11 Aug 2011 : Column 1501



11 Aug 2011 : Column 1501

House of Lords

Thursday, 11 August 2011.

Noon

Prayers-read by the Lord Bishop of Birmingham.

Deaths of Members

Announcement

12.05 pm

The Lord Speaker (Baroness Hayman): My Lords, I regret that I have to inform the House of the deaths of Lord Boston of Faversham on 23 July and Lord Marsh on 29 July. On behalf of the whole House, I extend our condolences to the noble Lords' families and friends.

Arrangement of Business

Announcement

12.06 pm

Baroness Anelay of St Johns: My Lords, with the usual channels' agreement, our business today will essentially follow our established procedure for the repetition of two Statements in this House, but with some added structure and time extensions.

My noble friend the Leader of the House will shortly repeat a Statement on public disorder made earlier to the House of Commons by my right honourable friend the Prime Minister. There will then follow contributions from the Leader of the Opposition and, on this occasion, the most reverend Primate the Archbishop of Canterbury. The Leader will then reply to those contributions, I hope within the 20 minutes usual for Front-Bench comments and questions on Statements.

Time for Back-Bench interventions will then follow. I suggest that we should first hear from the Convenor-elect, then from the noble Baroness, Lady Hussein-Ece, and then I know that the House will wish to hear from the noble Lord, Lord Hunt of Kings Heath, who usually speaks on these matters for the Opposition.

I suggest that we should take around 40 minutes for further Back-Bench contributions. I am, as is clear today, aware of the significant interest around the House, but remind Members that interventions on Statements are restricted to "brief comments and questions" and that this is not the occasion for an immediate debate. At the end of Back-Bench interventions, my noble friend Lady Browning will reply to those questions en bloc for about another 10 minutes.

This is a procedure that has been designed to fit today's circumstances and one which I hope will commend itself to the House. It gives us some structure to our day and some balance in the time available for the two Statements before us today.

When our proceedings on the first Statement are complete, my noble friend Lord Sassoon will repeat a Statement on the global economy, so long as my right honourable friend the Chancellor of the Exchequer has by then started to make that Statement to the

11 Aug 2011 : Column 1502

House of Commons. As ever, if that is not the case, we will need to adjourn briefly during pleasure until we are in a position to take the Statement. Proceedings will be similar on the second Statement. There will be 20 minutes for Front-Bench contributions, about 40 minutes for Back-Bench contributions and the Minister will reply at the end. If we manage to keep to roughly those timings, the House should rise by 3 pm.

I should like to remind all Members of the House that at 3 pm today my noble friends Lady Browning and Lord Wallace of Saltaire will be hosting an all-Peers meeting on the subject of the first Statement. It will be in Committee Room G, and all Members of this House are most welcome. It will give us all the opportunity to look at these matters in more detail.

Before the Leader rises to make the first Statement, I am sure that the whole House will want to join me in expressing our thanks to the staff of the House for enabling us to meet today.

Public Disorder

Statement

12.09 pm

The Chancellor of the Duchy of Lancaster (Lord Strathclyde): My Lords, I shall now repeat a Statement that was made by the Prime Minister a few minutes ago in another place. The Statement is as follows:

"First, let me thank all Members of the House for returning. When there are important events in our country, it is right that Parliament is recalled and that we show a united front. I am grateful to the leader of the Opposition for the constructive approach that he has taken over the past few days. I have spoken with many of the Members whose constituencies have been affected, and I would like to pay tribute to the Member for Tottenham for his powerful words and unstinting work over recent days.

What we have seen on the streets of London and in other cities across our country is completely unacceptable, and I am sure the whole House will join me in condemning it. Keeping people safe is the first duty of government. The whole country has been shocked by the most appalling scenes of people looting and of violence, vandalising and thieving. It is criminality pure and simple, and there is absolutely no excuse for it. We have seen houses, offices and shops raided and torched, police officers assaulted and fire crews attacked as they try to put out fires, people robbing others while they lie injured and bleeding in the street, and even three innocent people being deliberately run over and killed in Birmingham. We will not put up with this in our country; we will not allow a culture of fear to exist on our streets; and we will do whatever it takes to restore law and order and to rebuild our communities.

First, let us be clear about the sequence of events. A week ago today, a 29 year-old man named Mark Duggan was shot dead by the police in Tottenham. Clearly, there are questions that must be answered, and I can assure the House that this is being investigated thoroughly and independently by the IPCC. We must get to the bottom of exactly what happened-and we will.



11 Aug 2011 : Column 1503

Initially there were some peaceful demonstrations following Mark Duggan's death. Understandably and appropriately, the police were cautious about how they dealt with them. However, this was then used as an excuse by opportunist thugs in gangs, first in Tottenham itself, then across London and then in other cities. It is completely wrong to say there is any justifiable causal link. It is simply preposterous for anyone to suggest that people looting in Tottenham at the weekend, still less three days later in Salford, were in any way doing so because of the death of Mark Duggan. Young people stealing flat-screen televisions and burning shops was not about politics or protest; it was about theft.

In recent days, individual police officers have shown incredible bravery and have worked in some cases around the clock without a break. They deserve our gratitude and our thanks: but what became increasingly clear earlier this week was that there were simply far too few police deployed on to the streets, and that the tactics they were using were not working. Police chiefs have been frank with me about why this happened. Initially, the police treated the situation too much as a public order issue rather than essentially one of crime. The truth is that the police have been facing a new and unique challenge, with different people doing the same thing-basically looting-in different places, but all at the same time. To respond to this situation, we are acting decisively to restore order on our streets, to support the victims of this terrible violence and to look at the deeper problems that have led such a hard core of young people to decide to carry out such appalling criminality. Let me take each in turn.

I will start with restoring order. Following the meetings of COBRA which I chaired on Tuesday, Wednesday and again this morning, we have taken decisive action to help ensure more robust and more effective policing. Because of decisions taken by Acting Commissioner Tim Godwin and other chief officers, there are now more police on the streets, more people arrested and more criminals being prosecuted. The Met Police increased the number of police deployed on the streets of London from 6,000 to almost 16,000 officers, and this number will remain through the weekend. We have also seen large increases in deployments of officers in other affected areas; leave in affected forces has been cancelled; police officers have been bussed in from forces across the country to areas of greatest need; and many businesses have released special constables to help. They, too, have performed magnificently.

More than 1,200 people have now been arrested across the country. We are making technology work for us by capturing the images of the perpetrators on CCTV, so even if they have not yet been arrested, their faces are known and they will not escape the law. As I said yesterday, no phoney human rights concerns about publishing photographs will get in the way of bringing these criminals to justice. Anyone charged with violent disorder and other serious offences should expect to be remanded in custody, not let back on the streets: and anyone convicted should expect to go to jail. Courts in London, Manchester and the West Midlands have been sitting through the night, and will do so for as long as necessary. Magistrates' courts have proved

11 Aug 2011 : Column 1504

effective in ensuring swift justice. The Crown Courts are now starting to deal with the most serious cases. We are keeping under constant review whether the courts have the sentencing powers they need and we will act if necessary.

As a result of the robust and uncompromising measures that have been taken, good progress is being made in restoring order to the streets of London and other cities around our country. As I have made clear, nothing is off the table. Every contingency should be looked at. The police are already authorised to use baton rounds. As I said yesterday, while they would not be appropriate now, we do have in place contingency plans for water cannon to be available at 24 hours' notice.

Some people have raised the issue of the Army. The Acting Commissioner of the Metropolitan Police said to me that he would rather be the last man left in Scotland Yard, with all his management team out on the streets, before he asked for the Army. That is the right attitude and one I share. But it is the Government's responsibility to make sure that every contingency is looked at, including whether there are tasks that the Army could undertake that might free up more police for the front line.

Everyone watching these horrific actions will be struck by how they were organised via social media. Free flow of information can be used for good, but it can also be used for ill. So we are working with the police, the intelligence services and industry to look at whether it would be right to stop people communicating via these websites and services when we know they are plotting violence, disorder and criminality.

I have also asked the police if they need any other new powers. Specifically, currently they can only remove face masks in a specific geographical location and for a limited time. So I can announce today that we are going to give the police the discretion to require the removal of face coverings under any circumstances where there is reasonable suspicion that they are related to criminal activity. On dealing with crowds, we are also looking at the use of existing dispersal powers and whether any wider power of curfew is necessary.

Whenever the police face a new threat, they must have the freedom and the confidence to change tactics as necessary. This Government will always make sure they have the backing and political support to do so. The fight-back has well and truly begun. But there will be no complacency, and we will not stop until this mindless violence and thuggery is defeated and law and order is fully restored on all our streets.

Let me turn to the innocent victims. No one will forget the images of the woman jumping from a burning building or the furniture shop that had survived the Blitz now tragically burnt to the ground. Everyone will have been impressed by the incredibly brave words of Tariq Jahan, a father in Birmingham whose son was so brutally and tragically run over and killed. I give the people affected this promise: we will help you repair the damage, get your businesses back up and running, and support your communities.

Let me take each of these in turn. On repairing the damages, I can confirm that any individual, homeowner or business that has suffered damage to or loss of their

11 Aug 2011 : Column 1505

buildings or property as a result of rioting can seek compensation under the Riot (Damages) Act, even if uninsured. The Government will ensure that the police have the funds they need to meet the cost of any legitimate claims, and whereas normally claims must be received within 14 days we will extend the period to 42 days. The Association of British Insurers has said it expects the industry to be paying out in excess of £200 million, and it has assured us that claims will continue to be dealt with as quickly and as constructively as possible.

On supporting businesses, we are today setting up a new £20 million high street support scheme to help affected businesses get back up and running quickly. To minimise the costs facing businesses, the Government will enable local authorities to grant business rate relief by funding at least three-quarters of their costs. We will defer tax payments for businesses in greatest need, through Time to Pay and other practical support. For houses and businesses that have been the most badly damaged, we have instructed the Valuation Office to immediately stop liability for council tax and business rates.

A specific point was raised with me in Wolverhampton yesterday: that planning regulations made it difficult for shops to put up protective shutters. We will weed out unnecessary planning regulations to ensure that businesses can get back on their feet and feel secure as quickly as possible.

On supporting local communities, I can confirm that the Bellwin scheme to support local authorities will be operational. However, to ensure that urgent funding is immediately available, we are today establishing a new £10 million recovery scheme to provide additional support to councils in making areas safe, clean and clear again.

The Government will also meet the immediate costs of emergency accommodation for families made homeless by these disturbances. The Secretaries of State for Communities and Local Government and Business have made details of these schemes available to the House today. Of course the situation continues to evolve, and we will keep the need for additional support under close review.

Finally, let me turn to the deeper problems. Responsibility for crime always lies with the criminal, but crime has a context and we must not shy away from it. I have said before that there is a major problem in our society with children growing up not knowing the difference between right and wrong. This is not about poverty, it is about culture-a culture that glorifies violence, shows disrespect to authority and says everything about rights but nothing about responsibilities. In too many cases the parents of these children, if they are still around, do not care where their children are or who they are with, let alone what they are doing. The potential consequences of neglect and immorality on this scale have been clear for too long, without proper action being taken.

As I said yesterday, there is no one step that can be taken, but we need a benefits system that rewards work and is on the side of families. We need more discipline in our schools. We need action to deal with the most disruptive families. We need a criminal justice

11 Aug 2011 : Column 1506

system that scores a clear, heavy line between right and wrong-in short, all the action necessary to help mend our broken society.

At the heart of all the violence sits the issue of the street gangs. Territorial, hierarchical and incredibly violent, they are mostly composed of young boys, mainly from dysfunctional homes. They earn money through crime, particularly drugs, and are bound together by an imposed loyalty to an authoritarian gang leader. They have blighted life on their estates with gang-on-gang murders and unprovoked attacks on innocent bystanders. In the past few days, there is some evidence that they have been behind the co-ordination of the attacks on the police and the looting that has followed.

I want us to use the record of success against gangs of cities like Boston in the USA and Strathclyde in Scotland, which have done this by engaging the police, the voluntary sector and local government. I want this to be a national priority. We have already introduced gang injunctions and I can announce today that we are going to use them across the whole country for children and for adults.

There are also further sanctions available beyond the criminal justice system. Local authorities and landlords already have tough powers to evict the perpetrators from social housing. Some local authorities are already doing this. I want to see others follow their lead, and we will consider whether these powers need to be strengthened further.

I have asked the Home Secretary to work with the Secretary of State for Work and Pensions and other Cabinet colleagues on a cross-government programme of action to deal with this gang culture, with a report to Parliament in October. I also believe that we should be looking beyond our shores to learn the lessons from others who have faced similar problems. That is why I will be discussing how we can go further in getting to grips with gangs with people like Bill Bratton, former commissioner of police in New York and Los Angeles.

Of course, the problem is not just gangs. There are people who saw shop windows smashed and thought that they could just steal and it would be okay. It is not okay and these people will face the full consequences of their actions.

In the past few days we have seen a range of emotions sweep this country: anger, fear, frustration, despair, sadness and, finally, a determined resolve that we will not let a violent few beat us. We saw this resolve in the people who gathered in Clapham, Wolverhampton and Manchester with brooms to clean up the streets. We saw it in those who patrolled the roads in Enfield through the night to deter rioters. We saw it in the hundreds of people who stood guard outside Southall Temple, protecting it from vandalism.

This is a time for our country to pull together. To the law-abiding people who play by the rules, and who are the overwhelming majority in this country, I say: the fight-back has begun; we will protect you; and if you have had your livelihood and property damaged, we will compensate you. We are on your side. To the lawless minority-the criminals who have taken what they can get-I say this: we will track you down, we will find you, we will charge you and we will punish you. You will pay for what you have done.



11 Aug 2011 : Column 1507

We need to show the world, which has looked on appalled, that the perpetrators of the violence we have seen on our streets are not in any way representative of our country, nor of our young people. We need to show it that we will address our broken society and restore a sense of stronger morality and responsibility in every town, every street and every estate. A year away from the Olympics, we need to show it the Britain that does not destroy, but that builds; that does not give up but stands up; that does not look back, but always forwards. I commend the Statement to the House".

