What can be done to consolidate our position as a lead player? Measures and mechanisms that increase co-operation agreements between those with the necessary technology to partner those in Kazakhstan, indeed in all new energy economies, is a process that stakeholders should embrace in a new world order. There is good pragmatic reason to do so, beyond economic. The importance of social and corporate responsibility on the part of investors and suppliers is paramount, and they have a moral and legal imperative to put this into practice. Foreign legislation is increasingly demanding it.

Helping to create a culture of legacy beyond investment, development and profits should be embraced as a norm that would protect the UK’s position, and for which recipient countries should encourage and reward. Employment creation creates an environment for stability. This enhances the confidence that protects the very investments necessary for the development of those national assets. The underlying challenge is to contribute to the strengthening of professional skills and the industrial base by maximising opportunities for local companies and citizens to benefit directly. This developing of indigenous capabilities, in partnership with the United Kingdom’s professionalism and experience, would become a winning formula.

In my capacity advising the national oil company, KazMunaiGas, I was given the task by the chairman, Mr Kiinov, to unify the fragmented approach towards local content development endeavours of the lead oil and gas operators, Kashagan, KPO, NCOC and Tengizchevroil, which include such partners as BG, Shell, Chevron, ExxonMobil and Total. I invited them to London to determine common ground and agree necessity in what we labelled the “London Process”,

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and which culminated after complex discussions in the signing of the Aktau Declaration a year later. Operators agreed a strategy and the content of a forward engagement plan with ministries, regulatory authorities and industry bodies concerned with local content development.

Delivery by stakeholders contains six key components: first, training and skills development with fast-track programmes to address critical skill shortages and longer-term skills capacity building; secondly, an industrial capacity register as a source of reference to identify current and potential capacity in the oil and gas sector and, importantly, the non-oil and gas sector; thirdly, harmonisation of standards, specification and code of practice; fourthly, enterprise development to stimulate the promotion, growth and new development of local companies, including access to management expertise and funding; fifthly, an inward investment programme to contribute to the commercial environment and identify opportunities to accelerate and expand domestic manufacturing and supply; and, sixthly and lastly, research and development to anchor specific technology development programmes to create new high-value business opportunities within domestic and regional markets.

The technical, commercial and socioeconomic challenges will take time, investment and commitment to develop, with huge challenges ahead. These priorities can be delivered in the United Kingdom’s national interest within existing contractual arrangements and international treaties with foresight, willingness, respect and innovation. The programme I have outlined can be developed further into a bilateral win-win.

8.47 pm

Lord Warner: My Lords, nearly six hours into this debate I thought I would give us a change of subject. I was reliably informed by the Chief Whip’s Office that if I wanted to talk about the Care Bill and its implications for local government, I should speak today. In doing so, I declare my interests both as a member of the Commission on Funding of Care and Support, whose recommendations the Bill largely implements, and as a member of the Joint Select Committee that considered the draft Bill. However, before turning to that Bill I want to make a few observations on youth unemployment.

It is rare for me to quote approvingly remarks made by the late Lady Thatcher. However, nearly 30 years ago she said something that was true then and remains true today. She said:

“Young people ought not to be idle. It is very bad for them”.

She might have added that it is also bad for society, but that was not a word that easily passed her lips.

As the founding chair of the Youth Justice Board, set up after the 1997 election, I dealt with some of the consequences of unemployed, untrained and uneducated young men ending up in the criminal justice system. I am not going to lay all the blame on the current Government, because youth unemployment is a global problem. OECD figures suggest that 26 million 15 to 24 year-olds in developed countries are not in employment, education or training. Our performance in the UK is better than some but it is certainly not as good as it

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ought to be, with 1 million young people unemployed. Unless we improve the way that we tackle this problem, we will be storing up trouble not just for those young people but for ourselves.

Much current social policy is preoccupied with the demography of an ageing society. This is understandable and my noble friend Lord Filkin chaired a committee of your Lordships’ House which produced an excellent report on our lack of preparedness for the service demands of an ageing society. However, one of the social requirements of that ageing society is a well trained and educated workforce that is generating wealth—not a growing number of sullen, unemployed malcontents.

As we grapple with the needs of an ageing society through worthwhile measures such as the Care Bill, we also must ensure that we set aside sufficient resources to educate, train and employ our young people, and not waste their talents. That means striking a better balance than we have now in our priorities for public expenditure between the young and the elderly. That may be an unfashionable thing to say but, as one of the elderly, I think I am entitled to say it.

All the parties need to stop oversubsidising the well-off elderly with winter fuel allowances, free travel passes and free TV licences. I am sorry but on this I disagree with the noble Lord, Lord Shipley, who is not in his place. If tough decision-making is the political mantra of today, why not start by at least taxing those entitlements or partially withdrawing them, and removing exemption from national insurance contributions for those who work after retirement age? Will the Minister comment on those issues in her response, even if it gets her into a bit of trouble with No. 10?

Let me turn now to the Care Bill. The coalition Government are to be congratulated on grasping the nettle of both reforming social care law, as recommended by the Law Commission, and on accepting the thrust of the proposals in the Dilnot commission’s report. Here, I pay tribute to Paul Burstow and Norman Lamb for tenaciously pursuing reform despite Treasury obstacles. I do not intend today to comment on the detail of the Bill and will save those comments for the Bill’s Second Reading next week.

However, I want to comment on social care funding and the problems that it presents in implementing the Bill’s good intentions, particularly on some of the implications of that parlous state of funding for the NHS. Adult social care is now consuming more and more of local government’s budgets and is set on a course to consume virtually all of it in a couple of decades. Yet, strangely, the latest survey from the Association of Directors of Adult Social Services shows that by next April local councils will have stripped out £2.7 billion—I repeat, billion, not million—from adult social care services since 2010. That is equivalent to 20% of their budget for care at a time when demand for their services is rising considerably. Domiciliary care is being paid for at below the minimum wage by some councils and some care homes are relying on subsidies from self-funders because councils simply are not paying the true cost of providing decent care.

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The transfer of £850 million to councils from the NHS this year does no more than cover the budget reductions that councils are making. One-third of the directors of ADASS consider that many people who in the past would have qualified for help will no longer get it as a result of the existing tightening of eligibility criteria. On present plans, that rises to half of directors in two years’ time when the Care Bill will be implemented. The idea that this Care Bill can be implemented without a significant increase in the service and administrative budgets for adult social care is pure fantasy. However, let me emphasise that I am not suggesting an increase in public expenditure, as I shall explain.

The Dilnot commission made clear that its proposals would do nothing to bring up to speed the existing shortfall in funding of adult social care. On the most conservative estimate I suggest that the shortfall is somewhere in excess of £1.2 billion a year. Demography is worsening these matters by about 3% a year—another half a billion pounds a year. The consequences of this social care funding crisis for the NHS are already clear to see in the overcrowded medical wards of acute hospitals. Experts acknowledge that those wards have around a quarter to a third of patients who simply should not be there. The great majority of those people are aged 80 and older. This is both bad for the patients and extremely costly for the taxpayer. The present way in which we are caring for elderly patients in some of our hospitals and care homes is simply another Mid Staffordshire waiting to happen.

What we need now is a much clearer policy across the political parties of resource transfer from the £110 billion a year NHS budget to fund adult social care properly, where the taxpayers’ money would be better spent. Can the Minister tell the House what further plans the Government have to transfer resources from the NHS to social care this year and next to make good the budget shortfall before implementation of the Care Bill starts?

We have heard a lot today about Europe. Whether we leave or stay in Europe, we will still have to tackle these and the many other domestic problems that have been identified today. Endless banging on about EU membership seems to many of us a self-indulgent political diversion from resolving some of the difficult problems in our own back yard.

8.56 pm

Viscount Trenchard: My Lords, it is always a privilege and a pleasure to speak in the debate on the gracious Speech. I, too, pay tribute to the noble Baroness, Lady Lane-Fox of Soho, on her excellent maiden speech. Given how important IT is to all of us, it is very good to have her in your Lordships’ House and I look forward to many contributions from her. Like many noble Lords, I congratulate my noble friend Lord Lang on the entertaining and skilfully constructed speech he made in proposing the Motion for an humble Address.

In preparing for this debate today I was struck by the fact that much of the work that your Lordships’ House will undertake in this Session on business, the economy, local government and transport was not mentioned in the gracious Speech. The carrying over

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of Bills which have substantially completed their progress through another place has resulted in a growing disconnect between the gracious Speech and the agenda set for this House over the coming months.

On transport, the High Speed 2 Bills were announced. However, does it make sense to decide to go ahead with HS2 before deciding on the location of London’s main hub airport? The airport question should surely be determined first. After that it will be clear what enhancements to our railway network will be needed. I am sceptical about the value of shaving a few minutes off the journey from London to Manchester. Certainly I do not believe the figures produced in an attempt to monetise the value of HS2 in terms of enhancement to GDP.

If Heathrow is to remain our principal airport hub and expansion is to take place there, surely HS2 should be routed via Heathrow. If, as I believe should be urgently considered, a new airport in the Thames estuary were to be built, then there might well be a case for a new high-speed railway to be built as a part of the new airport’s links with Birmingham, Manchester and the north.

Among the measures announced in the gracious Speech was the deregulation Bill. We have only just seen Royal Assent given to the Enterprise and Regulatory Reform Act which paved the way for the merger of the Office of Fair Trading and the Competition Commission and some assorted minor tinkering. I fear that the new deregulation Bill, which is not yet published, will bring us more of the same. The Government’s website informs us that the Bill forms part of their agenda to reduce the burden of excessive or unnecessary regulation where primary legislation is required. I ask the Minister to explain exactly what that means. What about reducing the burden of excessive or unnecessary regulation where primary legislation is not required?

