which have been vital to the work of regional development agencies and, through the rural development of England proposals, has worked with the development agencies, which is another body we will look at after the new year. It has become a repository of expert advice and opinion to take advice of rural needs to the heart of government.

It is clear that there has been no real consultation about the abolition of this commission, despite the assurances from the noble Lord, Lord Taylor of Holbeach, about consultations in an earlier debate. In answer to a Written Question, HL2837, the Minister, the noble Lord, Lord Henley, said:

"The decision to abolish the Commission for Rural Communities was made after full consideration within Defra and the usual consultation across government".-[Official Report, 25/10/10; col. WA 224.]

No wider consultations have been undertaken.

Has the effect on rural areas really been considered? The noble Lord, Lord Greaves, referred to costs and rightly pointed out that the upfront abolition costs are in the region of £2.5 million. Unlike many of the other Defra bodies where cost savings are negligible or non-existent, this could be one where some costs may be at issue. However, one has to look at the value for money that this expenditure has produced. If the Government commission reports in the future on the kinds of subjects that have previously been considered by the CRC, there would presumably be considerable costs in undertaking them. Furthermore, independent, impartial advice is a valuable commodity.

The Defra Minister, Richard Benyon, has also said that proposed changes to Defra's public bodies will create modest savings. The main benefits of the proposals in the Public Bodies Bill are to increase transparency and accountability in public bodies. But how can accountability be improved if existing bodies, such as those we are discussing tonight, which publish their reports and proceedings and have excellent websites, high visibility in rural areas, and make minutes of their meetings available to everyone, are abolished and replaced by Defra in-house bodies? The CRC made a difference. This simply does not make sense.

I turn now to the announcement made on 29 June by the Secretary of State. A new policy unit is to be set up within her department covering rural communities. It will work across government to ensure that rural interests are reflected in programmes. I join other noble Lords who have asked the Minister how an internal policy unit can have the profile to cut across and into other departmental activities. Can these new

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arrangements be effective? What evidence will he require of his department to support the Government's contention that the work done so admirably by the Commission for Rural Communities will still be carried out as effectively in the future?

The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley): My Lords, I shall now address the amendment and put things into an appropriate perspective. I welcome the remarks of all noble Lords who have spoken about the CRC. The noble Lord, Lord Knight of Weymouth, described himself as the midwife of the body, but he was then described as its father by the noble Lord, Lord Grantchester. We are getting our metaphors a bit mixed up on this occasion. However, as I said, I want to put this into perspective, so I shall start by reminding the Committee, as other noble Lords have done, that we announced our intention way back on 29 June that, subject to the passing of legislation, we would abolish the Commission for Rural Communities along with its statutory functions as just one part of the Bill before us.

I think I can speak for all my fellow Ministers and future Ministers once my time is up when I say that the decision to abolish the commission does not reflect in any way a reduction in the Government's rural commitment. On the contrary, the Government are committed to improving the quality of life for people living and working in rural areas and intend to put the fair treatment of rural communities at the centre of government. There are already many rural organisations and commentators who will continue to hold the Government to account, as happened with the previous Government. I think that noble Lords might remember one faintly rural community, the Women's Institute, which I seem to remember a former Prime Minister going to address but not coming away from that occasion exactly unbloodied. However, I think he enjoyed the experience.

I remind the Committee of what the name Defra stands for. It is the department responsible for the environment, food and rural affairs. It is the department that works to promote the interests of rural people within all government policies. I can speak for all my colleagues in the department-I am sure it will be true of all future Ministers and, dare I say it, those like the noble Lords, Lord Knight of Weymouth and Lord Clark, who have served in similar departments in previous Governments-by saying that we will continue to push for rural affairs. Many of us have a strong rural background. The noble Lord, Lord Clark of Windermere, comes from my part of the world and I was grateful for his reference to the fact that we support the same football team and read the same newspaper. We will continue, as he and the noble Lord, Lord Knight, and others have done, to champion rural issues across the Government.

I must make it clear that we as a department will continue to work with a vast range of departments on issues of importance to rural people. This will include working with the Department for Business, Innovation and Skills and the Department for Culture, Media and Sport on broadband. It is an important issue and I am glad that noble Lords mentioned it. The noble Lord,

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Lord Clark, referred to what my honourable friend in another place is doing in Penrith and the border region for north Cumberland in trying to bring the project forward. He has had long discussions with both the DCMS and my colleague, Richard Benyon, who has responsibility for these matters in Defra on that issue. We will continue to work with the Department for Communities and Local Government on housing and planning and with the Department for Transport on rural transport issues.