12.27 pm

Baroness Royall of Blaisdon: My Lords, I thank the noble Lord the Leader of the House for repeating the Statement made in the other place by the Prime Minister. I begin by saying that it was the right decision by the Prime Minister and the Government to recall Parliament today. It was also the right decision to recall your Lordships' House.

Whatever we disagree on week by week, month by month, today we stand shoulder to shoulder in condemning the violence and vandalism that we have seen on our streets. I join the Prime Minister in mourning the loss of life that we have seen, including those in London and Birmingham. Our thoughts are with the families and friends of those who have died. As the Prime Minister said, the protection of the public is the key duty and obligation of a Government. In our recent debates in this House, both the Government and the Opposition have been united in this view. The first duty of government is the security and protection of the people.

The events of this week have been deeply shocking but they are rare. Britain is still a peaceable country; London is still a peaceable city. For the vast, overwhelming number of people in our country, the nearest that they have come to these riots has been their remote control unit. But when they have turned on their television sets people across the country have been appalled by what they have seen: buildings burning in city centres and suburban high streets; shop windows shattered; looting without limit; gangs of youths attacking the police and fire service; and the streets under the control not of the public but of the mob-random, sustained, direct violence. However, for people living in the areas that have been hit by these events, this has been far from a spectacle seen on the television. It is their homes that have been hit-their shops, businesses and communities. For some, their lives have been not just changed but changed for ever. For every chain store that has seen its windows smashed and its televisions or trainers looted, there have been local corner shop businesses that have seen their investments, savings, livelihoods and lives reduced to rubble or burnt to the ground. The Prime Minister was right to characterise these actions as criminal.

What we have seen this week in London, Birmingham, Manchester, Bristol, Nottingham, Liverpool and even, astonishingly, my home town area of Gloucester is serious criminality for which there can be no excuse. However, clearly there are problems in our society and

11 Aug 2011 : Column 1508

we have to work together to find solutions. Where there have been criminal acts, we need to see arrests being made, prosecutions being brought, cases going to court and the perpetrators being penalised. We need justice to be done. Criminality in breach of criminal law needs to be responded to by criminal law. We must see swift progress from charge to trial in these cases. Can the Leader of the House confirm that there is capacity within the courts and among our prosecutors to deal with cases swiftly, not just for first appearance but throughout the trial process?

This week, we have also been reminded of the importance of CCTV in catching those responsible. I wonder whether the Government will undertake to look again at the proposals on CCTV to ensure that they in no way hinder bringing criminals to justice.

There is no excuse for this criminality. There is no justification for what has been done this week. But there are questions that we need to address. Why did this happen? Why did this happen now? What lessons did we learn from the Brixton, Toxteth, Hackney, Leeds and other riots back in 1981? Of course, we know that there are differences from that time. There was no social networking in 1981, no Twitter, and no internet at all; there were no means by which those taking part in the violence could maximise their impact through modern communications. But, just as in 1981, we know now that the background to this week's riots is complex: unemployment, especially youth unemployment, poor education, and few prospects. The right reverend Prelate the Bishop of London has said:

"The events of the past few days in London are appalling-but not wholly unexpected".

He spoke of the role of gang culture in the capital. That is just one of the many issues, along with parental responsibility, jobs, aspirations and ambition for our young people, the need for a sense of hope rather than hopelessness, drugs and alcohol, which must be discussed, debated and analysed. Finding an explanation for the riots is not an excuse, not a justification for the violence, but it is a means of finding a solution. We need to look at these issues if we are to have a return to order and to normality and we need to look at them seriously. There has rightly been talk of responsibility and morality. Perhaps society has lost part of its moral compass, abdicating our responsibilities to our fellow citizens, breaking the rules that bind us as communities, indulging in wanton consumerism and this week despicable criminal consumerism.

I hope that there will be a full, independent examination of what has happened in recent days and what has led us to this position; not an inquiry sitting in Whitehall hearing evidence from academic experts, but reaching out and listening to those affected, an inquiry that perhaps goes around the country listening to people. There are millions of people in this country who care about the community in which they live; they want a voice; they want to express their horror about what has happened from their own experience, but they will also have many progressive answers. We must listen to their hopes and fears and to their ideas in order to find solutions. We on these Benches would urge the Government to establish such an independent examination as soon as possible.



11 Aug 2011 : Column 1509

There are things that the Government can and must do before then. Can the Leader tell the House that the Government will ensure that the people and families who have lost everything, whether it be their homes, their possessions, their businesses, or their livelihoods, will have fast-track insurance provision so that individuals, families and businesses can start to get back on their feet as quickly as possible? Local authorities in the areas affected-areas which, in the main, were already deep in deprivation-will be heavily stretched in trying to sew together again the fabric of their local communities, which has been so violently ripped apart this week.

Again, 30 years ago, we saw considerable effort and investment put into areas affected by rioting. In this House, for instance, we think of the work on Merseyside, following the Toxteth riots, led by the then environment Secretary and the now noble Lord, Lord Heseltine. Can the Leader of the House confirm that there will not just be extra resources, but the resources that these areas need, provided for by the Government, for the programme of physical and social rebuilding and reconstruction, which these areas will now unquestionably need?

The importance of the Olympics, mentioned by the Leader of the House, to all countries is self-evident, but for this country the importance of a peaceful, orderly and successful Olympics cannot be overstressed. Just last night, I was in Delhi, where on the front pages of all the major newspapers there were stories about the riots. Naturally, there is discussion about the violence and its causes but, in conversation, questions are also asked about our reputation in the world and the implications for the Olympics. In particular, can the Leader set out what steps the Government will be taking, less than a year before the start of the 2012 Olympics, to repair the damage to the reputation of London as a world city, as an attractive place to live and visit-damage which the events of this week have certainly done?

This is not a moment for party politics. Causes are one thing but, leaving politics aside, how these issues have been handled certainly raises vital questions-urgent questions to which we need to turn our consideration. The bravery, dedication and commitment of the police officers who have been out on our streets this week, trying to defend us all, trying to protect people and communities, has been exemplary and a tribute to the traditions and practices of good policing in Britain. I thank our brave policemen and policewomen throughout the country for the work that they have done on our behalf, and of course I thank the emergency services. We have seen instance after instance of real courage, real care and real compassion as police officers sometimes struggled to maintain law and order in the face of, at times, overwhelming odds against it and them. Admirable though that certainly has been, it cannot and must not mean that questions cannot and should not be asked about how the policing of the situation was handled overall.

It is quite clear that questions need to be asked about the policing of the events, from the initial shooting in Haringey a week ago to the fact that it took as long as four days for anything like an adequate police presence to be put in place for the capital city of this country. Why four days? The police must get proper support from the Government. We on these Benches

11 Aug 2011 : Column 1510

have spoken out well before the events of this week on the proposed cuts in police budgets and police manpower, which the Government are bringing forward. Now is clearly not the time for the Government to proceed with their plans for large cuts in the police forces of this country. Now is not the time to stretch the thin blue line even further, as so many of our excellent police men and women have told us this week. So can the Leader of the House confirm that the proposed cuts in the police-cuts which have led to estimates of as many as 40,000 police and police-related jobs disappearing-will now be put on hold and the basis of policing needs reconsidered?

Much was made by the Benches opposite before last year's election about what they liked to badge as broken Britain. We never thought it was true. We always had a higher opinion of Britain and the British people than that phrase implied. "Broken Britain" was a glib and easy charge to make in opposition, but government is harder and tougher. We never much took to the notion of "Broken Britain" as an idea but if Britain was broken then, it is a good deal more broken now than it was a week ago. Successful societies are built on an ethic of hard work, compassion, solidarity and looking after each other. Ours must be one society. We must all bear our share of responsibility for it. It is right that we come back to debate these issues in due course.

These are serious matters. Few things can be more dreadful than to see young women leaping for their lives from burning buildings, which have been deliberately set on fire by thugs intent on violence, looting and criminality. The people of this country rightly demand protection and security at home. To sit in your own house, as people across the country have testified to doing this week, hearing a mob attempting to break in to attack you, your possessions, your property, your family and your life, is not anything which anyone at all should be experiencing in Britain in the 21st century. We must move beyond the wanton and shaming violence we have all seen this week. There will be lessons to be learnt. We must all learn them and take whatever steps we can to make sure that there is no repeat of what has taken place in some of our greatest cities this week.

But in all the violence and in all the appalling images, we have seen some uplifting things. On the morning after their own communities had been trashed-trashed by people who are part of the very communities they were trashing-to see men and women of all ages and backgrounds coming out with shovels, mops and brushes to clear up the mess was as British in spirit as the Blitz, or the response of the public to the terrible events of 7/7. Through the violence we have also seen clearly that while for some people, at least, the rule of law means little or nothing, for every brush that was swept, for every spadeful that was shovelled and for those people trying to pick up the pieces from the violence, we have seen that the rule of law meant the opposite. The most extraordinary courage that we have seen is from Mr Tariq Jahan, whose son was killed and who said:

"Today we stand here to plead with all the youth to remain calm, for our communities to stand united".

We stand with that gentleman; he is the true face of Britain.



11 Aug 2011 : Column 1511

As its bedrock, the good society needs democracy, human rights and the rule of law. We have seen all that challenged this week but for all the despicable violence that we have witnessed, we have witnessed as well how uplifting the human spirit can be, how powerful is the rule of law-because support for it is so widespread-and how much, too, we all need to work to ensure that it is the human spirit and the rule of law rather than baseness and violence which eventually triumph.

12.40 pm

The Archbishop of Canterbury: My Lords, together with all Members of your Lordships' House, I wish to associate myself with the tributes that have been paid to the work of the police force in recent days, and to the work of the emergency services. These are people who have put themselves at risk in a very costly way in order to minimise the risk to others. And we are reminded by what we have seen in recent days of the crucial role that these services play in our society. I believe that there are indeed questions about the right level of policing that is appropriate to a complex and troubled society like ours, and I hope that those questions will be seriously addressed in the days ahead.

I wish also to express the deepest sympathy to those who have lost members of their family, those who have lost their livelihoods, and those who have in some measure lost hope and confidence in recent days. It is perhaps that loss of hope and confidence that is the most serious and most long-term issue that we have to address as a society.

In the events that we have seen in recent days, there is nothing to romanticise and there is nothing to condone in the behaviour that has spread across our streets. This is indeed criminality. Criminality pure and simple? Perhaps. But, as the Prime Minister reminded us, criminality always has a context, and we have before us the task of understanding that context more fully. It is worth remembering that seeking explanations is not the same as seeking excuses. In an intelligent and critical society we seek explanations so that we may be able to respond with greater intelligence and greater generosity.

One of the most troubling features of recent days, as I think all would agree, has been the spectacle of not only young people but even children of school age-as young as seven-taking part in the events we have seen. Surely, as we respond to these circumstances, high on our priorities must be the question of what we are to do in terms of rebuilding in some of our communities not only the skills of parenting but of education itself.

Over the past few decades, many would agree that our educational philosophy at every level has been more and more dominated by an instrumentalist model that is less and less concerned with the building of virtue, character and citizenship-civic excellence, as we might say. A good educational system in a healthy society is one that builds character and virtue.

In the wake of the financial crisis of a few years ago, we began to hear more discussion than we had heard for a very long time about the need for a recovery of the virtues-the need for a recovery of the

11 Aug 2011 : Column 1512

sense of how character was to be built in our society -because character involves not only an awareness of the connection between cause and effect in my own acts but a deepened sense of empathy with others and a deepened sense of our involvement together in a social project in which we all have to participate. As we have been reminded, there are indeed no quick answers here, but I believe that one of the most significant questions that we ought to be addressing in the wake of these deplorable events is what kind of education we are interested in for what kind of society. Are we prepared to think about not only discipline in classrooms but the content and ethos of our educational institutions, and to ask: can we once again build a society which takes seriously the task of educating citizens-not consumers or cogs in an economic system, but citizens?

Yesterday, I was speaking to a friend who teaches in higher education and who said that she had been overwhelmed by the number of messages she had received from the young people with whom she was involved, expressing their anger and frustration at what they had seen on television. They believed that their own generation was being betrayed by the activity of many young people. That is simply a reminder that the young people of this country deserve the best. The reaction of so many of them to the events of recent days has been, as we have already been reminded, an inspiration-just as has been the reaction of so many in our communities: generous, sacrificial and imaginative.

My right reverend brother of London has already spoken in other contexts about the way in which communities have rallied and the place of churches and other faith communities in that rallying to provide support, emergency help and simply a quiet space for reflection. Communities deserve the best and above all, I repeat, young people deserve the best. I hope that in our response to these events, we shall hold in mind what we owe to the next generation of our citizens. I underline the phrase, the next generation of our citizens. What we have seen is a breakdown not of society as such, but the breakdown of a sense of civic identity-shared identity and shared responsibility.

The Government have rightly made a priority of building community cohesion in what they have spoken of in recent months. Talk of the big society, of which we have heard a great deal, has focused precisely on the rebirth-the renaissance-of that civic identity. Now we need to see what that will look like; now all of us, without any point scoring in a partisan approach, need to reflect on what that building will require in terms of investment in the next generation-in formal education but also in the provision of youth services imaginatively and consistently across the country.

I have spoken a little about how communities have responded-not only volunteer bodies and local businesses but individuals, building new friendships and new networks. People have discovered why community matters. They have discovered why solidarity is important. They have begun to discover those civic virtues that we have talked about in the abstract. In other words, this is a moment that we must seize; a moment when there is sufficient anger at the breakdown of civic solidarity; sufficient awareness of the resources that people have

11 Aug 2011 : Column 1513

in helping and supporting one another; sufficient hope-in spite of everything-of what can be achieved; and for the governing institutions of this country, including your Lordships' House, to engage creatively with the possibilities that this moment gives us. I trust that we shall respond with energy to that moment, which could be crucial to the long-term future of our country and our society.

