The noble Lord, Lord McFall, spoke about the financial sector. I remember speaking in the debates about Northern Rock. That was six years ago. The nationalisation of Northern Rock was rushed through in six months. It has taken us six years to get to reforming our banking system. That is scary. I am very hopeful, and I congratulate the Government on appointing Mark Carney, a Canadian, to come in and head our Bank of England. Can the Government confirm that, apart from inflation targeting, they will now encourage the Bank of England to also have nominal GDP growth targeting as well? On SMEs, which other noble Lords have spoken about, I keep hearing that they cannot raise finance. In fact, I have heard that the enterprise finance guarantee scheme loans are falling. Can the Minister confirm that? They should be increasing at times like this, when businesses desperately need finance.
On a positive note, I am delighted with the efforts that the Government are putting in through UK Trade and Investment to promote British businesses doing business abroad. I am delighted to hear that the UK India Business Council, which is funded by UK Trade and Investment and of which I am the founding chair, is now to be opening up within India. The British high commission in India has opened up two new deputy high commissions in Hyderabad and Chandigarh and will increase the number of people on the ground helping to promote British business in India. This is fantastic. As the noble Lord, Lord Forsyth, concluded, we must promote and encourage our businesses not just in doing business with Europe, but in doing business with the emerging markets such as India—the BRIC nations.
The Government are doing a fantastic job through their marketing campaign, “Great Britain”. The “Great Britain” campaign tries to promote Britain with confidence aboard. I suggest that we need a “Great Britain” campaign to promote Britain within Britain. We do not appreciate enough the amazing strengths that we have as a country. We have the best of the best in the world in just about every field you could imagine, whether it is the creative industries or the legal and accounting professions, and manufacturing including beer, automobiles and aerospace, as well as sport, film and theatre. Our universities are, along with America’s, the best in the world. London is the greatest of the world’s great cities. I could go on.
We may be bumping along the bottom as an economy, but we should never take for granted the amazing strengths that I wish the Government would get behind—strengths which we should spread with confidence throughout our country. Then we will be able to generate growth with confidence.
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Viscount Simon: My Lords, we have heard noble Lords give interesting speeches on business and the economy. This reminds me that I never know on which days to speak, because I will not be talking about these matters. I intend to address various matters of concern to road safety experts and the police and on road policing.
There was a programme on BBC Three recently called “Barely Legal Drivers” where, at the beginning, three interesting statements were shown:
“1 in every 3 drivers who die on UK roads is 25 or under … 1 in 10 young people have been in a crash that resulted in death or serious injury … 1 in 5 young drivers has a crash within 6 months of passing their test”.
Things do not change very much, I have to admit, because I had a crash within six months of my passing the driving test. This led to my commencing a long attachment, as a civilian, to the traffic police with whom, over the years, I have taken lots of advanced driving courses.
Keeping inexperienced drivers in mind, it has been suggested that graduated licences could be introduced, putting in place certain requirements as to when they are allowed to drive, the number of passengers carried and probably various other bits and pieces. The insurance industry may require recording devices to be fitted to the cars of inexperienced drivers to see how they are driving. They may well adjust the premiums accordingly; I understand that this is already happening with young lady drivers. However, enforcement could well be a problem as there are some difficult issues and logistical considerations to be made in terms of how much time the police would have to enforce any legislation introduced. With the reduction of fully trained roads-policing officers over quite a number of years, this would not be a priority.
At the end of April, six terrorists were found guilty of serious offences against the mainland with the intention of blowing up towns and causing havoc. It was a roads-policing officer who instinctively decided to stop the vehicle they were driving. In view of his expertise, and that of all roads-policing officers, I wonder what plans the Government have to ensure that adequate funding and support is given to chief constables so that roads-policing receives higher priority, and greater investment in technology to ensure more criminals are caught while on the roads. With better vehicle-mounted technology and investment in skills and officers, criminals on the road will fear the risks and know that they will be caught.
The Royal Society for the Prevention of Accidents deduced that the currently used method of defining certain priorities is out of date and that the causes of premature deaths that can be prevented should be an area on which to focus. At all ages, cancers and other preventable diseases eclipse accidents. To put another area of premature death into the arena, accidents kill around 14,000 people in this country every year but only about 2,000 of these deaths occur on the road or in the workplace. So, home and leisure accidents now account for the majority of deaths, but this does not detract from reducing death and injury on our roads.
After all, the total cost of each road death is now about £1.6 million, which means that every reduction can be calculated on a financial basis.
On costs, it has been suggested that the purchase of more battery-operated vehicles should be encouraged to reduce emissions. While this is an admirable idea, I wonder how long a battery will last and what it would cost to replace one. I may be wrong, but I have heard that they are very expensive.
In the past two or three years a number of reforms to the police have taken place: the introduction of police and crime commissioners along with pay and pension reforms. Somebody joining the police gets £19,000 a year, yet a new PCSO gets £25,000 a year. What message does this send out? Then there is the potential for the introduction of direct entry at the rank of superintendent, with no experience of policing anticipated. How many people would go to their surgery to be seen by a doctor whose only experience is as a helicopter pilot? These changes, and others that have taken place over the past decade or so, are completely counter to those who label the police as “the last unreformed public service”. In addition, police have to deal with the impact of reforms on other services, particularly in the area of mental health. There are too few areas where places of safety are available on a 24-hour basis to assess individuals who are suffering from mental illness and in need of immediate support. This means that far too many people have to be taken to police cells following their detention under Section 136 of the Mental Health Act due to the lack of an available place of safety.
The next comprehensive spending review is on 26 June. I hope that no further cuts will be made to the police. If there are, there could well be disastrous effects in dealing with the requirements of the public. In order to reduce costs, a few constabularies are working closely together but there are still the same number of chief constables, deputy chief constables and police and crime commissioners within each constabulary. This has led to there being little consistency in approach, with little evidence to demonstrate savings or benefits to the public once these changes have been made.
The Crime and Policing Bill will enable the creation of the police remuneration review body. Police officers are officeholders, independent of state and answerable for their actions to the law. This onerous responsibility brings many restrictions on an officer, not least of which is the fact that they are forbidden in law to take industrial action. The transition from the current national Police Negotiating Board must take into account an officer’s inability to directly influence policy concerning police pay and conditions of service. Mechanisms must be put in place to ensure that officers feel that they will be treated fairly by the Government of the day. A system of appeal that can be influenced by the Police Federation is essential so that the relationship between state and officeholder continues with a common understanding. I would also urge caution with the current proposals to introduce compulsory severance, which could change the independence of the constable. There should be a pause to ascertain the necessity for something drastic, particularly as many no longer see it as necessary. It is the first duty of government to
protect its citizens and it is the duty of the Government to be fair to those discharged with this responsibility, the British police service.
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Lord Tugendhat: My Lords, I will focus on one of the biggest disappointments of our economic reforms over the past few years. I refer to our failure to expand our exports as rapidly as had been hoped, and in particular to expand them outside the eurozone, despite the 20% devaluation of sterling on a trade-weighted basis since 2007. Ministers invariably place the blame for this on the sluggish performance of the eurozone. Certainly the eurozone’s sluggish performance has played a significant part, but as an article on UK export performance in the February issue of the Bank of England’s Inflation Report points out, UK exports have increased by much less than those of several eurozone members, including Spain, Italy and Portugal, for whom the eurozone is also their major export market.
The Bank of England suggests that part of the reason for this is the weakness in demand, since 2007, for financial services provided by banks and other financial institutions. Devaluation cannot do much about that—which, given the composition of UK exports, shows the limitations of devaluation as a means of boosting British exports. However, devaluation should have given a boost to British manufactured exports beyond the eurozone, and our failure to make progress on that front is particularly disappointing.
The contrast with Germany is particularly striking. Against the background of rising trade with both eurozone and non-eurozone countries, the balance of Germany’s trade has shifted in favour of the latter. In 1999, when the euro began, some 45% of Germany’s trade was with other eurozone countries—now it is 37%. The fastest-growing partners for German foreign trade include China, India, Korea, Indonesia and Brazil. Within the next few years China is expected to become Germany’s biggest trading partner.
I accept that the quality and composition of German manufactured goods are such that overall they are always likely to outperform ours in that sphere. This is a sad fact, but, I fear, true. None the less, why are we so stuck in the eurozone, as Ministers keep pointing out, while they are so much more successful at breaking out into markets in other parts of the world? The single market is meant to be a launch pad for selling to the rest of the world, not a contemporary equivalent of imperial preference. Germany and other countries have achieved that break-out, and I wonder why we appear to have so much difficulty in doing so.
This is a complex subject, and there are many reasons for this situation, but I ask the Government—if they cannot reply tonight, perhaps they will do so later—whether they feel that ownership has anything to do with it. The great bulk of German industry is German-owned, and free to seek markets wherever its management sees fit. By contrast, Sir Alan Rudge has recently pointed out:
“The UK is home to 228 large manufacturing companies … and only 93 are UK-owned”.
I have always been a great supporter of inward foreign direct investment. Many foreign companies have made a huge contribution to modernising the British economy, improving the quality of its management and introducing new ideas. The spectacular revival of the British motor industry, thanks to Japanese and German investment, illustrates this point very vividly. Where British ownership failed, Japanese and German ownership has succeeded and the United Kingdom has benefited enormously.
However, it cannot be gainsaid that much of foreign direct investment into Britain has been made to supply European markets rather than markets outside Europe. The companies that have made those investments see their UK plants as part of a worldwide network in which plants in different geographical locations are aimed primarily at different markets. The same would be equally true of FDI in, for example, Spain or other European locations against which we compete to attract investment.
I do not mean to be absolutely black and white about this. Corporate trade patterns shift in response to changing circumstances. As I have said already, this is a complex matter in which many factors come into play. None the less, it would be helpful if the Government launched a review to determine to what extent the subsidiaries of foreign-owned companies in this country have the flexibility to take full advantage of opportunities opening up in markets beyond Europe, and what can be done to encourage them.
I know that many people will say that I have focused on the largest manufacturing companies, and that is true. However, the supply chains depend on those companies and, generally, in this country the largest manufacturing companies account for the greatest proportion of exports. Therefore, if the largest manufacturing companies are concentrated in one part of the world, it will follow that the supply chains that service them will equally be concentrated on that part of the world. Rather than look to the red tape and the other things people talk about that supposedly hold us back in the eurozone, we should see why it is that Germany and other eurozone countries appear to be so much more successful.
I will refer to the remarks of the Mayor of London, who has pointed out that if we were to leave the European Union, which I personally would deeply regret and regard as very counter to British interests, we would find that many of our problems arise from inadequacies within our own economy.
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Lord Monks: My Lords, I, too, will address the long-term prospects for the economy, as well as the relationship with the European Union. I am pleased to be able to follow the noble Lord, Lord Tugendhat, who has expressed some very wise words from the Conservative Benches, words that I hope will be heard loudly in that party as the frenzied debate seems to be kicking off again in such a vigorous way.
Before the crash of 2008, only a few of us warned of the excesses of what we termed “casino capitalism” in the financial services industry. These excesses, as we now know, were not even properly understood by
many of those in the financial services sector themselves, including many at the top of our greatest banks. We know the consequences: the bank problem became the problem of the nation states, and the consequences of austerity which have resulted need not have been as severe as they have been, as was well spelt out by my noble friend Lord Eatwell. However, the consequences are plain. As Francis O’Grady, the new general secretary of the TUC, said recently:
“The victims continue to be those who did least to cause it”.
Spending cuts are weakening vital services. Austerity rolls back gains in equality, and real pay levels, for most, are falling. Our performance on exports, as the noble Lord, Lord Tugendhat, just spelt out, continues to be unimpressive, and contrasts with our neighbours—not just Germany but our neighbours on the other side of the North Sea.
Apart from the noble Lord, Lord Heseltine, and, on a good day, the Business Secretary, no one on the Government side seems to show the urgency and energy that is necessary to tackle the mess we are in and to rebalance our economy more in the direction of the other side of the North Sea. As the Business Secretary said in the equivalent debate in the other place last Friday, there are no easy answers. However, there are some wrong answers, and these include a slavish belief in deregulation and in scapegoating the European Union for our difficulties. I ask, as my noble friend Lord Glasman did recently in an article in the New Statesman, why Germany is doing comparatively well. It has the highest level of workforce participation in its governance; it has the greatest degree of regulation of labour market entry through insistence on high-class vocational qualifications; and it has the most severe constraints on capital in its banking system. How can that be? The orthodoxy practised on the other side of the House is that you grow by deregulating, reducing workers’ rights and cutting some standards. The Queen’s Speech mentioned extra proposals in that direction. The German example is not being followed. We should go for the high road and not seek some kind of low road to growth. I looked in vain in the gracious Speech for evidence that the noble Lord, Lord Heseltine, or the Business Secretary had had a decisive influence on the Government’s programme, but I found little trace of anything other than the deregulation of employment tribunals and a further weakening of health and safety standards.
If there is a distressing lack of energy and application to the problem of rebalancing the British economy, there is no lack of energy in the debate in the Conservative Party about our relationship with the European Union. I note with great concern that scepticism is rapidly turning to phobia. Our problems are being presented as the EU’s fault—not just by eccentrics but by people who are much respected in the affairs of this nation. The call for divorce from the EU risks becoming a Tory stampede for the exit. I was pleased to see, as the noble Lord, Lord Tugendhat, mentioned, Boris Johnson partially taking on this case in today’s Telegraph and—rather bravely given the current mood—arguing that the UK will have to recognise that most of our problems are not caused by the European Union. For once, I find myself in agreement with him.
It is not the EU’s fault that we do not have a better record of export to the rest of the world, or to the EU itself. They are not alternatives. To compare the single market with a comfort zone akin to pre-war imperial preference is surely wrong. I wish that there had been a fixation among more British businesses on exports to the EU, or indeed to anywhere else. However, too many of our businesses did not have sufficient motivation, expertise or whatever to do the job. We cannot blame others for that; we must look inside ourselves. Neither is it the EU’s fault that much of what remains of the UK’s manufacturing is overseas owned, with the car industry the prime but far from the only example. Many of those owners are here only because of our EU membership. Ignoring this would be a huge national risk that certain metropolitans, or even expatriates, seem to be ignoring at present. Those of us from the weaker regions know exactly what is at stake.
