What is happening is that in this tough economic climate, companies are being asked to make increasing contributions for recovery periods, therefore cutting back on their schemes, when we could find a different way of defining liabilities. What I ask, therefore, is that as the National Association of Pension Funds and others have been urging, the regulator and the Bank of England make a joint statement indicating their understanding of the situation and willingness to explore ways of approving other methods of valuing liabilities during this period of such low gilt yields. In doing so, I am following a recommendation of the Treasury Select Committee in the House of Commons, which asked for virtually the same thing.

I hope that we can return to this matter and debate it in greater detail before long. Meanwhile, I urge my right honourable friend to take up that recommendation in consultation with the others to see if there can be some way of overcoming the serious difficulties that pension funds now face.

5.12 pm

Lord Myners: My Lords, it is a pleasure to participate in a speech on the humble Address and in particular to welcome the maiden speech from the right reverend Prelate the Bishop of Durham, who has already warmed the House to his wisdom and sense of social responsibility. I also look forward to the maiden speech of the noble Lord, Lord Ashton of Hyde—another old Etonian added to the House and a former joint master of the Heythrop Hunt. He is therefore incredibly well informed, no doubt, on the Prime Minister’s thinking on so many policy issues.

The gracious and humble Address contains many good measures that I welcome. As an adopted person myself, I am particularly pleased to see that the Government are giving priority to adoption issues. I also welcome the comments from the Minister about board remuneration, although I continue to believe that the core issue requires institutional shareholders to take more seriously their responsibility in the appointment of the directors and members of remuneration committees. They should best achieve that by becoming members of board nomination committees.

I will concentrate on the economy and on the Bank of England. Mr Andrew Tyrie MP, the Chairman of the Treasury Select Committee, who is a wise and informed man, said in October 2011 that the Government needed:

“A coherent and credible plan for the long-term economic growth”.

He was right and that argument remains the same. As he observed at the time, many of the Government’s policies are downright contradictory. The noble Lord, Lord Skidelsky, in our debate on the European Communities (Amendment) Act 1993 held on 25 April, drew the attention of your Lordships’ House to chart 2.4

16 May 2012 : Column 427

in the Treasury document, which clearly shows that the deficit is almost entirely due to the collapse in national output.

The engines that the Government assumed were going to drive growth are simply not working at the moment. Manufacturing activity is not picking up and business investment remains extremely low because of the absence of confidence in the economic outlook. The noble Lord, Lord Razzall, said that the jury was out on Project Merlin. I am afraid that he must have been out when the jury reported that the project has not worked, and the Government have admitted that by not renewing it. In fact, we know we are back in recession, and today’s Bank of England forecasts further confirm that, even though in the period immediately after the general election the economy was growing strongly. So noble Lords will recognise that we now have an economic management that has added incompetence to complacency. The Treasury team is too posh to comprehend what is going on and is now petulantly blaming others for its own failures. We have an economic policy that is devoid of intellectual coherence or economic endorsement—a mixture of assertion, dodgy definitions and flawed calculations.

Fortunately, external developments will give this Government the cover to change their economic policy if they so choose so as to give priority to raising demand and addressing the shortfall in output. They should take bold action to encourage housing, both private and social, which has a very positive contribution to make in its multiplier effect on the economy and on job creation. They should encourage investment in infrastructure. This is the time to say that we are going to build a third runway at Heathrow, push ahead with HS2, build more roads and invest in schools. It is a time when the cost of funding is low and when capacity is available—precisely when a Keynesian would expect the Government to be supplying demand into the economy. The Government should be encouraging capital allowances because they would have a much more immediate impact on the economy than cutting corporation tax, albeit that that is a good thing to do over time. Now is the time to invest in skills, and the time to introduce another temporary cut in VAT in order to encourage demand. However, the Government do nothing.

On the supply side we hear a great deal of talk about cutting red tape, yet we have heard today from the Minister about the groceries code adjudicator. I look forward to debating whether this is really going to be a priority for the country at this particular time. The Office for Budget Responsibility has shown us that the output gap is contracting, but the Government do not appear to be challenging its assertion, based on economic statistics on which we all know that it is extremely difficult to forecast.

Market confidence should not be of pressing concern and the Government should not hold back in addressing the need to push for growth. Interest rates are low because we have borrowed prudently in the past and there is an abundant supply of cash on corporate balance sheets, which at the moment, as the right reverend Prelate pointed out, is going into the gilt-edged market. However, the Government should not believe

16 May 2012 : Column 428

that these low interest rates are in some way an endorsement of the success of their policy. They are actually a clear message that the policy is not working. There are no growth opportunities to encourage investment.

We talk about monetary policy and quantitative easing. I believe that the Treasury should instruct the Government and the Bank of England to produce a report on the economic case for cancelling gilt-edged securities that have been acquired for value in the market so that they are not redeemed. Can the Minister tell us whether this has any different economic impact from holding them to redemption? The immediate impact of such a policy would not be to monetise debt but to address at a stroke one of the Government’s two fiscal objectives: reducing debt as a percentage of GDP.

The governor will not volunteer to do this. He said in his press conference about the inflation report that it would be “a whole lot easier” to contract the Bank’s balance sheet than to grow it. I do not see how he reaches that conclusion. If you look at the recent article in the Financial Times by Professor Tim Congdon, you will see that the Bank of England’s thinking on quantitative easing is becoming increasingly muddled.

Your Lordships’ House will debate the Financial Services Bill soon. This involves a remarkable—and ill considered—concentration of power in the hands of the governor. It will be unfair on the new governor for him to have as much authority as this Bill currently contemplates. Within the next 12 months the current governor will end a period of office that quite frankly is one of a considerable lack of distinction. I can see the Whip about to ask me to come to a close. The Whip allowed the noble Lord, Lord MacGregor, a little more leeway.

Baroness Rawlings: My Lords, I remind the House that the suggested length of contribution is seven minutes. Of course, that exempts noble Lords who speak after a maiden speech.

Lord Myners: I was referring to the noble Lord’s contribution to the debate as opposed to his endorsement of the right reverend Prelate, which he had completed at the point when we were allowed to leave the Chamber if we wished.

The current governor is probably the least distinguished since Walter Cunliffe, who served from 1913 to 1918. He has politicised the Bank of England and disregarded the outlook for inflation. We are introducing a policy of financial repression. When we debate the Financial Services Bill, we need to look very carefully at the additional authority and responsibilities that the Bill proposes to give to the governor.

5.22 pm

Baroness Kramer: My Lords, I also congratulate the right reverend Prelate the Bishop of Durham on his maiden speech. It was genuinely a very powerful speech on the issues that we are addressing today. I do not want to put words in his mouth but I would like to make a couple of comments that essentially spring out of the remarks that he made, because I think they are very important.

16 May 2012 : Column 429

The right reverend Prelate’s speech seemed to underscore the need for the rebalancing of our economy, both by region so that the north of England has the opportunity to thrive after so much historically has been concentrated in the south and south-east, and to diversify away from the dependence that we have had for several decades now on the financial services industry, to rebuild other services and our manufacturing base. This Government should take credit for picking up and working with this issue and with the regional development fund, enterprise zones and centres of excellence, and for the stimulus and tax breaks they have given to those investing in new enterprises, in order to begin to achieve that kind of change. This has become a cornerstone of government policy, one that was utterly neglected by the previous Government, and that is crucial.

The right reverend Prelate also talked about the skills gap. I think it is commonly recognised across this House that jobs are available but that youngsters are without the skills to take them, and that is an extraordinary situation. Again, this Government, particularly my colleague and friend Vince Cable, have pushed ahead with apprenticeship schemes, which had been nowhere on the agenda for at least a couple of decades, and with the youth contract, which is a fundamental change in the attitude towards upskilling our young people so that we can build the industries of the future. It is so important that enterprise and manufacturing have long-term, sustainable potential, whereas for years—and I understand that Labour did this partly because it did not see what was going on—we had an economy that was built on very large, growing public debt, on individual and consumer debt growing at an extraordinary rate, and on debt within our banking system, which was taking down and knocking up false profits to expand balance sheets. Instead of an economy based on burgeoning debt in various key sectors, one hopes that we are now moving into an economy that is sustainable because it is based on genuine contribution, creativity and production.

The right reverend Prelate talked about the cash surplus being hoarded by many of our leading companies. That is a crucial issue. This cash surplus is down to confidence, but it is also a result of many of our major companies having failed to take the opportunity to build their export markets. We are in the most extraordinary situation where Belgium sells more to China than we do. Sir Roger Carr has spoken today about business leaders having to earn their way in the world. He regretted our failure to exploit and to do business with emerging markets and said that we were still not punching at our weight, never mind above our weight. We had similar comments from the City of London last night. There is a real recognition that British business has failed to build its trade and business and to take opportunities in the emerging markets. I fear that part of the reason for hoarding this cash is the bad habit of many of our corporations of simply thinking that they are looking for an opportunity for acquisitions rather than building new product lines and expanding into new markets.

I want to raise with the Government the issue of infrastructure. I am a great supporter, as I suspect are many in this House, of the green investment bank.

16 May 2012 : Column 430

It was extraordinary to hear the noble Baroness, Lady Royall, say that no investment was being made in infrastructure because the green investment bank is an important breakthrough. However, will the Government confirm in relation to the £3 billion that will be used to capitalise the bank that their goal is to get that money out into investment by 2015 and not just to have the money committed? The two things are very different. Commitments can stretch over a far longer period. For economic growth, it will be important to be on a trajectory of getting £3 billion out of the door.

Others will know that I have been disappointed by the tax incremental financing proposals in the Local Government Finance Bill, because this is another opportunity for infrastructure investment. TIF 1 will encompass only very small projects—it is welcome, but it will not change the world. TIF 2, which has the potential to revolutionise and expand our infrastructure and is driven by local recognition of local needs, is capped at £160 million for the period. I hope that the Government will look at that again. Infrastructural investment in affordable housing surely has to be one of the opportunities that we seize. It seems amiss that credit easing has not encompassed housing associations as one of the areas where it can provide some additional stimulus.

I would be very interested in talking about finance for SMEs, but the Government have allocated time for a debate on those issues next week, for which I thank them. However, we must recognise that our high street banks are not in the business of lending to small and micro businesses and that we must build alternatives to that, whether they be some or all of local and community banking structures on the German or US models. We have to start looking at how we credibly expand and take from fringe to mainstream the various online lenders, and we have to look at the innovative bond markets, particularly social impact bonds and social impact financing.

I see that I am running into my seven minutes, so I shall choose to sit down. Before I do so, perhaps I may say that the Government deserve more congratulation than stick on their plans for economic growth.

5.29 pm

Lord Ashton of Hyde: My Lords, it is a privilege, but a rather daunting prospect, to address this House for the first time. I am lucky to have had the right reverend Prelate to pave the way with such an impressive speech. I thank the noble Lord, Lord Myners, for his kind words—I think they were kind. His facts were right, but the conclusions were wrong: I am not a confidant of the Prime Minister. In fact, he did actually write me a letter the other day, which was very kind of him, but he got my name wrong.

I echo the right reverend Prelate in thanking all those who have made my short time here so welcome and interesting, especially Black Rod and his staff, the clerks, the doorkeepers and particularly my mentor, my noble friend Lady Sharples. She has treated me with affectionate discipline, rather as one would treat a wayward spaniel, and I am very grateful to her.

16 May 2012 : Column 431

In many ways, it would have been obvious to have spoken in the debate about constitutional affairs. My great-grandfather came to this House in 1911, at the height of the furore over what became the Parliament Act. He had for many years been a Liberal MP, from a long line of northern non-conformists. Just over 100 years later, we are still talking about many of the same issues.

Apart from my Liberal heritage, I am able to speak here today because I was elected—albeit, I must admit, not by a huge electorate. I was elected under the alternative vote system, so one could say that I should be a natural supporter of the coalition. It seems, however, that there is very little to say about constitutional affairs that has not been said in the past couple of days, so I thought I would talk about a subject near, if not dear, to my heart—regulation. In doing so, I should declare an interest as the chief executive of two insurance companies and a member of the Council of Lloyd’s.

At the beginning of the gracious Speech, Her Majesty said:

“Measures will be brought forward to further strengthen regulation of the financial services sector”.

I am certainly not advocating a return to light-touch regulation. This would be impossible, and we have seen only in the last week the sort of things that can go wrong at JPMorgan Chase. We expect regulation to be firm and consistent; no business that thinks it is any good wants to be undercut by cowboys acting irresponsibly. However, we also want it to be pragmatic, proportionate and targeted correctly. This is where the implementation of regulation as set out by Parliament is so important. It can make the difference between sensible, prudential regulation and expensive self-serving bureaucracy.

I shall give an example from my own industry, the insurance industry. It is labouring at the moment under the introduction of Solvency II, which is the most far-reaching reorganisation of the way insurance companies organise themselves and their accounts for 30 years. It is driven entirely by EU directives and has produced a tidal wave of bureaucracy and expense which seems to be largely unnoticed outside the industry. Lloyd’s alone reckons that it will spend £300 million on complying with the Solvency II requirements, not to mention the cost of ongoing compliance.

The Lloyd’s Internal Model application pack alone will be 6,000 to 7,000 pages long. It is estimated that the insurance industry is going to produce 500,000 pieces of paper to support the Solvency II application to the FSA. To put that into perspective, if you pile boxes of photocopying paper one on top of the other, 500,000 pages is almost exactly the height of Nelson’s column. Nor is this a light read: it is full of complicated mathematics and mind-numbing details—for example, verifying the complex assumptions in the very detailed and complex stochastic models.

I think that what Parliament might not realise, when it makes perfectly sensible regulations at a high level, is the cost of compliance with the detail. I do not see this improving if this House is full of 450 elected, professional politicians. Everything from minutes of meetings, policies, terms of reference and succession

16 May 2012 : Column 432

plans to detailed descriptions of the data in a company and all its interdependencies now has to be documented in minute detail. In the words of modern regulators, “If it isn’t written down, it hasn’t happened”. These documents have to be written, reviewed, signed off—often by the board—checked, monitored and reviewed regularly for ever more. The idea that more documentation in itself is useful regulation should, in my view, not be accepted as given.

There is a strong feeling that the FSA has lost its sense of proportion in implementing Solvency II. It is very sensitive to the charge of gold-plating regulation but many in the industry feel that, in its insistence on more and more documents, it has lost its perspective in regulating the process rather than the outcome. You cannot help wondering whether all this detail and the requirements are more to help the regulators regulate, and to attribute blame if something goes wrong, than being about proportionate, risk-based regulation. To cope with this regulatory burden, the FSA has proposed a whopping 37% increase in the annual funding requirement for 2012-13 for the insurance industry. That is on top of the huge cost of Solvency II.