12.48 pm

Lord Strathclyde: My Lords, I am sure that the whole House will welcome those contributions, from both the Leader of the Opposition and, most particularly, from the most reverend Primate the Archbishop of Canterbury. Perhaps I may say how good it is to hear the authoritative voice of the church being represented in this House.

I thank the Leader of the Opposition for what she said and for the way in which she said it, on the whole. I will not say that I agree with every single word, but I very much share her horror at what we all saw on our televisions screens. It is right that we should not judge everything that happened by what we did see, but one cannot possibly be immune to some of the images that we saw on our screens in the past few days. The noble Baroness was entirely right to raise the fact that what we saw on our screens was affecting tens of thousands of people in this country-maybe even more. Some of them will be blighted for the rest of their lives by what has happened. She was right to call on the Government to make sure that we could deal with the criminality by cases being brought before the courts as swiftly as possible. I can confirm that that is happening. The courts are sitting all through the night when required to deal with cases. The Crown Court is now dealing with some of the more difficult ones.

The noble Baroness was also right to raise the question about CCTV and how we should deal with that. We believe that CCTV plays an incredibly important role in dealing with the criminality that has happened and we very much support the use of CCTV. We need to see it better regulated and we will perhaps need to see how regulation and/or legislation can change when we have had a chance to reflect and discuss with the police and the private sector how it can be used.

Of course there are many issues that we will need to debate and discuss in future about what has happened and why. The noble Baroness herself said that there were many and various solutions; indeed, the Prime Minister said as much in his Statement and raised some of them in it, as has the most reverend Primate the Archbishop of Canterbury and some right reverend Prelates who have already spoken and will no doubt do so again shortly.

As for an inquiry, we have taken the view that, in the first instance, this should be a matter for Parliament and that a parliamentary inquiry should do the work first. Therefore, the Home Affairs Select Committee has already announced an inquiry into the riots. I do not suppose for one moment that that will be a matter of taking evidence simply from academics in Whitehall; I am convinced that the committee will need to reach out to the community, to talk to people who have been directly affected, to try to find out what were the causes and to make an authoritative report to Parliament.



11 Aug 2011 : Column 1514

On money, many people who have been affected-shopkeepers, individuals, home owners and tenants-will be most concerned about how they can get their lives back on the rails and what they can do about the shortage of money. I can confirm that as many fast-track provisions as possible will be made to try to provide that money. The new high street fund, which is a proposal by two government departments, is designed to shortcut as much as possible the need for funding. Tax authorities, working with local authorities, have been put onto the fastest track possible.

The noble Baroness also asked about the Olympics. The whole House will share the sense of shame of anyone who was abroad, read newspapers or saw some of the television reports emanating from London of what impact this would have on the Olympics. It is the focus of this Government and our predecessors and everyone involved to deliver a safe and secure Olympic and Paralympic Games here in London which Londoners, the rest of the country and the rest of the world can enjoy. The Games should be a peaceful celebration of sporting achievement and a cultural celebration; they are not a security event. We have highly experienced police and emergency services which have successfully policed major events in the past, and they will be able to bring to bear their experience of dealing with protests, both peaceful and law-abiding and violent, during the Games.

Of course, we will need to look carefully at all that has happened. I welcome what the noble Baroness said about looking at these things in a non-partisan way, but both she and I are aware how warily we need to tread the line of partisanship. The riots did not happen because there will be public spending cuts, nor will the reduced spending on the police affect the police's ability to get policemen on the streets.

Noble Lords: Oh!

Lord Strathclyde: In a few moments, my noble friend Lady Browning will no doubt wish to take up that point with her statistics on funding.

The most reverend Primate the Archbishop of Canterbury made a most powerful contribution. The whole House will join him when he talked about our deep sympathy for those who have been affected and thoughts for those who have lost hope. It became obvious, again from reading the newspapers and watching the television, that so many have lost hope in our society and for the future. Although none of us wants to justify or condone what happened, it is true that this criminality has a context.

The most reverend Primate called for ethos in our education system. I think he is entirely right, and I do not think he would find anyone in this House who would wish to disagree with that or with the overall view that something has gone badly wrong. However, we are forward thinking and we owe it to the next generation to solve this problem and to find the necessary solution to take us forward. The most reverend Primate rightly referred to the new friendships, the new networks and the basis for new trust that will take us forward.

We now have a few minutes-perhaps a bit more-to discuss some of these issues in detail. What this House does best is reflect after some time on what has happened

11 Aug 2011 : Column 1515

and look carefully at the solutions that we need, and I am sure that in the months ahead we will have many opportunities to discuss these issues more fully.

12.57 pm

Lord Laming:My Lords, I, too, thank the noble Lord the Leader of the House for repeating this Statement on a matter that must concern us all very deeply, as indeed it concerns the vast majority of our fellow citizens.

The awful events of this week in many respects diminish us all. At this time our hearts must go out especially to those fellow citizens who have lost so much because their homes have been burnt out or their businesses destroyed, or they have been injured or, terribly sadly and even worse, killed. Rioting is a grievous activity that strikes at the very heart of the well-being of society, but I am sure we all agree that that is entirely different from looting, theft and wanton destruction. I ask the noble Baroness the Minister to say, when she replies, whether she agrees that this is not the time, in the heat of these events, to rush to any conclusions. Rather, the priority must be to restore social order for all our citizens to enjoy, and then to frame the important questions that need to be properly addressed in due course.

Secondly, while no criticism of the police is implied, does the Minister agree that a detailed review must include a review of how the police and the Independent Police Complaints Commission initially responded to the death of Mr Duggan? Did the police appoint a family liaison officer? Did a senior officer of the IPCC immediately explain in detail to the family exactly how the inquiry would be conducted and the rights of the family secured? I raise these questions simply because, like many others, I wonder why the family felt it necessary to march to secure such basic information.

Thirdly, does the Minister also agree that low income is not of itself a primary cause of criminal behaviour? Indeed, does she share the admiration of most of us for the way in which most families on low incomes not only manage their lives with great skill but very often form the bedrock of the local community? That being so, does she think that this may be an appropriate time to examine whether the much valued individual human rights that we all enjoy and share are nevertheless properly balanced by a commitment to wider social responsibilities? Does she agree that while we must continue to strive to ensure that society works for the benefit of every citizen, the other side of the coin is that every citizen must seek to contribute to the good of society?

1 pm

Baroness Hussein-Ece: My Lords, I, too, would like to associate myself and these Benches with the sentiments that have been expressed and to extend our condolences to those people who have lost so much in the terrible events from Saturday onwards. I thank my noble friend the Leader of the House for repeating the Prime Minster's Statement today.

There is absolutely no excuse for the terrible scenes that we have witnessed on the streets of London and beyond in our cities over the past few days. Our

11 Aug 2011 : Column 1516

deepest sympathies must go to those families who have lost their loved ones, their homes and their livelihoods. As we have heard, we must work to restore hope and confidence in our cities.

I have lived in Hackney and Islington all my life. I served as a councillor in those areas, which were among those where we have seen terrible unrest. I worked in Tottenham for almost a decade from the mid-1990s; in fact, I was there earlier on Saturday before all this happened. I know the area and the people well. I know that the vast majority are law-abiding, decent people who care deeply about their community. They are absolutely traumatised by what has happened to their neighbourhood. They did not have very much to begin with; all they had was their high street and that is now destroyed.

Whether we like it or not, the young people who rioted, looted and trashed their streets are part of our society. As the Prime Minister's Statement acknowledged, there is a deep-rooted problem with gangs in many inner-city areas. We know that in London, for example, there are more than 250 active gangs. The police know who they are and who the leaders are. These gangs have been allowed to grow and to take a hold for more than a decade-for 10 or 15 years. They draw in young people who are out on the streets and they spread criminality. When I was a councillor, mothers would come to my surgery begging me to get them transferred because they were so terrified of living on these estates and because of the way in which their families and their children were intimidated if they tried to resist joining these gangs.

These social problems did not happen overnight in our inner cities, where there are huge inequalities and a big social divide. We have to acknowledge that. We have a disconnection in a section of our society-an underclass of young people who have poor education and no skills and who come from dysfunctional families. They feel that they have nothing to lose. They have no fear of authority. Who are their role models? Millionaire footballers and rock stars. They want the latest gadgets, trainers or mobiles. This is what they aspire to.

The solutions for these riots must come from within our diverse communities. Please can we ensure that we do not demonise all young people? We certainly should not demonise all black young people. In future proposals to rebuild these communities-I am pleased that my noble friend the Leader of the House announced in the Statement that funds will be made available-can we ensure that these young people play a role in the rebuilding so that they feel a sense of ownership and pride in those communities? Let them have some work to do to rebuild their own communities.

It was clear that the police were often overwhelmed and could not protect property or stop the looting. On Monday night, in Dalston in Hackney near where I live, a large group of Turkish and Kurdish shopkeepers came together and successfully protected their businesses from rioters. They told me that they had no option. They prevented their high street from being trashed. I pay tribute to such people. I pay tribute to the Sikhs of Southall and the Turks and Kurds of Dalston. When strength was needed and they needed to stand up in their communities against this thuggery, they

11 Aug 2011 : Column 1517

spontaneously demonstrated what was very good in our community. They did this in a good and peaceful way and nobody was harmed. We have seen what is very bad in our communities and society but we have also seen what is very good. We need to recognise that and pay tribute to it. We should not focus just on the bad.

I ask my noble friend the Minister how we can restore confidence in the police, because a lot of people feel that they cannot rely on them now. Vigilante groups are being formed up and down the country, which we must feel are not welcome. How can we restore confidence in the police and prevent the need for the rise of these groups of vigilantes around the country?

On a final note, I think that a lot of us were very moved during the break by the words of the Norwegian Prime Minister, who said that at times like this we need more democracy and more humanity. We need to be guided by that and to reflect on it before we make any knee-jerk reactions in response to what we have seen.

Lord Hunt of Kings Heath: My Lords, I, too, am grateful to the noble Lord the Leader of the House for repeating the Statement and to the noble Baroness, Lady Browning, for agreeing to answer specific points on policing and the role of the Home Office. I have no doubt that the actions of police forces up and down the country will come under intense scrutiny in the next few weeks and months but none of us should underestimate the bravery of thousands of police officers and other emergency workers in the face of the shocking and indefensible lawlessness that we have seen in the past week. On Monday night, 44 officers were injured in London alone. They have done us great credit and we are very grateful to them.

In criticism that has been made-and will presumably continue to be made-of decisions by a number of police forces, we should not underestimate the complex challenge faced by police chiefs in these difficult circumstances. I, too, want to pay tribute to my own chief constable in the West Midlands, Chris Sims, for the careful and measured statements that he made yesterday and the leadership that he has shown. That calm response to a highly dangerous situation was influential in ensuring that the forecast troubles in Birmingham yesterday did not happen.

I pay tribute to Mr Tariq Jahan and his extraordinary courage in the comments he made yesterday following the tragic death of his son and two others, Shahzad Ali and Abdul Musavir. Community leaders in Birmingham, Members of Parliament, councillors, the police and representatives of the community worked very hard yesterday to defuse any potential racial tension. I am proud of what they achieved. I endorse the remarks of the most reverend Primate that we should seize the moment. Surely the noble Baroness is right in terms of using this to bring our communities together.

There will be many inquiries and reviews of policing. In my brief time, I just want to put three or four points to the Minister. We know-my noble friend referred to this-that it essentially took four days to ensure

11 Aug 2011 : Column 1518

that London was secure for its citizens. Can the noble Baroness confirm that the situation in London was due not to a lack of powers available to the police or a lack of willingness to use them but to the sheer lack of police numbers? The police were able to respond and restore order when they had a massive injection of police officers into the capital, an increase from 6,000 to just under 16,000.

Secondly, I want to come back to the important issue of funding. Can the noble Baroness give me some assurance that the Government will revisit the intention to reduce police funding by 20 per cent? Many Ministers have responded to this point in the past few months saying that they do not believe that those cuts will impact on frontline services. The noble Lord the Leader of the House repeated that this morning. Can that seriously be maintained in the face of actual reductions in frontline officers, in the forced retirement of some of our most experienced policemen and the indications that some frontline officers are being withdrawn to provide back-office services because of the redundancies of civilian staff within police services?

The estimate is that there will be a reduction of 16,000 police officers at the end of this four-year period. That is the very number of police officers who are now staffed in London over the next 24 hours to secure the peace of the city. Will the Minister respond to ACPO president Sir Hugh Orde, who wrote today of the challenges that those cuts are having on each force up and down the country? Will the noble Baroness the Minister give some assurance that the Government will take this opportunity to review their intention to take the police Bill through Parliament?

Faced with a series of reviews and a huge set of challenges, the last thing that the police forces in England and Wales need is the imposition, less than nine months away, of elected police commissioners in place of current police authorities. The risk of the politicisation of our police forces and the inevitable undermining of the authority of chief constables can serve only to reduce further the morale of our police men and women and the confidence of the public.

What of the Metropolitan police force? Who could underestimate the challenge that they face in maintaining public order, in the continuing investigations into phone hacking, in their counterterrorism responsibilities that they face and in the Olympics? There is no permanent police commissioner in place at the moment. When one is appointed, he or she will be the third commissioner who will serve under the auspices of the Mayor of London in a four-year term. How on earth can that provide the leadership and stability that the Metropolitan Police so need? Surely that cannot be the model that the Government want to extend to the police forces of England and Wales. How can the Government justify the expenditure of £100 million on the election of police commissioners when police forces up and down the country are facing such reductions in their overall funding?