The Institute of Directors has commented that the gracious Speech shows a “poverty of ambition” about reducing the regulation of businesses. The Government’s Fifth statement of new regulation states that:

“A substantial proportion of the burden of red tape and bureaucracy emanates from Europe. The Government is working with our allies in Europe to encourage the EU institutions to reduce the EU regulatory burden”.

I fear that the Government’s encouragement of their allies will not achieve a great deal. European regulations in areas where we have lost our national competencies bind directly, without parliamentary ratification, and the transposition of European directives into British law continues to produce a vast volume of cumbersome red tape. I fear that it will be largely a waste of time to debate the deregulation Bill, which will be of such limited effect against the massive tide of new regulation engulfing us.

It is not fashionable to defend our banks and financial institutions, which continue, six years on from the financial crisis, to be bullied and abused by Governments and politicians not only here but in many other countries. Although not mentioned in the gracious Speech, soon the Financial Services (Banking Reform) Bill will come here from another place. Your Lordships’ House will have a duty to ensure that this

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Bill does not negatively affect the prosperity of our financial services sector and the competitiveness of our financial markets compared with their global competitors. British and foreign banks alike are grappling with the burdens of the new regulatory structure; around 2,000 institutions will be regulated both by the FCA and the PRA. The fastest growing departments in many City institutions are compliance and IT—all power to the noble Baroness—rather than the business departments that promote lending to SMEs. No wonder the executive committees of City institutions spend 90% of their time discussing ICAAP and ILAA rather than talking about how to do more to support and lend to new and growing businesses.

Unlike my noble friend Lord Lawson, with whom I agree on most things, I am not really convinced that the strict ring-fencing of retail banks is either necessary or desirable. I do not think that if ring-fencing had been in place, it would have made any difference to any of the banks which failed. Besides, banks now enjoy greatly improved capital and liquidity ratios, which I believe is more important. However, ring-fencing is going to happen. The Government want it, the banks have accepted it, and your Lordships’ House should concentrate on implementing it with as little collateral damage as possible.

As noble Lords are well aware, our new regulatory system is being introduced at the same time that the three equivalent bodies at the European level have been reorganised as fully fledged regulators. I have heard from some continental bankers that they are surprised that we have undertaken such a far-reaching reform of our national regulatory system because, “Everyone knows that it is intended that eventually the European regulators will do the job for the whole of the EU”. The soaring costs and the continuing uncertainty about the regulation of our financial services markets have undoubtedly already lost us many jobs and business operations to other centres.

I do not know whether it will be possible to repatriate significant powers such as financial regulation, but if the European Union is to consist principally of one very large country—the eurozone, one medium-sized country—the United Kingdom, and perhaps one or two small countries, then I think that it will be neither comfortable nor advantageous for us to remain a member, and I congratulate my noble friend Lord Lawson on his decision to articulate his view at this time. As my noble friend Lord Forsyth so eloquently argued, our future lies in developing our global trading relationships with the Commonwealth and the growing economies of Asia, South America and elsewhere. Of course we would need to negotiate a free trade agreement with the EU, but if South Korea can have one, why can we not have the same? Why would the EU not agree? After all, we buy more from the EU than it does from us.

I have spent a third of my working life resident in Japan, which is at last enjoying its day in the sun after a very long economic winter. I was naturally delighted that the Prime Minister and the former Japanese Prime Minister Mr Noda signed two important collaboration agreements in April last year: one on military equipment procurement and one on civil nuclear power. Hitachi’s

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acquisition of Horizon, rescuing our new nuclear power industry, is an example of the second. I believe that our excellent trading and investment relationship with Japan can make an increasing contribution to our growth and urge the Government to include Japanese alongside Mandarin Chinese as one of the languages that may be offered in primary school at key stage 2. Given the deep economic ties with Japan, and the fact that the Chinese and Japanese economies are nearly the same size, it is strange and upsetting to our Japanese friends that Japanese is excluded from the list.

The Government deserve congratulations for sticking to their pledge progressively to reduce corporation tax. By April 2015, we should enjoy, at 20%, the joint lowest rate in the G20. That should help the Government’s first priority: to strengthen Britain’s economic competitiveness. Although I keenly support the Government’s economic policy, I would ask my noble friend to explain what the Treasury meant by its statement following the gracious Speech that there would be a crackdown on tax avoidance and evasion, with a £4.6 billion package, including a new information exchange agreement between the Isle of Man, Jersey and Guernsey. Can my noble friend confirm that, in spite of the Treasury’s statement, the Government still distinguish between tax avoidance and tax evasion? Can she explain whether the UK is also a party to the information exchange agreement between the three territories? What is meant by a £4.6 billion package: will it yield £4.6 billion and, if so, over what period, or will it cost £4.6 billion to implement? The language is not clear.

In common with some other noble Lords, I confess that I, too, did not really feel inspired by the gracious Speech. I regret that it felt somewhat lacking in enthusiasm and vision. Nevertheless, there are some sensible measures, already referred to by other noble Lords, such as the Local Audit and Accountability Bill, which abolishes the Audit Commission and outsources and delegates its powers to local communities. The National Insurance Contributions Bill will also, in a modest way, encourage small businesses to take on more employees. I look forward to hearing the rest of the debate and the Minister’s reply.

9.08 pm

Baroness Wall of New Barnet: My Lords, I, too, will quote from Her Majesty’s gracious Speech, even though when you are almost 40th on the list, I guess there is nothing new that one can say. I quote in particular the statement:

“My Government’s first priority is to strengthen Britain’s economic competitiveness. To this end, it will support the growth of the private sector and the creation of more jobs and opportunities”.

I want to focus on what that really means for businesses operating in a global economy, be they large companies or small and medium-sized enterprises.

Manufacturing is still the third-largest sector of our economy and generated £126 billion in gross value added in 2012. The United Kingdom is still the world’s ninth-largest manufacturer and, despite some popular misconceptions, still makes things that the world wishes to buy. However, I suggest that not only will any amount of expansion in manufacturing depend on the

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success of British manufacturing in designing new products and continuing to increase productivity—both of which are hugely important—but that there is a role for government to play in creating the environment for manufacturing to grow and prosper.

Like other noble Lords, I am going to quote from the interesting report of the noble Lord, Lord Heseltine, No Stone Unturned: In Pursuit of Growth, in particular the chapter in which he refers to his vision for a new business support infrastructure. He says:

“Each country provides support in its own way, but what is striking is how unusual the UK is amongst advanced industrial countries in not having a strong and stable business support infrastructure. We should address this deficiency”.

I understand that the Government have welcomed this report, to which many other noble Lords have referred, so I would be interested to know, in addition to what the noble Lord, Lord Deighton, said at the beginning of this debate—many hours ago—just what the Government are intending to do to address the deficiency referred to by the noble Lord, Lord Heseltine.

This is still work in progress but the Government should aim to address the concerns of the businesses that I visit and support. One is that all government departments should have the same focus on “Made in Britain” that BIS does, and should have a culture of checking every policy they work with by asking: will this support businesses to grow and prosper? The UK cannot and indeed should not hide from international competition. What manufacturing businesses want is a levelling of the playing field, an understanding of the challenges that UK manufacturers face, policies to ensure that, wherever possible, manufacturing is supported in government policy, and for policymakers to heed the Hippocratic oath—which exists in my other interest, the health service—“First, do no harm”.

Many businesses are striving to sustain their market share in a still-fragile economy, but those businesses that have really grasped the well quoted saying that the workforce is the most important component in a successful business are those that despite—or perhaps because of—these difficult times have focused on skilling and re-skilling their valued employees. They realise that doing this ensures that they have the talent and skilled workforce to seek out opportunities—as few as they are in some sectors—and to be in a fit state to take on challenging contracts in pursuit of growing their businesses.

The understanding of the need to keep manufacturers competitive has also been recognised by the British trade unions. My noble friend Lady Turner, who I worked with for many years in the trade union movement, referred to this. Many trade unions have worked closely with employers to support business competitiveness, by achieving flexible working patterns, encouraging and supporting the apprenticeship programmes and by constructive resolution to any disputes between business and their employees.

I am sad that my noble friend Lord Hanworth is not in his place. He bemoans the privatisation of many companies but I can give him examples of companies —BAE Systems, part of the aerospace industry he referred to, Jaguar Land Rover, Siemens and others—that have had this successful relationship, employing many

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thousands of people in the UK and further afield, all of whom are getting great skills and advancing their own individual opportunities.

I congratulate the Government on continuing and re-emphasising the focus on skills, in particular apprenticeships. This was started by the Labour Government, who put several millions of pounds into getting this off the ground. I was employed for many years in a major chemical company in the north-west where having apprentices was a way of life and the whole business was surrounded by young men, very often carrying the can for tradespeople. Nevertheless, apprenticeships were a way of life. We are now getting back to what I think is the best of all worlds by having apprenticeships revived. The evolution of apprenticeships is exciting and necessary for business services.

The level of skills required by UK manufacturing businesses has increased. According to the UK Commission for Employment and Skills, by 2017 the percentage of manufacturing jobs that will be in the employers’ “high end”—mostly degree-level employment —will rise from 27% today to 37%, meaning that there will be about as many people in high-end occupations in manufacturing as in low-end occupations. That is aspirational; it is wonderful; and we should all aim to support those who want to rise from the low end to that high end in all their businesses.

The recent focus on higher apprenticeships is making a huge difference to large businesses. As well as recruiting graduates to their management training programmes to carry forward talent and leadership skills, as they have in the past, they are focusing on expanding this talent pipeline by offering existing skilled employees the opportunity to gain additional leadership and management skills, thereby bringing them along that same route to senior management and senior supervision positions. Many businesses doing this say that those employees who have already served skilled apprenticeships will have the added bonus of knowing the business from the shop floor to the boardroom.

It was feared that SMEs would not see that higher apprenticeships were for them. However, many of them—when supported, for example, by Semta, the sector skills council for science, engineering, manufacturing and technology with which I work—are realising that they add huge value to their business opportunities, particularly in the supply chains within which they operate. Having people with skills, vision and leadership gained through the higher apprenticeships ensures that they stay competitive and, very often, punch above their weight.