I remind your Lordships that this is all for an industry which did not cost the taxpayer a penny during the financial crisis, employs 350,000 people and contributes £10 billion to the Exchequer each year. I very much hope that when my noble friend the Minister further strengthens regulation of the financial services sector, he will do his utmost to ensure that it is implemented at individual company level in a proportionate way under the new arrangements, and in a way which addresses the outcomes rather than the process itself.

5.36 pm

Lord Hunt of Chesterton: My Lords, it is a pleasure to welcome the noble Lord, Lord Ashton of Hyde, to this House. As my noble friend Lord Myners mentioned, the noble Lord was at Eton College. I used to play soccer for Westminster against Eton College. We used to draw honourably, so that was all right. The noble Lord’s background, as he described to us, was in the City—although I might make a party political point here. He said that it was natural that he should be a supporter of the coalition. For somebody who is in insurance to back something as risky as the coalition seems to me not at all clear, so maybe he would like to reconsider his evaluation of risk in that context.

It was of course very interesting to hear the noble Lord’s wise remarks about regulation. I am an applied mathematician and I think that I have worked with all his companies, which are involved in the Lighthill Risk Network involving academics and the City. That was extremely interesting, as the way in which the City has developed risk methods in computers and mathematics is an important part of the world and Lloyd’s of London is a great leader. The breadth of the experience of the noble Lord, Lord Ashton, from hunting through to the Army and in insurance, will, I am sure, make him a very welcome Member of this House.

Turning to my remarks on the Queen’s Speech, I hope noble Lords will have learnt that there is a new principle afoot in this House enunciated yesterday by the noble and learned Lord, Lord Howe. He said,

16 May 2012 : Column 433

more or less, that if an issue is not in the Queen’s Speech, you had better look it up in Magna Carta to see whether the same issue was discussed. He was referring to standardisation of the measurements of wine and corn, which are well discussed in Magna Carta but were somewhat absent from the Queen’s Speech. In my case, I should like to speak on the environmental issues, which are extremely important. They were mentioned well in the Magna Carta, with its references to the responsibilities of office holders and landowners to maintain as guardians the natural environment and resources of this country—forests, rivers and fish.

In the constitutions of several other countries, the Kings and the Parliaments are given clear responsibilities for the environment. In Malaysia, where I was recently visiting, the King—the Yang di-Pertuan Agong—has to maintain 50 per cent of the land for natural forests. That is a remarkable commitment, which I was pleased to hear from local business is supported. The British Parliament has, over the years, had an international reputation for some of its legislation, from the Clean Air Acts and the formation of the National Trust to the Climate Change Act. Perhaps a reformed House of Lords, with its legislators having several years without electoral pressures, should have certain special responsibilities. The United States Senate is responsible for treaties. For the reformed House of Lords—perhaps with our new Magna Carta—we should have special responsibilities for the environment, natural resources and even the long-term existence of the UK. The Netherlands Government have an Act of Parliament in which their coastline is fixed but, as a debate in the Lords in 2000—my first debate—pointed out, the United Kingdom does only cost/benefit analysis as to whether the coasts are defended as the sea level rises with climate change and the post-ice age land movements continue.

As the noble Baroness, Lady Wilcox, who is a practical environmentalist with her interest in fish, reminded us, the government programme in the Queen’s Speech has two major Bills to be considered, one of which is on energy and the other on water. The Bill on energy aims to ensure that the UK has adequate power supplies that minimise carbon emissions and have different components to ensure security. We need wind and solar power systems but, since these can fail in critical weather conditions that are becoming more frequent with climate change, nuclear power or other clean fossil fuels, such as those with carbon sequestration, also need to be part of the system. I applaud this Government for continuing the previous Government’s solid policy in this direction.

However, I criticise the Government for failing to argue strongly enough about the importance of the continued reduction of carbon emissions, not only by power stations but also by traffic. We are no longer run by Mr Toad at the Department of Transport, going faster and faster, but it is nevertheless important to point out that there is a strong connection between the short-term health benefits of reducing emissions from traffic as well as the long-term benefits of dealing with climate change. The Government should focus on the short-term benefits to explain to people why dealing with carbon emissions is important. They should not be bamboozled by certain Lords, and their well oiled

16 May 2012 : Column 434

propaganda machine, who continue to comment that there is no such thing as climate change. In fact, temperatures over the land areas of the world and the surface layers of the ocean are steadily rising, as is sea level. Desertification and drought are increasing. Some of the records in peak rainfall are one of the greatest climate change concerns to south-east Asia and southern China. Peak rainfall records are being broken year on year. They are now up to 150 millimetres an hour from about 100 millimetres an hour 20 years ago. The Governments of Brazil, Mexico, China and Indonesia are all introducing legislation. Of course, all of these countries remarkably agreed at the Durban meeting of the United Nations Framework Convention on Climate Change to develop a road map for an international treaty after 2015. The idea that the world is moving away from climate change is simply not correct.

We all support the government objective in the Queen’s Speech of expanding the UK economy, especially its exports. However, I am afraid that many companies and officials think that the UK Government could do a lot more to help export UK products and expertise in environmental technology. Small and medium-sized enterprises—I declare an interest as the chairman of an SME in Cambridge—need some kind of project financing and travel expenses to promote their products. I hasten to say that our own company does not seek this, but many SMEs have spoken to me about this issue. They compare the situation unfavourably with the support given by foreign Governments to their companies. This is why Governments in Asia, I am told by officials, are often asking “Where are the Brits?” at trade fairs and other events that are trying to promote environmental technology. UK officials are too embarrassed, they tell me, to say that the UK Government hardly covers expenses so that SMEs cannot attend these trade fairs.

An equally serious limitation is the UK Government’s technical agencies not being encouraged to use their expertise and people to promote UK technology. I know this—I used to be head of the Met Office. The House of Commons Science and Technology Select Committee is looking into this. Two years ago, at the beginning of the previous Session of Parliament, the noble Baroness, Lady Wilcox, reported on how all this would change, but I am afraid that I have not seen that, nor have I heard it from officials or indeed SMEs.

One of the great successes of this Government in environmental technology is in the development of satellites and remote sensing. I applaud them for that. However, this success also needs more government support. Last week there was a great crisis in the observation of the Earth’s systems and data as one of the most important older satellites ceased operating and no new ones are planned. There were leaders this week in the Economist—most unusual in the Economist on such a technical question—and Nature pointing out this crisis. Without data from these instruments, it will be impossible to provide warnings about natural disasters and long-term climate change.

Government plans for the G8 meeting in 2013 to focus on security and prosperity while monitoring and sustaining the environment are also important and there is great scope for international collaboration and trade to come out of that meeting.

16 May 2012 : Column 435

5.45 pm

The Earl of Lytton: My Lords, I add my congratulations to the two maiden speakers, particularly the noble Lord, Lord Ashton of Hyde, who I thought was about to shoot my fox in turning his attention to regulation, which I want to concentrate on, too.

I welcome the Government’s commitment to reducing regulation and red tape, and am pleased to see that a number of measures have been put in place. The question that I want to concentrate on relates to business rates. These are one of the largest premises costs after rent, typically relating to about one-third or one-half of the rent itself. Very small businesses get some relief, but the extra cost of that is passed back through the system and is borne by other business rate payers. The businessman has no democratic voice, unlike the council tax payer; no services are provided for his payment and, save for extreme and demonstrable hardship, there is little relief. Empty rates, meanwhile, are levied on all but the tiniest premises and stalk the minds of those with empty and unlettable properties.

The system is under considerable stress in terms of the management of the business rates environment. First, due to inadequate resources made available to the Valuation Office Agency, whose predecessor body I was once an employee of, the initial accuracy of figures in the valuation list has suffered. Secondly, the valuation base year for the 2010 valuation list that we are currently in is in fact the antecedent year of 2008, the peak of the market. Many commercial values have fallen a great deal since then, and rates have accordingly become more onerous for that reason. In fact on 1 April this year they went up by 5.7%, an increase that, had it applied to council tax, would have been fairly instantly stamped on. Thirdly, as I have said, the risk of liability for empty rates makes owners of unlettable buildings desperate to reduce their exposure. Regrettably, the VOA has allowed itself to change its role from being the impartial government valuer, when I was part of its predecessor organisation, to a strategic player in the maintenance of a tax base. I view that with considerable regret, as do a number of other professionals in this field.

I understand that the Valuation Office Agency and the Valuation Tribunal, which deals with appeals against rating assessments, just about manage to handle the current inflow of appeals but have no resources to clear the backlog, amounting to some 146,000 or so outstanding cases, some going back to the 2005 valuation list. Typically it might take two years for an appeal lodged today to receive even an initial substantive response from the VOA. Meanwhile, the rates are payable in full. The Valuation Tribunal, which appears to operate on a computer system different from and largely incompatible with that of the VOA, has in recent times produced a plethora of practice statements and other regulations making for immense complexity, such that even some of the experts no longer understand the system.

The businessman is forced to take advice from others. Unsurprisingly, in the confusion, unscrupulous practitioners emerge promising rate reductions they cannot deliver, charging high up-front fees and making mass appeals which further swamp the system.

16 May 2012 : Column 436

More draconian regulation then follows naturally from the Valuation Tribunal, and the Valuation Office Agency becomes more defensive in its administration as a natural consequence. Soon nobody knows whether they are coming or going, whether an assessment is correct or up to date and so on. This is a fairly corrosive mix. Justice is denied, fairness has gone out of the window and a rather unsavoury mercantile element seems to have entered the minds of those administering the system, which dents confidence in it. We do not need confidence to be dented.

For years, the smallest of small businessmen have voted with their feet. The threshold costs of moving to a conventional rented office or other commercial accommodation are too high at the margins. The market adjustments are too slow in terms of bringing rents and rates into line with affordability. If the necessary adjustments were made, I suspect that insolvencies and write-offs would be very large indeed. So microbusinesses operate from spare bedrooms, converted garages, garden sheds and other domestic spaces. Their marketplace is the web, which is also their shop window. Good luck to them. I am one of them. I have been using one end of my home since 1988. To use a term from one professional acquaintance, this domestic environment has become the new business enterprise zone, free of rent, rates, business premises regulation, legal set-up costs, travel-to-work overheads and so on. It is not lost on such business operators that the council tax on an average band E or F dwelling is less than half the rates on an equivalent area of business space.

Nobody is charged with policing what happens here, and nobody has any real interest in investigating further what is happening on the ground. There are no checks on, for instance, whether a second home with its council tax reduction is also a holiday home run as a business. Charging authorities have no incentive to check up on this either, as they are merely collection agents for someone else’s revenue stream.

Business rates are not the only place where this sort of thing happens and where the management of all sorts of things from environmental health, health and safety, employment rights, planning rules, landlord and tenant law and so on cumulatively affect small businesses, in particular small businesses that start as microbusinesses and want to become small and medium-sized enterprises and grow on from there. I believe this is a great country in which to start a business, but I am not sure that it is quite such a good one in which to grow it on once it has got going.

5.53 pm

Baroness Noakes: My Lords, it is a bit rich that the party opposite has tabled its amendment to the Motion for an humble Address. It seems to have collective amnesia about the economic mess that it left this country in only two years ago. Let me remind it that it left behind a very large deficit. There is no doubt that some of the ballooning of the deficit was down to the financial crisis, but the Labour Government had been consistently spending beyond their means in the run-up to that crisis. They failed to reform welfare spending and failed to deliver efficiency in the delivery of public

16 May 2012 : Column 437

services. They had overcommitted the defence budget by £38 billion. They left behind a legacy of debt and forecasts of more deficits to come, but they also left no credible plans to reduce them. That was not just our opinion; that is what the IMF and the OECD told us.

Since my Government came to power, we have delivered firm action to control public expenditure and to eliminate the structural deficit. We have balanced the defence budget. Debt will be falling as a percentage of national income by the end of 2015-16. It is through that resolve that we have reduced the cost of borrowing and kept it low. Yesterday, gilt yields were at their lowest for 300 years.

The noble Lord, Lord Myners, who is no longer in his place, is wrong about interest rates. They are a reflection of market confidence, as anyone can find out by looking at what is happening to eurozone interest rates. I hope that, when he winds up this evening, the noble Lord, Lord Davies of Oldham, will tell the House what he thinks interest rates would have been today if his party had continued to manage the economy.

I pay tribute to my right honourable friend the Chancellor of the Exchequer for delivering this impressive result. The economic headwinds have not been favourable in the past two years. He could have lost his nerve and taken the advice of the party opposite to spend our way out of trouble. However, Labour has never explained the magic by which spending more will not result in unsustainably high levels of debt and rising interest rates. Perhaps the noble Lord will do so today.

Our economic policies are often given the label of “austerity” but we are not in the same league as Greece. Our public expenditure will continue to rise. At the same time, we are taking 2 million people on the lowest incomes out of taxation altogether. We are managing to escape from the millstone of a 50p tax rate and reducing corporation tax rates to more competitive levels to support our economy.

There is no doubt that the economic outlook continues to be troubling. The uncertainty created by eurozone instability is a big problem. I can see no future for Greece remaining in the euro and the best thing for it would be to exit, or “Grexit” as Willem Buiter would have us say. Other eurozone countries are also struggling. Spain and Italy are again having a bad week in the bond and credit markets. We need the eurozone to sort itself out, which is why I support the Bill, which has already been introduced, to endorse the eurozone stability mechanism. However, there is not much else that the Government can or should do to support the eurozone. We should certainly not put our cash into any eurozone rescue fund.

The Government can do things to support growth in our economy and have done a lot already. However, there is more to be done and I would have liked to see more in the gracious Speech to support UK businesses. In particular, I would have liked to see a commitment to reverse more of the regulatory burdens and employee rights imposed by the previous Government. These are the very things that make running businesses, especially at the small and medium-sized end of the spectrum, particularly tough.

16 May 2012 : Column 438

There are some parts of the legislative plans in the gracious Speech about which I am not entirely enthusiastic. We are promised legislation to reform competition law to promote enterprise and fair markets, which sounds good in theory. However, competition law has often ended up being a big stick with which to beat our most successful businesses. A wholly blame-free company can end up with a lot of costs and huge distractions from running its business if the OFT launches an unnecessary investigation. Let us see whether the Bill really promotes enterprise.

In the same Bill we are promised the green investment bank, about which some noble Lords seem enthusiastic. It is not a bank in any real sense. It will put money into things that sensible banks would not touch with a barge pole. It will be gambling with taxpayers’ money. Even the cheerleading report on the green investment bank commissioned by BIS goes no further than to say that,

“it is unlikely to have a significant impact on economic growth … in the short term, but there might be some benefits in the long term”.

We are paying homage to the green religion at just the time that other countries are seeing that green policies are expensive luxuries. We do not have any spare money for such luxuries. We could spend the £3 billion that has been committed to it on so many more things that would promote our economic growth.