The Government also need to think about their overall law and order policies. The Prime Minister said today that we need a criminal justice system that scores a clear, heavy line between right and wrong. I

11 Aug 2011 : Column 1519

thoroughly endorse that proposal. But why are the Government so disparaging about some of the measures that the previous Government brought in, such as closed-circuit TV or dispersal orders-the very mechanisms that have been used effectively in the past few days? And why are the Government encouraging softer sentences to complement the reduction in prison numbers and prison places? In view of the utterly outrageous behaviour that we have seen in the past few days, surely that should be an opportunity for the Government to review their policies again and ensure that the public are given the security and confidence in public order that they need.

1.15 pm

Lord Dear: My Lords, we have been completely bombarded with images on television and in our newspapers over the past four days. The most significant one that I saw was the image of a woman jumping from a burning building into the arms of a police officer. But for that police officer she would undoubtedly have been very seriously injured or would have died on the pavement on to which she jumped. It is, it occurs to me, to the police that one finally entrusts one's safety when all else has failed.

I welcome the Statement by the Prime Minister today, which is obviously wide-ranging and perceptive and will deal with a whole range of issues. Has the education system failed us? Are broken families really at the root of all this? Why is there such a diminished respect for authority? Is materialism playing some part in that? And where on earth have standards, ethics and morality gone in our society?

In the short time that I have at my disposal, I want to look at the short-term issues. That cohort of disaffected people, most, but not all, of whom are young, who we have seen on television, who are now going through the courts and who concern us so much, will be with us for a very long time. Some of them are, whether we like it or not, past recovery. Many of them have children who are probably going to be brought up in entirely the wrong environment. So what does one do when, as a police service, one faces the prospect of a repeat, perhaps not on such a wide scale as what we have seen in the past four days or so, of the same sort of behaviour?

Policing has had to accept an enormous change within the past 12 months.

A noble Lord: Question!

Lord Dear: I will come to my question in a moment. If noble Lords look at the Order Paper, it refers to comments and questions, and I am coming to my question.

Policing has had to change remarkably in the face of social networks and the speed at which these disorders have taken place. My question is about baton rounds and whether the command officers in place were acting timorously or reluctantly. Baton rounds have been available to the police in this country for 30 years. The lack of deployment of that means of dealing with riot is in stark contrast to the bravery, which has already

11 Aug 2011 : Column 1520

been alluded to by various Members of the House, of the police in dealing with it. If I am right in saying that senior officers were timorous or irresolute, was it because of the confusion in the mind of society about what it and the Government want? We now have calls for robust policing that are in stark contrast to recent comments about the so-called provocative uniforms worn by riot police, kettling, what happened at the G20 and so on. There are examples of robust policing. One has only to look to France to see what the CRS does. There are no shrinking violets there. But I do not advocate that we move that far along that road. Can the Minister assure me that there will be a speedy debate about exactly what robust policing means, what society wants from its police in these circumstances, what it will tolerate, what it looks for and what it does not want? The lack of application by some senior officers in deploying what they had within their lockers indicates to me that the confusion has gone too far and needs to be addressed.

Lord McNally: My Lords, there is a great deal of collective wisdom around this House, but we are not going to hear all of it if we do not keep to what was agreed at the beginning: short inventions and short questions. That is no disrespect to the noble Lord, Lord Dear, who brings particular expertise, but I appeal for future interventions to be brief. I think it is time for the Conservative Benches.

Lord Cormack: My Lords, is there not a case for considering in the long term some form of compulsory national community service? Is there not also a case for considering whether young people at the age of 16 or 18 should go through the same sort of citizenship ceremony which those getting British nationality go through? Finally, is there not an overwhelming case for the inquiry to be conducted not merely by the Home Affairs Committee of another place but by a Joint Committee of both Houses, bearing in mind the experience that resides in this House, an example of which we heard a few moments ago?

Lord Harris of Haringey: My Lords, I declare an interest as a member of the Metropolitan Police Authority and a former leader of Haringey Council, where I spent about 12 years of my life trying to secure the sustainable regeneration of the area of Tottenham. One of the tragedies of what has happened in the past few days is that the stigma of an area of riot has again fallen on that community, and that the efforts built up over many years are now being undermined, with businesses no longer being able to survive.

Do the Government believe that the Bellwin formula will be a sufficient response to ensure the reconstruction that will be needed? This will be of communities after the damage that has been done, and must also tackle underlying problems. Will they review the resources being made available to local government for regeneration in such areas? Will they also review the way in which the Riot (Damages) Act operates? If it would drain funds from police forces to compensate people who have been hit and damaged by the riots, that would be extremely damaging to the sustaining of police numbers

11 Aug 2011 : Column 1521

in future. Finally, what advice was taken from the police service about the decision that water cannon should be made available on the mainland? It is used usually for the dispersal of large crowds, but the problem in this case was caused by small groups of people acting opportunistically.

Lord Phillips of Sudbury: My Lords, perhaps I may raise the issue of citizenship that was eloquently introduced by the most reverend Primate the Archbishop of Canterbury. We must not forget that the Government propose to remove citizenship as one of the subjects in the core curriculum. I hope that the Minister will say something about that. One aspect of this highly complicated state of affairs-obviously, one cannot begin to reach conclusions at this stage-that I do not think has been referred to, and that bears on the question of people feeling part of the community and feeling a sense of civic engagement, is the commonly found set of attributes and mental positions that I have come across many times in my home town. Young people have a sense of personal insignificance and certainly a sense of civic anonymity. They have a belief that they do not belong and that they are somehow outsiders, disconnected from all the things that we cherish and seek to enhance. They also have a sense of being uncompetitive. In this brazenly materialist world, we are constantly told that if we cannot compete we are useless and worthless. I suggest that these and other issues around citizenship are at the heart of one of the deep underlying problems referred to by the Prime Minister that are present in this sad crisis.

The Earl of Listowel: My Lords, having listened to the Prime Minister's Statement, it is hard for me not to reflect on the young men in these gangs. Many of them have grown up without fathers, or with fathers who have set them the worst example, in families where the hard-pressed mother has to do all the work of rearing of children. The young men may not be properly socialised in that early setting. They move on to schools, fail there and finally find a home and a new father in the gangs, with their charismatic leaders who become their new father figures.

Does the Minister agree that we need to look very carefully at early intervention, at very good, high-quality childcare, and at mentoring for young men and boys by father figures such as people in business who can take them to their work and show them what they do? Will the Minister look at how children's centres are being funded? Will the Government look again at the lowering of the requirement for children's centres to have a graduate manager and question whether that is the right thing to do, given the importance of giving good opportunities to children from disadvantaged families?

Lord Browne of Ladyton: My Lords, the Government are right to have recognised that gangs and gang culture lay at the heart of some of the worst violence that we have seen on the streets of our cities over the last few days. They are also right to appreciate that lessons can be learned from the Community Initiative to Reduce Violence, the gangs initiative in the east end of Glasgow that has been running since 2008, led by Detective Chief Superintendent John Carnochan and

11 Aug 2011 : Column 1522

his deputy Karyn McCluskey. Both of them could be here in London much quicker than Bill Bratton could be-unless, of course, he is here for another purpose.

However, the Minister should recognise that that initiative, successful as it has been, is part of a wider initiative in Scotland known as the Violence Reduction Unit. It was born in Strathclyde Police and grew into a national unit between 2005 and 2006, and addresses many of the issues that noble Lords have raised in their interventions already, particularly the last one about early intervention with young people in our communities. I ask the Minister to not just take part of that broader package south, or across the United Kingdom, but to look at the whole package and see what can be learned from the Violence Reduction Unit.

Lord Flight: My Lords, all the circumstantial evidence is that these riots did not just appear spontaneously. What evidence is there to date, if any, that there was a fair degree of central organisation, if not orchestration, even down to the use of Sun Tzu tactics in riots? This required people to understand what those were about and how to use them. So my question simply is: what, if any, evidence is there of central organisation?

Lord Adonis: My Lords, like the most reverend Primate-and, I think, the House-I find the prevalence of children as young as seven and eight in these events deeply shocking. I agree with the most reverend Primate that issues to do with education-education for citizenship, education for virtue-are vital, as is early intervention. However, some very pressing and urgent questions need to be asked in respect of schools. Many schools have attached police officers. Many schools in the communities that have seen disturbances over the last week will be in a very fragile state at the beginning of term. Can the Minister confirm that every secondary school that wishes to have an attached police officer in any of the communities in question will have access to them, and that funding constraints will not be an obstacle to that?

Secondly, I expect we will find that most of the young people involved either have been excluded from school at some point or indeed may not even be attending school at all. On any one day in the school year, 1,000 pupils are excluded from school, many of them for acts of violence and serious disturbance. One of the issues that has to be looked at, coming out of these events, is the whole way that we deal with pupils excluded from school. They need to be properly supervised; they need to be properly organised; there needs to be some inspiration in the provision for them. I also believe that that should be a punitive element for those who are excluded from school in respect of acts of violence. The underclass that we have talked about this afternoon begins, alas, in our schools. Unless we tackle it in our schools we will never tackle it at all.

1.30 pm

The Archbishop of York: My Lords, I want to raise two issues and I hope that the Minister will respond to them when she answers. She will hear the two questions in my brief comments. The first relates the difficulties

11 Aug 2011 : Column 1523

experienced by the police in controlling the riots. If the police cannot do it, vigilante groups will. Nature abhors a power vacuum. Can we be assured that the broader question of resourcing of the police should not be too glibly tied up with current plans for cuts in public expenditure? The public need to be assured that first things come first: the peace of the realm. Will the Minister assure us that that will be the case, and that police resources are not subject to some false principle of equal sharing of burdens among government departments? I hope that will not be the case.

An under-resourced police will always be a brutal and insensitive police. Will the Government assure us that they are going to create a structure that will enable the police not to be hindered either by excessive bureaucracy or by a suggestion that they are not capable of doing it? What hinders our liberty is not necessarily the police but other people. If there is a clear framework for the police to work within, we will all have our liberty.

Will the Government also assure us that they will protect the police and us by investigating complaints against the police thoroughly and conscientiously? The Independent Police Complaints Commission was suggested by the Stephen Lawrence inquiry. How can it be nimble and transparent and deliver on time, every time? Will they assure us how that will happen?

My second question relates to the motivation of the young people involved in the riots. I think noble Lords will agree that it would be foolish to shoot off quick-fire opinions on what brought them on to the streets. We must understand what is going on, which is not the same as condoning what has gone on. It is very easy to understand a little less and condemn a little more but that will not deliver safety. We need to understand; if we do not, we will never resolve the problems.

Some clear questions must be asked. Will the Government encourage-

Lord Campbell-Savours: We are meant to ask questions.

The Archbishop of York: The question is in my statement.

Lord Campbell-Savours: We are running out of time.

The Archbishop of York: It is coming, sir. If everyone appreciates what my colleague, the most reverend Primate of all England, has said, what are we going to do in terms of culture? The Secretary of State for Education has said that religious knowledge will not be part of the English Baccalaureate, but religious knowledge forms and creates a culture.

Lord Clinton-Davis: My Lords-

Noble Lords: Baroness Young!

Baroness Young of Hornsey: My Lords, I will not repeat what other noble Lords have said. Many remarks have been made with which I am in full agreement. I have a four short points.

First, we need to recognise that we cannot arrest our way out of this. The short-term proposition that we are looking at right now is necessary, but how do

11 Aug 2011 : Column 1524

we move on from there? In relation to that, as well as having robust custodial sentences, are any plans in place to lock restorative justice on to that? That is the kind of work that has a deep impact on people: to make these young people, and indeed the older people, who have been involved in these despicable acts face up to the communities that they have helped to destroy and get involved in work to repair those communities.

Secondly, this situation has been brewing for ages. People are fed up with the kind of government leadership that comes in at the last moment and says, "We're going to set up an inquiry", even if they say they are going to move away from academics in Whitehall. Any initiative that is around an inquiry needs to be much more community-based and community-focused. It needs to be led by people on the ground who have experience, ideas and knowledge. They know how they could fight back against some of the terrible things that blight their communities if they had the resources and the back-up support to make that work.

Thirdly, any such initiative needs to be multidisciplinary. We have talked about citizenship and education, but it is also about health and a whole range of other issues. There is no point in any initiatives unless we can involve all those different parts of Government, local government, sport and culture. All those areas have a role to play.

Fourthly, we ourselves need to take responsibility. If we talk about young people engaging in violent games and the kind of influence that that has on them, we must also say that recent publicity about the behaviour of the press, the media and politicians-people who are supposed to set examples in our society-has not been above reproach. We must look to ourselves and see what we can do, not only to ensure that our behaviour is a much better form of leadership and role modelling but to make active contributions to those communities.

Lord Prescott: My Lords, is there a recognition that this violent disorder is very different from past civic disorder? Do the Government recognise that and the need for a special policy? The announcements that have been made by the Minister about the policies that the Prime Minister has suggested today are covered by the Public Order Act and the Anti-Social Behaviour Act. Why did the Government not use this legislation for the very proposals that they have at this time? We might then have solved the problem earlier. Was it because there were not sufficient police to arrest people under those circumstances? Is it not time that we took a less partisan position on police numbers? The Government should consider how many police are needed for them to carry out their duties, and perhaps at the same time recognise-I welcome this in the Statement-that it is time we took on the criminals who clothed their faces to avoid being recognised in their criminal acts. I am glad that that proposal is there.

Lord Lucas: My Lords, first, we will have a couple of thousand of these people at our disposal for a year or so. Can we please have some proper academic research, using them, into the whys and wherefores?

11 Aug 2011 : Column 1525

This is a new phenomenon for us. We really ought to try to understand it; this is an opportunity that we should not miss.

Secondly, as a resident of Battersea, this week it was immensely distressing that the police station 100 yards away from the centre of disturbance did not produce anybody for the first hour and a half of what was going on. As the noble Lord, Lord Dear, said, we need to look at that. It is totally unacceptable that that should be the service that the businesses and people of Battersea had.