Government must not let this visionary and sustainable policy be just another flavour of the month. They should continue to support employers to recruit more so as to retain the true value of the whole apprenticeship programme and not allow it to be diluted, leading to the devaluation of these important levers. Although the increase in the number of apprenticeships and the money that is brought with it are welcome, I ask the Minister to reassure us that the quality of apprenticeships is hugely valued.

The funding allocation from government via the Higher Apprenticeship Fund, which was created to develop a range of higher-level apprenticeships and

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fund 10,000 apprenticeships, was enthusiastically received. However, as I have identified the pressing need for advanced skills in our economy, the Government need to consider doubling or trebling this level of support so that the quality of our apprenticeships increases as numbers rise. Employers need to support that by providing matched funding in many cases.

There is a growing momentum and ambition across the manufacturing business world to get out of this recession. Government must capitalise on this moment and on the consensus among political parties about the importance of manufacturing. The consensus, too, around the importance of apprenticeships must not be wasted. We must take this opportunity to reshape our economy and put it on a more sustainable footing.

9.18 pm

The Earl of Glasgow: My Lords, it seems that all parties regard transport as a minor, even expendable, department of government. In the past three years of this Parliament, we have already had three Ministers of Transport. The job has become a staging post for Ministers moving on to what are generally regarded as more important ministerial roles. As someone who cares a lot about our public transport, I find this department’s continual relegation to the class of a lesser ministry quite depressing.

On the other hand, I have to accept that there is one aspect of the transport brief that must make it less attractive to ambitious career politicians: nearly all important transport policies and decisions have already been made before you take up the job, often—in fact, usually—by an earlier Government. Any major decision that you may make in office is likely to come to fruition only long after you have moved on, and there is little satisfaction when someone else takes the credit for the hard work that you did 15 years earlier. All the big planning decisions are made at least 10 years before they are implemented.

That, of course, is the situation in the case of HS2. It has been on the cards for at least five years and now at last we learn that the first phase of the controversial high-speed rail line from London to Birmingham is expected to be completed in about 15 years’ time, with the further extension to Manchester and Leeds seven years beyond that. Work, however, is not expected to start before 2017, so HS2 and other long-term projects, such as extra airport runways around London, can be safely planned only with the aid of a crystal ball. What sort of world will we be living in 20 years’ time? Will we really need more airport capacity? Will we be driving electric cars? Will the threat of global warming finally be taken seriously and carbon emissions substantially and forcibly reduced? Will we still be in Europe? When will we be seeing those flying cars that feature in so many science fiction films nowadays?

I am convinced of one thing. Our middle to long-distance journeys within the United Kingdom will increasingly be taken by train. Apart from anything else, it is the only civilised and potentially pleasant method of travelling long distances. Flying is always a hassle and uncomfortable if you are squashed up to a particularly large man—and unhealthy, too, if he has

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a streaming cold, as happened to me recently. Driving long distances in a car is always stressful. Cars should be used primarily for shopping at your local market town, visiting neighbours and driving to the station to catch a train. Incidentally, we need more safe parking at our suburban and country stations.

I believe that the train is the only long-term answer to our national transport problems and will continue to be so for at least the next 30 years. I am therefore very supportive of the HS2 plans announced in the Queen’s Speech. I would like the Minister’s assurance that the Government will not be diverted by a number of powerful anti-HS2 bodies who believe that they can persuade them to change their mind. Its opponents are against it on the grounds of cost, that the money would be better spent elsewhere, that the Government have got their projections and figures wrong, that it is not a good use of taxpayers’ money and that it will pollute the English countryside, particularly the Chilterns. I believe, however, that HS2 is a crucial element in Britain’s overall policy for improving our railway network and should, if anything, go ahead with more urgency and, if necessary, at even greater expense to ensure that it achieves the objectives to which it aspires.

One of the objectors’ arguments is that the money could be spent on improving the existing rail network, but I am under the impression that the existing network is to be upgraded at the same time. I would like the Minister’s assurance that that is indeed the case and that it is not an either/or option. After all, one of the justifications for high-speed rail is that it will free up capacity for the existing network and enable other lines to operate more efficiently.

Beside the country’s overall need for a faster and more efficient train service, another of HS2’s purposes is to bring London and the south-east closer to the north and the Midlands. It has been calculated that if London and the Home Counties formed a separate country, it would be by far the most prosperous in Europe, but when included within the rest of the United Kingdom we stand only about half way in the pecking order. Surely anything that helps to widen Britain’s areas of prosperity can only be a good thing, although it will be up to the Government to ensure that the new rail line is used more to encourage southerners and southern companies to go north, rather than seducing more northerners to come down south to London. The BBC’s move to Salford shows that major relocations can and do work.

The argument that high-speed rail will ruin beautiful countryside seems completely fatuous. If you live nearer than a quarter of a mile from a proposed route, you may well have reason to object, but I understand that those adversely affected will be amply compensated—and so they should be. Who nowadays objects to any of our existing railways passing through areas of outstanding natural beauty? In some cases, the railway actually enhances the countryside. No one has ever made a convincing case that wildlife has been more than temporarily disturbed by new railway lines. A railway is not like a motorway, particularly a motorway interchange or, worse still, an extended runway to an existing airport, which really can have an adverse effect on the surroundings and everyone living near it.

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HS2 is a bold project and needs bold measures to ensure that it realises its potential. One of its detractors, the HS2 Action Alliance, calls it,

“arguably the single largest ever project ever contemplated in peace time by a British Government”.

It then goes on to list what it considers to be the project’s flaws. My fear is that compromise and elements of cold feet may infiltrate the Government’s future thinking. In the present plans, the project is to be completed in two main phases, followed rather vaguely by a contemplated further phase. However, these contemplated further phases are essential to the success of the whole project. For instance, there surely must be a direct connection to Heathrow Airport, and from there to Gatwick Airport. However, this is not intended in either of the first two phases. There must surely be a direct connection with High Speed 1 so that passengers from Manchester or Leeds can go straight through to Paris without having to change in London, yet this, too, is not included in the first two phases. HS2 needs to go north at least as far as Preston in order to make the time saving significant enough for passengers travelling to and from Scotland, ultimately making internal flights in the United Kingdom unnecessary. In the present two-phase plan, only three-quarters of an hour will be knocked off the journey time from Glasgow to London, which is not enough to deter many of us from taking the plane.

Phase 1 takes us only as far as Birmingham. If for any reason the line were to stop there, I would agree with the objectors that the whole thing had been a disgraceful waste of government money. When in phase 2 it reaches Manchester and Leeds, the project begins to make sense, but the real benefits come only when the distance travelled is considerably longer and when these other essential connections are made. The Government must therefore commit to phase 3 before even starting on phase 1. Delay the start if the financial situation demands it but, once started, all three phases must go ahead as quickly as possible, one after the other. The project cannot afford long gaps between phases, when the fares will be high and the benefits strictly limited.

The Government, supported by all three parties, are taking an expensive gamble on High Speed 2, a gamble that in my view will pay off handsomely in the end. However, the Government must be bold and buy wholeheartedly into the whole package, not progress slowly in small, hesitant steps. I would like the Minister’s assurance that this is indeed the Government’s intention and that they recognise the danger of progressing too slowly.

9.27 pm

Lord Patten: My Lords, I warmly congratulate my noble friend Lord Glasgow on what he has just said about high-speed rail, and not only on what he said but on the way that he said it, which was lucid and clear, so unlike many speeches that the political classes tend to unleash on the innocent electorate. They say all that stuff about how we are about to be nudged by the nudge unit, the need for a national conversation—what is a national conversation?—about this, that or the other and the need for us all to go out into the street

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and celebrate something as stakeholders, probably slipping into a paradigm shift as we do so. I greatly regret the way in which the political classes tend to address themselves and not the electorate, thus widening the gap between the two. The next thing that we will be told is that we need a political narrative about HS2. What is a political narrative? I cannot tell the difference between a political narrative and the back end of a number 11 bus.

I say this respectfully, but in the gracious Speech we have another prime example of meaningless guff, drafted for Her Majesty about a policy that I happen to support very strongly, saying that it is to be “world-class”—that dread phrase that public relations experts wheel out in company reports. I regret that the gracious Speech had those words for Her Majesty.

In the three areas that I intend to address, which are the economy, housing and transport and HS2—I regret to say that my noble friend has largely shot my fox, so the third section will be short—I wish to talk about the need for clarity and, above all else, for honesty, because if we are honest we will get a proper payback from the electorate.

I turn first to the realities of the economic situation that we are in. I am a strong supporter of our policy on deficit reduction. Doubtless the Treasury is pleased to hear that. There may not be all that many of us left, but those of us who are mostly think that the naysayers to our policy can “IMF off”.

I think the electorate will accept what is being done to achieve this deficit reduction if it is explained in an open and transparent way, so we should explain to our electorate that the UK’s debt, just as in the aftermath of World War 2, has ballooned to a level that will never be paid off by economic growth alone, probably in our lifetimes. Therefore, not wanting, at one extreme, to default our way out of the debt problems that face us or, at the other end, to impose impossible levels of austerity, what we are doing is very sensible. It is reducing the real value of debt by keeping interest rates below inflation. After 1945, this policy of negative real interest rates, sustained for many years—indeed into the 1970s—was a bipartisan and very effective approach to reducing the debt pile, with savers then as savers now being asked slowly to absorb the pain. They were a captive audience buying government debt at below market interest rates. That is certainly happening today with inflation fast approaching 3%.

Against the background of a more or less flatlining economy likely to obtain for some while—a long period of low growth—there is nowhere else for us to go. The banks already know, with greater regulation, which I again support, concerning demands on them to hold more capital, that the Government know that there is a set of captive buyers for their debt out there. I am not quite so sure that the rank and file of retail savers have woken up to the fact that government policy is indeed to erode the real value of their capital in order to reduce the country’s debt. This is a highly inconvenient truth, but truth it is, and both parties have conspired to cover up that truth in earlier years. It is better explained than not, better understood than glossed over. We should be honest.