We are also promised a Bill on the reform of the electricity industry. But, in plain English, that means more subsidies for green energy, which in turn means more costs for British businesses and domestic consumers. I hope that the Government will start to understand that the cost of energy in this country is a very real burden. They need to find ways of reducing it and not increasing it. This is another unaffordable green luxury. Last year, my right honourable friend the Chancellor of the Exchequer got it right when he said that he would not save the planet by putting our country out of business. When these Bills come forward, they must be justified against that background.

Finally, I turn to the promises of legislation on the financial services sector. There will be two Bills; namely, the Financial Services Bill, which was carried over from the previous Session, and the banking legislation. I agree with the noble Lord, Lord Myners, on the need to look carefully at the powers of the governor. However, there is one thing that is not likely to be covered in either Bill, which I hope that the Government will want to address. The Bank of England has resisted calls to publish an assessment of its role in the financial crisis. I do not understand how we can be expected to consider legislation explicitly designed to remedy deficiencies that arose during the financial crisis without that background. How will we know whether the problems related to the crisis have been dealt with? I hope that my noble friend the Minister will have an answer to this problem before he brings the Bills before your Lordships’ House.

6.01 pm

Viscount Simon: My Lords, I feel somewhat out of step with most noble Lords who have spoken in that I will not be talking about financial matters. The proposal

16 May 2012 : Column 439

to introduce legislation to address the problem of driving under the influence of drugs was not only in the gracious Speech but was mentioned in the newspapers a few days earlier. It had, none the less, been my intention to raise this subject had the proposals not been included in the Government’s legislative programme.

I find it interesting that the Transport Research Laboratory now estimates that drugs are an important factor in a quarter of road deaths. Along with the Department for Transport, the company that produces a drug swipe test carried out the world’s largest trial at the roadside. Almost 100% of the 5,000 drivers stopped agreed to partake in the testing and most saw no problem with being screened in the future. A report was made but the press office at the DfT denied its existence to inquisitive journalists for some years. Why did it do that? I have no idea. Any legislation in this area needs to address those who cause the most harm. At the same time, it should ensure that its provisions can be enforced effectively by efficient use of existing resources and by guaranteeing that it does not become overbureaucratic and overburdensome on officers and the CPS.

Many types of drugs could impair driving ability and care must be given to those that need to be included in any analysis and to determining the appropriate reading for driving legally. It should be remembered that a road vehicle is a lethal weapon and that alcohol or drugs can impair a driver’s reaction. The law does not recognise that when a driver kills someone, and that needs to be changed.

When the Serious Organised Crime and Police Act 2005 was passing through this House, one of my amendments was agreed. It enabled an evidential breath test for alcohol to be taken at the roadside and used in court, rather than the driver being taken to a police station where the reading might fall due to the time that has elapsed prior to getting the official reading. The kit for this test has still not been officially approved, despite it already being available to officers. I hope that the drug testing apparatus will be approved immediately; after all, it is being used very successfully in many other countries. To put the problem into perspective, in 2010 the number of drug-driver prosecutions in the UK, which has just been released by the Department of Justice, was 34. During the same period, the number of drivers losing their licences in Germany, where the drug swipe test was used, was 34,000.

Lots of people think that roads policing officers, who used to be called traffic officers until the name was adopted by the Highways Agency, purely give out tickets for exceeding the speed limit, but that is not the case. They are officers at the front line of crime fighting and their specialist skills and knowledge enable them to deter, hunt down and arrest serious criminals. I always think of these officers as police officers first and roads policing officers second, as their arrest rate for non-traffic offences is quite exceptional. Bearing that in mind, with budgets being reduced I wonder whether the proposed training will lead to a reduction in standards. As an aside, although it is somewhat relevant to this, a few years ago I was invited to a police driving school to sit in on the testing of three

16 May 2012 : Column 440

officers as response drivers and not—I repeat not—as roads policing officers. All three officers passed. I subsequently told the inspector that I would have failed one of them and gave my reasons. He said that I was probably right but that the course had been reduced from three weeks to two.

Training has been reduced on quite a large scale and it is not only the public who might become involved in this reduction. Should something go wrong, the officers might become the subject of investigation. I recall a police pursuit being stopped recently for health and safety reasons purely because the person being chased was not wearing a helmet, and if an accident had occurred the officers could have been temporarily removed from their specialist duties.

When departments are reduced, it is imperative that roads policing skills are not lost and that continual training is maintained in order that officers can deal with fast-roads policing. About 10 years ago, I passed the police’s fast roads course, since when driving conditions have changed. Perhaps I should declare that I am qualified in roads policing. Driving behaviour has changed and visible patrols are vital to maintain the confidence and discipline that led to a reduction in casualties over the past 10 years. However, with the number of roads policing officers and marked police vehicles decreasing, I would not be surprised if those statistics showed an increase in casualties in the near future. It is acknowledged that the threat of being caught is an effective deterrent, whether it be by breathalysers, drug swipe tests or speeding, but they all require trained and experienced officers.

It is interesting that partnership enforcement operations exist to target coaches and heavy goods vehicles. I have attended three of these operations where not only very highly qualified roads policing officers but people from Customs and Excise and VOSA are present. They are very efficient and I just hope that, with the financial cuts, they will be allowed to continue.

We have seen proposals to raise the speed limit from 70 mph to 80 mph and to decrease it from 30 mph to 20 mph in certain areas. Average speed cameras are very effective but they are not everywhere, just as roads policing officers are not everywhere. So how will these changes be enforced? Numerous research and common sense shows that a speed limit raised to 80 mph would result in more collisions and, because of the increased speed, more road deaths and serious injuries. After all, while vehicle design may change the human body does not. This, of course, flies in the face of the DfT’s long-standing commitment to reducing collisions and casualties.

The Ministry of Justice consultation document, Getting it Right for Victims and Witnesses, fails to make any proposals to improve the services offered to victims and witnesses of road deaths. Paragraph 56 says that more needs to be done but fails to make any recommendations. It is proposed that responsibility for the funding of victims’ services will soon be handled by appointed police and crime commissioners, but that will not be underpinned by a set of minimum standards that would ensure a consistent approach across the country. The Road Victims Trust, of which I am a patron, is concerned that the already patchy

16 May 2012 : Column 441

approach to support victims and witnesses of road deaths will simply be made worse. With pursuits being closely monitored and health and safety at the forefront of senior officers’ minds, will officers, within the bounds of the law, be allowed to follow and stop those who are driving dangerously?

Finally, road casualties and deaths are a national issue that requires a joined-up and co-ordinated response. The Government have a duty to ensure that, with the advent of police commissioners later this year, suitable methods are employed to encourage greater co-operation between government departments, the Department for Transport, the Home Office, the justice department and individual forces to continue to drive down the blight of deaths and injuries on our roads for years to come.

6.09 pm

Baroness Randerson: My Lords, we cannot legislate our way out of debt, although I seem to recall that Gordon Brown tried to do so when he was Prime Minister. However, we can use legislation to encourage enterprise, stabilise the banking system, encourage businesses to create more jobs and stimulate green investment. All those key issues were tackled in the gracious Speech, which outlined measures that reinforce the coalition’s policies for promoting growth by emphasising regional growth, rebalancing the economy away from the disastrous over-reliance on the finance sector under the previous Government. Then there is the policy of encouraging the growth of SMEs, emphasising the importance of manufacturing and developing skills.

I want to draw out two measures announced in the Queen’s Speech. The first is the Groceries Code Adjudicator Bill, which is all about the small producers being empowered to stand up to the big retailers to get a fair deal, not just for the small producers but for the consumers as well. The noble Lord, Lord Myners, who is not in his place, mocked the Bill earlier this afternoon. I fear that he might regret that, because the farming unions and consumer organisations are probably even now penning letters and e-mails to him to put him right on the importance of the Bill. It has been a very long time in coming; the first record that I found of the debate on it was in 1998 when Colin Breed, a Liberal Democrat Member in the other place, produced a report on supermarkets and competition, which led to the Competition Commission producing a voluntary code of practice in 2000. Like so many voluntary codes, it was ineffective because suppliers were afraid to make complaints. The issue was discussed very many times in the new Welsh Assembly; in the 12 years I was there I heard the debate year after year about the power of the supermarkets and the complaints of the farming unions about that power.

Another report came in 2008, and in 2010 the Competition Commission produced the groceries supply code of practice. Andrew George MP has said that the problem with that is that it is like having the rules of rugby without the referee. We need the adjudicator—we need the referee. During the passage of the Bill, I look forward to having the time to debate the place of financial penalties and the need for a third-party complaints process. I am glad that the Bill encompasses both of those.

16 May 2012 : Column 442

Unlike the noble Baroness, Lady Noakes, the second Bill that I wish to welcome is the one that includes provision to establish a green investment bank. Indeed, the bank is already up and running in skeletal form, and loaning money. Globalisation of the economy has led to such fierce worldwide competition that it is sometimes difficult to see where we can have the edge as a nation in competition. We clearly cannot sell ourselves as a low-wage economy throughout the world, so we must choose sectors where we have the technical advantage. The green economy should be one such sector. It has the advantage of being good for the planet as well.

Over the last two decades, I have been increasingly frustrated at the number of cutting edge initiatives on renewable energy that have been developed in my own home country of Wales and have been rejected for development funding—either commercial funding or government grants and loans—on the grounds that they are too risky and an unknown quantity. Hey presto, a couple of years later those same initiatives have been adapted and adopted in other countries in Europe, usually in Scandinavia, where they have taken the initiative and are now at the head of the field. This is an example of how the finance sector in Britain does not look sufficiently long term at investment issues. I believe that the green investment bank will help to change that outlook and provide that vital funding.

It is customary in debates such as this to regret desirable proposals that have been omitted from the Queen’s Speech, but I welcome one omission. I was very pleased that there was no reference to the introduction of regional pay. I have not been able to follow the logic that argues that higher public sector pay crowds out private sector jobs, especially at a time of high unemployment. I do not believe that the evidence has been correctly interpreted. I accept that the UK is not economically homogenous and I know that the previous Labour Government introduced local pay in the courts system, apparently successfully, so I await the outcome of the Government’s consultation on this but am very pleased that there is nothing in this Session.

Finally, I want to express my regret that there was nothing in the Queen’s Speech on the reform of the Barnett formula. There is now wide agreement that reform is overdue; indeed, there are ongoing talks between Governments on the issue and I hope that they will soon bear fruit. I know that there is irrefutable evidence that the formula short-changes Wales and I believe that the Government accept that. I understand with the upcoming referendum in Scotland that this is not an easy time to change the formula. I understand that in the middle of an economic crisis it is not an easy time to change the formula. But there is a short-term solution that would not impact on Scotland and not cause massive financial implications for the Government —that is, the introduction of a so-called Barnett floor mechanism that prevented any further convergence in funding between Wales and England. I remind the Minister that Wales is officially the poorest part of the UK. In order to be true to the Government’s aim to stimulate regional growth, it needs special attention.

16 May 2012 : Column 443

6.16 pm

Lord Low of Dalston: My Lords, I, too, congratulate our two maiden speakers, and have pleasure in adding my word of welcome to the House. I was astonished still to see a House of Lords reform Bill in the gracious Speech after the local election results. As the noble Lord, Lord Bilimoria, said earlier, a clearer case of fiddling while Rome burns it would be hard to imagine.

But to Rome burning, which is the matter in hand. It is hard to say anything that has not been said many times over here, but as there is little sign that the Government are listening it might just be worth saying again. We have heard about the enormity of the challenge facing the Government on taking office, and that is not denied, although there might be dispute about the reason for it. What is at issue is the right way of going about dealing with it. To begin with the unpalatable but ineluctable facts, the Government’s policy is not working. I am not just saying that as some kind of parti pris politician or economist; I am just saying what any fool knows.

After gathering momentum out of recession under the last Government, the economy has essentially seen no growth at all since the autumn of 2010. Output is still more than 4% below its peak in 2008 and probably will not regain that level until some time in 2014. This is a far longer period of depressed output even than the great depression. The official forecast at the time of the emergency Budget of June 2010 was that we would now be growing at over 2.5%, with unemployment falling sharply. Instead we see not just low growth but continued high deficits as well. Indeed, in the past year, the deficit on current spending hardly changed, with almost all reduction in the total deficit coming from cuts in investment spending. While the deficit may have edged down, however, net debt has risen from 43.5% of GDP in 2008-09 to 66% in 2011-12, and is set to reach 76% in 2015-16.

We have debated the Government’s economic policy on a number of occasions in this House over the last couple of years, and a number of your Lordships have been concerned to argue that it was unlikely to work, but they were forced to admit that they just did not know. Now, however, with the advent of double-dip recession, we do. I do not know whether the Minister will try to pretend otherwise this evening. However, if he does, we will know that he is just whistling in the dark for we have the advantage of a sort of controlled experiment on which to draw. While Europe has been following the path of fiscal contraction—most notably, of course, in the UK, with the recessionary consequences that we all know about—the USA has been applying a fiscal stimulus, with startlingly different results. People argue about the extent of the stimulus and just how startling the difference is, but that there has been a stimulus leading to growth of around 2% per annum is undeniable. Therefore, we have a clear correlation here: with contraction goes recession; with stimulus goes growth.

Last October, at Question Time, I put it to the noble Baroness, Lady Wilcox, that the Government had got their policies in the wrong order, and asked:

“Instead of pursuing deficit reduction in the short term and growth in the medium to longer term, should they not be pursuing growth in the short term and deficit reduction in the medium to longer term?”.—[Official Report, 11/10/2011; col. 1526.]

16 May 2012 : Column 444

With different emphasis, everyone recognises this now and is calling for a greater degree of flexibility. Business is calling for it. Even the markets—the Government’s cover for doing nothing—are calling for it. In truth, the Government recognise it: hence the various plans for growth with which we have been regaled over the months, which have all come to naught and which are bound to come to naught while the Government go on pursuing their self-defeating policy—what the noble Lord, Lord Skidelsky, dubbed their insane policy a couple of Queen’s Speeches ago—of retrenchment and austerity, which is essentially antithetical to growth.

Indeed, the Chancellor has had to extend the horizon for reaching his deficit reduction target by two years and allow debt to rise by £150 billion: hence we now have the ultimate irony of the ratings agencies putting the UK on negative alert. Clearly, the Prime Minister has learnt nothing from his time as special adviser to the noble Lord, Lord Lamont, who, in his recovery budget of 1993, explicitly postponed fiscal retrenchment until growth had been given a chance to take hold. In fact, the Government did not start cutting the structural deficit at all until 1994-95, by which time the economy had been growing for 18 months—by then at a very healthy pace of over 3%.