Lord Campbell-Savours: My Lords, if concerns over the publication of photographs are to be set aside, as the Prime Minister said in his Statement, can we have a national review of the guidelines on pixelation of CCTV, which has been a growing tendency in recent years?

Lord Alton of Liverpool: My Lords, have the redeeming features of the terrible events been not only the dignified stoicism of men such as Tariq Jahan, but the way in which community organisations such as Toxteth Against the Riots have held together and stood on their own streets, defending their own territory? Thirty years ago, when I was a Member of the House of Commons representing an inner-city Liverpool constituency, that city was disfigured by riots. In the aftermath, the Government appointed Lord Scarman to investigate those events. I support what the noble Baroness, Lady Royall, said earlier. I hope that the noble Baroness, Lady Browning, will not rule out the possibility-above and beyond the committee of inquiry to be established in another place-of someone of Lord Scarman's standing looking at the deep and complex issues involved here. In that context, will they particularly look at the crisis of values and virtues; at the flaccid language of rights, which has pushed to one side the idea of duties, obligations and responsibilities; and at the issue of absent fathers? Eight hundred thousand children in this country have no contact with their fathers. The Times, in an editorial today, says that some 900 children are excluded from school every day. As parents, we have to be on the side of teachers. We must re-establish discipline in our schools. If we do not, it will not be what we have seen this week that will come back to haunt us; it will be far worse events in the future.

Lord Pearson of Rannoch: My Lords-

Baroness Lister of Burtersett: My Lords-

Lord McNally: I wonder whether we could hear from the noble Lord, Lord Pearson.

Lord Pearson of Rannoch: My Lords, could I take the welcome question from the most reverend Primate the Archbishop of Canterbury one stage deeper? He referred to the curriculum, mentioning that it had become instrumentalist and not virtuous enough. Yet again, I remind your Lordships and the Government that the soil in which our education system feeds is teacher training. It has been polluted for far too long

11 Aug 2011 : Column 1526

by the gender, race and class agenda. Will the Government look into that area again? I have one very simple question for my erstwhile friend the noble Baroness, Lady Browning: will she please study how many of the people who have been arrested cannot even read?

Lord Cotter: My Lords, 30 years ago, I had my small business premises burnt to the ground, under different circumstances, when a fire spread to my small firm. I can relate to this issue. It took me four years of really hard work to recover. I congratulate the Government and the Leader of the House on the announcement of support for small businesses. That is very welcome, very comprehensive and excellent. However, I ask the Leader and the Government to ensure that measures are taken very speedily, with minimum red tape and bureaucracy. I also ask the Government to consider help for those who are struggling, having suffered through the loss of day-to-day turnover, in the intervening period.

Baroness Lister of Burtersett: My Lords, I would like to support those who have said that we have a responsibility not simply to condemn but also to try to understand why this has happened. If we do not, we risk alienating further those young people who feel shut out, disfranchised and disrespected by the wider society. If we do not do that, this could happen again. I hope that the Government will not go down the road of dispossessing further the dispossessed by taking away social housing and social benefits. I would like to support my noble friend Lady Royall's call for an inquiry, over and above the inquiry of the Home Affairs Select Committee in another place. We need an inquiry and I take on board what was said about it coming from communities; we need a special commission of inquiry which will go into communities, involve communities and will look at the underlying social, economic, cultural and political factors.

Lord Northbourne: My Lords, prevention is generally considered to be better than cure. A number of organisations and individuals are working successfully with young people who have become disengaged from society and those who are attracted by gangs and the like. Will the Government consider putting together a task force to draw together those organisations that are working successfully with these disadvantaged children in order that they can share their knowledge, and support them and encourage other organisations to do the same work?

Lord Morris of Handsworth: My Lords, condemnation of the recent events is undoubtedly the correct response. It is the correct response because the police need to know that this House and the wider society are really on their side. The Statement made reference to the victims, which, of course, is right. There are many victims, apart from those seen jumping from windows. The family members of Mr Duggan, who was shot by a police bullet, are victims as well. We must remember, in these sorry days, that the family was in the police station for more than five hours and still left without any answers from the Metropolitan Police or indeed

11 Aug 2011 : Column 1527

from the IPCC. It seems to me that when the report from the IPCC is available, the family should receive it at the same time as the Metropolitan Police Service. They are victims too and their interests should be considered in the wider restoration and rebuilding of our society.

Baroness Berridge: My Lords, although I join in the tributes that have been paid, over the past few days, to the courage and bravery of our police officers, I wish to include community leaders. I was in Tottenham on Monday night when, I think, the only reported incidence of violence in that borough occurred. The young people on the streets witnessing that incident called the community leader I was with to come and help, which he did until the police arrived. I am sure that is not an isolated incident of community leaders being at the forefront, but it gave me pause for thought that the first people whom young people called were not the police but the leaders whom they know. My question refers to the issues raised by the noble Lords, Lord Morris and Lord Laming. Could the terms of reference of the IPCC inquiry be made extremely clear so that it will investigate the matters that occurred after the initial incident? It is my understanding that this matter is considered equivalent to a death in custody and that therefore none of the provisions in terms of family liaison officers, who are a vital point of communication for the family, is available in those circumstances. Could we have the terms of reference clearly identified to us?

1.45 pm

Lord Clinton-Davis: Hackney was where I grew up and later served as a councillor, mayor and MP. As the noble Baroness, Lady Hussein-Ece, said, Hackney has suffered enormously over the past few days and it is not alone. Does the Minister accept that we ought to be able to survey the issues which have been brought up here today in depth? When does she have it in mind that Parliament should be reconvened to have a proper debate? Does the Minister also recognise, as my noble friend Lord Hunt of Kings Heath does, that several people in all parties are now calling for the police cuts to be abandoned? Those were always unwise but, in particular, do they not send exactly the wrong signal at this moment?

Lord Empey: My Lords-

Lord Imbert: My Lords, may I say how much I welcome the Prime Minister's Statement today? In particular, I welcome the fact that the leaders of the Opposition and the Government are united in condemning this thuggery and violence. A number of noble Lords have mentioned the reduction in police numbers next year and, as we have understood it, there is to be no change in that. The police know that they have got to play their part in the reduction of finances spent on law and order. They will complain about that, but they will get on with it and do it.

However, the police cannot understand why, having seen the result of a recent YouGov poll showing that 65 per cent of those polled felt that the election of police and crime commissioners was unacceptable, we

11 Aug 2011 : Column 1528

are prepared to spend £50 million to £200 million on that experiment, which risks extremist political individuals being elected as those commissioners. Accepting that the Government are going to do that, could that £50 million to £200 million-whatever the amount is-be spent on ensuring that we have adequate police officers, since next year is Olympic year and the police will need all the resources that they can have then? As I say, police officers will do it and will be there. They will run faster to stand still but as next year is Olympic year, although police will be there for that and any disturbances, there will have to be a reduction in the investigations of child abuse, domestic violence and other police responsibilities. We must accept that they are to be reduced and I would be interested to hear the Minister's comments on this.

Baroness Andrews: My Lords, I have two quick questions for the Minister. In the Statement that the Leader read, the Prime Minister has clearly given priority to tackling gang culture. A vital part of the partnership that effectively tackles gang culture is, as we have heard in the case of Strathclyde, the voluntary sector. It gets into places that other people cannot possibly reach. Much of the work that is done with gangs is invisible and is likely to lose funding. Can the Minister give us an assurance that the voluntary sector will have the support it needs to play the only, and unique, role that it can?

My second question is about the reference to evictions. There has been a lot of reference to the importance of parenting. Can the Minister explain to the House how evictions of young people and, in the terms of the Statement, other forms of eviction can possibly help a situation where the consensus of the House and, I believe, the country is to try to support parents in families who are under almost impossible and intolerable strains in bringing up children, often on their own? Can she give me an assurance that such measures are not going to be undertaken?

Lord Ahmad of Wimbledon: My Lords, I welcome the Statement of my right honourable friend the Prime Minister. I also wish to reflect for a moment that Croydon North is an area I know well. As the riots took place, I was on the phone to a lady who saw her business burnt down in front of her eyes as she watched from a flat opposite. She saw her tenant, an elderly lady, being taken out as the gangs took hold. She saw the police standing back, just along the road. I call upon my noble friend the Minister to ask for a review of police tactics, as the noble Lord, Lord Dear, suggested, because that is important in restoring the kind of confidence we need on our streets and in our police force.

Secondly, I should ask about sustainability. It is undoubtedly true that confidence was being restored when we saw police in numbers on the streets to protect law-abiding citizens of our country. How sustainable are these numbers in the long term, because that is the kind of real reassurance that residents and citizens of our country need?

Thirdly, I join other noble Lords in paying tribute to the likes of Tariq Jahan, who lost his son. He did two things. Not only did Mr Jahan show courage in what can only be described as exceptional circumstances

11 Aug 2011 : Column 1529

that none would wish to experience, he also addressed the issue of community relations. Hequelled what could have been an extremely difficult situation between two rival communities. I therefore call upon the Minister also to highlight what steps will be taken there to ensure that extremist groups do not take advantage of the circumstances we all find ourselves in on the streets of our country.

Lord Beecham: My Lords, I have a saddened sense of déjà vu today, because almost exactly 20 years ago riots erupted on Tyneside. Although they were not as severe as those we have recently seen, they extended to the ward that I represent in the west end of Newcastle. One of the responses that the council undertook, with the support of the Government of the day, was actually to invest in the local community and its leadership to build up that community and to rely on its strengths. Indeed, that proved to be extremely successful. Therefore, while I very much welcome the measures that the Government have announced about rate reliefs, help for businesses and the Bellwin fund, will the Government also look at a similar process of investing in the support and capacity building within the communities of the affected areas?

In the interests of future-proofing, I refer to the observations of the most reverend Primate the Archbishop of Canterbury in relation to the youth service and ask the Government to look again at the implications of the potential cuts to the youth service. That has not caused these riots but, in the interests of avoiding future trouble, will the Government look again at the issue? Finally, alongside the requests from a number of Members of your Lordships' House to look again at the cuts in the police service, will the Government look again at the strength of the probation service and the cuts that are affecting it?

Baroness Anelay of St Johns: My Lords, it might be helpful if I indicate that, with the usual channels' agreement, this is a flexible day and we will extend the time a little for Back-Benchers, who are striving to be brief, which is most helpful. It could be useful for those who have been waiting for some time if I suggest that we take the next four-they may be the last four; we will see how we go-in the following order: the noble Lords, Lord Empey, Lord Elton and Lord Corbett, and the noble Baroness, Lady Stowell.

Lord Empey: My Lords, coming, as I do, from a part of the United Kingdom that is well used to public disorder and riots, can I say that we were extremely shocked at what we have seen? I urge noble Lords not to take solace in reliance on water cannon or plastic baton rounds because they are limited to fixed-point disputes. This type of guerrilla rioting will not be dealt with by that means. Given what the noble Lord, Lord Pearson, touched on a moment ago, is it not the case that despite us being a sophisticated, advanced country more than 20 per cent of our population is basically illiterate and many thousands of young people have no skills? Those two things are component parts of the solution. Will the Government revisit the skills issue? A lady on television said that our problem was values. It is a combination of those things but the lack of skills and literacy are clearly important parts.



11 Aug 2011 : Column 1530

Lord Elton: Many of your Lordships will have seen a young person with presumably stolen goods in his hands and without concealing his identity in any way being asked whether he was afraid of being caught. His answer was that people are never caught and if he was it was a first offence, which would mean an ASBO, and what difference did that make? My first question is: are the courts able to give adequate sentences and are places available for custodial sentences for the numbers that will be needed? Rubber sentences are no good, any more than are rubber bullets in such circumstances. My second question is: will the Minister pay particular attention to what the most reverend Primate said about what is going on in our schools? It is essential that we re-establish not only order but ethics and morals in our schools. Will she listen to our former noble friend Lord Pearson when he draws attention to the fact that what is sown in our schools is sown by people trained in our training colleges who will remain in their profession for 40 years? It is vital that the right people are taught the right things.

Lord Corbett of Castle Vale: My Lords, as a former MP in the city of Birmingham, I pay humble tribute, as others have done today, to Mr Tariq Jahan of Winson Green, for his quiet, firm dignity in playing such an important part in ensuring that hotheads did not get hold of what was potentially an inflammatory position in that part of the city. I endorse the comments that have been made around the Chamber for any inquiry into the incidents in the past few days to be essentially local. People like Mr Jahan and others in that community, and those in other areas, have a lot to contribute to this inquiry. They live there. Through their places of worship, whether it is a mosque or whatever, they know these people, the families and the area. There is a wealth of experience there. I hope that the Minister will take seriously, as I am sure she will, that we should have a series of local inquiries to feed into a national inquiry. They need to be conducted locally. There is no point in asking people to get on trains and buses to come down to London. They should be held in their areas. They should be wide open to anyone who wants to make a contribution. Unless we listen and learn-I agree with those who have said that we all have responsibilities for this-we will find ourselves in this position again in a few years' time.

Lord Thomas of Swynnerton: May I intervene? The Minister will have heard my noble friend Lord Dear saying that he did not want to contemplate the idea of riot police, such as the CRS in France. I wonder whether it is possible to reconsider the hostility to that French innovation. I remember a liberal Lord in this House, the first Lord Gladwin-I remember him because he was my father-in-law-suggesting that if we had had a CRS in the 1970s we would not have had to send the paratroops in to deal with the riots in Northern Ireland and would have avoided Bloody Sunday.

2 pm

Baroness Stowell of Beeston: I welcome the Prime Minister's Statement repeated by my noble friend. I was particularly pleased to hear of the Government's

11 Aug 2011 : Column 1531

intention to learn from the success of police forces such as that in Strathclyde and those from beyond these shores. Will my noble friend take this opportunity, given the Government's intention to look elsewhere to learn from the success of other police forces, to reconsider the criteria that have been set for applicants for the Met Police Commissioner's job, specifically the requirement that only British citizens need apply? If it is possible to reconsider those criteria in the light of recent events, will my noble friend consider delaying the deadline for applications, which I gather is tomorrow, so that we can go further than what the Prime Minister announced in his Statement?