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Incidentally, there are those who want to persecute entirely innocent baby boomers for having had it too good over the years and force them to make recompense by passing some of their wealth down to generations X and Y. We should recognise that this blameless group is already doing quite a lot of that by taking part in the process that I have just outlined. Also, from January 2014, we will see more such transfers between the generations as the help to buy scheme, following the new buy scheme and then the fresh buy scheme, begins to be rolled out, paid for in part by savers and taxpayers, many of them in the baby boomer generation.

My second point is that, needless to say, I hope, I support anything that will enable more people to buy their own homes in a proper and orderly way. I also support anything that helps the building industry because it employs people and gets more jobs created more quickly. I also support anything that enhances the environment. However, there are three risks involved. First, there is the risk that under the new scheme, from some date in January 2014 onwards, people who should not be borrowing money may be brought into borrowing it and, as in the run-up to 2007, we may have a higher risk of people taking on debts that they should not be taking on. At no point in the excellent speech by my noble friend Lord Deighton that introduced this debate did I hear any assessment of the risk of this or, indeed, of the parallel risk that the scheme may incite house price inflation again in a way that we have not seen in recent years.

I am told that my noble friend was an investment banker in the old days. Doubtless he was pretty used to assessing risk and to mitigating it. I do not know whether he took a few risks as a young banker, but I do not wish to take risks with taxpayers’ funds that may leave more people in debt who should not be in debt and lead to house price inflation coming back again. If my noble friend Lady Hanham, who always speaks very clearly and never uses jargon, any more than my noble friend Lord Glasgow does, is tempted to say in her wind-up speech—if she chooses to address the point that I am making—that there is no risk at all in those schemes, I promise her I shall not barrack from my spot high up on the Back Benches by shouting “Bunkum!”, but I shall certainly be thinking it very fiercely. It is terribly important that we stress that risks are being introduced in this new housing policy.

The third risk, of course, is that it will lead to more rapid development on greenfield sites. I support housebuilding on greenfield sites. I prefer it to be on brownfield sites, but I support it because it is necessary and the only way that we can provide houses and flats for those with the ability to buy them.

However, I hear disturbing stories about the landscape effect and the quality of new buildings on greenfield sites being rolled out by housebuilding companies. I therefore took an interest this weekend and went to look at a housing scheme being run by Bovis Homes, a publicly listed company, on the edge of Wincanton, a small market town in the boondocks of Somerset. I found what I saw there disturbing. Much of the pre-existing landscaping that had been demanded by the local Liberal Democrat-controlled council had been eaten into, tree shelterbelts interfered with and taken

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into part of the development sites, and hedges planted by Messrs Bovis now ripped up and replaced by metal- grilled fencing, giving a terrible look to the development itself. It is just the kind of thing that discourages those who might be tempted to support, as I do, the building of high-quality houses on greenfield sites and gives it a bad name.

Incidentally, if it were not so sad it would be funny also to be told that in one or two of the new houses, which have been on sale only for about six months, there are the sort of issues that none of us who wish to promote the welfare of the housebuilding industry wish to see. One poor lady putting her three-pin plug into a socket in the wall found that it would not power up her appliances, so she asked an electrician to come; I have checked these facts, and they are facts. When the electrician came, he—for it was a male electrician—found that there was indeed no electrical supply of any sort running up the walls to the sockets. My noble friend Lady Hanham needs to do all she can to encourage local government to be strict on the maintenance of landscaping around greenfield site new buildings, and all she can to encourage the building industry to be right first time, just as we hope all manufacturers will be right first time.

Thirdly and lastly, I turn to infrastructure. Just as bad housing developments can be a blot on the landscape, as my noble friend Lord Glasgow said, we undoubtedly face blots on the landscape from the development of HS2. There is no point in messing about and saying that they are not there. We should be absolutely honest and say that HS2 will be damaging to some parts of the environment, at least for a while, through noise and the destruction of landscape and views. It is therefore absolutely right that we must persuade people to accept HS2 in its various manifestations as something that we will be prepared to pay large sums of compensation for in order to make it bearable for people who live nearby. I hope that we will say transparently that we recognise the environmental risk and intend to do something about it, including, maybe, the introduction of environmental offsets of one sort or another.

That sort of transparency is also vital for those who wish to come alongside the Government. My noble friend Lord Deighton wishes to attract investment from abroad, which I entirely support. Only last week, we had one of the big Canadian pension funds, the Ontario teachers’ pension fund, saying that it felt that too many schemes were seeking public funding from entities like it, and that it was important that we reduced the number of schemes and concentrated on those that were deliverable—and, as my noble friend Lord Glasgow said, get going on it very quickly.

9.39 pm

Lord Whitty: My Lords, some have said that this Queen’s Speech is too thin. I do not have a problem with that. Frankly, it is an issue of quality rather than width. If the legislation proposed was going to do something about the economy and improve our economic and societal prospects, I would welcome it, however thin it was and however many Bills were involved. As it is, I welcome some of what is there, and welcome the

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opportunity to debate the rest. I am very glad that we are about to debate the Energy Bill and the water Bill; both will probably be discussed more tomorrow, but both are vital for issues of living standards and cost of living, and for our investment programme. The Energy Bill seems deeply flawed, and I am sure that we will have some serious debates on that. I agree with what is in the water Bill, broadly speaking, but there are great gaps in it—in particular any reform of the abstraction sector, which will be vital for the economic and environmental future of that sector.

I am glad, although it was not mentioned in the gracious Speech, that we will also get banking reform back before the House. However, I am pretty dubious about the present proposal’s ability to reform a sector which both caused the financial crisis by its recklessness and which is failing and holding back the recovery by its caution. It is a sector in this country which, despite the dramatic changes since 2007, has somehow retained, broadly speaking, the same structure. Some institutions are under different ownership, including state ownership but, basically, we have not tackled the problem of the structure of the banking sector in particular. I was hoping that we would see a more decentralised and more segregated banking system, both horizontally and vertically, and an absence of organisations which, for the future, would be “too big to fail”. I regret that we are not yet in that position, and I cannot see that this proposition on banking reform will get us to it.

On other legislation in the gracious Speech, I think I welcome the Mesothilioma Bill, which should—although it requires some detailed scrutiny—right a serious, long-standing and distressing situation. On the deregulation Bill, I hope that it will raise burdens on small and medium-sized firms, but I suspect that it is largely another rehearsal of saloon bar prejudices, and so I cannot give it an unequivocal welcome.

I hope I will be able to welcome the proposed consideration of the draft consumer protection Bill. As my noble friend Lady Hayter has said, the Government’s record on consumer issues in legislation has not been particularly good. They not only abolished my own organisation, Consumer Focus, but resisted proposals from noble Lords on all sides of the House during the previous Session to improve the protection of consumers in Acts that were passed in that Session. I hope that we will see some real proposals for improvements for consumers this time round.

In particular, I hope the Government will return to the issue that was mentioned by my noble friend Lady Hayter: that of collective redress, which I have been banging on about on every possible occasion over the past few years. It was to be included in one of the last pieces of legislation of the last Government, but unfortunately it was lost during the wash-up when it was objected to by the then Opposition. Collective redress would have avoided a lot of the hassle which consumers face, for example with PPI, where they are exploited first by financial institutions and then by claims companies. To have a proper system of collective redress for consumers would be a major step forward, and I hope that the Government have that in their sights in the production of the draft consumer protection Bill.

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Excluded from the gracious Speech are some serious proposals on how to get out of the current economic recession. I follow the noble Lord, Lord Patten, in this, although I have seen the same bad example in Wincanton to which he refers. We need a massive housebuilding programme. The Government, after cutting back even on the rather inadequate programme they inherited from the previous Government, have finally realised this, and they are providing some significant support for the purchase of housing. However, as the noble Lord, Lord Shipley, said, that is not enough. In default of increasing the supply of housing—in other words, acting on the provision and capital side as well as supporting potential buyers and landlords—the net effect of underwriting and providing mortgages under Help to Buy and other schemes will be to raise house prices and increase housing costs, aggravating rather than resolving the problems of dysfunctional housing markets. Help on the capital side for building houses, by raising the limit on borrowing for local authorities and housing associations, by joint ventures and by supporting the private sector in housebuilding, is one way out.

Investment in housing ought to be accompanied by investment in infrastructure. The only serious mention of infrastructure in the gracious Speech was the reference to HS2. I broadly support it, but I will not enter into that controversy now. HS2 will bring jobs and serious investment only in several years’ time. We need investment in ready-to-roll projects now. There is an absence of that both in the Queen’s Speech and in the Government’s thinking.

Of course, behind all this is the problem of the economy, which manifests itself in a number of ways. The political obsessions at the moment with the EU and with immigration are a reflection of the failure of the economy. It is probably too late at night and I have too small an audience—actually, the audience is distinguished enough for me to go into a bit of a rant about the economy. Brussels, Frankfurt and Great George Street are all in thrall to a dangerous economic ideology, and they must get out of it if we are to see any economic progress in this country and in Europe.

The effect of the eurozone and the ECB’s view on how they should impose austerity on the rest of Europe is pretty clear. A single currency requires the transfer of resources and credit from the richer part of the EU to the poorer part. The fact that the Deutsche Bundesbank, German politicians and the ECB do not see that sufficiently clearly will, if they are not careful, ruin the eurozone. I speak as a passionate pro-European. I was even broadly in favour of the single currency at some point. However, they are failing to manage it properly because they are in thrall to an ideology that says that the only way out of economic recession and a public finance crisis is to impose austerity in a way that impacts most detrimentally on the poorest part of the eurozone.