The Government say that you cannot borrow and spend your way out of recession. It is usually said that you cannot do so at an individual level but that you can do so macroeconomically; actually, you might be able to at an individual level if you happened to strike lucky on the 3.30 or the lottery. However, at the macroeconomic level you can borrow to invest in jobs and growth—for some people, this is counterintuitive—thus creating a virtuous circle rather than the vicious one that we are in at the moment, with the bulk of the cuts still to bite and incalculable damage already being done to the fabric of our society. The National Institute of Economic and Social Research has calculated that at current very low rates of interest you could finance extremely cheaply—for example, with the revenue raised by the “pasty tax”—a £30 billion programme of infrastructure investment on things such as roads, schools and hospitals, which have been cut by half over the past three years and will be cut still further over the next two. What you cannot do is cut, tax and save your way out of recession.

I asked an economist friend why he thought that the Government kept pursuing this insane policy, and he replied, “Well, they like cutting, don’t they?”. This was rather confirmed by the noble Lord, Lord Sassoon, on 22 March, when he said:

“As the Government, we have to continue to reduce the burden of the state. If we do that, the economy will flourish”.—[Official Report, 22/3/12; col. 1031.]

So what takes the place of the state? Is it the big society? But that is being cut too and we should remember that it was the state that had to step in to remedy the inadequacy of the big society. The other possibility is that the PM and Chancellor have just painted themselves into a corner with their rhetoric about not spending your way out of recession. However, as we have seen, the markets are now calling for a more flexible approach and the agencies have put the UK on negative alert.

16 May 2012 : Column 445

One thing that the Government are good at is fixing Labour with responsibility for the crisis, and we have heard more of that this afternoon. However, that debases the currency of debate. If the eurozone crisis has a part to play today, the global crash must be accorded a role in 2008. What is sauce for the goose is sauce for the gander, and the Government should admit that they would have had to do much the same as Labour or else we would all have gone under. It is disappointing that Labour has not made a more convincing fist of pointing the way to an alternative. Until it can, disillusion with the political process will grow and Mr Galloway will continue to find a ready ear for his message that what we are witnessing is a crisis of capitalism in which the poor are expected to carry the can for the greed and mismanagement of the capitalist class. The Greeks are indicating that they have had enough. Other countries will not be far behind. The zeitgeist is shifting as between austerity and growth.

I end with three predictions. First, the first quarter figures will be revised upwards to show that we are not in a double-dip recession. Secondly, the next three quarters will show zero growth, give or take. Thirdly, unless the Government change course pretty soon, they will be swept from power at the next election.

6.25 pm

The Lord Bishop of Hereford: My Lords, like others, I pay tribute to the eloquence, insight and wisdom of the two maiden speeches that we have heard. Like the noble Baroness, Lady Randerson, I wish to focus for a moment on the groceries adjudicator and welcome the statement in the gracious Speech that there will be,

“legislation to establish an independent adjudicator to ensure supermarkets deal fairly and lawfully with suppliers”.

That, surely, is good news, and is certainly welcomed by the church, by many other organisations and, of course, by farmers and suppliers.

The church has been pressing successive Governments since 2007 to put protection of farmers and other suppliers on a legislative footing. Our landmark report, Fairtrade Begins at Home, produced by our Ethical Investment Advisory Group, highlighted the sometimes pernicious practices of supermarkets, which farmers and suppliers have, alas, to accept as a fait accompli of doing business with them. The revised Groceries Supply Code of Practice has been a move in the right direction but needs the adjudicator if it is to work effectively and give the protection which, sadly, is still needed. However, we do not need just any adjudicator. We need one who will have sufficient powers to ensure compliance with the code, including powers to fine at a realistic level if the code is breached and correction is not achieved by other means. It is also vital that the adjudicator is able to initiate investigations where they are needed and indicated by reliable evidence from different sources, including third parties such as trade associations and whistleblowers. All supermarkets that behave ethically and deal appropriately with their farmers and other suppliers will have nothing to fear from this welcome piece of legislation.

Although the announcement is welcome, there is much more that can and needs to be done to continue to support farming and rural communities in a wide

16 May 2012 : Column 446

range of areas, to which there was, sadly, little reference in the gracious Speech, but where I continue to hope that action will nevertheless be taken. Let me mention some of them. Over the past few weeks, dairy farmers have seen the price of a litre of milk fall by 2p. I am told that in some cases this now means that the price they receive is 3p or even 4p below the actual cost of producing the milk. This is clearly unsustainable and hugely worrying, not just for the farmers and their families but for us all since we have already seen a large number of dairy farmers go out of business, and, I regret to say, are poised to see many more do the same. That does not help us achieve food security or protect such a key area of the industry. Government action on unfair milk contracts, and the breaching of contracts, would be welcome, and would surely help this vital area of our farming.

It is good that slightly more young people are training to enter farming. I say this against a background of farming creating 2.2% more jobs last year and becoming more profitable and productive over the past five years. Yet there is an urgent need to do more to arrest the decline in the number of young people in farming, as well as in the countryside more widely. There is, of course, a complicated web of factors that influences an issue such as this. Among those factors is a paucity of university and higher education posts, an associated lack of research-based work opportunities and, linked to that, continuing slow broadband speeds, affordable housing, a lack of rural public transport, fuel costs and struggling rural services—all the things with which we are very familiar but which still need urgent attention. Constructive steps can be taken in many of those areas. For example, the reintroduction of a rural housing enabler would help a good deal, as would assistance with fuel poverty and revisiting the vexed issue of post offices, not least when we hear about more bank branches closing.

The announcement of proposals to reform the electricity market is welcomed by the church as a supporter of community energy. In relation to that and to the energy Bill, I would add that I hope that, in considering what I think is referred to as the nuclear option, the Government will give real and serious consideration to investing in the use of thorium, which, like others, I see as a far safer and genuinely greener alternative to uranium.

Not surprisingly, I am compelled to point out that the proposal to charge VAT on repairs to listed places of worship is utterly misguided. It is a policy which, if carried through, will cause huge damage and, I think, outrage across the country, especially in small rural communities. Some 45% of the nation’s grade 1 buildings are churches.

I also feel compelled to register the continuing urgent need for the vexed and hugely damaging matter of bovine TB to be properly addressed. The industry and most vets remain committed to a badger cull as one of the necessary measures to control the spread of the disease, while also supporting further work and research on vaccinations as a critical piece of the picture. Unless the primary wild vector is tackled, there will be no chance of eradicating this dreadful disease, even if everything else possible is done.

16 May 2012 : Column 447

In conclusion, I hope that the Minister will not only register the serious issues referred to but ensure that the right kind of groceries adjudicator is put in place, that action to support dairy farmers and eradicate bovine TB takes place, that further work is done on a whole raft of other pressing rural issues, and that there is a restoration of zero VAT rating for our listed places of worship.

6.32 pm

Lord Patten: My Lords, certainly in my part of the south-western dairying country, what the right reverend Prelate has just said will go down very well—“Bishop calls for speedy badger cull”. They will like that very much in my part of Somerset.

In declaring my current business and financial interests, I wish to concentrate on four paragraphs only in the gracious Speech: paragraph 2 on the deficit; paragraphs 3 and 7 together on regulation; and, finally, the last paragraph, which prefigures other measures that might be laid before your Lordships’ House.

Turning, first, to the deficit in paragraph 2, I strongly support the Government’s policies. That is a rather unfashionable position to take in the debate this afternoon in the face of the newly fashionable anti-austerity, pro-growth-at-any-cost consensus that seems to be sweeping across Europe and its political community. So far as concerns the deficit, I believe that we must stay the course. We have not yet really begun to deal with the effects of cutting Labour’s increase in public expenditure of more than a half in real terms when it was in office. To start swerving before the rubber has even begun to hit the road would be a self-inflicted political, as well as economic, act, waving goodbye to our AAA rating and saying hello and welcome to the bond market barbarians who are at our gates at the moment watching for the first sign of exactly this sort of capitulation by the United Kingdom.

If we need our deficit-reducing backbone stiffening, we need look no further than France, where meeting the deficit target of 3% of GDP by the end of 2013 is going to demand an extra €24 billion or €25 billion in terms of changes to be found via expenditure cuts and/or tax increases. I am afraid that even in France there are not enough bankers’ bonuses to go round to meet that sum. Therefore, we need to look to our own devices in our own businesses to help with faster deficit reduction and to help to fight our way out of the current double-dip recession. One of those ways is through regulatory reform. Often this can be done through a set of minor measures but they lead to great help for our businesses.

That leads me to paragraphs 3 and 7 in the gracious Speech. I know that the coalition realises that businesses, both large and small, are its friends—or should be—for they have in place much to help us grow again. Many corporates have healthy balance sheets, healthy cash piles and considerable confidence in their own businesses —at least, the businesses that they run. They work hard, as Ministers do. I sometimes worry that both business men and women and Ministers work too hard over too long hours and do not leave themselves enough thinking time. At the same time, those in the business world welcome the encouragement that coalition

16 May 2012 : Column 448

Ministers give them through, for example, leading export promotion delegations abroad, when Ministers and businesses work very hard together. It is just that at the moment those same businesspeople do not necessarily feel confident enough to pull the investment trigger, particularly those with exposure to Europe and the problems faced there, and particularly also those faced with recession at home and what some would argue is a sclerotic banking lending system, with a shrinking money supply and so on, to which little list businesses would add regulation.

Therefore, on the plus side of the measures in paragraphs 3 and 7 in the gracious Speech are the excellent proposals to overhaul employment tribunals here, as well as repealing some unnecessary regulations there. That is good. On the minus side are some potentially burdensome new rules, such as rights to flexible employment, extending time off via shared parental leave and so on. There is no doubt that this is great news for the beneficiaries but it is less great news for employers, as it will put heavier burdens on job creators.

Just as my hard-working and incisive right honourable friend Mr Francis Maude is busy reducing the number of quangos, lo and behold up pops in paragraph 7 of the gracious Speech the man or woman who is to be the groceries code adjudicator—something that I would certainly recognise as a quango. I do not know whether your Lordships have all received one of these but the Department for Business, Innovation and Skills favoured at least some people, and certainly me, by kindly sending an illustrated booklet about this new quango. The centrefold contains a quite lurid close-up picture, without any explanation of why it is there, of that very staple of the lunchboxes of working Britons—the imported and very expensive fennel bulb. There is no mention of why the fennel bulb is picked on in this document. We may learn later from the Minister about our Government’s fennel policies. The only thing that is mentioned is that the adjudicator will be protecting suppliers abroad, as well as at home, so there will doubtless be dancing in the fennel-producing fields of Mediterranean Europe tonight when they know that this adjudicator is going to look after their needs.

Do all these measures taken together—a bit less regulation here, more regulation there—equal a carefully balanced package, as I would like to think, or is there some self-contradiction, as I rather suspect? Whatever the answer, the instinct to regulate is still deeply embedded in our governmental genes. Ministers for deregulation are soon outfoxed. Deregulation tsars come and go, make speeches at party conferences and platforms, both parties calling for this and that, and are strangled shortly afterwards. Rising civil servants know that to swim against the regulatory tide is not to guarantee a clear path to becoming a Permanent Secretary. Therefore, I am concerned that we are continuing to have difficulty in getting a balanced approach to regulation.

I turn to the last paragraph of the gracious Speech, which prefigures, through a legislative glass darkly, what might come in due course in terms of new legislation in this Session. Emerging through the legislative gloom, I would still like to see sensible economic measures to promote non-inflationary and non-bond

16 May 2012 : Column 449

market disturbing growth; for example, measures to bring forward legislation to enable High Speed 2 to be built soonest in the interests of easing our sclerotic land transport system—it is going to happen so why the delay?—and measures to build a third runway at Heathrow soonest in the interests of ensuring that our equally sclerotic air transport gateway is relieved of the problems that face it. That is beginning to damage our reputation and, increasingly, to inhibit our economic growth. A few decades ago, we missed the chance to build a third London airport at a site like Cublington. I think we would be deluded to wait decades more for some new estuarine airport down the Thames. It would come too late to have any effect at all in the pressing need for a world-class airport. We should simply build runway 3 soonest.

There is so much that the coalition can do in collaboration with hard-working businesses in areas like this, but I would like to end on a note which sometimes bishops do not trespass on, a spiritual note. I repeat that it is very important that hard-working Ministers, like hard-working businessmen, leave themselves enough time to think and to contemplate. My noble friend Lord Waldegrave of North Hill, who is not in his place today, says that he believes that it is impossible to think consistently about an issue for more than two minutes without resting one’s mental equipment. Thinking time is sometimes just as important as working time.

6.41 pm

Baroness Worthington: My Lords, I am honoured to be able to contribute some words to this debate on the humble Address. We are living through difficult times: economic growth eludes us; long-term unemployment, particularly among the young, is rising; the divide between the haves and the have-nots grows ever wider; and the core elements that provide a safety net for those most in need are being eroded. Doctors’ surgeries are closing; morale in the NHS is rock bottom; swingeing cuts are closing front-line services; access to legal aid has been drastically curtailed; policing is being privatised by the back door; welfare reforms make it much more likely that people will fall between the cracks even while philanthropy and charities are being undermined; and, to top it all, the cost of living is rising.

It is sad to say that the contents of the gracious Speech will make matters worse, not better. It seems that the Prime Minister and his Government continue to govern the country for the benefit of the few and to the detriment of the many. This is perhaps not a surprise. The Government have repeatedly shown that they are incapable of empathising with people born into less fortunate circumstances than themselves. They like to tell themselves the lie that we are in this mess because somehow the British public are not working hard enough, quite forgetting that the cause of the recession was brought upon us by the financial elite, who also have become detached from the real world, risking our future on ever more complex and risky financial products in the belief that growth can be magicked out of thin air with clever algorithms and confusing products and not by investing in productive companies and in people.

16 May 2012 : Column 450

The only way out of this mess is to begin to rebuild our economy in the real world, reducing our reliance on the financial sector, investing in the things we excel at: high-quality and precision engineering; the digital economy; higher education; tourism; the media and the arts; and, critically, leading the world in tackling climate change and reinventing our energy systems to beat our addiction to expensive fossil fuels.

On this last point, the Government are to bring forward legislation to deliver reform of our electricity markets. But are these reforms in the interests of the many? Will they reduce consumer bills? Do they guarantee that investment will flow into low-carbon technologies? The answer, sadly, on all fronts, is no. The Bill has been written at the behest of the nuclear industry, which, in reality, is represented by just one state-subsidised French company. Those who want to build today’s reactors know that they cannot compete on the open market and have persuaded the Government to offer long-term contracts which guarantee prices. The chosen mechanism of support—contracts for difference—suits large-scale, base load providers but does not suit the development of offshore wind and other renewables. It is not certain whether they will clear state aid rules and they will do nothing to oblige the companies winning the contracts to build anything. We hear that they will be underwritten by the consumer—not the Government—which is a novel legal arrangement that may not give the investors the confidence that they say they need. Just today, six energy companies, including one of the big six, have written to the Government describing the proposals as a potential train wreck. We urge a rethink. It is likely to be a bad Bill because the existing nuclear industry is still the cuckoo in the nest of the UK energy policy, distorting it and robbing resources from the other elements of energy policy.