Why would we want to loosen our ties with our neighbours, especially when we rely so much on inward investment and overseas ownership? A very dangerous vision is developing of a Britain that is somehow offshore, with low tax, low regulation, low benefits and low standards, but able with impunity to go around the world undercutting the standards of the best and thinking that we will get access to their markets. If you think that occasionally there are problems with the single market, which there are, and that occasionally there are obstructions to the way trade operates in Europe, as there can be, you should listen to the stories of people who trade with the rest of the world. There, protection is the norm and not the exception. Businesses that export all say that the difficulties of breaking into markets, including the Commonwealth and the United States, are on a pretty large scale.
We on this side of the House, and many elsewhere, will do our utmost to keep us from becoming a sort of Greater Monaco, seeking that low road to the future. Presenting the EU as the enemy, which the noble Lord, Lord Forsyth, seemed to do, is ridiculous and over the top. There are many problems to iron out in future, but that is not the way to do it. It is not in Britain’s interests to follow that route even a little way, and I hope that the Conservative Party will come to its senses as quickly as possible.
5.55 pm
Lord Bradshaw: My Lords, Members of your Lordships’ House who were involved in the local elections might forgive us for doing something that the electorate certainly did not want. They wanted attention paid to local things. Most candidates who were successful had concentrated on local things. The first item on my list is the maintenance condition of our road network. It is absolutely disgraceful and if people are talking about emulating low standards, certainly the roads of this country are a disgrace. What is more, as water gets into the foundations of the roads, they will rapidly deteriorate further. I would like to hear from the Government that they will do something immediately to make use of shovel-ready schemes to give us a decent distributive road network. The problem is infecting even the main A-class roads and motorways of this country.
The second thing to which I will draw attention is the apparent failure of the M6 toll road. This has very serious implications for the Government’s ambitions to attract private sector capital into financing the road network. There have already been calls for the nationalisation of the M6 toll in order to relieve Macquarie, which was behind the scheme, of the liability that it openly accepted. One lesson that you are supposed to learn in a capitalist economy is that if you back a loser, you will lose money. That has applied to the banks but applies to other things as well. I would very much like to know how the Government intend to introduce private capital into this sector of the economy, which has been mentioned as being an important part of the recovery process.
Thirdly, in view of the possibility of Scotland somehow separating from England, I raise the case of the A1 in Northumbria. It is a key route between England and Scotland. It is a dreadful route with a dreadful safety reputation—and the diversionary routes are even worse. I believe that all the preparations have been done and that there is a shovel-ready scheme. This would be a step towards underlining our unity with Scotland rather than allowing the relationship to deteriorate into some sort of cul-de-sac.
The railways are desperately short of rolling stock. I advise the Government that the best thing they can do is get out of the way of investment, which they have inhibited for years by indicating within the franchise agreement a presumption that there will be a carry-over of rolling stock from one franchise to the next. This is very similar to the TUPE arrangements whereby staff from one franchise can automatically expect to move forward to the next. It does not seem that the Department for Transport is in any way equipped to work out a rolling-stock strategy for the railway. That should be done by the private sector. This was the original intention of privatisation. There were supposed to be asset-light franchises, and Railtrack was supposed to maintain the network. We know what happened there. The rolling stock companies are anxious to invest money and have large sums of money to invest, but they need the Government to get out of the way and allow commercial relations to take root between train operators and the railway.
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Lord Mitchell: My Lords, in my reply to the gracious Speech, I will address two issues. The first is the special concern of small business growth, and the second the consequences and opportunities of the digital revolution.
Despite the fact that my job definition as Shadow Business Minister includes responsibility for SMEs, I have vowed to myself to refrain as best I can from using the expression SME. It is so engrained in our vocabulary, but it is such a misnomer. The fact is that small businesses and medium-sized businesses are not the same and should not be grouped together; their requirements are so different that combining them is an error. Those who do so, in my opinion, demonstrate that they have no understanding of the particular needs of each sector.
As I have mentioned on many occasions in your Lordships’ House, nearly 40 years of my business career were spent in the small business environment. Well, that is not quite true, because the three small businesses I founded each grew to become medium-sized international companies. But in the beginning each business started with a few of us sitting around a small table, or at the bar in a pub, where we said, “Wouldn’t it be a good idea if?”. It is very hard to convey what it is that motivates one to become an entrepreneur. When I think back, I sometimes think that I must have been crazy; the incidence of failure in start-up businesses is heavily stacked against the entrepreneur. What few people outside the entrepreneurial circle understand is just how stressful it all is. There is the perennial stress that the money might run out, that an important customer might go somewhere else, or that a key employee might be recruited elsewhere. You need the constitution of an ox. Put simply, it is not for everyone, but if you succeed it is truly wonderful.
When I created my companies I never thought about the rates of income tax, corporation tax or capital gains tax, and I certainly did not have the vaguest notion what inheritance tax was, nor did I care. Indeed, when I started my first business in 1972, I seem to recall that the top rate of income tax was 83%, plus unearned income tax of 15%—not what one might call an entrepreneurial incentive. To me it was all irrelevant. I wanted to be my own boss. I had worked for big companies, and I simply knew that I could do it better; it was the arrogance of youth. I loved the freedom, I loved building teams of well motivated and excited people, and I revelled in the joys of customer satisfaction. So when I hear politicians somehow thinking that a tweak here and an incentive there will suddenly turn us into an entrepreneurial society, I know that they have got it wrong. It is not how it works. Nothing illustrates this better than the shares-for-rights issue that we debated at length in the previous Session. No businessman would have dreamt up such lunacy as this.
What does matter is creating a climate where the entrepreneur feels comfortable—and for them, as for all business people, the one ingredient that gives comfort is confidence. Success in any field comes from confidence. Just see what happens to a football team when a great new manager arrives; the same players are revitalised. As the Minister will know better than anyone, we saw it in the Olympics. When people believe in themselves, they can move mountains. As it is with sport, so it is with business. Confidence comes from leadership, and leadership, of course, comes from the very top. When I look at the grim face of George Osborne, all I see is dour despondency. What he needs to do is to lighten up and provide strong, positive leadership. He needs to change the atmosphere, be upbeat and introduce a strategy for growth. He could have done it in the gracious Speech, but he chose not to.
Goldman Sachs, for which I know the Minister has a special attachment, has run an interesting study in business growth, and I would like to bring it to your Lordships’ attention. Several years ago, Goldman Sachs introduced a project called 10,000 Small Businesses, which is a target that it set for itself. In conjunction with five UK universities and based on its American
experience, it set its goal to supercharge ambitious small businesses, seeking to generate small business growth that otherwise would not have happened. The results have been extraordinary.
Small businesses are the major source of job creation and also drive economic growth through innovation and market expansion. It is true that the overwhelming majority of small businesses do not grow and are static; they are important, but they do not produce economic growth. But there is a small percentage of small companies that are ambitious, growth hungry and well run. What the Goldman Sachs programme seeks to do is to locate such high-growth companies and propel them to achieve significantly greater returns. So what does Goldman Sachs do? It selects high-growth potential companies that have more than 10 employees and a turnover of just over £1 million and screens them carefully to determine their ambition and their management competence. Each CEO commits to undertake 100 hours of involvement over a four-month period. As Goldman Sachs puts it, they are companies that have dreams and talent which they wish to translate into advanced action. They learn about money and metrics, leadership, marketing, strategy, financing, and putting it all together. At the end, they produce a business growth plan—not so much a business plan, more a commitment to growth. The most exciting aspect of the programme is the dependence on peer-to-peer learning and engagement, which comes from the entrepreneurs themselves, from different backgrounds and different industries, sitting down together, challenging, querying and providing support from each other to each other.
The results are staggering. Employment growth is up 23% compared with 1% for small businesses as a whole, and there is revenue growth of 16% compared with minus 9% for the small business area as a whole. Equally impressive are the following qualitative statistics: 92% became more confident of their ability to grow their businesses; 83% introduced new internal processes; 81% used financial data to derive business decisions; and 84% had an understanding of external finance options that they did not have before. The programme has so far created around 2,000 new jobs. This type of programme is not exclusive to Goldman Sachs and variants are practised by others, but there is no denying that these are impressive results and an indicator that selecting high-growth small companies with big ambitions and helping them to accelerate their growth is an important way to stimulate the economy.
I cannot let the opportunity go by without welcoming the noble Baroness, Lady Lane-Fox of Soho. Her maiden speech was outstanding; for me, as an IT entrepreneur, it touched many key points. The noble Baroness is not in her place, but perhaps I can relate to fellow Members of the House of Lords how I first met her. I had to see her to do with a charity that I was involved in, and I was given an address in Soho. I went along this street and that street and, eventually, was standing outside what I would probably describe as a massage parlour. It was a tanning salon—noble Lords get my drift. I was pretty concerned about this, but I went in through the aforementioned massage parlour
and into the noble Baroness’s office, where lots of exciting people were doing amazing things in the IT sector.
Soho has played a major part in my own life. As a misbegotten youth, I used to spend much time there going to jazz clubs and generally hanging around. But perhaps I should move swiftly on. When I met my wife, she was a film director working in Soho, and we had our wedding reception there. In a moment of complete madness I opened a mega-restaurant just off Dean Street, which failed dismally and cost me a fortune. I put it down to a learning experience. So one way or another, Soho is part of my life. My only regret is that, unlike the noble Baroness, I did not have the foresight to include Soho as part of my title.
To those of us in the IT sector, Martha Lane Fox, as she then was, is a legend. Lastminute.com was one of the triumphs of the dotcom boom and one of the survivors, as was I, when all around us collapsed. Indeed, the noble Baroness is a born survivor. No matter what slings and arrows have been flung her way, she just brushes herself off and gets on with it. She has been a champion for our industry and has helped government understand the challenges of the digital revolution. Through her chairmanship of Go On UK, she has sought to make Britain the most digitally skilled nation in the world. That is a tough challenge in that, as she said, 7 million people have never used the internet. I am delighted to have a fellow IT entrepreneur in your Lordships’ House and I look forward to working with her.
There is a digital train crash about to happen. In the past few months, we have seen some dramatic failures on our high streets. Jessops, HMV and Blockbuster video have all gone bust but not as a result of the financial crisis, the Government’s policies or the boom in out-of-town shopping centres. They have failed because they were unable to anticipate the tsunami of the digital revolution. Cameras are on their way out, music is streamed, DVDs are downloaded over the internet. This is just the beginning and we had better get used to it. The internet is changing everything. It is Schumpeter’s creative destruction being condensed into months rather than decades.
This digital revolution is exciting and challenging. It will continue to revolutionise our lives. We must not be afraid of it. We must grasp it and make sure that all our people are equipped to participate in its benefits. Most of all, we must make sure that no one is left behind.
6.11 pm
Lord Higgins: My Lords, I certainly agree with the noble Lord who has just spoken—we have heard an outstanding maiden speech from the noble Baroness, Lady Lane-Fox of Soho. However, I should also add a word of warning: competition is increasing from the younger generation. I discovered last weekend that my eight year-old grandson has created his own fully operational website. An interesting section at the end states that no harm has been caused to animals in the creation of the website, which indicates a correct order of priorities.
I welcome various aspects of the gracious Speech, particularly the action that is proposed to be taken on asbestos-related cancer. That matter has been raised previously in your Lordships’ House but without success. I am glad that proposals are now in place to deal with it. Other than that, I think that the gracious Speech is regarded as being somewhat thin, and there is a tendency to concentrate on what has been left out rather than what has been put in, particularly at the other end of the building. None the less, there is no doubt that the central part, as far as economic management is concerned, is embodied in the paragraph that states:
“My Ministers will continue to prioritise measures that reduce the deficit, ensuring interest rates are kept low for home owners and businesses”.
I strongly support the line that the Chancellor of the Exchequer has taken on this. However, I am somewhat concerned by the assertion, which was repeated by my noble friend on the Front Bench this afternoon, that we have reduced the deficit by a third. I do not think that that is the right way to put it. One should say that we are still increasing borrowing at two-thirds the appalling rate set by the previous Government. I do not believe that this can go on. It is crucial that we find a means of reducing that deficit, as stated in the gracious Speech. I said right at the beginning of the formation of the coalition how difficult that would be. We are still not the least bit clear where the Opposition stand. Mr Balls still seems to be saying that the deficit has been cut too soon and too much. I do not believe that either of those assertions is valid.
However, the policy is now being reappraised. An IMF team is making its usual annual visit to the UK. The press seems to be indicating that the IMF’s support for the Chancellor’s policy is weakening. I believe that that is wrong. I very much hope that the IMF will continue to sustain his efforts to reduce the deficit and ensure that our position is sustained internationally. Various people have argued against the stance adopted by the Chancellor, as we have heard from the opposition Front Bench today. However, one thing is absolutely clear: the rating agencies are not reducing our rating because we are cutting the deficit too much but because we are not cutting it enough. That is an important point to take into account.
At the same time, we have to relate this overall problem to economic management. Demand management seems to have disappeared totally from discussion. It is very important, however, because if we find ourselves in a situation—as we are—where fiscal stimulus is not possible, we must rely on monetary measures. To that extent, I very much welcome the action that has been taken on quantitative easing. It is, of course, true that this is having a serious effect on pension funds, as was pointed out by the opposition Front Bench. The time has probably come to reappraise whether achieving quantitative easing by working through the gilts market is the right way to do it—that is, the rather ludicrous situation whereby the Bank of England purchases the gilts and then pays interest to the Chancellor. That is rather silly. We should consider other ways of doing this as we will never want to reissue the debt which has been purchased. If we need to do that to control inflationary pressures later on, that can be done by issuing new gilts, which are likely to be of a better
form and duration than those which have been purchased. I suggest to my noble friend on the Front Bench that we need to do some serious work on that matter.
The article by my noble friend Lord Lawson was very helpful in as much as it made one think afresh about Europe. I have to confess that for many years I have said to people that there is no question whatever of our withdrawing from Europe. I believe that the time has come when we need to reassess that. Indeed, the Prime Minister has indicated that that is the case. The timetable that he has set out is right. In television interviews he is asked whether he would vote to stay in or to go out of Europe if there were a referendum tomorrow. However, that is a totally false question. People come down on one side or the other but usually state their reservations, which are then totally disregarded in subsequent headlines. That is the situation we happen to be in but, as I say, the Prime Minister’s proposed timetable is right and we should follow it.
My noble friend Lord Lawson and others are too pessimistic about negotiations. At all events, we should take the opportunity to negotiate. It would be absurd simply to say that we will pull out without any negotiation whatever. That would not be the right way to approach the problem. However, irrespective of whether the negotiations are likely to be successful, the touchstone is the financial transaction tax. If we fail to resist that being applied to the City of London, the possibility of successfully negotiating other issues may be less than one would hope. None the less, overall, it is worth entering into negotiations and it is worth while to have a referendum in due course, as is proposed.