Having been critical of the eurozone, I say in a less dramatic way that we are pursuing the same policy here. The Chancellor likewise is locked in the same ideology. The one great success of the Treasury in the past three years has been to convince the bulk of the press and a large proportion of the British public that

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the current difficulties in the economy and the public finances are entirely the fault of the previous Labour Government. The noble Lord, Lord Hodgson, who is no longer in its place, said that the Labour Party was in denial about this. My assertion tonight is that it is the Government who are in danger of believing their own propaganda. The financial crisis was started by private debt in America and in Europe. It was compounded by the failure of the banks, and compounded further by the fact that Governments throughout Europe and North America decided that they were going to bail out the banks. That is what caused the crisis in public finances.

The UK was more impacted than others because we are more dependent than other countries on the financial sector. The long-run record of the Labour Government was that before 2007-08 we had a debt-to-GDP ratio that was roughly the average of the OECD countries. It got worse because of our dependence on the financial sector. That is something that this Government have to pick up. However, they should not try to do so by imposing a form of austerity on the whole of the country in a way that minimises our chances of getting out of the recession. In particular, they should not focus on the social security budget and misrepresent the way in which it has increased over recent years. The vast majority of that, of course, has been because of the increase in the part of the population of pensionable age. The other two elements include the increase in housing benefit, which has got seriously out of control. But that is due to a failure of the housing market, not of social security policies, and housing benefit should not be included within the universal credit system until we have resolved the problems of the housing market in a way that does not lead to huge increases in housing benefit for those dependent on ever-decreasing opportunities within the housing sector.

If you look at the Government’s credibility in international markets and their inability to stimulate investment within this country, despite the fact, as somebody said, that significant money is available in corporate accounts and pension funds, you can see that people are not investing in the UK because they do not have confidence in this Government’s ability to get growth going in the UK.

Lord Phillips of Sudbury: I am grateful to the noble Lord for giving way. I cannot resist asking him, on his second reference to our position in the international markets—he talked about our credibility—whether the most vivid example of where we stand in the eyes of would-be speculators against sterling is not the fact that the rate at which we have to pay on our admittedly massive international debt is little if any more than the Germans pay. Had we not adopted a programme of some austerity, the cost of our borrowing would have been enormously greater.

Lord Whitty: No, my Lords, I do not accept that. I accept the first part of what the noble Lord, Lord Phillips, says, but not the second. The ability to borrow in international markets, as with borrowing in almost any context, depends on a number of things. It depends

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on your ability to have a low rate of interest and low cost of borrowing; a reasonable term of borrowing; and an ability to service that borrowing and to repay the borrowing. On all those counts, throughout the desperate period of 2007 to 2011, the UK retained credibility and could borrow at relatively low rates over relatively long periods. The final qualification is that the markets have to be confident that the Government can raise enough money to repay those debts over the medium to long term. What has lost credibility in this Government is the slow growth and flat-lining of the economy, as well as the downturn of financial income for the Government as a direct result of that economic failure, which has reduced the markets’ confidence in the ability of the UK to repay loans. That is why the credit rating has gone. It was not Gordon Brown who lost the credit rating—it is actually George Osborne and his failure to get economic growth within this country. Unless the Government recognise that and start changing course by investing in infrastructure and housing and getting us out of this economic recession, they will be going down the wrong road. I think that they have already gone too far down that road, but there is still time even for this Government to change their direction.

9.53 pm

Lord Flight: My Lords, as the noble Lord, Lord Deighton, pointed out, there are some useful, detailed provisions in the gracious Speech for the economy, but it seems to me that there is really nothing of great substance. The national insurance allowance is welcome for small businesses. The help to buy scheme is extremely unwise in that it applies to existing property and not just to new builds and is in danger of feeding yet another housing bubble. It is perhaps inevitable, with two years before an election and with a coalition Government, that this is not a time for radical change. However, both the Labour Party and the IMF are by mistake or wantonly misreading the situation. The reality is that this Government are still running a deficit of £120 billion and they have financed most of the spending of £380 billion by printing money. They could not be much more Keynesian than that, in truth, whatever may be being said. In my book, we are erring on the rather incautious side in that territory and telling a slightly different story from the underlying reality.

I repeat that it is a question of what is politically practical at this stage of the cycle but, in principle at least, I would like to see radical supply side measures. Taxes are still too high, the state is too large, the incentives to work, invest and save are too low, regulations are too burdensome and increasing and the lack of planning reform is still the key delay to new housebuilding. The energy reforms will do nothing to reduce prices. Energy policy needs radical change to encourage fracking, given what is happening to the US economy as a result of that. There is plenty of potential here in that regard. We have a crackpot policy of massively subsidising unreliable and expensive wind power, which will result in ridiculously high tariffs for manufacturing industry and impoverish consumers. I am greatly disappointed that the Government have not yet got round to reviewing what is clearly a mistaken policy. The childcare scheme

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discriminates unjustly against single-earner families. Although I am absolutely convinced that the noble Lord, Lord Deighton, is doing his best, infrastructure investment needs to be released to a far greater extent than is the case. It is still hugely delayed by planning and environmental red tape. It is pathetic to continue to put off a decision on the airports serving London, which is clearly a very pressing decision relevant to overseas investment in this country.

However, my particular concerns are what I call “kicking the can down the road” measures, things being done today which do not attract much opposition from the Opposition or the media but will be the source of major cost in the future. It seems to me that care for the elderly will saddle the taxpayer with huge future liabilities, is a regressive extension of the welfare state and does not really solve the fundamental problems. Shifting the burden of identifying illegal immigrants onto landlords just adds to their costs and is unlikely to be successful. We have spent time in this House debating the Public Service Pensions Bill. Nobody seems to be concerned that by 2017 there will be an annual cash flow deficit of somewhere between £20 billion and £25 billion per annum. I question whether the Government of the day will be able to afford that, whichever party is in power.

The House of Lords Library recently presented a most interesting report which forecasts that the proportion of students who do not repay their student loans will rise from 28% to 40%. Forty per cent of a total of £80 billion is £32 billion to write off on the student loan book. There are two problems here. One is that a lot of students simply do not earn enough because their degrees have no commercial value. A second category of students either go overseas or return to Europe and do not repay their loans. The whole machinery needs to be tightened up. I have been told by students in Europe that they would be happy to repay their loans but do not how to do so because it involves getting a standing order from a bank account in Europe, which is in euros, translated into a sterling order over here and finding a representative bank to pay it. However, behind that there is a much more serious problem of the establishment still not attaching sufficient value to vocational training. The figures show that people doing proper vocational training get jobs more easily and earn more than those doing a lot of liberal arts degrees. Their debts are much lower because it takes much less time to complete vocational training. The truth is that the policy of trying to send 50% of the population to university, and then saddling them with massive debt, is wholly mistaken. What we need in this country is much more vocational training and for it to have the status it deserves given its economic value.

I now want to switch to a much more positive angle because it seems to me that few people realise that the UK economy is recovering extremely well. That is not just according to the latest figures, which I will come on to. What is happening is that the impact of the depreciation of sterling is finally working its way through. The second quarter showed 0.8% growth, strong factory output and particularly strong advertising spend, which is always a pretty reliable precursor to wider economic recovery. The true picture in relation to what has been happening for the past four years has

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also emerged. There has been a major reduction in North Sea oil production, and if you take that out of the equation the private sector has been growing by an average of 1.3% annually—more than 5%, which I said was the case when we debated the budget. That is where all the new jobs have come from. In comparison to much of continental Europe, the UK economy, as a matter of fact, has been doing surprisingly well. That is extremely good news and is not adequately recognised. In that context, it would be mistaken for government policy to overegg what is already happening of its own accord. In Birmingham South, you have an economic region in Europe that is among the most successful.

I want to close by picking up on the odd comment on the eurozone. In the 1930s it was the gold standard and reparations which caused chronic unemployment, particularly in Germany, and which, bluntly, let directly to the rise of Hitler. It is horrific that people are standing by and seeing some 50% youth unemployment in Spain and some 30% youth unemployment in Italy. This risks causing dangerous political reactions. It is a crackpot policy, all in the name of keeping the euro together. It is absolutely clear that the characteristics of southern and northern Europe mean that they cannot comfortably share a currency. The reality of that needs to be addressed. The German policy of getting away with doing as little as possible and temporarily financing it through the ECB ignores completely the political risks that are staring us in the face. The fact that Germany of all countries, having lived through what happened in the 1930s, cannot see that is completely extraordinary. Whether it is Italy or perhaps, eventually, Germany, I hope that they wake up to the dangers and realise that there has to be currency adjustment within Europe if they are to avoid severe political dangers. I hope that it is going to happen sooner rather than later.

10.02 pm

Baroness Crawley: My Lords, at this point in the evening, one wag in the House will say, “Surely everything has been said”, and his fellow wag will respond, “Ah, but not everyone has said it”. Despite that, I congratulate our new colleague, the noble Baroness, Lady Lane-Fox of Soho, on her maiden speech. I believe that we all feel that her contribution was a master class in riveting, resourceful and modern rhetoric. I look forward to her further interventions in your Lordships’ House.

Those colleagues who say that the gracious Speech was a bit thin this year may have a point because when I held it up to the light I could just see the letters “U-K-I-P” in the watermark. However, I was perhaps mistaken because most noble Lords will know that chasing UKIP on immigration or European policy will not turn our country’s economy around—and turn it around we must if 1 million unemployed young people are to enter work; if real wages, which have fallen rapidly since the election, are ever to recover; if the downward trajectory of bank lending to SMEs is to be reversed; and if growth is to be put back on track.

The only thing that seems to be growing in Britain today is the Prime Minister’s bewilderment at the antics of his own party on the issue of Europe. When asked by our leading polling organisations what their

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main concerns are, the British public continue to put the state of the economy first. Only one in 10 respondents, when asked, will put Europe as their main concern.