On top of this, in these difficult times of record energy prices, rather than saving consumers’ money, it will cost them more. The one element that we were promised, which would help to reduce consumer bills, was the creation of a market for reductions in energy demand—so called “negawatts”—but now we hear that this important element of the Bill is unlikely to be included. Why? The answer is because it would serve the interests of the people, not the powerful elite who control our current energy policy and markets.

Another major failing is that the Government are interested only in electricity market reform. What about the two other elements of energy policy: how we heat our homes and how we fuel our vehicles? Here the rising price of oil and gas has had a great impact on the household budgets of millions of people who are still dependent on their gas boilers to heat their homes and the petrol pump to get to work. On these markets the Government have been silent, despite the fact that there is a growing problem that they must face up to: falling tax receipts from fuels. Squeezed by rising prices, people are taking action to insulate themselves by buying smaller and more fuel-efficient cars and turning down the thermostat. However, as the DailyTelegraph mentioned yesterday, it seems that the only answer that the Government have is to increase fuel duty, instead of having a complete rethink and ushering in market reforms that help to provide a smooth transition to a lower carbon future across all energy

16 May 2012 : Column 451

sectors. They are, after all, all interrelated and we need a thorough and much more imaginative take on how to do this market reform and not simply to focus on electricity.

Rising fossil fuel prices are a huge issue that we must address. However, we do not need all our time to be taken up with considering a nuclear subsidy Bill that masquerades as a market reform Bill because no one is brave enough to be honest that that is what they are doing. For those struggling to pay their gas bills, we need to look again at how to improve the quality of our houses and to encourage greater use of electricity for heating. We need a return to the Economy 7 policies of the 1970s but, this time, with a view to enabling people to benefit from the increased use of energy from wind and solar power when the wind is blowing and the sun is shining. In transport we need to challenge the might of the oil companies and introduce real competition, not just between the oil majors, at every level of the supply chain, but also to enable alternatively fuelled and electric cars to penetrate the market more quickly.

Above all, we need a Government who can empathise with the real difficulties experienced by people around the country. We do not need a group of people detached from the real world governing the country for the benefit of the elite. Sadly, there is little or nothing in this gracious Speech to show that the Government have either the desire or the imagination to do this. This legislative agenda will not lead the country towards a more prosperous and secure future and it is a missed opportunity. I am sorry I cannot be more positive and that, ahead of us, we have three more years of trying to correct and prevent some of the Government’s worst mistakes.

6.48 pm

Baroness Miller of Chilthorne Domer: My Lords, before I turn to the main subject of my speech, I must say how surprised I was that the noble Lord, Lord Myners, chose to mock the Groceries Code Adjudicator Bill. Coming as he does from Cornwall, I would have thought that he would be on the side of the small producers who, in the past, have often had such a raw deal. I am very surprised that he did not welcome that. I warmly welcome it as it is long overdue.

The main subject of my speech is the environment. Today we are meant to concentrate equally on the environment and the other subjects but the environment is having a raw deal this afternoon as regards the time devoted to it. Today is also the centenary of the founding of what we now know as the wildlife trusts. They were founded in May 1912 by Charles Rothschild, who held a meeting to discuss his radical idea about saving places for nature. That meeting led to the formation of the Society for the Promotion of Nature Reserves, which would become the Royal Society of Wildlife Trusts and signalled the beginning of UK nature conservation as we know it. There are now 47 wildlife trusts covering the whole of the UK, the Isle of Man and Alderney. Through thick and thin—hard times, recessions and good times—they command tremendous public support.

The wildlife trusts do an amazing job: raising public awareness about wildlife, getting local communities involved and campaigning on local and national issues.

16 May 2012 : Column 452

They collect scientific evidence and their records of wildlife declines and increases are invaluable. They promote wildlife-friendly methods of farming and land management. I congratulate them on their centenary.

At both a macro and micro level, the environment is critical to the economy. As Nick Clegg said in his speech on 11 April this year, the environment contributes to our economy in a range of ways, many of which we do not always appreciate. He went on to say that lean times can be green times. His comments followed the Government’s review of EU habitats regulations. The review came to the welcome and correct conclusion that habitats regulations are not a burden on development.

It is not just economic contributions that are important. Many people feel uplifted by seeing a cloud of peacock butterflies on a buddleia bush or watching a heron fish, which we can do in central London—and many of us have. There is something equally special about the experience of hearing a lark’s song miles from anywhere after a stiff climb up a mountain, or seeing a herd of red deer grazing. In every case, one species does not stand alone; it is part of an ecosystem, with some at the top of the food chain such as buzzards or stoats—an animal close to your Lordships’ hearts—or moles, which of course are at the top of the in-soil food chain. Instead of swearing at the molehill in the lawn, one should welcome it as a sign of a richly biodiverse soil.

I welcome especially our Government’s initiatives, including the natural capital initiative, in which a leading UK forum will bring together scientists, policy-makers, business, industry and others to discuss how the ecosystem approach might be implemented in practice. Defra has just launched the Ecosystems Knowledge Network, which is a resource for anyone wanting to share knowledge or learn about the practical benefits of the ecosystems approach. These are very important developments towards understanding why it is important not just to save individual species but to join up the networks so that every species can be part of the chain.

In June, we will have the Rio+20 conference. There are no major treaties this time—it will be more about ways of working and sharing knowledge. The ecosystem will be recognised as the foundation of life. There will be moves to monetarise natural capital and realise its value. However, as invaluable and irreplaceable as ecosystems are, they need to be valued for themselves as well. I wish Rio+20 much good luck and look forward to hearing from the Government what our contribution will be to a successful conference.

6.53 pm

Lord Higgins: My Lords, this Queen’s Speech has been debated against the background of the recent election results. It is true that all Governments have mid-term problems, but the recent ones seemed to be particularly obscure. Some were due to a degree of mismanagement and some to a high degree of bad luck. They also reflected contempt for Parliament by the Government in a number of respects. It was said that the Budget was bad; that was the general received view. In fact it was a perfectly reasonable Budget. What was true was that it appeared that the details were

16 May 2012 : Column 453

given to the press the day before—totally contrary to all the traditions of Parliament. Of course, that was the good news, so perhaps it was not surprising that the bad news got all the publicity the day after. I hope that those responsible were demoted or fired, or some other appropriate action was taken. Similar things happened with the Queen’s Speech. We must restore a situation in which important statements are made first to Parliament and not given to the press the day before, creating an anti-climax the day after.

There is also evidence of clear contempt in the programming of legislation in the other place. Perhaps my noble friend would like to speculate about how many Bills in the Queen’s Speech scheduled to be introduced in the other place will be programmed. That is an area where the Government are preventing the House of Commons doing its job. This is to be deplored. It is a fact that we have therefore carried a much heavier burden. This must stop. The practice was introduced by Tony Blair. We gave an assurance that we would not do it; and we are doing it. It must stop because the issues in the Queen’s Speech must be debated properly in both Houses of Parliament.

I will say a word about the amendment tabled by the noble Baroness opposite. It does not take sufficient account of the first six items in the Queen’s Speech, which all relate to what she complained about. It is also the case that the overall effect of the Government’s inheritance must be taken into account.

I will say a word or two about the fashionable item of the moment: growth, or stimulus. We should revert to the old-fashioned idea of demand management, with a clear statement by the Government on how they intend to proceed in stimulating demand so that we mop up excess capacity and, once we have got close to the limit we can reasonably achieve, increase demand in line with what we expect productive potential to be.

There is an intrinsic problem in stimulating growth by cutting the deficit and using fiscal means to stimulate that growth. The burden has been placed much more on monetary policy, which concerns me. Gordon Brown was criticised on many fronts, but not for the fact that monetary policy was handed over to the Bank of England. In fact, it was not monetary policy for many years, but an interest-rate policy. Certainly we have now virtually exhausted the possibilities of using lower interest rates to stimulate growth.

I am also concerned that more and more of the burden of economic policy has been placed on the Bank of England. There is a case here. In the course of introducing its monetary measures, the Bank must take into account the overall situation on unemployment, growth and everything else. The Treasury has very nearly abdicated the day-to-day running—and perhaps the longer-term running—of the economy to the Bank. We must consider, particularly given the additional burdens that we are now going to place on the Bank, whether that is the right way of proceeding. Perhaps the Treasury should reassert its authority.

Having said that, and given that we have to rely on monetary rather than fiscal measures to support growth, I welcome the introduction of quantitative easing. It has been a help to stimulating growth in the economy.

16 May 2012 : Column 454

However, the method employed is open to increasing doubt. My noble friend Lord MacGregor admirably set out the effect that it has had on companies’ private insurance and pension schemes. It is a very serious matter, which he spelt out very lucidly. Should we adopt other means of increasing the money supply? We could abandon the traditional fully funded rule by not funding the whole of the deficit. Part of the problem with the present system is that money goes to the banks, which hang on to a great deal of it instead of lending it to people who then invest it. We should perhaps consider other more direct means of stimulating growth by means of the money supply. Indeed, since we are clearly printing money, we could simply print the money and give it to whatever suitably investment-prone institution is likely to use it.

I turn finally to the question of the eurozone and in particular Greece. We have a situation where Greece has a debt problem and an exchange rate problem. The eurozone authorities are concentrating on the debt problem. They can go on bailing out Greece with the debt problem until Kingdom come, German generosity runs out or alternatively the streets of Athens go up in flames. This is an immensely depressing situation. But they have to face the fact that no amount of bailout in the foreseeable future will restore Greece to a competitive situation. The only way to cure the exchange rate problem is for the exchange rate to change by Greece leaving the eurozone.

One particular point has only become apparent in the light of various statements made by the different multi-political parties in Greece and the argument, “Oh well. Don't let’s bother with austerity: the eurozone will bail us out just the same”. The left wing parties are putting that forward and it may turn out to be right. But we also have to take into account the real dangers to the banking system as far as this is concerned. I will conclude in one moment. Paradoxically, the right answer in this respect may be to bail out Greece on the condition that it leaves the eurozone, because that will mitigate the otherwise disastrous effects on the international banking system. Again, we have underestimated the technical problems of all this. They are very great indeed but alas I do not have time to spell them out.

7.02 pm

Lord Young of Norwood Green: My Lords, first, I congratulate the right reverend Prelate the Bishop of Durham and the noble Lord, Lord Ashton of Hyde, on their maiden speeches, which were stimulating and interesting. I do not want to say too much about the economy because that has been amply covered by my noble friend Lady Royall in her contribution and the noble Lord, Lord Low, in his analysis. I want to concentrate on the failure to stimulate the economy to produce growth and the impact that that is having on youth unemployment. I will also speak about apprenticeships, which will not surprise anybody I am sure.

On Monday, my noble friend Lord Kennedy asked a Question about youth unemployment and said that there were more than 1 million young people unemployed. The response of the noble Lord, Lord Freud, was that if you took away the students, the figure was only

16 May 2012 : Column 455

719,000. He did conclude that that was perhaps a little too high. There is certainly no room for complacency in this area. Students will eventually leave the world of acquiring knowledge and will require jobs. Like thousands of young people, they will be faced with the reality of making hundreds of job applications only to find that they are lucky if they get any response at all to those applications.

Yesterday, I listened to the noble Lord, Lord Ramsbotham, speak eloquently about young people being locked up for hours in cells in institutions. He said how debilitating that was because they were not learning anything. But what about when they leave young offender institutions and fail to find a job? If there is any bigger challenge in dealing with youth unemployment I cannot think of one.

I do not want in any way to denigrate the Government’s attempts to deal with this problem, apart from their economic policy. Their approach to apprenticeships has been good. It has been enthusiastic. If you look at the overall figures, they look like good news. We are told that there are something like 450,000 apprenticeship starts. But if you start to disaggregate those figures, you find that there are large numbers of adult apprenticeships. I do not question the fact that we should have adult apprenticeships, but we need to look at quality not just quantity in terms of apprenticeships, and there is some disturbing news coming through about the quality. I raised in another debate in the Moses Room the recent “Panorama” programme which showed what purported to be apprenticeships were delivering very little training at all and certainly no job at the end of them.

We were criticised when we were in government for having programme-led apprenticeships, and we started to phase those out. We said it was not an apprenticeship unless there was a job at the end. The Government need to focus carefully on this. There is a place for adult apprenticeships. It is an opportunity for people to re-skill, but some of the experiences that we are getting these days in relation to large companies employing large numbers of adult apprentices gives us cause for concern.

There are areas where I believe the Government have an opportunity to ramp up the number of apprenticeships and there are some practical things that they should be doing. If we think that we have solved the problem because numbers are increasing I remind noble Lords of two statistics that should worry us. Only something like 4% to 8% of companies employ an apprentice and only a third of FTSE 100 companies have an apprentice. We have not created a culture of apprenticeships by any means, even though the situation has significantly improved.

What can we do to improve it further? The Government should lead by example. I have said that on a number of occasions and I make no apologies for repeating it. I do not understand why they do not heed that advice. They should demand that wherever they have government or public contracts there should be a commitment for apprenticeships. We did it for the Olympics and we got well over 300 apprentices. We got Crossrail to commit to 400 apprentices. I do not understand why the Government somehow believe that the marketplace will do it. That is not the right way forward and it is something they could demonstrate by leading by example.

16 May 2012 : Column 456

If you want to involve more SMEs, giving them £1,500 will not crack the problem. It is a help, but creating more group training associations, where there is a hub that deals with the basic training and administration of apprentices, is a tried and trusted formula. I went on the National Apprenticeship Service website today looking for progress on GTAs. As I read it, I thought that it looked familiar. That is hardly surprising because it is dated October 2009. I know that work is being done, but it is not enough. We need to be driving it harder and further. The same can be said of apprenticeship training associations.

It is a shame that the right reverend Prelate the Bishop of Durham is not in his place. He said that skills are not just learnt in the classroom but they are learnt in the workplace. We need to ensure that things like the green investment bank and regional growth funds start to deliver. He gave a good example when he talked about “shovel-ready” jobs in the construction industry. We should be worrying about the fact that we still have a downturn in the construction industry. I also concur with the other right reverend Prelate who talked about the fact that VAT is to be put on the cost of repairing listed buildings, which seems to be a totally self-defeating policy. I hope that the Government are listening and that they recognise the scale and size of the problem of youth unemployment, and will do much more to create more apprenticeships.