Baroness Anelay of St Johns: My Lords, perhaps we might have as the last Back-Bench speaker the noble Baroness, Lady Farrington of Ribbleton, and then my noble friend will respond.

Baroness Farrington of Ribbleton: My Lords, the most reverend Primate raised the important issue of what happens in society. I suggest trying to get young people themselves to monitor what is happening in communities. My deep concern is that, nowadays, in most families, both parents work. Churches, community groups and activist groups are struggling like mad to keep going because people do not have the time. There is an urgent need for youth and community workers to be employed to help local groups-be it a church group, a youth group or a sports group-through those patches when it is hard to continue.

If the Government say that they are determined to press ahead, I must warn them that from my observation, listening to the general public, they are saying, "Why weren't there more police officers?". The Government are spending £130 million on their pet project-I disagree with it very strongly, but that is irrelevant. The public out there want more trained police officers. Members of your Lordships' House say, "Police officers stood there, looked at a situation and did not move in". Often it was one police officer facing a group of 20 or 30. We need the right number of officers with the right approach.

The Minister of State, Home Office (Baroness Browning): My Lords, I am very grateful for the contributions that we have heard today, many of them based on first-hand experience across a whole range of disciplines which are, necessarily, going to be part of the solution to the challenge that clearly faces us all in dealing with the crisis-I use that word deliberately-that we saw on our streets in the past few days. The noble Lord, Lord Laming, began this part of our deliberations by saying, first, that we needed to restore social order and that we must not rush to conclusions. Let me deal with those two things, because they have been picked up by many noble Lords around the Chamber today.

It is quite right that we must in the very short term-and I hope this is already evident-restore social order. We saw, particularly on the streets of London after Monday night but also in other cities around the country, a significant increase not just in the numbers of police but in what has been referred to as robust policing in order to bring law and peace to

11 Aug 2011 : Column 1532

our city centres. It would be wrong to pretend that we feel that this is over. We still have to be vigilant and to maintain that presence to make sure that we have dealt with the immediate crisis, and I hope noble Lords will feel from today's Statement that additional measures are being put in place to help to resolve this.

Noble Lords have raised many issues. The pressure of time means that I cannot go into all of them, but there are some things about the way in which certain parts of our communities live that affect particularly young people and their upbringing. The question of education was raised, as was the moral basis both in schools and in homes, which was raised by the most reverend Primate in his initial speech and by others speaking with great experience on these matters.

I would just say to the noble Lord, Lord Adonis, that just before the House rose for the summer I wrote to my colleague at the Department for Education to ask specifically about the policy on excluded children. They have been a problem for a very long time-to themselves as well as to the wider community-and we must have sustainable policies on children whom we have identified as being likely to cause problems and become criminals. However, what we have seen in the past few days has involved children not just from deprived backgrounds or children who have suffered brutality in childhood that has affected them later but people, as we have seen from the court cases, who are holding down jobs, many of them responsible jobs. One cannot but conclude that the moral compass has been abandoned, and restoring that moral compass across those communities is part of the challenge that we must all-the church, Parliament, society and the law-work together on.

I hope noble Lords will forgive me if I do not respond fully to them, but as they will know there is a meeting at 3 pm in Room G. I am very happy to go into further details on that. The most reverend Primate asked us to look at what the next generation will inherit. The noble Lord, Lord Dear, also picked up on this, as have others. While we deal with the current generation-and it is important that we do-we have to get right not just the policies but the whole change in culture for the next generation. I am reminded of the generation that went before me. My father spent five years of his youth in a prisoner of war camp. He and those of his generation who survived came home to make sure that this country had a set of values and a moral compass, and that children were brought up to respect the law and received a good education. There is too much detail to go into today, but we all understand the diversity and the range of issues that we are going to have to grasp, and grasp them we must.

I was reminded of this on Monday night when I did not sleep, not because I live in London-I live miles away-but because one of my children does and had been forced to barricade himself into his house because of what was going on in the road outside. He had to do so again the next day, just in case. That fear runs among people well beyond those who have been directly affected, and the public out there expect us collectively-across this Chamber, the next Chamber and in all our statutory services-to work together to bring law and

11 Aug 2011 : Column 1533

order so that we can live in peace and security. All that needs to be harnessed and to come together, because it is broken.

Questions have been asked about policing. I am very happy to answer those questions, but I suggest to the House that what happened in London on Monday night happened not because there are insufficient police on the payroll but because decisions were taken that we will have to examine in some detail. It was quite obvious that once the policing numbers were increased the next night, and once the strategy changed, the whole scenario changed in London-so, yes, there will need to be inquiries.

In the very short term, we will need to look at gangland culture, particularly in our inner cities. These problems involve people from across the range-children as well as adults. We heard from the noble Lord, Lord Browne, and others of their experiences and we should look to the Strathclyde experience to try to learn from it. We have to deal with this. Yesterday, the police identified members of known gangs who had orchestrated much of what had gone on during the nights before and I am pleased to say that they were able to make arrests on the basis of that information.

We see a challenge before this country. Not only do we have to come together but we have to get it right. We have in the short term to restore confidence among the wider public-not just those who were affected but people across the country as a whole. Even those people in safe areas who were watching this on their televisions now feel that their security is undermined. People never expected to see this on the streets of this country in their lifetime. It is not just shocking and it is not just something about which we must have a few discussions; we must tackle it, drawing on and harnessing the experience across the community. I take the point that was made about going into local communities. I am already booked-this was done before what has happened-to go next month to Manchester to see what a community has done on a very troublesome housing estate. We can learn a lot from the people who have tackled this problem at the grass-roots level. They have taken that responsibility, with help, and have got results. We must all learn from that. I hope that many Members of your Lordships' House will feel that they can attend the perhaps more detailed debate on each of these points at 3 pm this afternoon.

I conclude by paying tribute, as many in this House have done-and I hope that the message will go out from this House-to the police, including those police officers who were injured during the nights when this was happening, and to the emergency services, including the ambulance service and the fire brigade, who we saw showing great heroism on our television screens. I also pay tribute to the voluntary services and community leaders, who have clearly, as we have heard in our discussions today, played a big part not just in assisting practically but in holding communities together. That has been extremely important, as has been mentioned several times. We should remember in particular the humbling words of Mr Tariq Jahan, who stood out as a beacon in his hour of grief as somebody who, even then, put his wider community first. We all need to put the wider community first. I thank noble Lords for their contributions today.



11 Aug 2011 : Column 1534

Lord Pearson of Rannoch: My Lords-

Baroness Anelay of St Johns: My Lords, I think that we have reached a moment when the mood of the House is that, on a very sombre and sobering day, when colleagues have had the opportunity to make their views known and to put questions, we might draw the extended form of this Statement to a close. I am aware that the Chancellor of the Exchequer has not quite started in another place, which may be what the noble Lord, Lord Pearson of Rannoch, wished to indicate-his sign language is even more eloquent than his voice. It has been agreed through the usual channels that it might be appropriate at this moment to adjourn during pleasure until 2.30 pm and then to take stock before we see whether we are able to commence the next Statement.

2.14 pm

Sitting suspended.

Global Economy

Statement

2.30 pm

The Commercial Secretary to the Treasury (Lord Sassoon): My Lords, with the leave of the House I shall now repeat a Statement made by my right honourable friend the Chancellor of the Exchequer in another place.

"Mr Speaker, people will be concerned about the turmoil in the world's financial markets and what it means for economies here and across the globe. I want to use the opportunity of the recall of Parliament to update the House on what we are doing to protect Britain from the storm and to help lead a more effective international response to the fundamental causes of this instability.

As of this morning, after heavy losses yesterday, markets in Asia and Europe are calmer. But over the past month, the Dow Jones index has fallen by over 14 per cent, the French market is down 23 per cent and the Nikkei by 11 per cent. It is striking that the German market is down 24 per cent and even Chinese equities are down 20 per cent since November. Bank shares in all countries have been hit particularly hard, with French banks the latest in the firing line. Many sovereign bond markets, too, have been exceptionally volatile, with market rates for Italian and Spanish debt soaring before falling back in the last three days.

Sadly, Britain is not immune to these market movements. In the last month, the FTSE 100 is down by 16 per cent and British bank shares have also been hard hit. However, while our stock market has fallen like others, there has been one striking difference from many of our European neighbours. The market for our government bonds has benefitted from the global flight to safety. UK gilt yields have come down to around 2.5 per cent-the lowest interest rates in over 100 years. Earlier this week the UK's credit default swap spread, or the price of insuring against a sovereign

11 Aug 2011 : Column 1535

default, was lower than Germany's. This is a huge vote of confidence in the credibility of British Government debt and a major source of stability for the British economy at a time of exceptional instability. It is a reminder of the reckless folly of those who said we were going too far too fast. We can all see now that their approach would have been too little too late, with disastrous consequences for Britain.

It is not hard to identify the recent events that have triggered the latest market falls. There has been the weak economic data from the US and the historic downgrade of that country's credit rating. The crisis of confidence in the ability of eurozone countries to pay their debts has spread from the periphery to major economies such as Italy and Spain. But these events did not come out of the blue. They all have the same root cause-debt and, in particular, a massive overhang of debt from a decade-long boom when economic growth was based on unsustainable household borrowing, unrealistic house prices, dangerously high banking leverage and a failure of Governments to put their public finances in order. Unfortunately, the UK was perhaps the most eager participant in this boom, with the most indebted households, the biggest housing bubble, the most over-leveraged banks and the largest budget deficit of them all.

History teaches us that recovery from this sort of debt-driven, financial balance-sheet recession was always going to be choppy and difficult. We warned that that would be the case. But the whole world now realises that the huge overhang of debt means that the recovery will take longer and be harder than had been hoped. Markets are waking up to this fact. That is what makes this the most dangerous time for the global economy since 2008. I think we should be realistic about that. I think we should set our expectations accordingly.

As the Governor of the Bank of England said yesterday, and as the head of the Office for Budget Responsibility has also noted, the British economy is expected to continue to grow this year. Some 500,000 new private-sector jobs have been created in the past 12 months-the second highest rate of net job creation in the G7. But instability across the world and in our main export markets means that, in common with many other countries, expectations for this year's growth have fallen.

This is what our response must be. First, we must continue to put our own house in order. I spoke again yesterday to Sir Mervyn King and I can confirm that the assessment of the Bank, the FSA and the Treasury is that British banks are sufficiently well capitalised and are holding enough liquidity to be able to cope with the current market turbulence. We have in place well developed and well rehearsed contingency plans. We must also continue to implement the fiscal consolidation plan that has brought stability to our bond markets.

I believe that events around the world completely vindicate the decisions of this coalition Government from the day they took office to get ahead of the curve and to deal with this country's record deficit. While other countries wrestled with paralysed political systems,

11 Aug 2011 : Column 1536

our coalition Government united behind the swift and decisive action of in-year cuts and the emergency Budget. While other countries struggled to command confidence in their fiscal forecasts, we have created an internationally admired and independent Office for Budget Responsibility. These bold steps have made Britain that safe haven in the sovereign debt storm. Our market interest rates have fallen while other countries' have soared, and the very same rating agency that downgraded the United States has taken Britain off the negative watch that we inherited and reaffirmed our triple-A status. This market credibility is not some abstract concept. It saves jobs and keeps families in their homes. Families are benefiting from the lowest-ever mortgage rates and companies are able to borrow and refinance at historically low rates thanks to the decisions we have taken. Let me make it clear not only to the House of Commons but to the whole world that ours is an absolutely unwavering commitment to fiscal responsibility and deficit reduction. Abandoning that commitment would plunge Britain into the financial whirlpool of a sovereign debt crisis at the cost of many thousands of jobs. We will not make that mistake.

The second thing we need to do is to continue to lead the international response in Europe and beyond. In the G7 statement agreed between finance Ministers and central bank governors this week, we said that we would take all necessary measures to support financial stability and growth. In the eurozone, there is now a growing acceptance of what the UK Government have been saying, first in private and now in public, for the last year-that they, too, need to get ahead of the curve. Individual countries must deal with their deficits, make their economies more competitive and strengthen their banking systems. Existing eurozone institutions need to do whatever is necessary to maintain stability, and I welcome the ECB interventions through its securities markets programme this week to do just that.

But this can only ever be a bridge to a permanent solution. I have said many times before that the eurozone countries need to accept the remorseless logic of monetary union that leads from a single currency to greater fiscal integration. Many people made exactly this argument more than a decade ago as a reason for staying out of the single currency-and thank God we did.

Solutions such as euro-bonds or other forms of guarantees now require serious consideration and they must be matched by much more effective economic governance in the eurozone to ensure that fiscal responsibility is hardwired into the system. The break-up of the euro would be economically disastrous, including for Britain, so we should accept the need for greater fiscal integration in the eurozone while ensuring that we are not part of it and that our own national interests are protected. That is the message that the Prime Minister has clearly communicated in his calls with Chancellor Merkel, President Sarkozy and others this week. I have done likewise with individual finance Ministers, in ECOFIN and in the G7 call at the weekend, and will do so again at the September ECOFIN and G7 meetings.

But this is a global, as well as a European, crisis. At this autumn's meetings at the IMF and the G20, we

11 Aug 2011 : Column 1537

need far greater progress on global imbalances. We need an international framework that allows creditor countries such as China to increase demand and debtor countries to make the difficult adjustments necessary to repay them. Everyone knows what needs to be done, but progress so far has been frustratingly slow, with lengthy disagreements on technical definitions, let alone on any concrete actions. The barriers are political not economic, so it is up to the world's politicians to overcome them. There are no excuses left.