Therefore, the unseemly spectacle of Conservative MPs disagreeing with their own Queen’s Speech is indeed “strange” and “extraordinary”, to quote the Prime Minister today. However much we may all wish to see reform in the European Union and work towards it, the idea that we can just vote to leave Europe, putting at risk the British jobs that depend on our 40%-plus trade with the rest of the EU and putting at risk the inward investment that comes to us because we are part of the largest trading bloc in the world, is bizarre. The idea that we can just start over with the BRIC countries, which make up a fraction of the trade that we have with Europe, is indeed strange and extraordinary. The PM and I are at one on this, as I am sure he will be thrilled to know.

My specific interest in the gracious Speech, as president of the Trading Standards Institute, is the draft consumer rights Bill, which sets out to establish, as the speech says,

“a simple set of consumer rights to promote competitive markets and growth”.

So far, so good. The main elements of the Bill are to consolidate legislation in one place, bringing together eight separate pieces of legislation on consumer rights, and it will cover goods, services, digital content and unfair contract terms. Again, we would all welcome such a consolidation.

The main benefits of the Bill, being to give consumers greater confidence when buying, to introduce new protections for consumers and businesses, to update the law to take account, finally, of the purchases of digital content and to reduce burdens on business are all to be welcomed, as my noble friend Lady Hayter made clear. So where is the catch?

I hope that it is not the Government’s intention in this draft Bill to dilute the powers of the enforcement agencies—of trading standards officers in particular—to enter suspect premises unannounced. If that were the case, a vital aspect of consumer protection would be done away with and those Members of your Lordships’ House who champion consumer rights would oppose such a move strongly.

In this very difficult economic climate, it is more important than ever to boost markets by boosting consumer confidence, yet the regulatory services in local government, including trading standards, have lost a substantial number of key posts in the budget cuts of the past three years, and that policy continues. This has not left us, for instance, in a strong position to deal with the horsemeat scandal or whatever is next to come round the corner, and consumer confidence has taken a knock as a result. If the Government’s Bill were to damage further the enforcement role of the regulatory services, carried out in the interests of both consumers and businesses, then I am certain that many noble Lords would find that unacceptable.

The gracious Speech needs to be part of a toolbox for building growth and prosperity back into our country. I am not confident, with the exception of

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High Speed 2, as made clear by my noble friend Lord Faulkner of Worcester, that this gracious Speech will do that job.

10.08 pm

Lord Tope: My Lords, I must start, as always, by declaring my interest. I have just started my 40th and last year as a London borough councillor.

Lord Razzall: Shame.

Lord Tope: I am not sure whether my noble friend, who started his local government career on the same day as I did, although it did not last nearly so long, was saying “shame” because it has gone on for so long or because it is coming to an end. However, it is too late at night for us to indulge in our familiar repartee.

It is customary at this stage of the debate to say that it has been wide-ranging, and indeed it has been. However, all the subjects covered today—business, the economy, transport, and, dare I say, standing immediately behind the noble Lord, Lord Forsyth, even the European Union—are matters that are crucial to local government. Indeed, good local government is crucial to the success of each of them. Long gone are the days when business and local government viewed each other from a distance with mutual suspicion and distrust, at a time when the only contact that most businesses had with their local council was with its regulatory services, and not always very positive contact at that.

Local growth is now top of the agenda for pretty well all local authorities of all sizes throughout the country, and it can be achieved only with a positive and dynamic partnership between the business community and the local authority. When that happens, it is a powerful driver for growth in the local economy. The roles of local enterprise partnerships are crucial to that, although I have to say that I think they are rather a mixed bag and it may be time to review the effectiveness of some of them.

A good transport infrastructure, both locally and nationally, is vital to the local economy everywhere. I say to my noble friend Lord Glasgow that I have waited nearly all my adult life for Crossrail in London. Now, at last, it is happening. So, in respect of HS2, I say to him to hang in there because I am sure that it will happen and that it will reach Glasgow one day.

On Europe, I tread carefully. It is calculated in the European Union generally that something like 70% of EU regulation has to be implemented by local or regional government as appropriate. That is crucial to local government. The say that local government should have in the preparation of that regulation and in getting rid of unnecessary regulation is extremely important and very often overlooked. I am conscious that the Minister who will reply to this debate was, like me, for many years a member of the EU Committee of the Regions, the voice of regional and local government in the European Union. Indeed, I recall that our third speaker today, the noble Lord, Lord Empey, joined me in the first term of the Committee of the Regions.

Turning now to the gracious Speech, I am quite sure that if local government had been asked what it wanted to hear in the Queen’s Speech, it would generally

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have echoed the words of my noble friend Lord Razzall earlier in this debate. The words it would most have wanted to hear are, “My Government propose no legislation”. The world would really have changed if that had been accompanied by a commitment from the Secretary of State and some of his Ministers to a prolonged period of silence on matters that should properly be the sole concern of local authorities and their electors in a true spirit of localism. But that is fantasy world and it will not happen. The Government will continue to legislate and regulate because that is what they do, and some Ministers inevitably will continue to make unnecessary and often ill-informed comments on matters that should not be their concern, although I exempt from that totally our Minister in this House, who has long since known better than to do so.

My noble friend Lord Shipley has already referred to a number of the Bills of significance to local government. Next week, we will debate two Bills of considerable significance—the Local Audit and Accountability Bill, and the Care Bill, which is not a subject for today’s debate but which has great significance to local government and, particularly, to its residents. We will have ample opportunity to consider them both in detail in the weeks to come, so I will save my comments on both of them until then.

However, of even greater significance to local government will be the spending review to be announced next month. The past three years have been a period of unprecedented challenge and opportunity for local government. The challenge has been implementing 33% budget cuts in only two years. The fact that they were front-loaded in the four-year review was a very unwelcome and unexpected surprise. Some Ministers, although never the noble Baroness who will reply shortly, have sometimes given the impression that that was easy—that all that was needed was to get rid of a few chief executives, cut the pay of the rest, share a few services and the job would be done. At the other extreme, local government representatives gave the impression that the world was going to collapse. Both of these, of course, were considerable exaggerations.

On the whole, local government has managed these major budget cuts very well. However, they have been just that—cuts—and the threat of more cuts in the next spending round is an even greater challenge. They will not be achieved just by reducing back-office costs and a few more salami slices. They will need real transformation in the delivery of local services and the expectations of local residents of what they should receive from their local authorities—a real behavioural change. Behavioural change and transforming services and the way in which they are delivered takes time and needs a climate that encourages creativity and innovation. That is very difficult to achieve when all jobs are under threat and the future is far from clear. It needs good, strong local leadership.

That is the challenge, and it is a big one—but what of the opportunities? Despite the rhetoric of some Ministers to which I have already referred, this Government have made some welcome changes to reverse the trend towards more and more centralisation which has gone on throughout my time in local government. It is not enough and is not fast enough

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for my liking but it is nevertheless real movement which has sometimes been overshadowed by some of the other measures and some of the other comments.

In his opening address the Minister referred to city deals. These provide real opportunities for the cities concerned and involve real power being devolved to them, together with the requirement, quite rightly, for those cities to take much greater responsibility. So far the two rounds of city deals have been confined to cities. I hope that the Minister can reassure us when she responds that the next round will be targeted largely at rural areas. No doubt it will have a different title but one hopes that it will have the same intentions and the same effect. However, we still need to move faster. We need more devolution of that power and responsibility.

My noble friend Lord Shipley also referred to whole-place community budgeting. I echo what he said. I would also add something that is even more exciting and interesting—namely neighbourhood community budgets as distinct from whole-place community budgets. As my noble friend said, huge savings have been suggested by the implementation of community budgets. Whether those estimates are accurate we will know only if and when we do it. However, even if they are only half-accurate they will achieve huge savings. Even more importantly, that will be done not by reducing services but by targeting those services more effectively on the people who are receiving them and worrying less about who or which organisation is delivering them.

Two Sessions ago we spent a long time on what is now the Localism Act, but that legislation will not implement itself. It gives local authorities the opportunity to do things differently, to innovate and, above all, to devolve power and responsibility to their own local communities. Local government faces a period of continuing challenge but also of great opportunity. My plea to Ministers is to trust local government and to let it get on with it. My plea to my colleagues in local government is to stop moaning and demanding more from central government. Rise to the challenge and make the most of the opportunities.

10.18 pm

Lord Stevenson of Balmacara: My Lords, I thank the noble Lord, Lord Deighton, for introducing the debate on the humble Address and for making a fair fist of it, despite the relatively sparse material he had to work with. I am sure that he will not mind my saying that he had to rely on more than a few previously announced policies—housing, infrastructure, training and planning come to mind. Of course, there is always a case for limiting the amount of legislation, provided, as my noble friend Lord Whitty said, it is of high enough quality. However, the problem he had and that the Government have in general is in matching their rhetoric to the reality of their programme. You cannot trumpet your wish to focus on building a stronger economy if all you do is bring forward a programme that fails to deliver the growth and jobs required while attacking people’s rights and economic security and perpetuating a failed austerity policy.

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I should like to congratulate the noble Baroness, Lady Lane-Fox, on her excellent maiden speech, which managed the difficult trick of making a substantial contribution to the debate, to which I should like to return, while leaving us all wanting a little more. I hope that she will intervene regularly in our work over the succeeding period.

I thank all other noble Lords for their contributions. It was a pity, although, I confess, quite amusing for us on this side of the Chamber, that the crisis du jour—how or whether we should continue our membership of the European Union—boiled over into the debate. However, I suppose we had better get used to it. It is invidious to single out contributions, but I hope that when the Minister responds she will pick up some or all of the interesting points made by the noble Lord, Lord Forsyth, on the Scottish dimensions to many of our debates and the Barnett consequences of that, which are very important. UK productivity problems were raised by the noble Baroness, Lady Wheatcroft, who also touched on regional recession concerns, a subject also raised by the right reverend Prelate the Bishop of Birmingham.