7.10 pm

Baroness O'Cathain: My Lords, as has already been said, it is an honour to take part in a debate on the gracious Speech. Like so many others, I was tempted to take part in the debate on constitutional matters, but on a self-denying ordinance I took a vow not to on the basis that everything that should be said or could be said on the reform of the House of Lords had been said. I am not sure I was totally right about that because there were one or two nuggets during all those hours of debate—and we should not forget that we also had a full day of debate a short time before that debate. Frankly, I do not think we should publicise the fact that we spent two full debating days on 17 words in the Queen’s Speech, because that is what it amounted to. It would be difficult to justify, particularly as they came, as I have said, hard on the heels of a full day’s debate. There is also, I am afraid to say, overwhelming evidence that, outside the precincts of Westminster, very few people are even remotely interested.

I believe that there are many thousands, indeed many millions, outside the precincts of Westminster who are intensely interested in the issues being considered in today’s debate: agriculture, business, the economy, energy, the environment, local government and transport. Many of the contributors to this debate have commented on some or all of them. Each one of these issues is of huge importance to all the citizens of our country, whether they are really aware of it or not, and we should keep our minds and eyes firmly fixed on those instead of on our little local difficulty. Our responsibility is to ensure that all Bills related to the areas we are considering today are carefully scrutinised, debated and improved through the legislative process in this House, using all our experience and expertise—and

16 May 2012 : Column 457

thus negating, it is hoped, the statement of the Deputy Prime Minister that in the House of Lords we have only a “veneer of expertise”.

Many of the excellent attributes of our House have been described fairly fully in recent debates, but sadly we are frequently subjected to negative pronouncements which in common parlance are described, I believe, as “bad mouthing”. The economy, particularly the debt and deficit situations—too many confuse these—the sorry state of a large number of pensioners—we know where that stems from—and the truly worrying situation of unemployment are not collectively joyous and are constantly thrown at us from the Benches opposite. When I point out, as I shall again, that all of these issues are to a large extent part of the legacy of the previous Government, the orchestrated groans become full-throated. I hear no response.

The noble Baroness who is the Leader of Her Majesty’s Loyal Opposition in the House of Lords and who I definitely number among my personal courageous friends, told us on 9 May that the “real record” of this Government is,

“of businesses and shops closing; of people being put out of work”.—[

Official Report

, 9/5/12; col. 12.]

The wording of the Motion of Regret tabled today includes regret about the,

“one million young people out of work”.

One needs to have a very short memory indeed not to make an instant link between that wording and the statement made by the Governor of the Bank of England in the past two weeks to the effect that the previous Government were directly responsible for the loss of—yes—1 million jobs. The noble Lord, Lord Myners, who sadly is not in his place, put up two blacks today. He certainly put up a black about the grocery adjudicator, but he also put one up about the Governor of the Bank of England. But, after all, was the noble Lord not actually part of the process that reconfirmed the Governor of the Bank of England’s reappointment during the period of office of the previous Labour Government?

Happily, something is being done about those 1 million jobs, as we have seen in today’s figures, but, sadly, we can expect yet another twisting of that news by the BBC. In the past few days, a presenter on Radio 4’s “Today” programme said that there was no mention of growth in the Queen’s Speech. No mention of it? Let me read out the first sentence of the speech:

“My Lords and Members of the House of Commons, my Government’s legislative programme will focus on economic growth, justice and constitutional reform”.

Episodes like that make me warm even more towards the re-elected Mayor of London. He has stated that,

“the prevailing view of Beeb newsrooms is, with honourable exceptions, statist, corporatist, defeatist, anti-business, Europhile and, above all, overwhelmingly biased to the Left”.

I could not agree more. Contrary to what is a fast-developing tendency in this House to score points, to increase the number of “blame statements” and rubbish this Government’s efforts to remedy as solidly, quickly, fairly and permanently as possible the legacy of 13 years of economic mismanagement, I believe that we must stop

16 May 2012 : Column 458

talking down our country and our economy, and in particular the heroic efforts being made in many sectors to build up what has been so damaged in the past.

The Opposition constantly accuse the Conservatives of destroying British manufacturing industry. I suggest that the doom-mongers should take a good look at what has happened to the British motor industry since 2010, and in doing so dispel that accusation. The statistics and information I am about to impart come from the Society of Motor Manufacturers and Traders. They show that during the last five years of the Labour Government, jobs in the motor industry steadily declined year on year from 868,000 to 736,000. That inexorable decline stopped in 2010 when there was a slight increase of 1,000 jobs. In 2011, some 9,900 new jobs were created, and just as important, more than 12,000 jobs were safeguarded. Net investment during those last five years of the Labour Government—

Lord Whitty: My Lords, this is the third time that someone from the Benches opposite has claimed credit for the very welcome revival of the motor industry. Does the noble Baroness not accept that the reasons for that revival, after a disastrous prior record, were threefold? The first was the intervention by my noble friend Lord Mandelson on the motor scrappage scheme and other incentives to the industry. The second was the better relations that were established between management and trade unions in the industry, and the third was very substantial investment by Japanese firms, nearly all of which occurred prior to the election in 2010.

Baroness O'Cathain: I absolutely refute all of that, but we can talk about it afterwards because the noble Lord is taking time out of my speech, and I will not have that. In passing, has anyone in this House mentioned the fact that the Corus plant which was mothballed by the said noble Lord, Lord Mandelson, in February 2010 was reopened a few months back and, since last Friday, is exporting steel?

I understand that I shall get bad marks if I carry on. All I want to say is that I think it is time that we understood that good things are happening in this country. We should stop peddling gloom and doom and get down to supporting the measures in the Queen’s Speech.

7.19 pm

Lord Haskel: Like the noble Baroness, Lady O’Cathain, I welcomed the words in the gracious Speech that the Government would concentrate on economic growth and restore economic stability—amen to that. Those are fine words but how are we going to put them into action?

I agree with the noble Lord, Lord Low: surely the place to start is for the Government to realise that their policies are not working. When quantitative easing was introduced, its purpose was to increase the quantity of money to encourage more spending. We now know that the money has got stuck in the banks. It is not working, as the noble Lord, Lord Higgins, just explained. Austerity is not working. Many feel that the double-dip recession means that the medicine is killing the patient, as many noble Lords have explained.

16 May 2012 : Column 459

Job cuts in the public sector were meant to be replaced by jobs in the private sector. It is not working, as the noble Baroness, Lady Royall, explained. As a bright sixth-former said to me on a school outreach visit the week before last, “Until the private sector can absorb them, would it not be more sensible to keep people employed in the public sector where they would be doing something useful? After all, working or not, the taxpayer is paying them anyway”. Perhaps the Minister should try a few school visits.

All this gives the Government an air of incompetence and it does not do any of us any good. It is not only sixth-formers who feel this way. We have had similar views from our major business organisations and, on Monday, the Prime Minister’s own Business Advisory Group. All hoped that the gracious Speech would show an understanding that changes need to be made.

What was in the business section of the gracious Speech? There were a number of piecemeal Bills whose common theme seems to be fairness. The gracious Speech speaks about supermarkets that deal fairly, electricity prices that are fair, state pensions that are fair and markets that are fair. Are the Government speaking in some sort of code here? Are they trying to make up for the lack of fairness to women, the disabled, minorities and the elderly in the legislation on health, legal aid and tax that they rushed through? The recent report from the Equality and Human Rights Commission makes this very point.

What would I have liked to have seen in the Queen’s Speech? How can the Government show the leadership that the noble Lord, Lord Bilimoria, called for? First, they should show that the lesson has been learned: that they are prepared to show flexibility where the policy is not working. There should be more balance between growth and austerity, with the pace of austerity being slowed. I would have liked to have seen a modification of our attitude towards the financial markets. The National Institute of Economic and Social Research said last month:

“It remains our view that fiscal policy could be used to raise aggregate demand in the economy with little to no loss of fiscal credibility”.

With the cost of government borrowing the cheapest in living memory, and many unemployed people, plenty of spare capacity, a chronic lack of housing and a creaking infrastructure, surely there should have been something about construction, as my noble friend Lord Myners suggested.

What else? I repeat the appeal I made in the Budget debate for the Government to lead a crusade on technology, particularly digitalisation, which would be inspirational to the young people about whom my noble friend Lord Young was concerned. Yes, BT and others are improving broadband services but it is the use of technology to improve productivity, introduce new services, start new businesses and create new ways of manufacturing such as additive manufacturing that will help to produce growth.

There are other ways that the Government can show leadership; for example, bringing businesses back home. Offshoring has been a common strategy for the past 30 years, but that seems to have run its course. Cost, variety, speed, proximity, quality control and

16 May 2012 : Column 460

stock reduction are all now moving in favour of onshoring. President Obama makes a point of visiting companies that have brought employment back to America. Perhaps Ministers could show support for job creation and take a leaf out of his book; the BBC has. Did the Minister see the programme about the young man who is enlarging his factory in Britain to bring the manufacture of cushions back from China? If it makes sense for cushions, for how many other things would it make sense?

The Minister will say that there are all kinds of government schemes to encourage these activities, and he is right. If you go to the website, click on “manufacturing” and inquire what assistance there is for starting and running all aspects of a manufacturing business—I clicked on Barnet because it asked for a location—the number of schemes that comes up is 137. I am sure that some work and some do not; some are accessible and some are not. My point is that these are mainly gestures. What we need are initiatives with which people can identify, by which they can be inspired, and that mean something to them in their lives.

The Minister will be happy to know that I am not calling for more expenditure, but I am calling for leadership. The Government should recognise that their policies are not working and demonstrate their determination to lead us out of this recession with an industrial policy committed to technical progress and jobs, a policy that we can all identify with, and action that creates the confidence about which the right reverend Prelate the Bishop of Durham spoke in his excellent maiden speech. This is the sort of thing that the Minister’s colleague Vince Cable calls a “compelling vision”. This is what I would like to have seen in the gracious Speech.

7.27 pm

Lord Brougham and Vaux: My Lords, it is always a privilege to follow my noble friend Lord Haskel; I say noble friend because we share duties on the Woolsack. Your Lordships will be pleased to hear that I am not going to speak about economics as I cannot run my own financial affairs. I declare my interest as chairman of an associate parliamentary group, the European Secure Vehicle Alliance, which aims to reduce vehicle-related crime and disorder. I welcome the Government’s proposal to introduce legislation to deter the incidence of driving under the influence of drugs, but would like to highlight three other areas that warrant further consideration.

The core theme of my speech is to highlight the virtue of designing products, systems and indeed legislation that get it right first time, as such innovative approaches invariably win public support and deliver considerable savings. One recent such innovation which has got it right first time is average speed camera systems, which have reduced casualties and improved journey times on the stretches of our roads where they have been operating, while issuing very few speeding tickets to motorists. The overwhelming majority of motorists grasp immediately the purpose of the innovation and willingly observe its intention.

Over the past year it has become increasingly apparent that we are now in happy possession of another innovation, namely the use of telematic data systems,

16 May 2012 : Column 461

which by assessing driver performance can reduce not only the costs of insurance but road casualties. The collection, transmission and interpretation of data that are generated continuously while a car is being driven by a known driver can now be shared in an easy-to-comprehend format between the driver, their parents if appropriate and their insurance company. The driver’s premium can be reduced, or indeed increased when justified, and early indications from a growing number of insurers developing such policies with related telematic data transmission devices are most encouraging. Moreover, such systems offer further financial savings by reducing the incidence of fraudulent claims for personal injury or vehicle damage by affording detailed examination of vehicle and driver data at the time of such incidents.

Fortunately, this innovation should not require specific legislation, but it would undoubtedly be welcome should the Government offer their encouragement and support. In addition, it should be regarded as an opportunity to reward the observant who welcome the challenge to drive responsibly and to be seen to drive responsibly; it should not be subverted by being positioned as a device to monitor irresponsible drivers. It should be seen as the Big Friendly Giant and not Big Brother.

The second innovation to which I would like to draw your Lordships’ attention is the growth of automatic number plate recognition—ANPR—and its relatedness to the vehicle number plate manufacturing and distribution regime that exists in the United Kingdom. I have recently been in correspondence with the Department for Transport Minister responsible for this matter, Parliamentary Under-Secretary of State Mike Penning, and ask for your Lordships’ support in encouraging him to take timely and appropriate action to remedy the shortcomings in the UK’s vehicle number plate regime.

The United Kingdom leads the world in terms of its police’s ability to both detect and prevent crime through its ANPR camera network, yet its value is compromised by having to read the number plates produced by approximately 30,000 to 40,000 number plate suppliers. Such a regime offers little capacity to ensure that appropriate quality standards are maintained and the high readability of a number plate on a correctly designated vehicle. Furthermore, it has recently come to my attention that one of the UK’s leading suppliers of vehicle number plates has manufactured and distributed hundreds of thousands of plates that present significant challenges to the UK’s ANPR camera manufacturers. That is clearly an area where we are failing to get it right first time.

The police first made representations to Government in 1994, recommending a radical change to the UK’s number plate regime that encompassed innovations in manufacture, distribution, security and systems management which would all lead to safer roads and a greater ability for the police to both detect and prevent number plate crime. Should the method of manufacture and supply be rationalised, the significant economies of scale would result in lower number plate prices to motorists while enhancing the potential value of the cherished number plate scheme to Government.

16 May 2012 : Column 462

I conclude by making brief reference to a third area of interest; namely, the operating methods of an ill defined number of private parking companies which use CCTV and ANPR technology to identify motorists who have fallen foul of their often poorly signposted car parks. Recent legislation has focused on the cessation of wheel clamping and the establishment of an appeals procedure for “transgressors”, but we are missing the point by not planning to get it right first time. Our primary emphasis should be on developing approaches which help ensure that all parking regimes are designed to maximise observance, and measures should be developed to restrict operations that are unduly focused on capturing the non-observant parking motorist.

Legislation to deal with people driving with handheld cameras has been talked about. This situation is getting worse by the minute. The Department for Transport should crack down on it, because it is becoming very dangerous.

7.34 pm

Baroness Parminter: My Lords, for Liberal Democrats, there is much to be welcomed in the gracious Speech. The proposals for a green investment bank and an energy Bill will help us meet legally binding carbon reduction targets to reduce our emissions by 80% by 2050. Beyond that—here, I fear that I will diverge from the views of my noble friend Lady Noakes, who is sadly not in her place—they are welcome because they will help secure investment in low-carbon power generation, create green jobs and deliver lower consumer energy bills in the face of escalating world oil and gas prices.

However, I shall focus on another welcome green proposal in the speech, which has not had much mention in the House today: a commitment to a draft water Bill. One of the many challenges that we face in the UK and across Europe is protecting the health of our rivers and lakes while keeping water available and affordable. Water resources are under pressure from current unsustainable levels of abstraction, with the Environment Agency calculating that only one-quarter of our rivers and lakes are fully functioning ecosystems.