Meanwhile, those who are in my party need to be very careful. There is not to be a referendum, as I understand it, unless the Conservative Party wins the next general election. If there is one thing that I learnt from some 18 years on the executive of the 1922 Committee in another place it is that the electorate are far more concerned about whether a party standing for election is united than they are about any individual policy. I lived through that in 1997. My only consolation was that the people on the 1922 executive who were being such a pain were the ones who lost their seats. We really must deal with this issue with a little more sensitivity. The press is bound to blow up enormously the matter of a referendum as a great event, which it may be, but we have to keep a sense of perspective on this issue.
6.20 pm
Baroness Hayter of Kentish Town: My Lords, I shall speak about consumer rights, on which a number of things are to be welcomed. First, I welcomed the opportunity of hearing the maiden speech of the noble Baroness, Lady Lane-Fox of Soho. We look forward to her continued activity on behalf of consumers, particularly in disadvantaged communities. Secondly, I welcome the proposed consumer rights Bill and everything in it. Anything which can be done to make markets work better for consumers is good for the economy, as well for consumers. I also pay tribute to the role played by the Minister, the noble Baroness, Lady Hanham, in accepting our amendment on requiring letting and managing agents to belong to an ombudsman
scheme. That is going to make a real difference to tenants and landlords, and help clean up the sector, which can only be good for the provision of much-needed homes. She should be proud of the results of her arm-twisting. Thirdly, I welcome the opportunity that will be provided through pre-legislative scrutiny of a draft Bill. This will ensure that we end up with a Bill that will make a real difference to consumers. That is probably enough of the good side.
I now turn to what is not in the Bill and where the Government have failed to help consumers. We on this side have tried to amend various Bills to help consumers. We sought to have the Prudential Regulatory Authority and Competition and Markets Authority set up consumer panels. The Government resisted. We sought to amend the Financial Services Bill and the Enterprise and Regulatory Reform Bill whereby service providers should have to exercise a fiduciary duty towards their retail savers or beneficiaries. The Government resisted. We asked for the Competition and Markets Authority to include members drawn from a consumer background. We failed. We sought to prevent the closure of Consumer Focus. Sadly, we failed.
Furthermore, funding of trading standards has been slashed, thereby making the identification and prosecution of scams and rip-offs even less likely. The Government also failed to introduce a register of lobbyists. Yet who has the money to pay for fancy public affairs companies? It is not consumers. Whether it is the tobacco industry, drinks manufacturers, the insurance industry, food producers or newspaper proprietors, their bought access is never in the interests of their customers but of those industries’ bottom line. We need to know who is paying for such access. Sadly, the Government omitted from the gracious Speech proposals in this area. When tested, the Government have shown themselves to be lacking in resolve to help consumers negotiate complicated or unfair markets. The Government have failed to put consumers’ interests centre stage. Other measures in the Queen’s Speech, such as requiring landlords to check the immigration status of tenants, are likely to lead to more unofficial letting or to fewer available lets, both of which disadvantage potential tenants.
I turn to the proposals, which, although welcome, do not go far enough and miss the opportunity to ensure that consumers always get a fair deal or, failing that, easy access to redress or restitution. We welcome the enabling of “opt-out” collective redress in competition cases, whereby firms found guilty of competition law breaches will be more likely to pay damages to all affected consumers. However, the proposals are limited to competition and do not cover breaches of consumer law. Why is there no provision for claims to be brought by representative bodies, which could cover product liability, mis-selling or unfair terms such as over bank charges? We welcome the proposal to clarify the law on unfair terms in consumer contracts, which will enable, for example, bank charges to be assessable for fairness by the OFT or its equivalent body. We welcome the introduction of redress for a breach of consumer protection regulations, which will clarify the law and extend consumers’ ability to claim for losses from misleading advertisements or aggressive sales practice. We welcome the remedy for consumers when they have not received what they expected from a service,
although we would like this to be extended to where the service was substandard, even though the provider used skill and care.
We welcome the provisions to clarify consumer rights for purchases with digital content. However, it is not clear whether a consumer can get a refund for faulty digital content. We will return to this matter in due course. As with our letting agents amendment, we support consumers having access to redress but would like to go further, with better enforcement and the possibility of a single portal to assist such access. We will seek to ensure that the Bill provides for a strong, accessible, collective redress mechanism, similar to those in Portugal and Australia.
Finally, where are the measures to respond to constant consumer problems? These include cold calling; energy bills increasing by £300 a year since the Government came to office; ever-increasing rail fares, up 9% a year after the Government allowed train operators to increase some fares by 5% above the cap; and extortionate charges on some pension savings such that on retirement some pensioners find that nearly half their pension fund has been wiped out by charges. We need a tough energy watchdog to force suppliers to pass price cuts on to the consumer and to ensure that the over-75s automatically get the cheapest tariff. We need intervention on rail fares and rights for passengers to get the cheapest ticket available, without having to be a whizz-kid on the computer—be they my noble friend Lord Mitchell or our latest noble Baroness.
We need transparent charges on pensions and savings, and to tackle the worst offenders by capping charges at 1%. In addition, we should have had a communications Bill to help consumers, involving greater protection for children and action to tackle the industry’s concentration and monopolistic nature. We need to strengthen people’s rights in a digital consumer’s charter that should cover privacy and online theft, price transparency, greater ease in switching providers, help for parents to protect their children online, improved access to decent broadband, consumer protection for digital payments, and effective action to tackle nuisance calls, texts and spam e-mail.
In short, we need action to create a culture that respects consumers and helps them to obtain a fair deal across all markets. We need to tackle rip-offs and sharp practice, and we need a Government to be on the side of users and consumers, not a voice for the producer or service provider over the less powerful consumer. We will welcome the consumer Bill but work to improve it to make it the best that it can be.
6.28 pm
Lord Mawson: My Lords, the first words of the gracious Speech tell us that the Government will continue to focus on building a stronger economy so that the United Kingdom can compete and succeed in the world. That is exactly right.
At a recent meeting with a large construction company that is playing a major role in rebuilding some of our public infrastructure, I was told how the company longed to build developments that were more “joined up”. The present silo approach to regeneration did not
make business or social sense with the limited funds now available. In recent years, there has been much talk and some action from successive Governments in seeking to join up public sector budgets because they get more bang for their buck, but the living examples of success are still rare. The silos that exist between education, health, housing and business funding remain stubbornly in place, and successful partnerships between the business, public and voluntary sectors are still hard to do because our procurement systems are broken. When times get hard, the tendency is for us all to retreat back into our familiar silos precisely at the time when the financial squeeze presents us with a real opportunity to address this enduring impasse. I fear that this is happening now, and without clear leadership centrally it will get worse.
When you have worked in a local community for 30 years, you gain the long-term view. You have seen government programmes come and go, and you have gained some measure of what works and what does not. There has been a whole host of attempts in recent years by successive Governments to join up local delivery. Everyone—particularly the business community—knows that that is really important and that it is the only way to make smaller budgets stretch further. As a result, there has been a whole host of initiatives. To name just a few, there have been local integrated services, Total Place, small area budgets, participatory budgeting, Total Neighbourhoods and the Neighbourhood Community Budgets programme. These government programmes had one thing in common: they were short-term initiatives promoted by one Minister. What seems to have happened is that as some have encountered the difficulty of making change happen, interest towards them has waned and the pilots have not been sustained or the Minister has changed. Another Minister has then decided that they want to tackle the problem and so they start again.
These initiatives seem to fall into two types. There are the Total Place-type initiatives, which are about bringing together local public services—for example, health and social care—and then there are the small area budgets and Neighbourhood Community Budgets programme, which seem increasingly to have taken the direction of consulting local people about local service delivery. However, it is far from clear why the process of consulting local people necessarily has an impact on the quality of local services or enables services to be delivered in a more joined-up way. Again, in our experience the private sector was excluded.
It may be helpful at this point to share with noble Lords some recent practical experience. This is not a criticism of government but it illustrates what can happen to those of us in local communities who are serious about this agenda. On the Department for Communities and Local Government website we are told that in October 2011 the Communities Secretary announced details of how areas can bid to trial two local approaches to integrated services: Whole Place Community Budgets and Neighbourhood Community Budgets. The website describes this dramatic new shift as,
“an opportunity to change the future of the way public services are funded and be the thumping heart of your community”.
We are told that 24 areas out of 45 had been shortlisted to put their name forward to work with Whitehall and develop neighbourhood-level community budgets to explore how different public sector funding streams could be brought together to both save money and create more integrated public services. The website says that the applications demonstrated a drive across the country to explore new ways to give local people more control over services.
Our partners in Tower Hamlets working in education, housing and health thought that this was a very good idea and timely, because we had been developing integrated services together for many years with some success and often against the odds. Here was an opportunity seriously to extend our work and create more joined-up solutions that focus on the individual and the family.
As partners, we applied for and won pathfinder status, and here I must declare an interest. I was asked to speak at a meeting of civil servants new to this field of work and to share our experience early in the process. I was also invited, with an excellent local authority CEO, to meet 15 directors-general from across government, who said that they were all keen to co-operate and learn from our experience of what works on the ground. We were encouraged by the offer of support and involvement from government. Although we did not want government to hold our hand, we did want understanding of the practical issues involved and a little oil in the wheels.
In Tower Hamlets we began to get practical, bringing local people and partners together. We developed a pilot programme and explored how we could bring budgets together and thus use the limited moneys that were available in health, education and housing more efficiently. Crucially, we wanted to involve local people in the delivery process and not in talking shops, thus creating buy-in, new skills and community ownership. We began to talk to major business partners to bring them on board; there was some interest.
There is real concern from politicians across the House about a lack of engagement with local communities, particularly at a time when people feel increasingly disengaged from the political process. We have had a taste of this in recent weeks. In my experience, people do not want to be just the recipients of the state and its services or to be consulted to death about what the state is going to do to them. No—our experience over many years is that many local people also desire to be involved and practically engaged in the delivery of services. New jobs and skills and innovation can come through this process, as we have discovered, and very poor people’s lives and those of their families have been changed for ever as a result.
After some consultation and research, our team decided to focus its efforts during the first year on the diabetes epidemic that is rife in Tower Hamlets. This epidemic needs to be tackled through a joined-up approach in the local community. The lead consultant at the local hospital told me that his caseload was overwhelming him. He agreed that the solution lay in people’s lifestyles and diet, and that it could be tackled only through a joined-up programme run in the community connecting health, education and lifestyle.
We created a business plan and began to commit individual budgets as a sign of good faith and to build the project around well established work we had already been doing in this area.
What we then experienced from government was what one of our very experienced CEOs described as a “journey in retreat”. Promises were made to work with us to “enable” the process, but when we asked the Minister to write two letters to the chairman of a supermarket chain and the chairman of the local hospital—both of whom were coming towards the project anyway—to help to oil the wheels, we were told that the officials advised against it. The more we sought to create integrated solutions, bring funding together, innovate and to take seriously what the Secretary of State had said about empowering communities, the more we experienced a process which encouraged consultation and talking shops and not delivery.
Given the health crisis we faced, this about-turn was serious. We were being pushed back into thinking we had explored 20 years earlier and had moved on from precisely because in our experience it delivered little change in practice and often led to increased apathy among local people, along with more talk and reports. My colleagues and I began to ask: is government under the leadership of any party capable of being a learning organisation? Very little, as far as we could see, was being learnt. I never saw the directors-general again and, as far as we can tell, we will now have to move forward on our own with, we suspect, little learning taking place at the centre. This we will of course do; we do not want wet-nursing by central government but we worry about the cost of this process and another wasted opportunity.
I suspect that this experience is not unique and that it has something to do with why the electorate, many of whom have become involved in this project, are increasingly sceptical about the ability of any Government to follow through and deliver. This is one policy initiative that was actually a very good idea: it could have led to deeper community engagement, joined-up innovation and a streamlining of public funding. We had created a project that we could all together learn from by acting both centrally and locally, but, as far as we can tell to date, there has been little follow-through.
So how do we move integrated working forward and deepen practical partnerships between the various sectors? First, we need to recognise the importance of long-term leadership. In my experience, real change happens in a community where there is clear, committed leadership that remains involved for the long term. Secondly, we need to resolve the confusion between democracy and delivery. The reason local services are not joined up is not that local people are not consulted. While it is good to understand the priorities and concerns of local people, joining up delivery is hard work and, if at every turn the partners feel they need to check via some amorphous consultation process, it is likely to run into the sand. Instead, we need to enable and encourage local organisations to deliver services together, and to use the Government’s procurement muscle to deepen partnership working between the sectors. Business is now up for this but it needs encouragement and not signals that point to a retreat.
Thirdly, what is the role of government? Everyone knows that we have to make this work. One of the reasons why there is such a loss of trust in the political process is the frequent failure of successive Governments to deliver on all their many promises. My colleagues and I suggest that the Government identify a figure who everyone respects and who will take long-term responsibility for this process in government. Then they should find an organisation outside central government to run the programme and agree a sensible budget with a 10-year contract.
To be frank, if the will or desire to do this is not there, my advice is to stop wasting everyone’s time with talk of joined-up thinking and action. The electorate know spin when they hear it. If the present Government want to distinguish themselves from previous Governments and distance themselves from broken political promises, I suggest our politicians focus on three words: delivery, delivery, delivery. My colleagues and I have found that trust is created and local people participate when you deliver in practice on what you say.
Is not an integrated, in-the-round community what politicians past and present are struggling to define when they use phrases such as the third way, big society and one nation? This is how you put flesh on the bones of what these terms might mean in practice and make them come alive for people.
I have an awful feeling that I could be making this same speech in response to many future gracious Speeches: I just hope that someone will prove me wrong. We can hope. I certainly will continue to worry about this issue like a dog with a bone because I know what a difference integrated working can make when you get it right and, of course, what moneys can be saved if you do it.
6.41 pm
Lord Faulkner of Worcester: My Lords, in my speech this afternoon I intend to concentrate on transport, with particular reference to the gracious Speech’s very welcome confirmation that the Government are proceeding with a paving Bill to allow work to proceed on plans for the construction of High Speed 2. I wish them well with that and with the hybrid Bill, which I hope may pass before the end of this Parliament.