Our poor export performance and questions about why that arises were raised in a powerful intervention by the noble Lord, Lord Tugendhat, and I should like to hear the response to that. We were also advised that we need a more effective consumer regime than seems to be promised by the draft Bill. That was picked up initially by my noble friend Lady Hayter, and then by my noble friends Lord Whitty and Lady Crawley. Mention was made of the needs of small and medium-sized companies, particularly small companies that want to grow. My noble friend Lord Mitchell, late of Soho, picked up points that are worth taking forward. We had a reference to higher education by my noble friend Lady Warwick. I endorse that; it has been far too long since a major statement on higher education has been made and we have not had a chance in this Parliament to debate at any length the very radical changes that are being pushed through by the Government.

Finally, but not exclusively, my noble friend Lord Berkeley raised in a wide-ranging speech, not all of which I was able to follow, particularly geographically, a number of important points about the water industry, to which I am sure the Minister will want to respond. I could have referred to the points raised by the noble Lord, Lord Flight, but there were so many and they were so sharply focused on the Government, rather than on any general points, I did not think it was worth encouraging him; we will pass over that quickly. I am sorry about the listing but, by implication, the point I am making is that a number of issues have been raised all around the Chamber about the focus of the gracious Speech and why it does not match up to the rhetoric of the title of “building a stronger economy”. Why do so few of the Bills we have talked about and will be debating over the next few months focus on the question of how to build our economy?

When we debated Her Majesty’s gracious Speech last year, unemployment had soared beyond 2.6 million, we were in a double-dip recession, and the Government were borrowing £150 billion more than forecast to pay for the costs of their failed economic plan. What has

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happened to the economy since then? Since October 2010, the UK economy has grown by just 1.1% compared with 3% in Germany and 4.3% in the United States. Unemployment has stuck at around 2.5 million. A large number of those in work are working part-time when they want full-time work, and most people face difficulties in maintaining their standard of living, let alone improving their lot.

According to this year’s gracious Speech, and quoting it in full,

“my Government’s legislative programme will continue to focus on building a stronger economy so that the United Kingdom can compete and succeed in the world”.

You would have thought that an aspiration on that scale would have presaged Bills that created the conditions for businesses to grow and for wealth to be created, to enhance productivity and to propose a restructuring of our economy, ensuring diversification towards those sectors that would contribute to GDP in the future. Instead, what do we have? In finance, we have the carryover banking Bill and the welcome but very modest national insurance Bill. In business, we have a modest set of amendments to the intellectual property regime; a promise of more regulatory reform, but led from the Cabinet Office; and a welcome but very limited consumer Bill that plays around with structures and responsibilities but does not introduce the sort of regime that will protect hard-pressed consumers and empower them as drivers in making markets work effectively for them and for producers, thus helping to provide the foundation for UK businesses to succeed here and in other markets abroad. Surely what we needed to make this speech’s laudable aspiration a reality was a set of Bills that would establish a modern industrial strategy—an agenda where the role of government is not to step back but to work with business to create better outcomes at home and to ensure that we can pay our way in the world, to ensure that growth is more broadly based across sectors and the regions, and to reduce imports and to grow exports. So, to add to the list of gaps identified by other noble Lords, I want to mention four areas where there are still points to be picked up, and to which we will return as we move forward through the programme.

As my noble friend Lord Eatwell said, we must reform our banking sector, not only so that banks are made safe but so that the sector better serves the economy. Under this Government, lending to businesses is falling month on month, including a fall of £4.8 billion in the three months to February according to the latest Bank of England figures. We know that the rash of government schemes, from Project Merlin to the national loan guarantee scheme, and now the Funding for Lending scheme too, have simply failed to get credit to the businesses that need them. The problems are exacerbated in the regions and nations of this country. Every other country in the G8 has a state-backed investment institution to tackle this problem and to ensure that their small businesses can access the finance they need. That is why we have been arguing for the establishment of a proper British investment bank and for the creation of a network of regional banks, perhaps, following on from my noble friend Lord McFall, using

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one of the nationalised banks to operate alongside that institution to transmit the investment bank schemes to small businesses.

Weaknesses in vocational skills are a concern of every business that we talk to and a source of competitive disadvantage for the UK as compared to our neighbours. With almost 1 million young people out of work, we must ensure we have a system that delivers people with the education and skills our businesses need. Ministers boast that they have created more than a million apprenticeships, but the number of 16 to 18 year-olds starting an apprenticeship in the first half of this academic year has dropped by 12%. We urgently need to improve a situation in which two-thirds of large companies in this country do not offer apprenticeships. Why will the Government not legislate to require those large firms getting government contracts to have active apprenticeship schemes, ensuring opportunities to work for the next generation?

The only direct mention of infrastructure in the gracious Speech is the two HS2 Bills. I declare an interest, as the current route for HS2 goes close to my home—not, as I may have mentioned to the noble Earl, Lord Glasgow, close enough to qualify for compensation, although I have my hopes. I have made clear before that I support my party’s approach to the scheme although, like the noble Viscount, Lord Trenchard, and, I think, the noble Earl, Lord Glasgow, we do not yet understand the rationale for the introduction of a paving Bill before decisions have been made on our airports, for example. We have made clear that we will look to ensure that HS2 is fully integrated into the existing rail network, with services running directly to a wide range of towns and cities in addition to those already placed on the new line, which amount to a very small number; affordable to use, rather than a premium-priced service aimed at business passengers; not at the expense of investment in the existing network, including the rolling programme of electrification, upgrades and new rolling stock; and required to generate at least 1,000 apprenticeship opportunities for every £1 billion of public investment.

However, surely we need to look beyond HS2 and its 30-year payback. As the noble Lord, Lord Forsyth, said, we need jobs now. With our economy flatlining, the country is crying out for investment in infrastructure to create jobs, boost confidence and strengthen our productivity and competitiveness, particularly in the regions. Both the CBI and the EEF criticised the Government for their failure to get on and deliver on infrastructure. The last infrastructure pipeline update given by the Government shows that of their 576 projects, less than 5% were completed or operational. Why was there not more in the Queen’s Speech to take that forward? Where are the practical measures on housebuilding, which would kick start the economy with jobs in the construction industry while providing much needed homes?

Finally, what on earth is happening on communications? Communications are vital to every aspect of our lives today—from business to leisure and accessing public services. Everyone should be able to access a decent level of communication, including phone and internet. Our content and broadcast

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industries need copyright protection and certainty. The communications sector was worth £50 billion, employing 530,000 people, in 2011, and of course it supports the wider economy. The internet contributed 8.3%, or £121 billion, of the British economy in 2010—a bigger share than in any other G20 major country, and is predicted to grow at 11% a year over the next five years. In her excellent maiden speech, the noble Baroness, Lady Lane-Fox, argued that the Government should develop a strategy and a programme that would get as many people online as possible. We agree. A communications Bill is desperately needed, focused on helping people to get broadband in rural areas, a point picked up by the noble Baroness, Lady Byford; helping people improve their digital skills through training and education for both business and personal reasons, as more public services will be delivered online; ensuring that those who do not have a computer or broadband at home can access those facilities from a public library; and making sure that older people, disabled people and people with learning difficulties have access through the appropriate design of services and equipment.

This debate has been primarily about the economy, business and transport but it has also dealt with local government, and the main Bill in that section is the Local Audit and Accountability Bill. Having announced the abolition of the Audit Commission three years ago, the Government have finally come forward with a proposal to try to fill the vacuum they have created. However, we must ensure that taxpayers get value for money and that we maintain high standards of audit. We have concerns about whether the plans will produce an open and competitive market—contracts may well be awarded to a small number of firms—and there are real uncertainties about the level of future audit fees.

The draft Bill was heavily criticised in pre-legislative scrutiny. The committee questioned the estimated savings claimed by the Government. It also called for a new financial impact assessment, stronger safeguards for whistleblowers, and better value for money compressions to enable more informed judgments about the effectiveness of local expenditure. I hope that the Minister will be able to reassure us on these points.

Twelve months ago, we warned that the Bills in last year’s programme would not do much to get the economy going again. Today, the economy is flatlining and there is little, if any, hope that the legislative programme announced so far will bring the growth and jobs that we so desperately need. For me, the saddest thing is that the Government who legislated for a fixed-term Parliament of five years seem to have run out of steam after three—what a waste.

10.31 pm

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham): My Lords, I am probably the only person in the Chamber who sat and listened to every single one of the speeches made today. It is with some lack of confidence that I say I will be able to respond to all the points that were made. I will do my best. It may require me gabbling a bit but I will provide as many responses as I can. This has been an important and good debate. I always enjoy the Queen’s Speech debate

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because it is very wide-ranging—I apologise to the noble Lord, Lord Patten—and we get a whole lot of views.

In his opening speech—many, many hours ago—my noble friend Lord Deighton laid out the Government’s programme for the next Session. Since then, we have had more than 40 commendable speeches, to which I will endeavour to do justice in the short time available to me. Where I have been asked direct questions, if I do not answer them I will see that a letter is sent to the noble Lord concerned.

I, too, congratulate our new noble friend, the noble Baroness, Lady Lane-Fox. Many others have complimented her on her speech, very justifiably, and I, too, would like to say how fortunate this House is to have her in our midst. She will not know this but I knew the previous Baroness Lane-Fox very well and respected her very much as a great supporter of the disabled. She was one of the first people to really put the needs of disabled people on the map, of course being disabled herself. She was a great person and I am sure that the noble Baroness will follow adequately in her shoes.

The comments started off with a sort of mish-mash of disagreement about what has happened with the economy. I found rather rich the suggestion that the Government were not doing the right thing to put it right. On a number of occasions in this House, I have gently reminded noble Lords on the other side that this deficit was not of our making. We inherited it after 13 years and now to suggest that we should borrow our way out of this situation, when we were borrowed into it, is something that will require more time for debate than I have today.