Finally, the UK, like the rest of the developed world, needs a new model of growth. Surely we have now learnt that growth cannot come from yet more debt and government spending. Those who spent the past year telling us to follow the American example with yet more fiscal stimulus need to answer this simple question: why has the US economy grown more slowly than the UK's so far this year? More spending now, paid for by more government borrowing and higher debt, would lead directly to rising interest rates and falling international confidence that would kill off the recovery not support it. Instead, we have to work hard to have a private sector that competes, that invests, that exports. In today's world, that is the only route to high-quality jobs and lasting prosperity.

In the developed countries, and especially in Europe, that means making the difficult structural reforms needed to restore competitiveness and improve the underlying performance of our economies. Internationally, we have the greatest stimulus of all sitting on the table in the form of the Doha round-a renewed commitment to free trade across the world-that should be taken up now. Here in Britain, The Plan for Growth has set out an ambitious path. Twenty-three of the measures in it have already been implemented and another 80 are being implemented now. On controversial issues, such as planning reform, we will overcome opposition that stands in the way of prosperity. On tax, we have already cut our corporation tax by 2p, with three more cuts to come over the next three years. In welfare and education reform, we will continue to pursue a radical reforming agenda.

There is much more we can do and much more that we must do if we are to create a new model of sustainable growth. All of us in the House must rise to that challenge in the months ahead and confront the vested interests. They are the forces of stagnation that stand in the way of growth. In these turbulent times for world markets, we will continue to lead the international response, redouble our efforts to remove the obstacles to growth and stick to our plan that has made Britain a safe haven in the global debt storm. I commend this Statement to the House."

My Lords, that concludes the Statement.

2.43 pm

Lord Eatwell: My Lords, I am most grateful to the noble Lord for repeating the Statement made by the Chancellor in the other place and for travelling back to the House to do so. We are living through a grave and difficult situation for the international economy; indeed, for the economy abroad and at home. Many noble Lords will feel that the current situation in

11 Aug 2011 : Column 1538

the global economy is eerily reminiscent of the early days of the financial crisis in 2007-08. Then, as now, shocks to relatively small entities destabilised financial markets by undermining confidence in the authorities' understanding of what was happening and hence their ability to do anything constructive. Small events then spread to even larger entities, so that even the most stable and secure institutions were affected. Then as now, fears were stoked up by the grandstanding of the ratings agencies. Then as now, funding dried up and the solvency of major institutions and sovereign states was questioned. Some of the actors have changed, but the play is the same, and those who will suffer-ordinary, hard-working people-remain the same too. As the crisis enters this new phase, are we better prepared? Have we learnt the lessons of the past three years? Does the Chancellor's Statement represent a new understanding of what is happening?

The first lesson is simply to remember that the object of economic policy is the prosperity of our citizens, not the comfort of the financial markets. Stable financial markets are a means to an end, not an end in itself. That lesson was clearly learnt in the strategy devised by the G20 in 2009. It committed members to halve national deficits in five years by pursuing a concerted growth strategy. Unfortunately, the commitments made in 2009 were abandoned a year later. The growth strategy was abandoned in favour of austerity, imposed either by the markets, as in Greece, or by the Government, as in Britain.

The second lesson was the need for a clear analysis and understanding of what was happening in order to fashion an appropriate response and to generate confidence throughout the economy. Recent events in the United States and the eurozone suggest that this lesson has not been learnt. In the United States, the political wrangling of the past few months, and the intransigence and lack of flexibility of some senior policy-makers, resulted in a loss of confidence in the authorities' ability to deliver an economic recovery and even in their understanding of what needed to be done. None the less, at least output in the US has recovered to pre-crisis levels, while output in the UK is still 4 per cent below those levels. The Chancellor's cheap jibe about US growth over the past two quarters is a fine example of statistical chicanery. Will the noble Lord explain why the US has got output back to pre-crisis levels but the UK has not?

In the eurozone, it should be clear to all that the institutions of monetary union are perfectly designed to transform economic difficulties into economic crises. The lack of a single eurobond market, backed by an effective treasury function and allied to fiscal transfers that occur as a matter of course in the US and the UK, results in a situation in which growth in weaker economic areas can result only in the accumulation of debt-and accumulation of debt results in the diversion of funding from the weak to the strong. It should be clear by now also that the main beneficiary of this flawed structure is Germany. We can imagine where the German exchange rate would be if it were the outcome of a deutschmark market rather than a euro market. Germany would be being priced out of world markets by its own exchange rate. What would happen to German export-led growth then? Does not the

11 Aug 2011 : Column 1539

greatest beneficiary have the greatest responsibility to secure positive reform for every nation in the eurozone? Given the importance of the eurozone to the UK economy, we should do everything we can to assist in the creation of institutions necessary to run a successful monetary union. Here, I agree with the Chancellor's assessment of what reforms need to be made. The process will almost certainly require significant revision to European treaties. Will the Government lend their support to treaty revision?

The third lesson that is becoming clearer every day is that austerity alone does not work. The Chancellor has persistently argued that the Government's austerity policy will, in and of itself, promote confidence in business to invest and in households to consume, thereby rebalancing the economy. Chart 2.7 of the Bank of England's Inflation Report, published yesterday, shows clearly that the Government will meet their deficit targets only if firms and households start borrowing and spending again-if they borrow to replace government borrowing. However, that is not happening. The austerity policy is not working. Households are saving and companies are not investing. Financial institutions are deleveraging. Growth in manufacturing has ground to a halt and the balance of payments deficit is on the rise again. Real incomes are falling, squeezed by the rise in VAT and by an inflation rate that is twice as high as in France or Germany. The economy is dead in the water, yet the Chancellor's Statement shows no recognition of what is happening out there in the real world. He repeats his obsession with deficit reduction at the cost of economic growth.

The central message of the Statement is that bond rates are low and the ratings agencies are appeased. But has anyone in the Government noticed that exactly the same was true in the Japanese economy 20 years ago, and has been for the past 20 years? Interest rates in Japan are significantly lower than in the UK, and have been for 20 years, and Japan's AAA rating is secure. The result is 20 years of stagnation, "lost decades" as they are called, and the Japanese deficit has not fallen. We risk the same fate. Already, with prospective growth in the UK being downgraded by every respected economic agency, the deficit forecast is rising, not falling. The crisis in the financial markets has shifted from fears about deficits to fears about stagnation. The markets have realised that austerity will not fix deficits. Austerity reduces tax revenues and forces the Government into yet further expenditure cuts to hit its deficit targets.

There is no recognition of these dangers in the Statement, and they are dangers not only for Britain but for the global economy, as the obsession with austerity grips policy-makers around the world. Britain's lead in this respect is doing great damage. What is needed now is a strategy for growth-in the United States; in the eurozone as a whole, not just in the northern states; and in the UK. The Chancellor recognises this and states that Britain needs a new model for growth. We on this side agree, but the plan for growth trumpeted by the Government-and who would not discount a plan that is described as "83 initiatives" rather than having clear content and direction?-

11 Aug 2011 : Column 1540

was assessed by the independent Office for Budget Responsibility and its conclusion was that it would have no significant impact on growth at all.

What new measures do the Government have in mind to stimulate growth? Now is the time for the Government to back a real growth initiative, one based on investment in infrastructure, productive capacity, skills and new technologies. It should include an accelerated infrastructure programme, a national investment bank to mobilise funds lying idle in corporate balance sheets, and greater incentives for investment in and the expansion of new technologies. Without a commitment to economic growth, confidence will not return to industry or the consumer and deficit targets will not be met.

Policy-makers around the world, most especially the British Government, need to learn the bitter lessons of the last three years-that the object of economic policy is the prosperity of our citizens, not the comfort of financial markets; that a clear and consistent understanding of what is happening is necessary; and that austerity alone does not work. Simply repeating over and again that a policy is working does not make it true. The Government's austerity policy is not working. It may delight the Chancellor's friends in the ratings agencies, but it means prolonged stagnation for the British economy and economic misery for the British people. The Government need to face up to the reality of what is happening in the British economy and introduce a truly substantial growth strategy now.

2.54 pm

Lord Sassoon: My Lords, I am grateful for the opening remarks made by the noble Lord, Lord Eatwell, but subsequently I heard little that I could recognise as a coherent alternative or even critique of the Government's policies. On the one hand, the noble Lord talks about the austerity imposed by this Government, which seems to imply that he would like more spending; on the other hand he complains about the dangers of a rising deficit and the forecasts of a rising deficit.

The noble Lord says we should be spending more. Well, if we did not have to spend £120 million a day on debt interest we could be spending it on more police, schools, hospitals-you name it, we could have it. It is precisely because of the record debt, the largest deficit, that we inherited from the previous Government that we are in the bind that we are. That is the answer to his first question about why the UK growth performance has been so weak. We are struggling under the massive burden of debt that was inherited.

The noble Lord challenges the comparison that my right honourable friend made between the stronger performance of the UK economy in recent months compared with the US economy. I give him another statistic: in the UK we now have unemployment of 7.7 per cent, while in the US it is 9.2 per cent. Again, the idea we can somehow look at some mythical way of stimulating the economy to get us out of the bind that we are in is the stuff of dreams.

There were one or two things on which I agreed with the noble Lord, Lord Eatwell. We share an agreement that the eurozone needs to strengthen its institutions. As my right honourable friend the Chancellor said in

11 Aug 2011 : Column 1541

his Statement, we would welcome the strengthening of the eurozone's institutions to have real bite in the fiscal co-ordination that there needs to be. If strengthening the eurozone's management of its fiscal affairs requires treaty changes among eurozone members, we will look sympathetically at that. But as my right honourable friend made clear, that is for the eurozone; the UK will be supportive of its efforts but we will not directly be part of them.

On growth, the noble Lord quoted various things from the Bank of England's report. The critical thing in yesterday's report-this is consistent with the Office for Budget Responsibility's analysis-is that the Bank of England's forecast for UK growth is 1.5 per cent this year and 2.1 per cent next year, rising to 2.6 per cent in the year after. Although the economic and market conditions are very difficult and fraught with danger, we must not forget that, provided we hold to our plan, provided we remain the safe haven that the UK has become, provided we continue to give our householders and holders of mortgages the benefits of very low interest rates and we continue to give businesses the ability to refinance their debt at those low interest rates, it is that that will underpin the confidence that business needs to invest and individuals need to spend their hard-earned money. That is the fundamental basis on which growth will come.

As my right honourable friend has said, we had a significant plan for growth six months ago. Within the past six months the Treasury has published a progress report to show how far we are getting, including tackling some of the most difficult issues such as the planning rules in this country. We will come forward with more growth-supporting measures this autumn, and that is what will enable this country to get out of the mess that we inherited from the previous Government.

Lord McNally: My Lords, I remind the House that we will now go to a 40-minute session that will follow the precedent of the previous Statement. There will be no immediate answers from the Front Bench but a response at the end. I suggest that we start with my noble friend Lord Oakeshott and then circulate as usual. Forty minutes, even for economists, should be okay.

2.59 pm

Lord Oakeshott of Seagrove Bay: My Lords, I thank my noble friend Lord McNally for that and for this invitation back to the Front Bench for one day only.

I declare my interest as a pension fund manager for the past 35 years and an active investor in British shares and property. The noble Lord, Lord Eatwell, mentioned rating agencies. I have never taken a blind bit of notice of them in my life, which is probably why I still have a job. I well remember how wrong they were when I was warning about the dangers of Iceland.

We on these Benches believe that the Chancellor is right to stress the need for Britain to stick to a determined deficit-reduction plan and keep interest rates low while we have to keep borrowing so much because of-let us be frank about this-Labour's legacy. However, I agree with the noble Lord, Lord Eatwell, that low government bond yields are not a guarantee of a strong economy.

11 Aug 2011 : Column 1542

They can be a sign of weakness, as they were in Japan. I would be interested if the noble Lord, Lord Sassoon, could comment on that. Are we not now in danger of keeping the confidence of foreign investors but losing the confidence of British consumers? Some noble Lords will, like me, be old enough to remember Harold Wilson complaining that his economic recovery plan had been blown off course. That has clearly been happening in this country since the Budget. Even looking through-I am bound to say-the Minister's rather rose-tinted spectacles at the GDP forecast, does he agree with the Governor of the Bank of England, who said:

"Headwinds to world and domestic growth ... are becoming stronger by the day"?

I thought that was a striking comment from him yesterday. I agree with it; does the noble Lord?

Does the Minister also agree with the Business Secretary, the Chief Secretary to the Treasury and all Liberal Democrats that the priority, if and when there is room for tax cuts, is not to help the 1 per cent of taxpayers who pay the 50p top rate, but the millions of ordinary people who will spend any tax cut they get-and desperately need-to boost demand and jobs? Does he also agree with our calls, from Vince Cable and others, for more quantitative easing from the Bank of England to boost growth, so that we do not risk slipping into the Japanese morass, and much more bank lending to small businesses? Royal Bank of Scotland, the bank that we own, has just missed even its own soft Project Merlin target for gross lending to small and medium-sized enterprises by £1.5 million over the first six months. Is it not now time that we seriously considered imposing a net lending target on the nationalised banks, as was flagged up in the coalition agreement, so that they take their foot off the throat of small business?

Lord Foulkes of Cumnock: My Lords, the Minister and the Chancellor have prayed in aid of their argument the credit rating agencies. Is it not strange that these credit rating agencies, which downgraded the economy of the United States of America, are private companies-private sector institutions such as Standard and Poor, Fitch, Moody and all the other credit rating agencies. Does the Minister not agree that they have, by their actions, exacerbated the economic crisis and that, as a result, some of their friends and interests have benefited? Would it not be better if our Government and those of other countries, particularly members of the European Union, were to get together and look at ways in which credit rating can be done on a public sector basis in the public interest, and not on a private sector basis in the private interest?

Baroness O'Cathain: My Lords, I thank my noble friend for repeating the Chancellor's Statement. I have a copy of it here. One of the things that stands out is:

"We need an international framework that allows creditor countries like China to increase demand and debtor countries to make the difficult adjustments necessary to repay them".