I should remind the House of my relevant interests. I serve as an unpaid member of First Great Western’s stakeholder advisory board. I am president of the Cotswold Line Promotion Group and the Heritage Railway Association. I am also the co-author of a recently published book called Holding The Line: How Britain’s Railways Were Saved, which contains a political and social history of the railways, particularly since the publication of the Beeching report 50 years ago.
Perhaps I may start by picking up a theme that runs through that book. It is sometimes hard to recall how massive the turnaround in the public’s attitude to rail travel and the fortunes of the industry has been. In the 1970s, 1980s and early 1990s, the railways appeared to be in terminal decline. The process of retrenchment and cost-cutting, which had started at the time of
Beeching, appeared remorseless and inexorable. Numerous plans were hatched to reduce the size of the network further by line closures, cuts in services and fare increases.
Governments of both parties encouraged plans to substitute buses for rail services, particularly in rural areas. Weird enthusiasts for the Railway Conversion League were listened to as they put forward plans to concrete over the railways and turn them into busways. Thirty years ago, it looked as though the lobbyists for the road industry, road haulage and motorway construction might achieve their final victory. Back in 1960, the Road Haulage Association felt able to say in its journal, The World’s Carriers:
“We should build more roads, and we should have fewer railways … We must exchange the ‘permanent way’ of life for the ‘motorway’ of life ... road transport is the future, the railways are the past”.
Happily, it did not get its way because the public decided that they liked their railways and did not want them closed. By 2001, the distinguished City correspondent, Christopher Fildes, who served on the Railway Heritage Committee with me and was a journalistic colleague of the noble Baroness, Lady Wheatcroft, was able to write in the Spectator:
“Railways are a growth industry. Their most sustained attempts to drive away their customers have not succeeded”.
Twelve years on, the growth continues. In 2012, the total number of rail passengers exceeded 1.5 billion, compared with 630 million in 1982. Numbers grew by 5.5% in 2012, 7.2% in 2011 and 7.9% in 2010. The number of those travelling in the last quarter of 2012 was the highest for any quarter since the 1920s. It will not have escaped the attention of your Lordships that much of this has been achieved at a time of recession and in the face of fare increases above the rate of inflation, as my noble friend Lady Hayter pointed out. On 11 March, Sir David Higgins, chief executive of Network Rail, said in a speech at the Campaign for Better Transport conference in the Science Museum that,
“utilities such as airports and power have seen annual compound growth rates of no more than 1 per cent on average, yet rail has grown by 5 per cent compound every year”.
As people’s experiences of travelling by rail and the reliability of services improve, this growth is likely to continue. The West Midlands Regional Rail Forum says that Network Rail’s growth forecast for 2021-22 has already been achieved eight years early and it is a similar story elsewhere. Both the west coast main line and the east coast main line will reach capacity before the end of this decade. In the case of the west coast main line, that will be less than 15 years after the completion of one of the most disruptive and expensive upgrades of all time.
I do not understand how anyone can seriously argue that spending another £20 billion-plus on upgrading these two Victorian railways and disrupting services for years at a time, and in the end producing infrastructure that cannot support line speeds that are commonplace throughout Europe and the Far East, stands any sort of comparison with the benefits that will flow from building High Speed 2. To argue, as the HS2 opponents do, that the new line is only about reductions in journey time between London and Birmingham is completely wrong and misses the point. It is about
revitalising the economies of towns and cities in the Midlands and the north of England, and narrowing the north-south divide. It is about giving the railway the opportunity to satisfy the ever-growing demand for passenger travel. It is about reducing the number of car journeys and short-haul air passenger flights, both of which will have significant environmental benefits.
Perhaps equally important, High Speed 2 will—according to the WSP engineering consultancy—lead to 500,000 fewer heavy goods vehicle journeys on the M1, the M40 and the M6, which is the equivalent of 65,000 tonnes of CO2. The new railway will produce environmental benefits worth £1.3 billion over 60 years. For all those reasons, I am happy to reaffirm my unqualified support for High Speed 2, which is a rare example of a brilliant idea conceived by one Administration—thanks to my noble friend Lord Adonis—and then picked up and developed by their successor.
Before I conclude, there is one other matter that I wish to bring to the attention of the Minister. I have already given her notice of my intention to raise it in this debate. This is also a non-party issue in the sense that the previous Government took the initial decision and this one are sticking with it. I am talking about the western terminus of Crossrail, which is a hugely important and valuable project capable of transforming the travel-to-work experience of hundreds of thousands of commuters, as the noble Lord, Lord Deighton, said in his opening speech.
On 5 March, a number of Members of the other place and of this House, including the noble Earl, Lord Attlee—who I am very pleased to see in his place—and I visited the site of the new Crossrail station at Bond Street. The following week, I was taken by First Great Western on a tour of the new station at Reading. I was particularly interested to see included in the new arrangements a platform designed to accommodate four Crossrail trains an hour, should it be decided at some stage that Reading should be the western terminus, rather than Maidenhead. To me, and to almost everyone in the industry and outside it who understands these issues, it is intuitively self-evident that, following the Government’s welcome decision to authorise electrification of the Great Western main line, it is to Reading that the Crossrail trains should run.
I also learnt that we are within days of starting work in Maidenhead to construct the turnback facilities, taking around 18 months and costing as much as £35 million. I wrote to the noble Earl, Lord Attlee, on 18 March, making the point that if the decision was to be taken later to extend Crossrail to Reading, much of the new infrastructure at Maidenhead would not be needed and the Government and Transport for London would be criticised for wasting money. The Minister replied to me last week and I thank him for his letter. It contained the sentence:
“Officials will continue to work with Network Rail and the train operators on the timetabling issues presented by the introduction of Crossrail services on the Great Western Mainline”.
It did not, unfortunately, state that there would be any pause in the work at Maidenhead.
I raise this issue today because we are at the point where a decision must be made to prevent money being wasted at Maidenhead and to deliver a far better arrangement in its place. I understand that various discussions are going on behind the scenes involving Transport for London, Network Rail, the train operators and the Crossrail team. I ask that DfT Ministers get directly involved and help deliver a solution that makes best sense all round. I hope the noble Baroness will have an answer to that when she replies.
6.51 pm
Baroness Byford: My Lords, the Government are committed to building up the economy, supporting growth in the private sector and the creation of more jobs and opportunities. This is welcome. I also very much welcome the maiden speech of the noble Baroness, Lady Lane-Fox of Soho, because she spoke on the important topic of digital online and the growth of online services. Increasing the coverage of broadband and improving broadband speeds is but one way of achieving this goal. A survey of the Institute of Directors in January 2013 found that fixed-line broadband for urban businesses is generally good but that in rural areas growth was unsatisfactory. Its conclusions state that,
“broadband in rural areas is an urgent priority”.
The CLA estimates that 18% to 20% of rural areas cannot get broadband. This affects around 100,000 businesses, with a turnover of up to £60 billion, many of which are obviously farming or farm-related businesses. Rural broadband influences diversification and has enormous potential for on-farm increases. The noble Baroness stressed the importance of digital growth and online services. She commented that there should be a universal UK system and that it was a basic right for everyone.
I am grateful to the NFU for its briefing on broadband services. Defra’s whole-farm approach involves moving most or all of the farming-related services online and is run through Business Link. Without adequate broadband services many businesses are unable to progress and grow. The House of Lords Communications Committee report of July 2012 criticised the Government’s broadband strategy for failing to create a future- proof national network, concluding that the current programme risks leaving people and businesses in certain areas of the UK behind.
In his introduction to the debate on the report, my noble friend Lord Inglewood highlighted three key elements. First, broadband policy should be driven by the need to arrest and ultimately eliminate the digital divide. Secondly, it should be driven by a long-term but flexible view of the infrastructure’s future; the report referred to fibre-optic hubs that could bring open access into or within reach of every community. Thirdly, it should strive to reinforce the robustness and the resilience of the network as a whole.
I should have spoken in tomorrow’s debate, which obviously covers agriculture, but I cannot and so I have tried to pick three issues that are common to the debate today—namely, regulatory reform, broadband and local government. I move swiftly to regulatory reform.
My noble friend Lord Forsyth, who has just left his seat, said that he felt that there was no need to have in the gracious Speech a Bill to look at the effectiveness of the regulation of business. I am not sure that I agree with him but I share some of his thoughts. Within the agricultural sector, a farming regulation task force was set up in July 2010. It was asked to carry out an independent review of ways to reduce the regulatory burden on farming businesses. The report brought forward some 200 recommendations.
Defra responded in February 2012 and followed up with an implementation group chaired by Richard Macdonald. One year on, it has identified five priority issues. First, there should be a culture change, focusing on outcomes rather than on processes. Secondly, there should be a system of inspection and earned recognition allowing farmers to demonstrate best practice and earn recognition, which would reduce the number of inspections made on-farm. Thirdly, data-sharing and paperwork across Defra and its agencies should be improved. Fourthly, a system for overseeing government projects and developing ways to deliver simplified and integrated environmental regulatory messages should be followed. Fifthly, the electronic reporting of animal movements should be extended.
I have gone into some detail as the evidence reflects that change comes slowly. In its briefings, the NFU recognises that progress has been made but that it is slow, which results in frustration. Its plea is that the recommendations should be driven forward urgently, with the impact on the ground being the real test for delivery. I suspect that other noble Lords will have had similar experiences within their own range of businesses.
Finally, I turn to local government and particularly to planning. In a Written Statement last week from the Department for Communities and Local Government, it was stated that the secondary legislation will, among other things, allow underused and old-fashioned offices to be revamped as dwellings and existing unused agricultural buildings of 500 square metres or less to be used for new businesses, all without recourse to the planning system. As the Written Statement points out, the rural economy will be given a boost,
“while protecting the open countryside from development”.—[
Official Report
, Commons, 9/5/13; col. 5WS.]
The simplification of planning guidance and a careful relaxation of planning law will benefit both town and country—provided, that is, that the remaining rules are observed, and strictly enforced by local government where they are not.
It is known that in some areas the flouting of planning laws leads to both a marked decrease in community spirit and, in too many cases, to an increased risk for local inhabitants. An obvious risk is where a business is established in premises with poor access to a main road and where planning permission would have been turned down by the Highway Authority if it had known about it. Figures on serious road accidents have already shown a rising trend in rural areas.
A less obvious problem is that businesses without planning permission tend not to advertise their presence. Visitors in vehicles of all kinds use postcodes. Google focuses each postcode on one particular building and
satellite navigation systems take drivers to what might be a private dwelling. I know of one dwelling occupied by a single, elderly lady which receives unwanted callers several times a day, from 7.30 am until 9.30 pm. The drivers are looking for second-hand car offers, for sale over the internet, from premises on the other side of the road. Clearly, that site should not have been approved, and it was not.
On 24 April, permission was granted in another place for a Bill requiring local authorities to impose substantial fines for the flouting of planning regulations. Such a move would not affect legitimate development. However, it would support the National Planning Policy Framework, which explicitly recognises that effective enforcement by local government is necessary for maintaining public confidence. Is the Minister confident that local authorities have the planning officers and the finance to make sure that this happens?
Finally, I turn briefly to direct farming issues. Farms and the farming industries provide a variety of different businesses within the whole. They produce food, look after the countryside, care for biodiversity and are involved and engaged in energy projects. One thing makes the farming community different from all other businesses: it is subject to the vagaries of the weather. Over the past year, snow, sunshine and drought followed by floods have obviously had a big impact. Farm incomes for 2012 show a bottom-line decrease of some 14%. UK agriculture is but part of the food industry, but it is an enormously important one that wants to play its part. It needs people with vocational training and appropriate skills. Science and technology are hugely important, while innovation is key to making our businesses grow. Farmers are responding to these issues and they are willing to take calculated risks. They look to diversity and growing new ideas outside their businesses.
I welcome many of the proposals in the gracious Speech, but the Government are supporting many other things beyond the Bills set out in it.
7.01 pm
Baroness Warwick of Undercliffe: My Lords, I join with other noble Lords in congratulating the noble Baroness, Lady Lane-Fox of Soho, on a splendid maiden speech that was delivered with grace and feeling. I look forward very much to hearing more such contributions from her.
There was one piece of very good news in the gracious Speech. The Intellectual Property Bill will provide a new exemption within the Freedom of Information Act for pre-publication research. This is an amendment which I, together with several other noble Lords, notably the noble Baroness, Lady Brinton, argued for during the passage of the Protection of Freedoms Bill. It is true to say that the Government took some persuading. The Justice Committee of another place took up the argument, and the Government finally accepted that some real harm could flow from the premature exposure of ongoing research material. I want to congratulate the Government on taking this step and I shall certainly support the measures as the Bill progresses.
I am far less certain that we should wholly welcome the promised immigration Bill. In announcing the Bill in the Queen’s Speech, the Government made it clear that the purpose was to,
“ensure that this country attracts people who will contribute, and deters those who will not”.
I think that there is a danger in this description. It seems to play to popular notions of “good” and “bad” immigration. It also suggests that we can know absolutely what a migrant will bring to this country in the future. I can think of many examples of people who came to this country as refugees who have made enormous contributions, not least in academic fields. However, in framing the introduction of the Bill in this way, the Government have sought to emphasise the value of many migrants to the UK. We should welcome and not deter them.
I am sure that the Prime Minister and many of those close to him understand and share my view that international students are an enormous asset to the UK and make both an immediate and a long-term contribution to this country. Where I think we differ is in believing that the UK is doing the best it can to attract such people. Although the Prime Minister has gone some way to explaining that the UK welcomes international students, that has not been enough to counter the effect of recent policy restrictions and, perhaps more significantly, hostile rhetoric. If the Prime Minister wants to see growth in this important area of university activity, he is going to have to do more. Removing international students from the net migration target would send an important signal that the Government do not intend to meet that target by means of steadily tightening the rules for students. In that context, can the Minister explain how the measures in this Bill will affect students? Will they be affected by new restrictions on access to the NHS? Which appeal rights will be lost? What calculations have the Government made on the impact of requirements to check immigration status in regard to the supply of private rental accommodation?
If the Government’s aim is to achieve a balance in policy which ensures that the UK attracts migrants who contribute to the country, what plans are in place to increase our attractiveness, given the evidence that we are losing ground? The Minister may say that applications for visas to study in universities are up, and that UCAS figures are also up. There are a good many people in this House who understand these figures and know that the really important measure is the number of new enrolments. These figures, as the Minister will no doubt be aware, have shown a decrease recently, particularly for post graduate taught students. In the context of a rapidly growing market, this should be a cause for concern. While the Government are clearly doing what they feel they can to put off those who, in their view, are unlikely to contribute, where are the measures to attract those who clearly do make an unequivocal contribution?