The water abstraction system was set up more than 40 years ago, in the decade I was born. Given the damage already done to ecosystems, maintaining such a system is untenable, particularly as the effects of climate change and the extreme weather it brings us, combined with population growth in the UK, all take hold. The Government’s water White Paper suggested that legislation to change the abstraction regime would not take effect until the mid-to-late 2020s. I endorse the conclusions of the report by the House of Lords EU Sub-Committee D on EU freshwater policy, published just two weeks ago, which says that delaying this reform for at least 15 years fails to respond to the urgency of the situation.

That urgency is further highlighted when one considers the planned shift to low-carbon energy generation over the coming years. The electricity supply industry is already responsible for 43% of water abstraction, more than the amount abstracted for public use. Do the Government have the research to inform the draft Bill about the possible water abstraction demands of

16 May 2012 : Column 463

differing electricity supply models over the next 20 years? Just how water-intensive is nuclear energy as opposed to electricity supplied by wind farms? Given the pressures that differing supply scenarios may put on the water supply, undertaking such analysis and making it publicly available would seem essential.

I recognise that changes to the abstraction licensing regime will be complex, with more than 30,000 licences in existence—although, to be blunt, it cannot be as complex as reorganising the National Health Service. However, we must act now to fundamentally reform the regime so that it takes into account the environmental realities that we face. Can the Minister therefore explain why the Government feel that they can produce a draft water Bill in 2012 but intend to wait until beyond the lifetime of this Parliament to deal comprehensively with overabstraction?

Tackling water pollution is also a priority. Defra estimates the cost of treatment technology to tackle certain pharmaceutical substances alone in wastewater to be around £27 billion. It is essential that the Government work with our European partners to acquire more knowledge of the risks posed principally by pharmaceutical substances entering wastewater and the methods of reducing this risk before effluent containing the substances requires wastewater treatment. As a Liberal Democrat committed to the “polluter pays” principle, I hope that this would include consideration of the contribution that pharmaceutical manufacturers could be asked to make to mitigating those risks.

As my noble friend Lady Miller pointed out, this draft Bill is an important opportunity to engender recognition of the ecosystem services that water provides. The announcement of the members of the Natural Capital Committee last Friday was a welcome sign of the Government’s commitment to embedding the value of natural capital and its potential to support growth into decision-making, as is the Government’s commitment to further reform of the CAP to promote the farming industry’s role as custodians of the natural environment. Businesses which rely on water as part of their industrial and creative processes need to factor water supply into their decision-making, and this draft Bill could help by introducing a requirement for businesses to measure their water impacts and develop specific water strategies to ensure security of their water supply. In this draft Bill, will the Government help companies ensure such water resilience?

Businesses need to review their use of water and seek to minimise wastage, but so do we need to keep bills low. We will therefore have to do more to help people value and save water. Smart water metering, combined with advice on how to reduce water usage, and social tariffs which minimise affordability issues for disadvantaged heavy-use households, give consumers greater control over their water consumption. In France, water meters are compulsory, and by 2015 over half the homes in England and Wales will be on water meters. Liberal Democrats support compulsory smart water metering in water-stressed areas and I hope the draft Bill will propose this measure for England and Wales.

Keeping water bills affordable—at present the average household bill is about £1 a day for water and sewerage—is important. However, in these challenging economic

16 May 2012 : Column 464

times, if people have to pay more for this crucial resource we must ensure that they fully understand what they are paying for. They must feel connected to their local areas and know the benefits that freshwater lakes, rivers and streams provide for their local wildlife and ecosystems. To that end, the recently launched “Love Your River” campaign, supported by Defra, along with the National Trust, the Wildlife Trusts, Keep Britain Tidy, Waterwise and the water companies, is to be applauded.

If, however, we are to get individuals to start being more responsible with their water usage, it is critical that it is seen that the water companies tackle leakages with renewed vigour. The Environment Agency estimates that the current rate of leakages from our water supply is 20 to 25%. That seems a remarkably high figure to regard as acceptable. Ofwat should focus far more on the environmental impacts when setting future leakage targets for water companies.

The draft water Bill has the potential to deliver much to conserve this vital resource for both the public and our economy. The opportunity must not be squandered in the expectation that the privatised market will alone deliver the scale and pace of change that is urgently required.

7.42 pm

Lord Crickhowell: My Lords, I intend to talk only about energy policy. During the last Session, I was a member of the Select Committee on Science and Technology. Our report, Nuclear Research and Development Capabilities, was published last November. The focus of our inquiry was not on the arguments for and against nuclear energy, but on whether or not the Government are doing enough to maintain and develop nuclear research and development —R&D—capabilities and the associated expertise to ensure that nuclear energy is a viable option for the future.

The report said:

“During our inquiry, we were struck by the extraordinary discrepancy between the view, on the one hand, of some senior government officials and the Secretary of State”—

we were referring to the last Secretary of State—

“and on the other, those of independent experts from academia, industry, nuclear agencies, the regulator and the Government’s own advisers. A fundamental change in the Government’s approach to nuclear R&D is needed now to address the complacency which permeates their vision of how the UK’s energy needs will be met in the future”.

Those were strong words and they seem to have detonated like a nuclear explosion within DECC. The Government’s response, accepting almost all our recommendations, appears to represent the fundamental change in approach to R&D that we demanded. It also acknowledges,

“that nuclear power stations have a vital part in our energy strategy”.

It goes on to say:

“The UK civil nuclear industry is an important sector in the UK economy given its current, as well as potential, contribution to jobs, growth and high value exports”.

That is a welcome change, but I remain acutely concerned about the Government’s wider approach and I fear the growing possibility of an energy security crisis.

16 May 2012 : Column 465

The energy Bill, we are told, is designed to provide investors with long-term certainty and incentives to invest in low carbon. Far too much emphasis is still placed, and money spent, on onshore wind farms, which at best can only provide a very small proportion of the energy needs of this country and make a minuscule contribution to the worldwide reduction of carbon emissions.

At the same time, the start of the nuclear programme is proceeding far too slowly, if it is proceeding at all. Were it not for the rapid growth of a competitive worldwide market in gas, as LNG facilities grow and shale gas exploitation develops, we would be in deep trouble. The experiments in carbon capture and storage seem unlikely to produce results that will make any contribution to our needs for a good many years. Nor can we rely on energy efficiency and conservation. Even the rather modest nuclear ambitions of Ministers are now under serious threat. RWE/E.ON has withdrawn from nuclear building in the UK. Both companies in the consortium have incurred losses of billions of euros and run out of money because of the decision of Chancellor Merkel to pull Germany out of the nuclear business. That represents a major setback as new owners are sought for the sites at Wylfa and Oldbury, possibly from China or Japan.

We are left with EDF Centrica. The French EDF may have to adjust its plans in the face of the new French President’s pledge to cut the French nuclear programme by a third. Already, that company has, if the report in the Times on 7 May is correct, increased the price of its two planned reactors at Hinkley Point by 40% to £7 billion each. The Timesreport says:

“EDF energy will decide by the end of the year whether to proceed with the £14 billion plan, but experts said that the rising costs—and its parent company’s deteriorating financial position—made this less likely”.

Speculation has also mounted that Centrica will pull out of the joint venture. EDF energy has promised to complete the first Hinkley Point reactor by 2017, but the plan is already well behind schedule—though a pessimistic report in the Guardian has been denied. The company is quoted as saying:

“We remain committed to delivering the first new nuclear plants in the UK for 20 years at Hinkley Point. The decision depends on having the correct market framework that will allow an appropriate return on the massive investment required”.

EDF is in a strong bargaining position and that places the responsibility for what happens next firmly on Ministers, who are faced with uncomfortable choices. We face the further uncertainty that the Government’s plans have to jump EU hurdles and are dependent on the examination to be made of a draft Bill and the subsequent passage of a Bill that may be carried over into the next Session. It is absolutely crucial that the Government come forward very soon with a clear statement of policy and firm measures to provide the foundations on which the industry can build with confidence.

I have just a few more words about wind farms. In Wales, a very large expansion of onshore wind farms is going ahead on the back of the Welsh Assembly Government’s TAN8 document, which sets out the location of wind farm concentrations in Wales. Already,

16 May 2012 : Column 466

there is great local anger about the concentration above Neath in the south. In mid-Wales, the local community is outraged by the planned concentrations in some of the most beautiful, unspoiled parts of Powys —concentrations that are to be joined by a network of pylons and cables and then carried down one of the most glorious valleys in Wales by a massive transmission line into and across Shropshire. Scottish Power is pressing ahead, eager to get its hands on the subsidies.

If I thought that this desecration of the natural environment would make a significant difference at a reasonable cost to meeting the nation’s essential energy requirements or to saving the world from global warming damage, I might regretfully conclude that it was a necessary evil. I do not believe either of those things. It is an odd irony that the flooding of Welsh valleys to provide water for English cities provoked the understandable outrage of a previous generation. Now, however, a Welsh Assembly Government cheerfully give the go-ahead to this desecration in order that electricity should flow across the border to English cities. Greater benefits would be provided by turning off the multitude of lights that illuminate towns, villages and roads between midnight and dawn. I believe that one county council has already given a welcome lead in that direction; I hope that others will follow that example.

7.49 pm

Viscount Hanworth: My Lords, within the past few weeks we have had to face the reality of a double-dip recession. Britain is facing prolonged economic woes. The Governor of the Bank of England has expressed his certainty that the UK economy will eventually emerge from its recession, but it is notable that he has been unwilling to give a timescale for this forecast. Others have foreseen the prospect of a decade of economic misery, and the experience of Japan comes to mind.

The lost decades of Japan, running from 1991 virtually to the present, followed the bursting of a Japanese asset bubble. The parallels between Japan’s experience and the current circumstances of the UK economy are close and very discomforting. Despite the quantitative easing that occurred in Japan under the guise of a zero-interest rate regime, its economy stubbornly failed to revive. There was a prolonged weakness in domestic demand, which was partly the consequence of the traditionally frugal habits of Japanese consumers, and there was a failure among Japanese export industries to provide a necessary stimulus. This failure could be attributed to the rise of the manufacturing industries of the competing south-east Asian economies and to the maintenance of the high value of the Japanese yen in international currency markets.

All of these features are characteristic of the British economy at present. Nevertheless, the British experience differs from that of Japan in some crucial respects. The lost decades of Japan followed years of post-war economic success in which its export industries led the way. British industry, by contrast, has suffered years of senescent decline. The withering of British industry has meant that we have had to make our way in the world by other means. For years, we have experienced a balance of payments deficit in our exports and imports of manufactured goods—and even in the

16 May 2012 : Column 467

overall current account, which includes exports and imports of both goods and services. The deficit has been made good by a surplus on the capital account. There have been large inwards capital investments, mediated by the City of London.

There has been a remarkable sale of British assets to foreign owners, in the process of which the City financiers have reaped some remarkable benefits and personal rewards. They have ensured that British companies can be taken over more easily than companies anywhere else in the world. The foreign ownership of our rail franchises, of our power industry, of our water utilities and of much else besides implies that we have ceded our strategic control over investment decisions in vital areas of the economy. While these massive inward investments enable us to sustain financial deficits, they also serve to exacerbate our fundamental problems. Inward flows of capital equate to a demand for sterling on the international currency markets, which enhances the value of the pound. Such a high value relative to other currencies means that our exports are expensive and face a limited demand. The decline in the earnings of our export industries increases the need for the inward flow of capital. The cycle cannot continue indefinitely. When it is broken, which will happen sooner rather than later, we shall face a very harsh economic climate.

The manner in which capital flows have come to displace exports is well illustrated by the Government’s recent efforts to find ways of stimulating the British economy. In January, George Osborne took a trip to China. His primary aim, so it was declared, was to encourage the Chinese to increase their imports of British goods. A secondary aim, which Mr Osborne pursued in his meetings with senior figures in China’s financial sector, was to encourage investment in British manufacture. The primary aim was quickly relinquished; instead, Osborne succeeded in convincing China’s sovereign wealth fund to purchase an 8.6% stake in Thames Water, which is London’s water company. There have since been further Chinese acquisitions, including a manufacturer of one of Britain’s favourite breakfast cereals. More significantly, there has been strong encouragement by the Government for China to assume a major role in regenerating the UK’s nuclear power-generating industry.

The Government’s attitude to the emerging crisis in the UK power industry serves to illustrate their basic economic philosophy and to highlight its dangers. The Government’s economic philosophy is dominated by an atavistic notion of free-market enterprise. Britain, they say, is open for business and any willing provider of goods and services is welcome to participate. According to this philosophy, the Government should relinquish any responsibility for making industrial investment decisions and, by relinquishing responsibility, they imagine that they will conveniently avoid the blame for mistaken decisions. For example, it is believed that if a previous Government had adopted this stance, they would not have been blamed for encouraging the UK nuclear industry to pursue the development of advanced gas-cooled reactors when the rest of the world was opting for pressurised water reactors. Yet by avoiding making strategic decisions about the future of such industries, the Government are abrogating their essential responsibilities.

16 May 2012 : Column 468

What should a responsible and imaginative Government do when faced with Britain’s economic problems? The answer is that they should do many things that are not even in the nature of the present Government to consider. In the first place, they should instruct the Bank of England to pursue an active exchange-rate policy aimed at lowering the value of the pound vis-à-vis the currencies of our economic competitors. At the same time, the Bank should seek to reduce the volatility in the exchange rate which, by common consent, has a negative impact on our export industries.

However, there are some far more demanding requirements that we should make of the Government. They should look to the infrastructure of our national economy and ensure that some fundamental needs are met in a timely manner. This would entail support for emerging technologies and the fostering of Britain’s neglected scientific and engineering skills. The renewal of our power industry is perhaps the most urgent requirement at present. It offers possibilities for technological innovation that it would be appropriate to discuss in detail on another occasion. For the present, it should be observed that none of these things will materialise without a commitment from the Government to provide the substantial support that is necessary.

7.56 pm

The Earl of Selborne: My Lords, I want to confine my remarks to environmental issues and I start with the case for the green investment bank. The gracious Speech refers to the introduction of,

“legislation to establish a Green Investment Bank”,

perhaps more accurately called a green investment fund. It is not universally welcome on our Benches. My noble friend Lady Noakes said that she certainly thought that was £3 billion wasted. I recognise that if we are to justify the green investment bank, it has to stand up to exactly the same resilience tests of value for money and doing a job with government funds that market failure might otherwise fail to deliver.

If we wish to move towards a green economy, at the moment we are clearly hopelessly over-reliant on policy interventions by government, which are usually very expensive. We have to define quite clearly what we mean by a green economy. I think we all recognise that we mean: moving towards low-carbon technology for greenhouse gas reasons; more sustainable use of natural resources; reduced environmental damage, which simply means that later generations or neighbours pick up the bills for what has not been adequately captured by the market; improved resource efficiency; resilience to climate change; and energy security from diverse low-carbon sources. My noble friend Lord Crickhowell referred to that and, I say again, he was absolutely right to point out that to deliver this green economy you must ensure that those definitions will deliver maximised growth and create high-value employment.