I should like to ask: what are the chances of this happening? What is the mechanism? Is it the autumn meeting of the IMF and the G20? I come back to my point about what the chances are. There is no question

11 Aug 2011 : Column 1543

that if we could stimulate China to increase its demand for products from our country and Europe, we would be well on the way to restoring the confidence of our small and medium-sized enterprises to get more involved in that market. Leading directly on from that, my noble friend said that more supporting measures will be produced in the autumn. Can I make a plea on behalf of small and medium-sized enterprises for something to be done to limit the huge burden of regulation, which disproportionately falls on small and medium-sized enterprises? They wish to carry on but find international trade really difficult.

Lord Knight of Weymouth: My Lords, the Chancellor's Statement sustained the spin around the safe haven notion. I wondered whether the Minister has seen the comments of Jonathan Portes, the director of the National Institute of Economic and Social Research. Last week, he said that if you thought that what was driving low gilt yields was us being perceived as a safe haven, you would see a significant rise in the pound and we just have not seen that. He added:

"The reason people are marking down gilt yields is because the economy is weak".

Is not the problem, as my noble friend Lord Eatwell has said, a lack of growth? Is it not true that, as a result of the decisions that this Government have made, we will see an additional £46 billion-worth of borrowing than was predicted a few months ago, and is it not important that the Government decided to slow down the rate of deficit reduction so that there is room, for example, to spend money on sustaining police numbers and keeping prisons open so that we can deal with the public disorder which we have been debating today?

Lord Taylor of Goss Moor: My Lords, is it not the case that when we hear the Governor of the Bank of England talk about head winds, we need to understand that, although the central projection may still be for growth, there are real risks to that growth? In those circumstances, surely it is possible for the Government to be clear that they will stick by the deficit reduction programme as the target, and that, like any good pilot faced with stormy weather, they will adjust course as necessary? I do not believe that the Opposition are right to say that that needs to be done in some emergency way at the present time, but it is sensible to flag up that that may be necessary if the projections are not met. In those terms, will the Minister endorse the comments by the Deputy Prime Minister that seemed to indicate that the Government would work to stimulate the economy, as and when that proves necessary?

Lord Radice: Has the Minister noted a certain irony in the Chancellor's Statement in that the United Kingdom, which is not a member of the eurozone, is advising the eurozone how to conduct its affairs? Indeed, it is going so far as to suggest that the eurozone institutions are strengthened and that there should be further integration. I happen to agree with the Chancellor, and with my right honourable friend, but I think the Chancellor has a nerve.



11 Aug 2011 : Column 1544

Lord Pearson of Rannoch: My Lords, my questions come against the background of the cuts generally and our perilous economic condition. They also feed in to our previous debate. My first question to the Minister is very simple. Do the Government accept their own figure of £9 billion a year, net cash, which we pay to Brussels, with no conceivable benefit to us? If they agree their own figure of £9 billion a year net, will they agree that that comes to some £25 million every day? The sum of £25 million a day would pay the salaries of 833 policemen every day, or 304,045 policemen per annum. I emphasise that that is net cash. I do not mention the costs of over-regulation of 6 per cent of GDP per annum in food and so on.

My second question is: do the Government admit that there would be no crisis in the eurozone without the euro? Do they also admit that there would be no eurozone without the ill-fated project of European integration? On the Statement, when they accepted the remorseless logic of a federal budget, which they appear to have done, are they convinced that the German people, the Dutch people and so on will put up with this? I think they may be mistaken.

Finally, how can they possibly say that the breakup of the euro would be economically disastrous, including for Britain? Could the noble Lord at least justify that because if we face the reality that the thing is going to break up-and the quicker we face it and the quicker it breaks up, the better-we would all be very much more comfortable?

Lord Sewel: My Lords, the Minister has rightly drawn attention to the weaknesses, indeed the failures, of the European political institutions in responding to the crisis. Would he care to reflect on the contribution of the political institutions of the United States to the present crisis? Could it possibly have something to do with the fact that they have a political structure based on two elected Chambers, one in which the Executive have a majority and one in which they do not? We have heard that somewhere before.

Baroness Kramer: My Lords, these dark glasses are not for glamour but to prevent me sharing an eye infection. I very much agree with the Minister that the Government, and individuals, have no choice but to deleverage. Many of our large companies are not anxious at this time to invest or borrow significantly because they are doubtful about both the domestic and international economy. Surely, however, one sector has significant capacity to absorb new investment in the form of equity and debt: that of the micro-businesses and very small businesses, because they have been in large part neglected by our banking sector and our financial institutions for years. Would the Minister be willing to look at a programme that specifically targets those kinds of businesses which, culturally, our current institutions usually fail to serve, perhaps building off some of the schemes which are being looked at now to revitalise the high streets which were so badly damaged earlier this week?

Lord Harrison: My Lords, I am sorry that the Minister has had to break off his holiday reading of your Lordships' European Union Select Committee's Sovereign Credit Ratings report. I hope that he will

11 Aug 2011 : Column 1545

return and study it when he is next on the beach, and reflect on some of the words from the noble Lord, Lord Oakeshott. These institutions exist but a healthier degree of scepticism might inform the City and, indeed, elsewhere to ensure that they are taken for what they are-an educated guess as to the future debt of sovereign nations.

Secondly, would the Minister consult his colleague on the business section about the regional growth fund, which I raised some months ago? I discovered and reported to your Lordships that it was unsuccessful at the moment, especially because of the £1 million bar required for small businesses to make application to that fund. My third point relates to the points made by the noble Baroness, Lady O'Cathain, in the European Sub-Committee B's report on the single, internal market. Why do we not put greater effort into ensuring that the market comes to fruition, which would surely benefit UK companies perhaps more than any others within the 27 countries of the European Union?

The Archbishop of York: My Lords, I listened intently to the Minister but I did not hear in that Statement what the Government intend to do about inflation. The noble Baroness, Lady Thatcher, believed when she was in the other place that inflation was a danger to savings, to investment and to growth. Inflation is rising; what are the Government going to do to cure that particular problem and difficulty? Secondly, debt in the United Kingdom is not just government debt. The greatest difficulty we have is personal debt. When austerity measures are there to cure the national debt, is it ever wise to then encourage the ordinary person to go out and spend? How can that be right? They, too, ought to have austerity measures for themselves.

Finally, I have listened intently and what I constantly hear is that our difficulty is-and it comes again and again-the mess that we inherited from the last Government. Is that right? They certainly left a big debt, but it certainly was not just that. What about the role of the banks? They got us into a mess, and I never hear it said that the mess was caused not just by the last Government but by our financial institutions that left us in debt. Is it not time to put the blame not only on one foot but on both feet?

3.15 pm

Lord Flight: My Lords, perhaps I may suggest to the Minister that what is really damaging confidence and what has knocked stock markets is, in fact, the euro crisis. It is the perception that the economies of southern Europe and Ireland cannot recover without substantial devaluation. It is a situation analogous to that of the UK back in 1992. Broadly speaking, markets, because they cannot go for the currency, go for the bond markets. It may or may not be correct that the only solution is pan-European bonds, but the second issue is, if there is to be a pan-eurozone, it will obviously require massive ongoing transfer payments by Germany. Markets do not believe that Germany will be willing to accept such liabilities. That is the big factor damaging confidence and growth. It is the potential further banking and government debt crisis that that represents; it is people understandably moving their deposits out

11 Aug 2011 : Column 1546

of banks in southern Europe because they fear they may end up with a lira or a peseta. Money supply is falling dramatically, with a 10 per cent reduction in Italy in just the past few months. That is the crisis which is having the knock-on problems for this economy-much more, I suggest to the Minister, than for the US.

Lord Lea of Crondall: My Lords, perhaps I may make two comments and ask two questions. First, it has already been remarked on that the Faustian pact between China and the United States over the past 10 years has been an ultimate, if not the principal, reason for slow world growth. Secondly, although the Minister dismisses so perfunctorily what my noble friend Lord Eatwell said, I suggest that he reads Hansard tomorrow, because my noble friend made a very carefully considered analysis of the world and European situation. I suspect that in terms of economic analysis my noble friend would probably get a higher mark than the Minister on the current situation.

Six months ago, I and many of us were on record as saying that all this would lead to a double dip. It is a quite different scenario from the Thatcher period when there was a reasonably good international position. The prediction of the IFS and others was that if you are going to cut £200 million-worth of output through the crash, the deficit would actually rise from 3.5 per cent in 2008 to something like 11 per cent now. That was without adding to it through austerity measures. We are talking as if austerity measures apply to all circumstances.

My first question is: will the Minister, the noble Lord, Lord Sassoon, consider inviting Chancellor Merkel over here to give her a personal tour of Britain to show her how a modern economy can best succeed-an economy where manufacturing all around works at the rate of Siemens and BMW?

Lord Foulkes of Cumnock: This is irony.

Lord Lea of Crondall: I had better spell it out as sometimes it does not get across.

That tour could demonstrate that the higher economic growth rate in Britain than in Germany could help solve the German problem. I have a second question arising from that. My noble friends will not be aware of this but I asked a Written Question about the relative position of German multinationals and Britain's multinationals and the proportion of value added in Germany and Britain, the home country. It is pretty obvious from the FT Global 500 employment figures that Germany, which has only about half the number of multinationals as Britain, is miles more successful. Employment in Germany-that is the value added as a proportion of the German economy-is far, far higher than in British multinationals.

My question, which I shall repeat, asked the Government to give me the statistics. I had the most perfunctory reply in one sentence from the noble Lord, Lord Sassoon, that the Government are not interested in such statistics and that it was not their job to collect them. The Department for Business knows what the figures are, and the relative value

11 Aug 2011 : Column 1547

added of our multinationals in Britain and the relative value added of multinationals in Germany. Will the Minister today say that he will look at the matter more carefully and give me, the House and the Library a less perfunctory answer?

Lord Cotter: My Lords, we all recognise the need for growth in the economy. The Statement repeated by the Minister today said that we have to work hard to have a private sector that competes, invests and exports. In the light of that and the need for growth, I refer to a report in the Financial Times today. It indicates there has been a flood of applications from other parts of the country for investment funds backed by the state available in the northern part of England. In some cases, it is one in 10 and in some cases, in Yorkshire, one-fifth. That flood of applications indicates strongly that small and medium-sized businesses are desperate for scarce loans and equity funding, which they cannot obtain because they do not come from that part of the country. Can the Government do more to help?

I ask once again, as did my colleagues and noble friends, Lord Oakeshott and Lady Kramer, whether the Government will take on board that that highlights the struggle that small businesses in particular are having to get funding from banks because of high prices, costs and tougher covenants. This is a nation of small businesses. We read the report in the FT today that there is a great demand and wish for funding but it does not seem to be available.

Lord McNally: My Lords, I withdraw entirely the snide remark I made about the long-windedness of economists. May I suggest that we hear from the Minister now?

3.25 pm

Lord Sassoon: My Lords, I do not pretend to be an economist. I am sure that if I was sitting an exam paper now, I would fall well short of the mark that the noble Lord, Lord Eatwell, would get. The problem is that we do not live in a pure economics world. A lot of what we are struggling with now is where the world of economists meets the world of markets.

I am not sure where to start with the many interesting interventions that we have had. I go back to the question about the deficit reduction plan: there were some concerns about the size of the deficit rising and others expressed the opinion that we should be investing more and driving borrowing up. It is worth getting a little bit economicsy about this and remembering that there are things called automatic stabilisers, which mean that if the economy does not grow as fast as anticipated there will be additional payments in areas such as welfare, for example. It is worth remembering that the deficit goes up and down. Within the Chancellor's fiscal plans, more money gets pumped into the economy-crudely put-if growth is lower. We should always bear that in mind. There is no absolute rigorous number at which we shoot that does not vary as economic circumstances change.

On the point raised by my noble friend Lord Oakeshott and others about interest rates, of course low bond yields themselves are not a guarantee of growth. Germany has been mentioned, and I will come back to that. Yes,

11 Aug 2011 : Column 1548

it would be great if we had a deficit as low as Germany and bond yields as low as it does, but the fact is that we have a deficit as high as Greece but interest rates as low as Germany. They are not in themselves a guarantee of growth, but if we divert from the basic course we could very well find ourselves with both a very high deficit and very high interest rates. In those circumstances, growth would be choked off very quickly. That is fundamentally why we have to stick to our plan. My noble friend also talked about tax cuts. To remind noble Lords, the coalition is set out on a track which is significantly raising, and already has raised, the starting level of tax for those at the bottom end of the income scale. That is an important part of the whole rebalancing of the tax and welfare package to get people back into work. Equally, at the other end, my right honourable friend the Chancellor has made it clear that, over the medium term, a top rate of tax of 50 per cent is not conducive to an economy growing consistently and driven by entrepreneurial activity.

My noble friend Lady O'Cathain reminded us of the very big picture and questioned the chances of getting agreement to action on the imbalances. She was right to say that it will be for the autumn meetings of the G7, the G8 and the G20 to make further progress on that. Although there has been considerable frustration about turning good words into action, the latest statements from Ministers are, let us say, modestly encouraging, but it requires a big push this autumn. My noble friend then moved from the very big picture to more micro matters, with the question of regulation and how difficult it is for businesses that want to grow. That is precisely why we have a moratorium on new regulation for micro businesses in the period up to 2014 and that new tests under the "one in, one out" rule are being applied to all new proposals for regulation from Ministers.

Lord Pearson of Rannoch: My Lords, what about the regulations that come from our friends in Brussels? The Government's Answer to me recently said that a majority of all our business regulation comes from Brussels, and we can do nothing about it.

Lord Sassoon: If the noble Lord will be a little patient, I will get back to Europe in a moment.

It was nice to have confirmation from the noble Lord, Lord Radice, that we are all on the same side when it comes to wanting to strengthen the eurozone, even if he questions the motives of some of us in wanting to do so. It really is very important that this happens, and we should give it all our support.


Next Section Back to Table of Contents Lords Hansard Home Page