Finally, I want to speak briefly about something which was absent from the gracious Speech. Last year, we were led to expect a higher education Bill. We now know that we will not see one this side of an election. However, even without a Bill, the Government will be taking decisions that will have a major impact on the
future of our universities. The spending decisions that the Chancellor will make in the next couple of months for the years 2015-16 will be very challenging indeed, and I certainly do not envy him the task. But the biggest priority facing this Government is the return to growth. It would be economically short-sighted in the extreme to cut funding for teaching and research at this time. NESTA has shown that 54% of jobs growth between 2000 and 2005 was produced by innovative companies. It also showed that innovative companies employ more than double the share of graduates than non-innovative businesses. The UK now ranks second in the world for university-business collaboration. It amazes me that we still spend substantially below the OECD average on tertiary education in the UK, and we spend substantially less on research than many of our competitors. This would be precisely the wrong time to make that disparity even worse. The industries which are going to help us re-establish growth need graduates and they need a strong research base. I hope that the Government will not prioritise one at the expense of the other. Yes, we need to maintain expenditure on research, but not at the expense of student numbers or efforts to widen participation.
In that context, we know that part-time undergraduate numbers in England have decreased considerably, with a 40% drop in part-time enrolments compared with 2010. We really cannot afford to ignore this. I am pleased that the Government have asked Universities UK to lead a review into the reasons for this decrease. The fact is that although many in higher education have been aware of the issue, little public or political attention has been devoted to it. A recent meeting of the All-Party Parliamentary University Group heard some of the possible reasons for the fall, but we were all struck by the fact that if something like this happened to the full-time population, there would be an enormous reaction and great concern; there should be concern about part-time provision too. The changing demands of employers mean that we have to provide routes back into education for people long past their early twenties. I would like to ask the Minister what assessment has been made of the impact of the drop in part-time enrolments on the economy.
I hope that the Government will look carefully at the recommendations of the Universities UK review when they are published in the autumn. I hope, too, that in the difficult spending round ahead, we will see that the Government are committed to investing in both teaching and research. I know that many others in this House will join me in making that case over the next few months.
7.08 pm
Baroness Bonham-Carter of Yarnbury: My Lords, like the noble Baroness, Lady Byford, I should really be taking part in tomorrow’s debate, in my case concentrating on culture and education. Today, I will talk about the creative industries, so there is quite a nice overlap. However, perhaps I may start by offering my congratulations to the noble Baroness, Lady Lane-Fox, who I know a little. She made the most fantastic maiden speech. Her father, the distinguished historian,
was sitting next to me and said that he was far more nervous than she was, and I suspect that that was probably true. Perhaps he will give the noble Baroness hints for her speeches on horticultural and historical matters.
I will concentrate on the creative industries and the contribution they make to our economy, our shared identity as communities and as a nation, and our reputation in the world. Matthew Parris has referred to the culture of a country as its heartbeat. It is a fitting image, as considerable economic benefits flow into the body politic from cultural activities. The UK’s creative industries are a significant contributor to our economy and can, if properly nurtured, play a key role in the nation’s financial recovery and be part of the solution to the problem of our young people facing unemployment, to which the right reverend Prelate the Bishop of Birmingham referred. They are a result of innovation, ideas, imagination and spontaneity, inspired by the rich tapestry of British arts and culture. As a country, we have always been blessed with a wealth of creative talents which have shaped and illuminated our history and national identity.
We have a global reputation for creativity and innovation, even more so since last year’s Cultural Olympiad. Who can forget that opening ceremony? It was a beautiful and brilliant spectacular; complex and humorous. In celebrating the entity that is the United Kingdom, it was a showcase for our great creative industries. We saw our pre-eminent conductor, Sir Simon Rattle, performing with Mr Bean. There was James Bond, first the product of a writer, Ian Fleming, and then of film-makers, actors, special-effects creators, costume and set designers, and those who make the costumes and sets. It celebrated our children’s literature, music, television and art, and how art and design can come together in such a wonderful creation as Thomas Heatherwick’s “The Cauldron”. And centre stage of course—literally—was Tim Berners-Lee, British creator of the world wide web. The ceremony was shot through with our creative accomplishments, and was a huge one in its very self.
Aware as I am that this is a debate partly about the economy, I have some statistics. The UK’s creative industries are worth more than £36 billion a year, generating about £70,000 every minute for the UK economy. Employment in the sector has grown at double the rate of the economy as a whole. At least £856 million per annum of spending by tourists who visit here can be attributed directly to arts and culture. The economic contribution of the arts and cultural sector has grown since 2008, despite the UK economy as a whole remaining below its output level before the global financial crisis. The UK has the largest cultural economy in the world as a proportion of GDP. That is all according to a report brought out by the Arts Council last week. That last point is crucial, because in today’s global economy, where capital and labour are so mobile and goods and services can be produced almost anywhere, it is the power of ideas and innovation, and of creativity and design adding value, that will bring growth, economic success and prosperity. The world’s creative industries make up around 7% of global GDP and are rightly being recognised as crucial
to economic success. While ours are a driver for economic growth in the UK, they are also helping our country compete effectively on the world stage.
I am lucky enough to be the Prime Minister’s trade envoy to Mexico. On a recent trip, I was impressed by the opportunities that this one country potentially offers the UK in terms of trade and by the reputation that goes before us there in the area of the creative industries. Guadalajara, the second largest city in Mexico, was designated last year by the new Government as a digital creative city. Developing that is a priority for the Government and for the governor of that area. It will focus on attracting technology companies that produce video games, movies, multimedia and mobile applications—all areas in which we excel—and offers a clear opportunity to achieve our Government’s target of doubling bilateral trade with Mexico by 2015.
Then there is the contribution that creative industries make to the vitality of our own society. Here, like my noble friend Lord Razzall, I will quote John Maynard Keynes, although in my case it will be with his Arts Council hat on. He said that government must recognise,
“the support and encouragement of the civilising arts of life as part of their duty”.
An area of great concern is the cuts being inflicted at local government level on arts and culture, despite LGA and Arts Council research that shows the benefits council investment in these areas brings—revitalising local economies and regenerating neighbourhoods that have seen traditional industries decline. Sheffield is an old example of this: an economy that was based on the manufacturing of steel, cutlery, engineering and tool-making. Its city council was the first to recognise that investing in cultural industries was an alternative as a source of employment creation and urban regeneration. It discovered that putting money into culture became investment rather than simply subsidy.
As I mentioned at the start of this speech, I sit on the board of the Lowry in Salford. The idea behind it was to build a major arts complex as a trigger for the regeneration of the area. In 1996, £64 million of National Lottery money was allocated. Central to the Lowry’s ethos is interaction with the local population through a community and education programme. An example is the “Walkabout” project, in which a member of the Lowry team and a range of artists spend 14 months within a specified community—recently the Yemeni and Orthodox Jewish communities. The primary aim is to help them turn their own ideas into creative projects that articulate local issues. A recent report showed that 71% of, I think, the 2,340 people involved in it said that it helped them develop skills which would be useful in future jobs while 81% said participation made them feel more part of their local community. The establishment of the Lowry has been a resounding success in encouraging social cohesion but also as a catalyst for the regeneration of the local economy. The BBC’s decision to relocate some of its key departments to Salford Quays and the subsequent development of MediaCity are clear evidence of this. They brought with them employment, traineeships and new floor space for business and residential property.
In conclusion, the creative industries punch above their weight, providing a significant return on what government invests. The UK is fortunate to have a
powerful creative industries sector, but we must maintain it. This creative economy needs creative innovators and employees—we must continue to create the creators. Interestingly, this is an area where we do not have a jobs problem but a skills problem, so it is excellent that the coalition Government have listened to the industry and included computer science in the science strand of the EBacc; and excellent that, last October, the Secretary of State for Education announced bursaries of £20,000 for 50 top graduates to train as computer science teachers.
However, the creative economy needs people who are not just skilled in computer science but also art and other creative subjects. My noble friend Lady Hanham will not have heard this but many other noble Lords have heard me ask about Darren Henley’s review into cultural education, which was published 18 months ago and greeted with great enthusiasm by the Secretary of State for Education. We were told that a national plan for cultural education would follow immediately. When I asked last autumn, I was told we would be getting it this year; when I asked at the beginning of this year, I was told it would be in the spring. We may or may not have had a spring but we certainly have not had a national plan for cultural education, so I am asking again when this might happen. We should listen to such successful and highly respected individuals as Sir James Dyson and Sir John Sorrell, who argue that we should invest more in creative education and design.
The other area in which the creative industries struggle is in getting access to finance. It is a two-way problem. The banks and the regional development funds do not understand the creative industries and the creative industries are not aware of the various support schemes that exist. I commend the coalition Government on setting up the Creative Industries Council, the remit of which includes addressing this problem. But I draw to the attention of my noble friend the Minister the CIC’s Access to Finance Working Group Report, which says:
“In order to grasp the opportunity, investors must learn to understand creative innovators, and creative innovators must learn to make themselves investor-ready … The challenge for public policy is to address the shortage of risk capital in creative content companies and the dire consequences if ignored”.
The creative industries are worth more than £36 billion a year and employ 1.5 million people in the UK. With the right support, they have the potential to bring even more benefits to our communities and our economy.
7.21 pm
Lord Borrie: My Lords, the great German Chancellor Otto von Bismarck once said:
“Laws are like sausages, it is better not to see them being made”.
Of course, we in this House see laws being made all the time. It is what we do. We use words such as “scrutiny” and “amendments” and so on, but what we do is watch laws being made. Sometimes it is not a very edifying sight. Since naturally I will choose examples of recent times, it is not really a blame that I can attach to a Government of any particular colour.
We are very familiar with Bills that have been through all stages in the other place and yet we find they have been inadequately discussed or whole chunks of them have not been discussed at all. Sometimes we get Bills in this House where Ministers have to produce all sorts of amendments because they have only recently thought of things or because of points made by Back-Benchers in the other place or this House. Sometimes, as in recent Sessions, we get Bills such as the Public Bodies Bill or the Enterprise and Regulatory Reform Bill, which range over an unrelated mix of topics so it is quite difficult for us to understand what the specific aims of the legislation are. Sometimes the aim of the Bill may be clear but the solution that the Government propose to us is not at all clear. Sometimes new institutions are created that are not really necessary.
For example, in the previous Session, the purpose of the Groceries Code Adjudicator Bill was perfectly clear and the Government had a perfectly good answer to the question: what is the purpose of the Bill? The Competition Commission had recommended that because of the overweening powers of supermarkets, suppliers such as farmers and others deserved some sort of protection and dispute machinery. Why on earth did the Government not simply give this role to the Office of Fair Trading, which was about to be amalgamated—under another Bill of the Government’s—to form a powerful competition body called the Competition and Markets Authority? Instead, a new institution was set up, a charming lady has been appointed; nobody knows how many cases it will receive, but a whole new institution has been set up with a back office and all the rest of it. I do not know how much work it is going to do. It must be very difficult to estimate because “groceries” is very narrowly defined. Nobody knows quite how many different anti-competitive practices may emerge that deserve to be looked at by this adjudicator. It may take some time to know what the result is. It does not even cover all supermarkets; only the biggest ones are specified.
Time and again, the Government tell us that there is a great need to protect small and medium-sized enterprises. I apologise to those who think that there is a real difference between small and medium-sized. Of course there is, but they are classed together for many purposes and that seems quite reasonable. One of the troubles that SMEs—as I will continue to call them—suffer from is late payment of debts. Larger companies deprive SMEs of their cash flow because the cash flow does not proceed in accordance with the dates that the contract has set out. Payments are delayed and small companies have to put up with that. This is a very real problem. I have not seen the full report yet but I am glad to note that the special adviser to the Government on matters of enterprise, the noble Lord, Lord Young of Graffham, has pointed specifically to this problem as something the Government ought to deal with. Of course, I entirely agree.
To my mind, instead of creating some new body, one should look at the Financial Conduct Authority, which was set up recently by the Government; it is a perfectly good, existing body that could be given the task of assisting the creditors among the small enterprises which really need assistance. It is unreasonable to leave it to consumers or small businesses to fight their
own case. If they start fighting their own case, they may find that that supplier does not wish to deal with them again.
I note the very worthy sentence in the gracious Speech that:
“A draft Bill will be published establishing a simple set of consumer rights to promote competitive markets and growth”.
It will be very important to see how far the ordinary consumers will be assisted—because they will need assistance—in getting advice or pursuing their case, by citizens advice bureaux, trading standards officers and the like. They will need that help. How far will the resources be provided?
“A simple set of consumer rights” sounds like some kind of holy grail, and people have been using that phrase for quite a long time. I have been involved with the reform of consumer law one way or another for about 50 years. In the 1960s and 1970s Governments of different political colours set about making a number of changes; for example, making illegal any contract terms that sought to exempt a seller from his normal liability to supply goods that are fit for their purpose and of satisfactory quality. Incidentally, it used to be “merchantable quality” but it was reasonable for the Houses of Parliament to accept that “merchantable quality” was not a phrase that would appeal particularly to the ordinary consumer and something else was needed, and so one has “satisfactory quality”, bearing in mind the price and description of the goods. That was an excellent change, but I wonder whether the setting out of consumer rights more simply can be achieved, because it may be very difficult. It may be asking the impossible to set out rights in such a way that they are self-explanatory and the consumer needs no help, but I am delighted, as others are, to see the Bill, and to see how it might be achieved.
7.30 pm
Lord Sutherland of Houndwood: My Lords, there is much that has been excellent in the rich tapestry of speeches which we have already heard, but I am tempted to say, “And now for something completely different”, which I hope is not too Pythonesque.
I wish to talk about greed. I will not be surprised if this produces a frisson of embarrassment. It is perhaps to be expected that a right reverend Prelate should use this word from time to time, because that is partly what they are for. It is perhaps not unexpected if an ex-trade union official does likewise, because in the days before sharp suits replaced cloth caps talking about greed was fairly regular practice. It is perhaps not unexpected if a “leftie” academic does this, for, after all, we do not pay them particularly well and they probably have not got over being a student at the LSE in the 1970s. And so on we could go, but it is still unsettling to hear the word in polite company. It is a bit like using the word “fornication” at a Mothers’ Union meeting, or confessing to preferring football in the directors’ box at Twickenham. However, I have to tell your Lordships that the world has changed. The Prime Minister has been reported in the press using the word, as has the Chancellor of the Exchequer. It has appeared in a Times leader and even in a report in the Financial Times. So, thus encouraged, I continue.