Environmental security, as my noble friend Lord Crickhowell pointed out, is simply getting less and less probable after Fukushima. The Germans have made the disastrous decision, as far as I am concerned, to remove support for their nuclear industry. In the United Kingdom, we have therefore lost a possible six nuclear

16 May 2012 : Column 469

reactors while, as my noble friend also pointed out, the French company EDF’s project to build two reactors is at risk. That is because of the record that they have in France at the moment for delay, being behind schedule and with double the budget costs. We may get some nuclear capacity, but clearly, because of the terrible neglect over 20 years of our nuclear heritage and its skills, which my noble friend again referred to, we are simply a long way behind the curve. We are going to be desperately short of non-fossil fuel energy, whichever way you look at it, so we need new approaches for green investment to make a critical contribution to energy security.

I will give one example where there is a market failure at the moment. It is a modest proposal; it is not going to resolve our issues of energy security or anything like it, but it is a contribution that should be looked at: energy from waste. It is a mixture of mature technologies such as anaerobic digestion, which we know a lot about, and incineration, together with new technologies such as pyrolysis, gasification and plasma arc heating. There is clearly a great lack of confidence in the investment community with these new technologies. I can certainly see that a kick start from the green investment bank might be extremely productive, and in the long run establish new industries and certainly contribute towards these heroic non-fossil-fuel energy targets that we have set ourselves. It is a double win, because the current amount of biodegradable waste from the catering trade, shops and food manufacturers that ends up in landfill is scandalous—and landfill, of course, contributes to greenhouse gases. It is a resource. We talk about maintaining and using our natural resources sensibly. You simply would not allow waste to be put in a hole in the ground. If it can act as a fuel or as feedstock for energy, that is clearly what it should do.

Public perception is the reason why we in this country are so inefficient at putting in energy from waste. We have a horror of incineration. Perhaps this dates back to a time when we did indeed deal rather less efficiently with emissions of toxic materials, such as dioxins and ultra-fine particles. That is not the case any more; incinerators must now abide by much higher European Union standards than fossil fuel power stations anyway, so we need to ask carefully of any planning committee that rejects either anaerobic digestion, which still seems to happen quite regularly for reasons that are obscure to me, or certainly incineration with modern technology, on what basis they come to this perverse decision. These are the sorts of issues which Switzerland and Holland, for example, have never had any difficulty with. Switzerland, which we would consider to be a clean country in many ways, finds itself with an overcapacity to burn waste and imports it from Italy. Likewise, Holland is importing waste, so we need to change our attitude towards incineration and the new, advanced thermal treatments such as gasification. We need to invest in them, and if there is difficulty in attracting the funding we must ensure that the green investment bank provides the start.

We cannot possibly meet these targets for non-fossil fuels without carbon capture and storage. Again, as my noble friend Lord Crickhowell pointed out, it is

16 May 2012 : Column 470

quite a long way away. It will need massive investment, not just by us but by many other countries. America, Norway and many other countries are spending a lot at the moment. We simply have to be in there. If we do not get carbon capture and storage right, we can dismiss for ever the prospects of meeting these heroic targets. We need to recognise that an investment in this sort of technology is absolutely the only hope we have of achieving these targets.

8.03 pm

Baroness Turner of Camden: My Lords, there are some items in the Queen’s Speech to be welcomed, and others about which many of us will feel concerned. There is at least an acknowledgement that the public’s major concern is about austerity and all that that means for the working people who the Prime Minister now claims to care about. Anyone who has been involved in the recent election campaigns knows that people are worried about job loss, insecurity, wage stagnation, housing and welfare problems: all aspects of the Government’s policy on the economy. There now seems to be a growing opposition, not only in this country but throughout Europe, to austerity programmes and their impact on ordinary families, and an increasing pressure for programmes involving growth. This seems sensible. Dealing with deficits is important, but how to do it if economies are stagnant? Things will only get worse. There is already concern that austerity policies are impacting most heavily on those least able to cope.

Recent unemployment figures show that those impacts are highest in the north-east and the Midlands, where the decline in manufacturing industry, about which my own union Unite has campaigned for many years, has left many areas with no job prospects, even for skilled people. Many of us believe that this decline was first started by a previous Conservative Administration way back in the 1980s. In certain areas, public sector employment made up for these changes, but now, with present government cuts, declines in public sector employment will add to that unemployment, much of it among women and often where no alternative work exists. I am glad that at last the apprenticeship schemes are being reinstituted. This should at least assist where there are large numbers of unemployed young people. However, my noble friend Lord Young made a spirited plea for there to be far more done in that direction. I hope that his recommendations will be taken seriously.

For all these reasons, the Government need a rethink. We need, of course, to go for growth. There is to be an enterprise Bill, but the Government are going the wrong way about it. Apparently, it is felt that removing employment rights from employees will result in more jobs. Long-standing employment rights for workers are to be removed. This will add to the sense of insecurity that already exists. Why should it be made easier for employers to sack workers? So that they can employ cheaper ones? Many of us have fought for years for workers to be treated decently and not like serfs. We will not accept lightly a change in government policy. Why should it be deemed necessary to provide more assistance to low-paying employers? We already have low pay in this country. The Government know this. Their welfare policies attempt to subsidise low pay through the welfare system to make sure that

16 May 2012 : Column 471

jobseekers are better off in work than on benefits. In other words, the taxpayer already subsidises employers who pay low wages.

Further changes to the law on arbitration would make it more difficult for a worker who claims unfair dismissal to make a claim. Charges are to be made before he or she can get to a tribunal. Then the tribunal itself will consist not of lay people representing each side of industry or commerce but of only a judge sitting alone. It is a more legal process but, of course, there will be no legal assistance.

My advice to employees is to join your union. You are going to need all the protection you can get. The Government, of course, like to act as though unions do not exist. Unions are mentioned only in the context of a possible strike—and then, of course, the strike is all the workers’ fault. There is now talk of making strikes more difficult, when we already have legislation that requires ballots, and probably tougher legislation than exists in other developed countries. Many government supporters—I emphasise “supporters”, not necessarily the Government—clearly think that workers should put up and shut up. That really does seem unlikely to me.

Unions play an enormous role in other areas, which is hardly ever mentioned. Unionlearn, the education section of the TUC, helps 230,000 working people back into education every year. Through its support for Ruskin College, Oxford, it has assisted many to acquire degrees. Many members of your Lordships’ House have benefited from further education at Ruskin College. Unions play a vital role in health and safety provision in the workplace through their training of safety representatives and in other ways. Despite this, the Government do their best to discourage this traditional and important organisation of the employees themselves.

I hope that the recent election results will cause the Government to re-examine their policies. If they do not do so, more people are likely to suffer as a result of economic policies that have already begun to impact unfairly on employment, welfare and other matters of great concern to everyone.

During the previous Session in this House, every time we sought to deal with the problems caused by the cuts we were told by government spokespersons that “there is no alternative”. I and many others do not accept that, and many people who are worried about declining living standards do not accept it either. We need to go for growth. We need policies—not words, but policies—for growth. The Queen’s Speech does not have such policies.

8.10 pm

Baroness Byford: My Lords, there has been criticism that the gracious Speech lacked an agenda for growth, jobs and a stimulus for the economy. That is clearly not true, though, as others have said. The Government are indeed taking steps to free up businesses to allow them to grow and employ other people. I wholeheartedly endorse the stated priority of cutting the deficit and approve the reduction in the number of civil servants. Most of all, I support the measures being taken to reduce the regulatory burden on entrepreneurs to clean up the IT systems with which so many of the departments have been saddled, particularly those in Defra.

16 May 2012 : Column 472

I wish success to the negotiations on reducing the pension burden. The previous Government, during their tenure, increased the pension burdens from 7.2% to 14.1% on local government salaries and centrally by over five percentage points to a range of 16.7% up to 25.8% at the most recent elections. These are additional burdens that have to be met, and they are the fault of the previous Government. In the circumstances, I took great exception to the comments by the noble Baroness, Lady Royall, at State Opening, when she asserted that the coalition was unfair, incompetent and out of touch.

There is much to be welcomed in the gracious Speech. I cannot touch on everything but I am particularly glad to see a draft water Bill, an energy Bill, the reduction of regulation and in particular the Groceries Code Adjudicator Bill, which has its Second Reading on Tuesday. That cannot come quickly enough. I am watching the death of market towns, caused mainly by the rapacious advance of supermarkets and aided and abetted, sadly, by local councils that still cannot see the damage that they do to the rural economy. I am aware that so much of the success of these mammoths is due to the stranglehold over those who grow, produce and manufacture items for sale.

Last week we were told of a further fall in the milk price, which the right reverend Prelate the Bishop of Hereford referred to earlier. That is iniquitous. The prices of fuel, fertilisers, grass seeds, animal feed and machinery all continue to rise, some of them rapidly. Supermarkets, on the other hand, are making profits. In the face of recession, those profits have held up very well, and we know that the salaries of those who run the supermarkets are generous. That is what is unfair. Farmers and processors are being openly robbed and they desperately need the support of an adjudicator. We shall deal with this in greater detail on Tuesday.

I am particularly concerned about the fresh milk supply. Will the Minister carry out an exercise to reveal exactly how well supermarkets do? They sell in four-pint, two-pint and one-pint cartons. The price comparisons are all based on the four-pint model, which considerably understates the average return per pint to the supermarket. It also minimises the insult to the farmer. A single pint sells for 49p, which is almost exactly the four times the price that he gets, but the official figures are based on the four-pint model—39p to 42p per pint. We shall debate this further.

The contribution that charities and voluntary workers give to the life of this country is incalculable. It would be wrong to reduce their impact through the side effects of measures taken to deal with the control of the deficit or developments in the commercial sector. In this Christian Aid week, I am pleased that pressure to reduce our international contribution has been resisted and that there are clear intentions to encourage further volunteering and to maximise the value of charitable giving. As an aside, I understand that DfID has agreed to match-fund the first £5 million that Christian Aid achieves this week.

There is no doubt that volunteering can assist individuals into employment, which is good for them and good for the economy. The major benefit, however, must be the application of donations, large and small,

16 May 2012 : Column 473

to improving the quality of life for people throughout the country—and abroad, as I have indicated—regardless of colour, creed, age or financial circumstances. I hope that the charities Bill may look at ways in which gift-aiding can be simplified and the burdens there reduced.

It does not necessarily need a Queen’s Speech to reflect the importance that I believe farming and agriculture play in our community today. Their role is the driving force behind so much economic activity. Between them, farming and food have 3.5 million jobs. The headline is that the total farming and food sector is worth some £85 billion, the equivalent of 6.9% of GVA. Farming is more than that, though: it is important for jobs both on and off the farm. In all, farming and food production provides 3.5 million jobs, but technology means that employment on the farm may fall. Other areas are growing, however, and in that I particularly include research and development. They will play an important role in our food security in future.

The departments have given some stimulus and help to particular areas. I am best known for my connection with rural areas. In March and April this year, a £160 million package of measures was announced to support rural communities, mostly through the rural economic growth review. Of that, £100 million is to grow rural businesses through the rural development programme for England, some £20 million of grants will extend superfast broadband to remoter areas, some £25 million will promote rural tourism and support its businesses and there will be loans totalling more than £20 million for community-owned renewable energy schemes. In addition, £2 million will help women in rural businesses to develop those businesses. Those do not feature in the gracious Speech but they make a huge difference. It is seed-corn money that makes a difference to enable businesses to start. The Government need to see ways in which they can lighten the load of regulation and red tape so that that seed corn can grow and a business can become one, two and then 10 and perhaps 20. I support the Government in the measures that they have taken in the gracious Speech.

8.17 pm

Lord Borrie: My Lords, when I first put my name down to speak in this debate on the gracious Speech, I thought that I would talk about two items: the groceries code adjudicator and the changes in the competition policy regime, which feature in the Speech. I then learnt that the Groceries Code Adjudicator Bill will be before us for Second Reading on Tuesday, and I have little doubt that the competition regime changes will be in a Bill that will come before us soon. With more time available in Second Reading debates than in the sort of debate that we are having today, I decided to latch on to the remarks made by my noble friend the Leader of the Opposition on youth unemployment, which to some extent has also been commented on by my noble friend Lord Young of Norwood Green.

I am delighted to congratulate a Member of the Conservative Benches who is in her place right now, the noble Baroness, Lady Stedman-Scott, who spoke on this subject yesterday and described the terrible expense to the public finances and the lost-opportunity

16 May 2012 : Column 474

costs of youth unemployment. She made the point that some 16%, probably more than that, are NEETs and causing a great deal of personal, social and financial problems. That is a very serious matter, a terrible waste in economic terms and a very severe social and personal loss and detriment to the young people themselves. In addition to those fairly obvious points, I think that we ought to accept that many young people are alienated, disaffected and are often engaged in criminal or anti-social activity.

Many people have solutions and have their favourite ideas. I dare say that there is no one idea that is worthy of promotion; there are many that are worthy of promotion. One idea that deserves further consideration and is timely to consider now is some sort of non-military national service or citizens’ service of one year or more and applicable to young men and young women. When I did military national service way back in the 1950s, it applied only to men, so I naturally think of any modern development as covering both.

This idea was recently advocated—I mention this specifically for my noble friends in the Labour Party—in an article by Robert Williams that appeared in the March 2012 edition of the Labour magazine Progress. Twenty years ago, it was one of the proposals of the commission on social justice that was set up by the late John Smith, then the leader of the Labour Party, with me as chairman and several other present Members of this House on the commission. One of our proposals was for a citizens’ service, a community service scheme designed to enable young people to develop personal, social and learning skills and a work ethic through a variety of activities which, no doubt, would have to be looked at and modified and so on as the years go by. They would engage in work that improves the environment by cleaning and improving public spaces and engaging in caring activities in hospitals, care homes and people’s own homes, and, importantly, they would have the opportunity to make up for the gaps in their education that so many young people have.

It would probably have to be a voluntary scheme, which is what my commission proposed 20 years ago, because in peacetime—and I exclude the immediate post-war years in Britain—it would politically be very difficult to make it compulsory. Yet I have to admit that a weakness of a voluntary scheme is that some of the very people who would benefit most from a citizens’ service would be excluded.

There would be many gains from a citizens’ service in educational terms, in breaking down social barriers and in enabling people to improve their personal standing and so on. I believe that it is timely now to revive interest in this proposal. I have not attempted the important matter of cost. A parliamentary committee or inquiry would be needed to establish costs and feasibility and to estimate what I suggest would be, but I have no figures to back this up, a very considerable payback in economic and social gains to the community.

8.24 pm