My noble friend Lord Newton kept emphasising that he was a junior Minister, but he was actually the first Secretary of State I served under in the Department of Social Security, and I hope that I learnt a great deal from him in doing so.

Lord Newton of Braintree: I am tempted to intervene. I am grateful to my noble friend because I now remember. He was War Pensions Minister, if I remember rightly, and I am willing to bet that he found the external campaigning of what was then called COBSEO-it may be called something else now-very useful in trying to get money out of me for war pensions.

Lord Henley: My noble friend touches a sore point: I remember many issues relating to war pensions and other matters that caused him and me a great many problems. I can also remember taking social security Bills through this House for my noble friend when he was the Secretary of State and that I suffered a number of defeats which ran into millions, billions and trillions of pounds and which my noble friend then had to overturn. The point I am trying to make is that what this House and another place can do is equally important. I always used to feel that any Secretary of State from another place with whom I worked needed two or three defeats in this House before they understood its importance. My noble friend learned that and we dealt with the problems.

We talk to a large number of different departments; we will continue to do so and we will continue to be the rural advocate. As part of our changes to rural policy, Defra's rural capacity will be significantly increased to create a new rural communities policy unit. That unit will expand on the existing policy work of the department, moving to a single organisation to act as the rural champion within government-and that rural champion is Defra. This will remove duplication, improve efficiency and improve our focus on priority issues for rural communities.

In moving the amendment, my noble friend Lord Greaves asked about staffing issues and the transitional period. This is very important. I can assure my noble friend that 14 staff from the CRC have already transferred to Defra as they are connected to work which will be undertaken in the rural communities policy unit. This will assist in building upon the relationships that the commission has built up. In addition, any vacant posts in the new unit-and we expect there to be at least some-will be advertised so that commission staff without an automatic right of transfer can apply for those positions.

The noble Lord, Lord Knight, asked about the RDPE and whether the CRC was responsible for that network. That function has been transferred to Defra and the three CRC staff undertaking the work have

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been transferred; they are among the 14. I must make it clear to the noble Lord that the CRC was not responsible for the full RDPE programme, which is a wider matter.

One of the most important issues to address is costs. What we are doing is not only about saving money, but we expect significant savings to come from this action. This is important in terms of our contribution to reducing the deficit. We, as a Government, inherited a very large deficit from the party opposite when they were in government and we all have to do our bit to reduce it. Obviously there will be up-front costs as a result of the change and redundancies, and those are estimated at less than £2.5 million. These will be far outweighed by the long-term savings, estimated to be in the region of £4.5 million a year. That is a significant sum. There are very good reasons for wanting to continue to attack the deficit and we will continue to do so. However, as I have made clear to the Committee, that is not the sole reason for our doing this.

8.45 pm

I hope that I have given sufficient reassurance to the Committee-I think that it is fairly obvious-that we are committed to rural people and rural communities. The department will continue to do all it can for them, but we will also continue to pay tribute to the commitment of, and quality of work undertaken by, the CRC, midwifed by the noble Lord, Lord Knight of Weymouth, some years ago. However, I think that its time has come-

Lord Knight of Weymouth: My Lords-

Lord Henley: I will give way to the noble Lord when I have finished that sentence. It is my right to decide when I give way. I pay tribute to the work of the Commission for Rural Communities during the past four years, but I think that its time has come.

Lord Knight of Weymouth: Will the noble Lord also pay tribute to the work of the rural advocate and address the points made by all speakers in this debate about the importance of having a voice for rural England that is independent of government? Does he think that that role should continue, even if the other functions can be absorbed within his rural policy unit?

Lord Henley: The noble Lord looks for an independent rural advocate. I do not think that we will be short of any number of independent rural advocates or that they necessarily need to be government funded. He referred in terms of environmental matters to Geoffrey Lean. There are many others who will offer us advice and make their views known, as will the noble Lord himself, this House and another place. I can assure the noble Lord that we will not be short of advice. I therefore hope that my noble friend Lord Greaves will consider withdrawing his amendment.

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