Perhaps I may offer you two different interpretations of the word. The first is from Gordon Gekko in the film “Wall Street”. “Greed”, he said, “is good”. There is a remarkable scene in the film where he persuades unwitting customers to buy useless products. Contrast that with David Hume, who wrote in his Treatise that greed—he used the 18th-century term “avidity”—is the most destructive of all the vices. That is strong stuff.
Which of these is right? And what does it have to do with the gracious Speech? The first clause in the speech states that,
“my Government’s legislative programme will continue to focus on building a stronger economy”.
“It will also work to promote a fairer society that rewards people who work hard”.
These themes are reiterated and re-emphasised:
“My Government is committed to a fairer society where aspiration and responsibility are rewarded”.
These themes, of the economy and fairness and justice, are tied together in the Queen’s Speech. It is difficult to talk about things such as greed in the various debates on the Queen’s Speech—there is no particular section that deals with it, so I am taking today.
Two questions arise. The first is whether Gordon Gekko was right about the driving force of capitalism—if he was, it is a very serious matter, and it is claimed by some that that is the case—or whether David Hume was right and has given us fair warning.
The second question is: what is the relationship between a stronger economy and fairness? That relationship is posed in the gracious Speech. I am with Hume in the voting lobby on both these questions. Hume’s case is pretty straightforward. He argued that one of the two major responsibilities of the state was to enshrine in law the rules concerning property—who owns what, what are the grounds of legitimacy of ownership and what are the rules governing the transfer of property and wealth, because societies, until well into west European history, used other means of transferring property and other means of claiming legitimacy of ownership. This covers much of what is important to all the members of our society. It covers ownership of property, payment of wages and salaries, payment of taxes in life and death, inheritance and financial gain or loss.
Hume argues that in a society where everyone understands these rules and sees them enshrined in law, we find them broadly acceptable. In such a society, there will be stability, continuity and sustainability, which are essential in many ways—not least in “building a stronger economy”, because without these civic virtues enshrined in our society the strength of the economy will begin to fray. It would also help in “strengthening Britain’s economic competitiveness”—another phrase from the gracious Speech.
However, connoisseur as David Hume was of the ways of men and women and the contortions of civil society, he saw that the needs of society went beyond the simple definition, simple acquiescence and enforcement of law. A just society goes beyond simple acquiescence in words of the law; it goes beyond the capacity of the
state simply to enforce the requirements of the law. A just society requires the acceptance of a shared concept of fairness within that society.
Acquiescence in the law is fine, and indeed necessary up to a point, but it is not a sufficient condition of health in a society, whether economic health or civic health. If one’s sole criterion of acceptable behaviour, commercial and financial, is whether that behaviour is in accord with the law, Gordon Gekko becomes the relevant guru—“Greed is good”, if you can get away with it. If the definitions of law are inadequate or, even more, the enforcement of law is weak, then “grab all you can” is the order of the day. Forget flaccid words such as “fairness” and “justice” even if they feature in the gracious Speech. Tax evasion is, after all, not the same as tax avoidance, especially if you are an international company with international tax arrangements. Tax avoidance is okay, provided your overseas bank account is sufficiently shielded from the gaze of HMRC.
Greed in those circumstances, Gekko would claim, is actually good—it is good policy; it is the right technique to use. After all, as both Amazon and Starbucks argue in these circumstances, it provides jobs and satisfies customers. There is some good in it. “Well, what is wrong,” some would ask, “with the going rate of £4 million as an average perhaps annual bonus in certain areas of the financial services? Four million pounds is not big by comparison with some of the bonuses paid, but it is the equivalent of 40 years’ earnings for a university professor, a junior consultant and all sorts of people who are considered reasonably comfortable. There is something odd; there is a distortion that we have drifted into when that kind of figure—and that is at the lower end of the scale—is seen as acceptable.
“All very well”, you might say. “You’re wearing your conscience on your sleeve. What is to be done about it? It is not so easy to deal with”. I have to declare an interest here, lest your Lordships get the wrong impression: I am actually a capitalist. I chair an SME that employs 130 people, most of whom are software engineers, in the town of Halifax. It makes a major contribution to the employment of talented young people. We have a strong overseas sales portfolio; we know what this is about; but just conforming to the letter of the law is not enough—the company is called Frog, by the way, if you want to check it out.
What do we do about it? That is hard. It is not easy to change a culture, but that is what is required. There has to be a change in culture. This is not the politics of envy; I am reasonably comfortable, as many Members of this House are, but it has to do with the way in which we see the future of our society.
Hume has two suggestions for us to turn our minds to. He says that the capacity to be a mature moral agent with mature moral opinions has two sources in society. One is the family and the other is education. In the family, the two year-old learns that it is not just, “Me, me, me; mine, mine, mine”. That begins in the family. In education, virtue has to be learnt, it has to be taught, it is part of how we see the future development of young people, but that is a story for another evening.
7.40 pm
Lord Sheikh: My Lords, I am very pleased to speak in this debate. Last week’s gracious Speech was rightfully centred above all else on the economy. It was a reminder to us all that although we have made some progress, there is still much to be done and our Government are committed to staying the course and maintaining our disciplined approach of austerity. Even more than that, it was about managing our economy in a way that is fairer for people and rewards those who work hard.
As a businessman myself, I was particularly heartened to see that central theme running through the very heart of our plans for the next 12 months. I am sure that everyone will agree that the way to strengthen our economic competitiveness is by growing our economy back to the health that it once enjoyed. That will be achieved only through more companies doing more business and offering more job opportunities.
I believe that the twin engines behind achieving that will be those of increasing our level of international trade and attracting higher inward investment from overseas. Last week, the Prime Minister spoke passionately to financial leaders at the global investment conference, when he rightly said that we face a sink or swim moment in the global economic race. Indeed, two of several key points that the Prime Minister outlined were focusing on trade deals and ensuring that the UK remains as internationally connected as possible.
Encouraging figures were also released last week which showed that our successful management of the 2012 Olympic Games brought the UK an extra £2.5 billion of direct foreign investment, increasing our productivity and, ultimately, our competitiveness. It created 58,000 new jobs, and 105,000 jobs were safeguarded as a result, firmly retaining our position as the leading destination for foreign investment in Europe. UK Trade and Investment was involved in helping to deliver the majority of those projects and should be applauded for its efforts.
Our focus must now turn to maintaining the momentum. We need to prove to the rest of the world why the UK remains an ideal place to do business. Specifically in terms of trade, I believe that we must begin to look much more seriously at developing our trade relationships in Africa. We have historic ties with some African countries and we can build on those connections further. Strong growth over the past decade has already helped to reduce poverty, and the International Monetary Fund recently forecast that sub-Saharan Africa will grow by 6% over the next four years. In fact, Ghana, Mozambique, the Congo, Liberia and six other African economies are expected to grow by 7% or more this year. To put that into perspective, the only other emerging economies in that 7% growth club are China, India and Vietnam.
It is therefore a very good time for British companies to get more involved with and invest in Africa. We must capitalise on that rapidly expanding economy simultaneously to grow British business and to help to drive further development and job creation across the African continent.
Here at home, as specifically mentioned in the Queen’s Speech, we must also continue to grow our private sector. Well over 1 million new jobs have been created since 2010, which has played a key role in the reduction of our deficit by one-third. I am very confident in our Government’s commitment to increase that further by a number of encouraging policies.
The £2,000 allowance on national insurance contributions has been welcomed with open arms by businesses across the board. It will particularly help those smaller firms which currently find that a substantial financial burden and means that one-third of all employers will not have to make any further national insurance payments. Research has shown that employers favour that measure, and it will be a business-boosting initiative. The Federation of Small Businesses has even stated that it went beyond what it was asking for.
The continued cutting of corporation tax is also helping private businesses to keep more of their cash to invest in expansions and employ more people, while promoting the UK as an attractive place for overseas companies to set up businesses here. Our Government have also promised to reduce the burden of excessive regulation on business. Again, that will make a considerable difference to small and medium-sized businesses, which find themselves bogged down with health and safety laws and restrictive red tape.
If there was ever a time to do away with the over-bureaucratic legislation that holds some businesses back, it is now. In particular, I look forward to seeing progress on the scaling back of consultations, audits and judicial reviews, as well as the elimination of equality impact assessments.
The latest figures show that we now have 4.8 million companies; 75% of them are sole traders; and 96% of all firms in the United Kingdom employ fewer than 10 people. It is therefore safe to say that small businesses will continue to drive us out of the economic downturn. The SMEs should, however, utilise digital technology as much as possible. That will be essential for their survival and growth.
I have always supported SMEs in my business life. In that regard, I declare the interest that I am chairman and chief executive of an insurance organisation which helps smaller organisations to place the insurance covers. I add that I was previously the chairman and chief executive of an organisation which had connections with more than 1,000 smaller insurance organisations.
In addition to cutting and reforming where necessary, it is also the job of government to invest in infrastructure to help to nurture growth and provide extra jobs. I was glad to see that explicitly referenced in the gracious Speech, with a specific focus on the development of the High Speed 2 railway line. I appreciate some of the controversy that inevitably comes with such a large-scale project, particularly on the acquisition of land, but the long-term benefits that it will provide to businesses across the country cannot be underestimated. It also takes a significant step in addressing two economic policies that I feel most strongly about—that of rebalancing our economy towards a manufacturing
sector, which made our country so great; and promoting the redistribution of growth to many of our cities and regions nationwide.
Through such turbulent times, I believe that it is crucial that the Government are seen to be acting not just in the interests of economic health per se but in a way that also promotes economic fairness. That was another key pillar of the Queen’s Speech and one that goes hand-in-hand with our disciplinary approach to finances. It is heartening for me to see a government pledge on,
“building an economy where people who work hard are properly rewarded”.
I have always believed strongly in the notion of individual responsibility and reaping rewards from one’s own commitment and perseverance, and have spoken to that effect in your Lordships’ House in my support for reform of the benefit system.
Let us make no mistake: this Government’s welfare reforms are about making sure that the right people are helped back in to work while allowing for increased levels of support to those genuinely in need. Simplifying and rebalancing the ways in which benefits are considered and awarded can be seen only as progressive, particularly in the current climate.
I also welcome the inclusion of a Bill to help businesses protect their intellectual property. I have already declared my interest in the insurance business. I add that I have arranged insurance schemes for the protection of patents and copyrights. I therefore fully appreciate the value of a Bill to protect the intellectual property rights of businesses across the country. This is essential if we are to be seen as a centre for innovative ideas and products.
Before concluding, I wanted to mention my appreciation for the inclusion in the Queen’s Speech of the Government’s focus on preventing sexual violence in conflict worldwide. I have spoken on this subject both in your Lordships’ House and at several meetings elsewhere, and I am very grateful to the Government for placing a focus on it. The victims of these heinous crimes deserve justice, and it is up to countries like ours to provide the support that they need and to take effective action to deal with this dreadful problem. I have made clear my appreciation of the Government’s £1 million funding to the Office of the UN Secretary-General’s Special Representative on this matter, and I look forward to further progress in this regard.
7.51 pm
Baroness Turner of Camden: My Lords, I have decided to speak in this debate because I feel that many of the problems that we all face stem from the policies on the economy. We all know what the problems are—unemployment, declining living standards, public sector cuts and general feelings of dissatisfaction that became manifest during the recent elections. It is now generally accepted that we need growth and that the economy needs to be rebalanced. The lack of balance is obvious in the growth of the south-east compared with the decline in the Midlands and the north. Areas where once mining, steel and shipbuilding provided
often highly skilled employment to the local population are instead now areas of high and continuous unemployment.
My own union, Unite, has frequently drawn attention to the need for government policies to do more to support manufacturing industries. It says that while Britain remains an engineering powerhouse, it is suffering from a crumbling infrastructure, a growing skills shortage and years of neglect from successive Governments, particularly that of the Thatcher Administration. There is concern that manufacturing is not now showing the growth that is required. Unite believes that this is because of subdued domestic demand, particularly in the construction industry. The cutbacks in public expenditure have also had an impact on manufacturing.
The union calls for an active industrial strategy to be developed, similar to that already existing in Germany. There is now apparently an increased interest in the German strategy, with the New Statesman devoting its recent issue to the subject, while today we have had well informed contributions on the same subject from the noble Lord, Lord Tugendhat, and my noble friend Lord Monks.
Unite also draws attention to the relative success of the automotive industry in the UK, where the Automotive Council, which involves the union, works extensively to promote the industry. It also believes that there should be a strategic investment bank. The Government have of course committed themselves to the establishment of a Green Bank, but a strategic investment bank could provide access to funding for innovative companies, including small businesses. The contribution that unions make to the training of their members is often overlooked. The TUC has always had a skills training programme called Unionlearn, and refers to this in its current statement on the economic situation.
During the previous Session of Parliament we considered two pieces of legislation that one might have thought would have addressed some of these problems: the Growth and Infrastructure Bill and the Enterprise and Regulatory Reform Bill. Both have now been accepted by both Houses, but both contained provisions weakening employment rights, making it more complicated and costly to sue for unfair dismissal, changing legal requirements relative to accidents and illnesses through work and making it more difficult for workers to obtain compensation. Then there was the peculiar provision whereby workers surrender employment rights, fought for by previous generations, in return for shares. I and a number of noble Lords opposed those provisions—unfortunately, without success. The Government appear to believe that a system in which workers are regarded as disposable—hired when needed and sacked without rights when no longer required—will improve the economic situation. I think that they are wrong. The support of the workforce is necessary if companies are to succeed. Will Hutton, the director of the Work Foundation, put it very well when he said that,
“it is only through workforce engagement and commitment that successful innovation can be achieved. Care must be taken to ensure that procedures and processes embody fairness—in performance management, in promotion, in setting bonus targets, and in resolving disputes. In this respect trade unions can be
important custodians of good faith processes, and as communication routes that uphold the authenticity and integrity of management actions”.
Of course, trade unions insist on good pay and conditions. One of the problems about the private sector, where union organisation is low, is that the pay is too low as well. The benefits system is actually subsidising employers who pay low wages. That has an effect on the housing market too, where housing benefit has to be provided to ensure that families are not rendered homeless. We have discussed these issues in the House in the past, when I and other noble Lords have said that rents are too high and pay is too low. The TUC is calling for the introduction of the living wage, in the hope that this will lift families out of poverty.
These are all important aspects of the economic situation that we have been experiencing. The austerity measures that have been introduced and are continuing have not helped—indeed, quite the contrary. A determined effort by the Government is needed to introduce measures to stimulate the economy, particularly by assisting the financing of innovative companies in manufacturing and other industries that can contribute to growth.
The measures already taken in regard to apprenticeship training are welcome. These are necessary in light of the unacceptable level of youth unemployment. However, we probably need to go much further, particularly for vulnerable and poorer disadvantaged children. The role of unions in developing such schemes should not be underestimated.
We need to rebalance the economy. We cannot rely on financial services, important as they are, to produce the growth we need. The Government should reconsider their current policies. They need to change direction.
7.57 pm
Lord Shipley: My Lords, I declare my interest as a vice-president of the Local Government Association. I welcome the comments of my noble friend the Minister, reflecting his and the Government’s support for faster growth by devolving greater financial powers to local government and local enterprise partnerships, particularly from 2015 with the proposals for the single pot. They are hugely welcome.
In the gracious Speech itself, I welcome in particular the proposals on national insurance, which will cut NI for small businesses through the £2,000 employment allowance, thus generating new jobs. I welcome High Speed 2, which will increase passenger capacity, freight capacity and speed in linking the north of England, Scotland and the Midlands together and linking them in turn with London and the south. Better connectivity will drive faster growth.
I welcome the Energy Bill, or its continuation, which will create green jobs and growth, with up to 250,000 jobs in the private sector following an estimated £110 billion of investment. However, in terms of energy, that growth needs to be achieved without ever-spiralling costs to consumers. Today it is reported that almost one-third of UK households say that the cost of gas, electricity and water has become their biggest worry, and the Government will need to pay very close attention to that trend.
I thank my noble friend Lord Bradshaw for his comments on the A1 in Northumberland and the need for it to be dualled throughout its length. On grounds of safety, volume of traffic and access to east coast ports, particularly from Scotland, and to grow the local and regional economy of the north-east, the case is unanswerable, and I hope progress will be made soon. I thank my noble friend Lady Kramer for her constructive and timely suggestions around regional banking, which could be a major catalyst in driving regional growth.
I shall refer to three strategic issues relevant to the gracious Speech that could help the Treasury: first, reducing public spending where it is higher than it need be by investing more in prevention; secondly, reducing overhead costs caused by duplication in public service provision; and thirdly investing further in social rented housing.
In terms of prevention, I am very disappointed that no Bill is yet proposed on the minimum pricing of alcohol. Recent research from Canada has shown that a 10% increase in average minimum price would result in a 9% reduction in hospital admissions and a 32% reduction in wholly alcohol-caused deaths. The costs to the NHS, the police and local councils in dealing with the consequences of alcohol abuse and excess are substantial. It is in the interests of the public purse that minimum pricing is introduced. The same is true of smoking, where good work has been done to reduce it. Reducing it further through plain packaging would save the NHS yet more.
As a third example of how investing in prevention can help to cut costs, I shall mention concessionary fares for pensioners. I declare that I am a holder of a concessionary bus pass. I raise this in the context of the forthcoming Care Bill and proposals for the support of children. There has been some discussion recently about the justification for such passes, but too often it is considered only in terms of its immediate cost. Concessionary bus fares should be seen as part of the support system for carers. They enable older people to travel to give help to families and friends. Demands on the public purse for care could rise without the availability of those bus passes. In addition, without the income from bus passes to bus companies, many bus routes could close down or else would require higher public subsidies to keep them running, which would be of no help to those trying to get to and from work. There are no plans, of course, to change the policy on concessionary passes, but could we look again at levels of reimbursement to local authorities and make them reflect actual usage of buses rather than simply a population split? As a national scheme with national funding, the distribution of the budget needs to reflect the higher costs in those areas with lower car ownership, more bus routes and hence more passengers.
Next I shall speak about the potential for reducing public spending through reducing the overhead costs of public sector organisations that we now know can be achieved through whole community budgeting. There have been whole place pilots in Greater Manchester, west Cheshire, Essex and the London boroughs of Hammersmith and Fulham, Westminster, and Kensington and Chelsea. This latter tri-borough community budget
pilot concluded that it could within five years deliver savings of approximately £80 million per annum across all public services through initiatives to drive growth, build homes, create jobs, reduce dependency and rehabilitate offenders. That report was published in October last year. Essex has estimated £127 million cashable savings. West Cheshire and Greater Manchester also forecast substantial savings. The evidence from the Local Government Association is that savings of between £2 billion and £5 billion a year across England can be generated, depending on implementation. In the context of a forecast £16.5 billion funding gap for local government by 2019, it has become clear that some of it could be made up for by community budgeting. It has become vital that this process is progressed speedily.
I agree substantially with the noble Lord, Lord Eatwell, on housing and social rented housing in particular. It is not enough to try to stimulate new housing simply by subsidising mortgages, which is likely in any event to lead to higher prices. The priority has to be increasing the housing supply at levels of affordability, which is why relaxing the housing borrowing cap for the local government rented sector matters. More properties for social rent could reduce significantly the Government’s housing benefit bill in the more expensive private sector. Local authorities have further headroom to borrow without it being counted as public sector borrowing since their local housing accounts are now trading accounts.
There are two Bills in which I shall take a close interest. The first is the local audit Bill. A key role of the Audit Commission was to assess good practice and value for money, and I do not want to see it lost as new audit arrangements are introduced. The second is the water Bill which will reform the water industry in England and Wales. I welcome, in particular, the proposal to ensure that flood insurance remains affordable in areas of high flood risk. When we debated the Growth and Infrastructure Bill, I raised concerns that the duties on Ofwat might be insufficiently strong to drive economic growth strongly enough by guaranteeing an adequate water and sewerage system deliverable to all premises. The Minister indicated then that my amendment was probably unnecessary, and that may indeed be so. However, there might be an opportunity during the passage of the water Bill to make Ofwat’s obligations even more explicit, and I hope we can look at this further.
Finally, making the economy stronger is central to this gracious Speech. The role of our universities will be central to that process. Universities working with their regions and with regional banks will help to underpin the work of LEPs and local authorities. But in repairing our economy, can we put youth unemployment at the top of list of priorities? The Government have done good work with apprenticeships, but the current scale of youth unemployment is deeply worrying. All proposals for investing in growth, of which there are many, should be tested for the number of long-term jobs that they can generate for young people because we cannot permit a lost generation, as seems to be happening in some other parts of Europe.
8.07 pm
Lord Berkeley: I welcome two parts of the Queen’s speech. The first is:
“My Government will continue to invest in infrastructure to deliver jobs and growth for the economy”.
“My Government will continue with legislation to update energy infrastructure and to improve the water industry”.
I shall speak to these two issues with two examples, one large and one small.
The large one is the Thames tunnel, the £4.3 billion tunnel to remove the inflow of sewage-flavoured rainwater into the Thames when it floods. I believe that it is the wrong project, that the wrong company is doing it and, equally bad, that the regulator does not appear to be regulating. That is to the detriment of customers and the environment. There is no point in the Government investing in infrastructure if the private sector can or should do it or if there is a cheaper or better alternative, especially if that will create more and local jobs, as I believe this one will.
The tunnel has been discussed for many years and Thames Water is now starting the process of obtaining planning permissions. However, in the past five years, there has been increasing evidence from around the world that the scheme is out of date. The best example is probably in Pittsburgh in the US, where it has been demonstrated that preventing the volume of storm water entering the sewage system in the first place is a much more effective solution. It is easier to achieve, there is much less risk than building a big tunnel, it will use lower-skilled and therefore local labour and it will start the clean-up of the river much sooner, which could mitigate the effects of the potential fine from the European Commission of up to about £1 billion because the Government have failed to clean up the Thames. The problem is that neither the Government nor Thames Water have examined this new option properly. I wrote to Ministers about a month ago, asking them to set up an independent inquiry to look at the alternatives; I have not had an answer yet.
Another reason for such an inquiry is Thames Water itself and whether it is a fit and proper company to undertake such a project, especially when it has reduced its asset base over the years to the extent that it says that it cannot fund the tunnel—it needs government help, which the Government have kindly given it through legislation last year—but still suggests that this project will add £80 to the bills of every Thames Water drainage customer for the next 125 years. Thames Water customers go well past Reading to Oxford and places such as that—that is a lot of customers.
Since the Minister said in his opening remarks that the Government intend to tackle all forms of tax avoidance, and the Treasury indicated a few weeks ago that the Government intend to stop companies bidding for major contracts if they have used aggressive tax structures in recent years, perhaps this particular company and project should be looked at. Other examples include Wales & West Utilities, which was recently sold to Cheung Kong Infrastructure Holdings, where the shareholder equity was largely represented by a shareholder loan at 15% to 21%—not bad for a boring utility—and Arqiva, where the equity is represented by shareholder
loans at 13% and no corporation tax has been paid from 2007 to 2011. It is difficult to find much information about Thames Water. One thinks that Macquarie Bank is involved, but it is almost certain that it has followed the same route, which is the kind of route that many of these utilities have followed.
It is surprising that the regulator, Ofwat, has not investigated whether Thames Water complies with condition P of its licence, which is that Ofwat has to,
“be satisfied, in each particular case, that the prospective owner has the probity and the operational and financial capacity to assume that role”.
The CEO of Thames Water, Mr Baggs, said in a letter of 8 March that shareholders should not be required to pay for enhancements of the network. That seems to contravene the duties of the regulator to,
“secure that the functions of each undertaker”—
“are properly carried out and that they are able to finance their functions”.
It appears that the Government are already asleep in failing to apply their Treasury ruling that those companies applying aggressive financial structures should not be involved in constructing government-funded infrastructure projects. Ofwat is also in a long-term sleep, failing not only to apply the probity test on Thames Water but to ensure that the company has the financial resources and capability to pay for enhancements.
The noble Lord, Lord Shipley, mentioned these water issues. I have not read the proposed water industry Bill that was mentioned in the gracious Speech. I certainly hope that it will put right some of the wrongs that I have outlined. In the mean time, I ask the Minister whether the Government will agree to an independent inquiry into this Thames tunnel project before any more taxpayers’ money is wasted.
My second issue is much smaller and a long way away: the Isles of Scilly transport. It should fit in with this statement in the Queen’s Speech:
“My Government will continue to invest in infrastructure to deliver jobs and growth for the economy”.
This is where it is needed. It is a small project in an outlying part of the UK, which is just as deserving of better infrastructure and services. If the island community of 2,000 is to survive, its economy, now based largely on tourism, needs to be maintained and to prosper. At present, the decline in visitor numbers is more rapid than that in mainland Cornwall, which can only be due to the high cost of travel there. Islanders need a year-round service, tourists in the summer need a range of services and all need to receive these at affordable prices.
Noble Lords will know that the helicopter service stopped on 1 November last year, probably for good. There remains a fixed-wing air service of eight-seater or 19-seater planes, which operate all year round but are frequently delayed or cancelled by wind, fog or waterlogged runways at Land’s End. These planes—as anybody who is an expert in them, which I am not, will tell you—are much more vulnerable to bad weather than helicopters. The “Scillonian” operates March to October and has just had a good refit for a five-year life extension. As noble Lords will know, the original build of the ferry was funded with support from
Harold Wilson when he was Prime Minister. However, that was some time ago and one ought to be looking forward to a replacement.
The loss of the helicopter has brought into focus the dire service that remains. Between November and March, Land’s End was closed due to waterlogging for more than half the days. Immediately before Christmas, 177 people were queueing, unable to travel between the islands and the mainland for over three days; they finally got there on Christmas Eve. Some islanders have in desperation travelled in a RIB, a high-speed motor boat, from the Scillies across 20 or 30 miles of very rough sea, costing 12 people £1,200. That shows the desperation; it is not as if there are a lot of rich people there.
What can be done? A year ago, the Council of the Isles of Scilly produced a report comparing the transport available there to that for the Scottish islands: charges, frequencies and the lifeline service concept, which ensures an affordable service to all islands—some provided privately, some subsidised, but guaranteeing a service so that people can go for work, business, pleasure or hospital appointments at a cost that approximates to that of using an equivalent road distance. In the case of the Scillies, it would be £20 to £30 return, compared with the current fare of £84 on the ship and £160 by air. The islanders get a concession on the ship but not in the air, as the noble Earl, Lord Attlee, pointed out to me some time ago.
These are the kind of journeys that everyone else takes for granted, so there is general support for short-term measures for the airport and harbour improvements to be expedited. I ask the Minister whether the Government are planning to accept the applications from Cornwall Council and the Council of the Isles of Scilly for the ERDF-funded harbour improvements, because time is running out for some of these grants.
The affordability and reliability of a year-round service needs attention. The answer for next winter would be a trial winter sea service, which the Isles of Scilly Steamship Company is prepared to operate; it operates the air service as well. However, it will not say how much subsidy it would need, because it fears that the service will be tendered out. I have written to the Minister responsible, Norman Baker MP, asking whether the department would consider this. We have to reflect that there are very few other places, however remote and vulnerable they are to snowdrifts, floods, gales and so on, that have only one unreliable means of travel throughout the winter. It is not as if people can walk or cycle if it is difficult—it is a bit wet and you cannot do it.
I am very pleased that the new Cornwall and Isles of Scilly Local Enterprise Partnership, which the Minister also referred to, is keen to help and follow up the recommendations of the Scottish report, by offering to lead a detailed economic transport study to identify the best means of providing for the long-term needs of the islanders and visitors. Sadly, however, the Council of the Isles of Scilly has indicated that it is not interested in taking part. I find that very depressing. However, I hope that the new councils in the Isles of
Scilly and Cornwall will be able to work much more closely together to further the interests of the islanders and visitors. I hope that they will start a joint campaign to persuade the Government that the Scillies need a trial winter service for next winter and to agree to a policy of developing a public service obligation with a new ship to give these islanders the long-term comfort that they need to enable their economy to grow on a firm basis. I hope that they will support the LEP in accepting its offer.
In summary, my questions for the Government are: what is the status of the application for the funding for harbour improvements that I mentioned and will the Government consider a trial subsidy for a ferry next winter? With that ferry and the air service, there would be a very good chance that at least one of them would get you to and from the mainland, when you want to go, without having to spend too many nights in hotels in Penzance.
8.20 pm
Lord Hodgson of Astley Abbotts: My Lords, it is perhaps inevitable that all defeated Governments engage in a period of introspection during which there is a tendency to rewrite history. It appears that the previous Labour Government are no exception to this rule. The narrative that we have heard this afternoon focuses on two things: first, that the economic crash of 2008 was the result of factors entirely outside their control; and secondly, that by May 2010 their actions were bringing economic recovery. I am afraid that neither of these assertions withstands close examination. It is true, and absolutely fair, that the trigger for the economic cataclysm of 2008 was the collapse of the sub-prime mortgage market in the United States. However, the economic policies of the Labour Government left this country uniquely ill prepared to withstand the consequent shocks. Profligate government spending without any associated requirements for economic performance, linked to low interest rates, which inflated asset prices—particularly house prices—were policies that could have only one ending, and it was not the promised ending of “boom and bust”.
Tullett Prebon, the money broker, has produced an interesting study of debt levels. Between 1997 and 2010, in constant prices, public debt increased by 250%, and private debt by 275%. Such levels of indebtedness, with their associated asset price inflation, will inevitably take a long time to unwind, and it will be a painful process. It does not seem wise for the Opposition now to propose, as I understand they do, that the Government should go out and borrow more money. I was therefore reassured by the commitment in the gracious Speech that the Government will stick to their broad strategic economic approach. In my commercial life outside the House I see some good signs of a pick-up in economic activity generally.
However, one area that continues to concern me is the persistence of, and perhaps increase in, regional disparities, a matter which the right reverend Prelate the Bishop of Birmingham referred to earlier. It is hard to find many signs of recession in London and, to a greater or lesser extent, in the south-east. However, in the review of the Charities Act which I carried out
for the Government I travelled and met representatives from the voluntary sector all over England and Wales, and the economic outlook, as well as the level of social capital, were all too often not encouraging. My noble friend Lord Heseltine made some interesting suggestions about how to narrow these gaps in his report
No
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tone
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nturned:
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, and I was very glad to hear in my noble friend’s opening remarks that the implementation of these proposals is now under way.
For the rest of my remarks I wish to go off on a riff of my own. It is not an issue which was raised in the Queen’s Speech, but it is an important issue, and one which particularly concerns the Treasury and local government—namely the implications of population growth in the world and in this country. This is a sensitive issue that is easily capable of being hijacked, so I make it clear that my remarks are not about immigration under another name; they are not about relative population sizes and whether there are more white people or black people; they are not about the relative sizes of faiths and whether there are more Christians, Jews or Muslims; they are not about the relative sizes of social classes and whether there are more rich or poor people; and, finally and most importantly, they are not about preaching or personal example, because I need to put on record that I have four children. My remarks are about the staggering absolute increase in the population of the world and in that of the UK.
It is worth while every Member of your Lordships’ House bearing in mind that each morning when he or she looks in the shaving mirror or the make-up mirror, there are 200,000 more people in the world than there were when that exercise was undertaken 24 hours earlier. We are creating a city the size of Wolverhampton every day, 365 days a year: 70 million people a year. According to UN population projections, this will continue, albeit at a slightly slower rate of 40 million people a year by 2050: 120,000 people a day. By then the world population will have increased by one-third, from 7 billion to 9.2 billion.
It needs no great imagination to see the stresses and strains that the arrival of an additional 2 billion people will likely cause on land, resources and, above all, water. We would be foolish to believe that the issue will not touch us in this country. Desperate people do desperate things. We may be sitting here tonight feeling slightly sorry for ourselves because of our economic fortunes, but if you are sitting impoverished in a huge family in a war-torn, unstable country, the United Kingdom looks like nirvana. Somehow, however unpleasant, dangerous and difficult the road may be, people are going to get here.
What can be done? All research suggests that the best way to reduce population growth is to give women control over their fertility. A woman’s quality of life is not enhanced by repeated pregnancies. It is believed that there are more than 200 million women in the world with no access to family planning. The Government’s overseas aid programme rightly places a high focus on providing family planning and advice. We all know that economic times are hard. I hear voices suggesting that cuts should be made to our overseas aid budget. Of course we must be careful to ensure that our
overseas aid is properly spent, but I urge my noble friend, wearing his Treasury hat, to resist any cut in that part of the aid that is devoted to family planning. It is in all our interests that it should be continued.
Finally, I turn to the no less challenging position of the United Kingdom. Our population is now just over 63 million. The Office for National Statistics’ mid-range projections suggest that the UK’s population will reach 70 million by 2027, 15 years from now. What do 7 million people look like? The city of Manchester has 500,000 people: think 14 Manchesters. The larger Manchester conurbation, including Bolton, Bury, Oldham, Rochdale, Salford, Stockport, Tameside, Trafford and Wigan has a population of just over 2 million, so we will have to build three Greater Manchesters by 2027.
There is a further complication. Not only is England the sixth most densely populated country in the world, after Bangladesh, Taiwan, South Korea, Lebanon and Rwanda, but the population is not spread evenly across the country. The bulk of the population increase will surely take place in the south-east, where we will probably have to build two of the three Greater Manchesters. It will certainly be a challenge for future government planning Ministers to explain all this, not least to those who live in the shires and the leafy suburbs.
What can be done? “Stop immigration” is a popular cry. That would make some difference, but perhaps not as much as people think. The Migration Observatory at Oxford University has pointed out that with 100,000 migrants per annum—the Government’s target—the population would reach 70 million by 2035. With zero migration the figure would be 66 million, a difference of 4 million. On the other hand, there are those who say that unless we have more young people, we cannot afford to look after our existing old people. They appear to have forgotten the implications of compound interest. We would be engaging in what Sir David Attenborough calls a gigantic population Ponzi scheme. We have to recognise that at some point we will have to achieve a stable, balanced population in this country. There will be considerable strains during the transition phase, but at some point, someone, somewhere has to be brave enough to state this fact and withstand the misinterpretation, misconstruction, misreporting and misquotation that will surely follow.
Finally, it is worthwhile reflecting on how much more serious this problem is for the UK, and especially for England, than it is for our continental European neighbours. At present, with a population of 63 million, England has a population density of 383 people per square kilometre. We have just overtaken the Netherlands and we are now more densely populated than that country. By contrast, France has 102 people—about 25% of our density—and Germany 226, which is about two-thirds. No less importantly, both those countries and Italy have falling populations. Germany’s population today is 83 million compared to our 63 million but, on present trends, it will fall to between 70 million and 74 million by mid-century. Sometime in the 2030s, the UK’s population will overtake Germany’s, and we will become the most populous country in Europe.
None of this is to say that we cannot fit the people in. I have referred to our present population density of
383 people per square kilometre. Bangladesh has about 1,400 people per square kilometre, so we can certainly fit the people in—but at what cost to the quality of life? Sir John Sulston, who recently chaired an inquiry by the Royal Society on people and the planet, said that our target should not be to cram as many people as possible on to the planet. He went on to say:
“We have to look at what will allow humankind to flourish. We want to aim for a high quality of life and not just to scrape along”.
I conclude by addressing why I am raising this topic particularly today, as some noble Lords may be wondering. The answer is that the issue concerns every government department but is the responsibility of none. No doubt, my noble friend on the Front Bench is thinking that this is at least one speech to which she does not have to reply when she comes to stand up—that she can pass gracefully on. That lacuna is part of the problem. No one anywhere in government has responsibility for looking at this problem, looking at the big picture and the long-term trends, and explaining the implications for us all. A Minister with responsibility for considering the issue and drawing the attention of the public to what lies ahead would be a good first step.
Dean Acheson, the US Secretary of State, once said that policies did not trickle down but welled up. This is an issue that is rapidly going to well up.
8.31 pm
Viscount Hanworth: My Lords, I concur with much of what the previous speaker said in the second part of his speech and nothing of what he said in his first part.
On Wednesday 10 April, the House of Lords met to pay tribute to Baroness Thatcher. Most of the tributes were the anecdotes of those who had participated in Thatcher’s Governments, and we should not begrudge them the opportunity to reminisce. However, some of the tributes expounded the methodology of the Conservative Party as it relates to those years. Perhaps now is the time to call into question some of the things that were said on that day.
It was said that Margaret Thatcher had helped to pick Britain up off its knees, changed our place in the world, and made Britain great again. It was asserted that her programme of deregulation and denationalisation, and of defeating the trades unions, had made Britain again into a global economic competitor. Finally, it was said that Margaret Thatcher transformed the very nature of our political debate. In common with most of my colleagues on these Benches, I disagree with all of this, save, perhaps, the assertion that Mrs Thatcher transformed the nature of our political debate. For this, I believe that she and her acolytes deserve discredit.
Under Margaret Thatcher, political warfare reached a level of intensity that had not been seen for several generations. It was in this respect that she transformed the nature of our political debate. Her unbridled aggression toward her political opponents eventually led to her downfall. By exalting the motives of personal economic gain at the expense of the principle of social cohesion, Mrs Thatcher subverted the growing egalitarianism of British society. At the same time, she protected and reinforced the traditional privileges of the wealthy
classes. These persons, and the party that she served, expressed their gratitude by adopting her own social and economic philosophies. The economic philosophy in question was a resurrected version of the moral philosophy of the commercial classes of the 18th century that is associated with the name of the Scottish economist Adam Smith. Smith’s nostrums are manifestly unsuited to the modern world, and their adoption by politicians has done untold damage to Britain’s economy. How has this damage arisen? It has been multifarious, but I should like to focus on two areas. The first area concerns the Conservatives’ flagship policy for the denationalisation of Britain’s strategic industries and utilities. The second area concerns financial deregulation.
One of the major Acts of privatisation, of which we will be facing the consequences in this Session of Parliament, concerned the electricity supply industry. This was enacted in 1990, at the end of Thatcher’s period as Prime Minister. She must have regarded it as her crowning achievement. The national electricity grid was one of the great technical achievements of the interwar period. Its origins date back to the Electricity (Supply) Act 1926, which created the Central Electricity Generating Board—CEGB—that set up the UK’s first synchronised, nationwide AC network. The grid provided a prototype and an inspiration for electricity networks throughout the world.
Our national electricity industry was serviced by some world-famous British engineering companies, which it also sustained. Foremost of these was BTH (British Thomson-Houston), later incarnated as AEI (Associated Electrical Industries) and as GEC (General Electric Company). This company provided generators, transformers, switchgear and turbines. Over the years, it absorbed several companies of foreign origin, including Siemens Brothers and Company, which was an offshoot of the German company. Another famous company which was sustained by orders from the CEGB was C A Parsons and Company, famous for the invention of the steam turbine.
The ultimate effect of the denationalisation of the electricity industry was to place it in foreign hands. Powergen now bears the name of its owner, the German utility company E.ON. National Power split into a UK business, which is now owned by the German utility company RWE, and an international business, which is now fully owned by the French company GDF Suez. Britain’s nuclear power stations are now in the hands of EDF Energy, which has 5.7 million customer accounts in the UK. EDF is wholly owned by the French state.
Another effect of the denationalisation, which began immediately, was the crippling of the companies that had served the industry. This was the consequence of the so-called dash for gas, whereby the newly privatised electricity-generating companies, many of which were on a small scale, opted for combined cycle gas turbine generators. The British engineering companies, which had been crippled by the loss of their primary market, were unable to compete. The outcome has been that virtually all the modern equipment in our power stations is of foreign origin. The major suppliers of this equipment are the Japanese companies Toshiba and Mitsubishi, the American company Raytheon, the French company
Alstom, which absorbed a large part of GEC on the eve of the privatisation, and the German company Siemens. The strength of these various companies derives from the fact that they are sustained by the electricity-generating utilities of their native countries, which, for the most part, are nationally owned industries. The failure of our national Governments to support our strategic industries in the way that has been common in the countries that are our competitors is both remarkable and hard to explain. However, part of the explanation lies in the insouciant free-market and laissez faire ideology that was espoused by the Conservatives during Thatcher’s Administrations and that continues to dominate the policies of the present Government. We have seen its devastating effect on several occasions recently.
The story of our electricity network has been paralleled by the story of our rail network. A recent episode concerned the proposal to award the contract for supplying Thameslink rolling stock to the German company Siemens in preference to Bombardier, which is a Canadian-owned enterprise that runs the last remaining manufacturer of rolling stock in Britain. Siemens is also the company that has provided most of the equipment for our wind-powered electricity-generating facilities.
Another respect in which the policies of Margaret Thatcher have done great damage to the British economy has been in the promotion of the interests of the City of London via the programme of deregulation which began in 1986 during the time of Thatcher’s second Administration. Here, there is a sharp division of opinion between the Conservatives and us on these Benches. A week ago, a senior Conservative politician proposed that we should leave the European Union for the reason that the Parliament in Brussels seems to be intent on placing restraints on the activities of the City. He pointed to the success of the City and its importance to all of us through the fact that it accounts for a large proportion of the British national economic product. Far from being an asset that benefits the nation as a whole, the City serves the interests of a very restricted class of people at the expense of the rest. The very size of the City is a symptom of the morbid hypertrophy of an organ of the economy that threatens the health of the body as a whole. Until recently, the City has been responsible for sustaining an overvalued rate of exchange that has made it difficult and sometimes impossible for our industries to export their products. The City has been largely responsible for the way in which our industries have fallen into the hands of foreign owners. It also bears responsibility for one of the longest periods of economic recession on record, which we are currently undergoing. The detrimental effects of the City have been monstrous.
8.40 pm
Viscount Waverley: My Lords, the gracious Speech emphasised the focus on building a stronger economy and that the first priority is to strengthen Britain’s economic competitiveness; this following recent remarks
calling for greater productivity in the United Kingdom by, among others, the noble Lord, Lord Heseltine, who is not in his place.
There is, however, a substantial success story by UK companies in the oil and gas supply chain. According to trade information, exports related to that sector have grown for the 14th year in a row and are now worth £17.2 billion. Certainly, I can confirm in relation to activities in which I am engaged that UK supply chain-based companies have the highest number of individual companies supplying a high-priority export market—that of Kazakhstan.
However, we cannot afford to relax. Kazakhstan has been determined to be a priority export market by the United Kingdom and cannot be ignored. Leaders from other supply-chain countries are knocking on Kazakhstan’s doorstep. The German Chancellor has visited and now the French presidency has confirmed another state visit. I am in no doubt that to underpin the UK’s position requires a visit by the Prime Minister in helping to retain our position. No Prime Minister has visited Kazakhstan since independence in 1991, and yet it is where British interests, notably BG and Shell, are excelling.
I should declare that I chair the British Kazakhstan Parliamentary Group and the regional Central Asia Parliamentary Group and, for the record, have signed a co-operation agreement with opposite numbers in Astana that includes, among other initiatives, encouraging emphasis on increasing two-way investment and trade.