Despite the considerable efforts that have been and are being made by the Government, the country is still facing difficult economic challenges. The departments represented in today’s debate—my department, the Department for Communities and Local Government; BIS; the Department for Transport; and the Treasury—are the most involved in providing the essential measures that can assist recovery and stimulate growth.

The Government have been consistent in basing their policy on an unwavering commitment to fiscal responsibility and introducing measures aimed at ensuring that this country is one of the best places in the world to do business.

We have had many speeches on the economy, on both its strengths and its weaknesses. The Government’s key objective is to reduce the deficit, and spending consolidation is a vital part of this. Interesting speeches on this were made by the noble Lords, Lord Eatwell and Lord Empey, and the noble Baroness, Lady Wheatcroft. The Government have consistently looked to prioritise growth and enhance spending. The Chancellor announced in the Budget that the Government would increase their infrastructure spending plans by £3 billion per annum, paid for through permanent reductions in current spending. This will mean £18 billion additional investment by the end of the next Parliament.

The noble Lord, Lord Empey, suggested that individual departments and civil servants should have a duty to make savings and to understand what they were doing—I

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think that that is more or less what I would interpret it as. We are currently engaged with departments to identify more savings from their budgets ahead of the spending review on 26 June. There will be a zero-based review of capital to identify the highest-value-for-money growth schemes. As noble Lords have said and understand, capital growth is essential to support the growth strategy.

Public investment as a share of national income, thus GDP, will be higher on average between 2010-11 and 2020-21 than under the whole period of the previous Government despite much greater constraints on the public finances. This means that the Government will never cut capital spending to the levels planned by the previous Government, who intended to cut it by 7% more than in our plans. This would have meant £3.4 billion less investment by 2014-15.

We have made good progress on coalition agreement commitments and business plan delivery. Our focus now is on maximising the impact of our policies, particularly to achieve growth at a local and national level. That means devolving powers and responsibilities and giving business as much freedom and support as possible so that it can flourish. As my noble friend Lord Tope has pointed out, my department has been instrumental in passing funding and responsibilities to local government to help to promote business activity.

A final part of this localisation is covered by the measures announced in the gracious Speech of the local audit Bill. I shall not go into the details tonight because it looks as though we are going to have a lively time with it, but I know that we will be starting consideration of that in the next few weeks. The legislation will enable local authorities to be more independent of central government in selecting their auditors and managing their finances.

We have had a number of contributions today on transport and transport infrastructure. It is correct that we are investing more on major transport projects such as HS2 and Crossrail. Despite the strictures of my noble friend Lord Forsyth, we are investing also in local roads, rail and transport schemes. I am pleased that, in general, speeches today have supported that investment.

I was asked specific questions by the noble Lords, Lord Faulkner and Lord Bradshaw, and the noble Viscount, Lord Simon. They were all kind enough to give me advance warning of these, so I shall briefly respond to them now. The noble Lord, Lord Faulkner, asked about Crossrail having a station at Reading or Maidenhead. I know that he has recently had a written response from my noble friend Lord Attlee and that my noble friend is happy to speak to him again on this subject if he wishes. Network Rail’s Crossrail works on the Great Western main line are already under way in a number of places. However, the works at Maidenhead that might not be needed if the route was extended to Reading are not due to commence until 2016, so there is plenty of time to deal with that.

The noble Lord, Lord Bradshaw, asked about the acute shortage of railway rolling stock and whether Her Majesty’s Government would get out of the way of investment by indicating in franchise agreements a presumption of the carry-over of such stock.

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The Government’s rail Command Paper stated that bidders should not be fettered in their future use of rolling stock and should have more market freedom. That was endorsed by the industry’s rolling stock strategy, published in February 2013. The Government already make use, where appropriate, of Section 54 of the Railways Act, under which we can require a new operator to take on the previous operator’s rolling stock.

Finally, the noble Viscount, Lord Simon, was concerned about young drivers’ road safety. We are intent on reducing the number of accidents involving young drivers. That is a top priority and we have already taken steps to make the driving test more realistic by introducing independent driving and stopping the publication of test routes. A Green Paper considering a range of options for improving the safety of newly qualified drivers will be published later in the spring.

My noble friend Lord Forsyth asked about the modernisation of transport, to which I have just referred. We are undertaking the biggest modernisation programme for the railways since the Victorian era. We are working with local authorities and businesses to target investment where it is most needed, and we have established the independent Airports Commission to make recommendations on how to safeguard future international aviation capacity. The noble Lord, Lord Bilimoria, asked about that. Sir Howard Davies will be delivering a shortlist of credible proposals by the end of this year. He will also identify ways in which we can make better use of existing capacity and, as part of his final report in summer 2015, the commission will provide materials to support the Government in preparing a national policy statement.

We have of course made a commitment to HS2, which I am glad was largely supported by speakers from around the House. We believe that that will change the economic geography of the nation. The noble Lord, Lord Bilimoria, also asked us about timescales. I can tell him that we aim to produce a paving Bill this year. The target for Royal Assent to the paving Bill is November this year. The hybrid Bill for phase 1 will be introduced by the end of 2013, with 2015 the target for Royal Assent. We expect that the hybrid Bill for phase 2 will be introduced in 2018. Construction of phase 1 will start in 2017 and construction of phase 2 will start in the mid-2020s. We hope to have the first line open in 2026.

The general support for HS2 is a great help. The noble Lord, Lord Faulkner, gave stirring support for it. I agree with him that it is not just about high speed. It will unlock the enormous potential opportunities that cities including Birmingham, Manchester and Leeds have to offer, making them more attractive places to locate and do business. HS2 will bring jobs on the railway to the cities that it will serve. HS2 Ltd estimates that about 9,000 jobs will be created to construct the new London-Birmingham route, with a further 1,500 permanent jobs created in operations and maintenance. All in all, it is something to look forward to and support. However, we have not just been working on HS2. We have also been investing in other railway and road structures in an ongoing programme to ensure that it is not just new lines that are supported but current ones.

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We know that at least 90% of businesses are small and medium-sized enterprises and that they have not found it easy to access finance in the past few years, so we have created a business bank, which will deploy £1 billion of additional capital to address gaps in the supply of finance to small and medium-sized enterprises. That will enable them to access loans and give them certainty to bid for contracts both within this country and beyond. We are providing further help by reducing corporation tax from 28% to 20% by April 2015. In addition, we will be providing a £2,000 contribution towards employers’ national insurance contributions if they take on extra staff and so help the unemployment situation, which my noble friend Lord Sheikh welcomed.

My own department has been at the forefront of promoting infrastructure support, which, as other noble Lords have said, is important to the future of the economy. Creating the right conditions for increasing infrastructure projects is essential to stimulate growth, particularly through the construction industry, so we are building on an existing commitment to an £11 billion housing investment in this spending review. In this year’s Budget, a further housing package totalling £5.4 billion was announced. The noble Lord, Lord Eatwell, suggested that there should be more concentration on new housing. I remind him that we have recently launched an equity loan scheme for help to buy, and that will provide £3.5 billion of investment, focusing on new-build home ownership. It will also boost construction. That has been well received and well taken up.

We have introduced a mortgage guarantee scheme from January 2014 to provide guarantees to support £130 billion of high loan-to-value mortgages. We are undertaking a build-to-rent scheme, the funding for which has expanded from £200 million to £1 billion, to support the development of more new homes. The affordable homes guarantee programme doubled the support for a further 15,000 new affordable homes in England by 2015, and we have the right to buy.

The noble Lord, Lord Shipley, and I disagree that none of this will generate more housing and boost construction. It will, and that is what we are aiming for. However, it involves a huge investment of money in both housing and construction.

The Government published our full response to the Heseltine review in March 2013, confirming that 81 out of 89 recommendations had been accepted in full or in part, including the creation of a single local growth fund. The size of the pot has not yet been agreed but it will encompass quite a lot of other pots.

The Government have also established 24 enterprise zones, and those are creating jobs as we speak. The right reverend Prelate the Bishop of Birmingham rightly pointed out how Birmingham was doing, particularly with the city deals. Birmingham clearly has a good future and is working extremely hard to ensure that it is at the top of the tree and ready to take on any responsibilities to come its way. It is estimated that the first wave of city deals will create 175,000 jobs over the next 20 years and 37,000 new apprenticeships.

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In addition to the Autumn Statement, 2012 saw the announcement of government investment of an additional £980 million in schools in England by the end of the Parliament, the funding for 100 new academies and free schools. All these promote growth and investment.

The noble Lord, Lord Bilimoria, made a passionate plea for more pressure on trade, including selling the UK in the UK. The Government are encouraging investment in exports as a route to a more balanced economy, and we have set out our ambitions to increase total annual UK exports from £488 billion in 2011 to £1 trillion by 2020.

My noble friend Lord Sheikh and the noble Lord, Lord Bilimoria, promoted the need to pursue trade with Africa as well as with India and China. We understand the need to extend that, and I know that my noble friend Lord Deighton will be taking notice of that.

Lord Lea of Crondall: The Minister has mentioned Africa and China. Does she recall that a number of noble Lords have mentioned Europe? Does she think that it makes no difference to the prospects for investment in Britain if we have one hand on the door handle to exit from the European Union?

Baroness Hanham: I was not ignoring Europe. I was speaking directly to the points that were made about India and Africa. Of course our trade with Europe is extremely important, both imports and exports. I do not think anybody is going to want to unbalance that. The noble Lord’s point is well made and I was not trying to underestimate its importance. Trade with the rest of the world is also extremely important.

In January 2013, the Government introduced a one-in, two-out system of deregulation whereby no new regulation is introduced unless it is offset by deregulation of twice the equivalent value. That will be part of the discussions we will be having later when the deregulation Bill comes forward.

I have a sheaf of papers here and about two minutes to deal with them. The noble Lord, Lord Eatwell, spoke about the banking reform Bill. The Government are going to give careful consideration to the recommendations made by the Parliamentary Commission on Banking Standards, including those it makes in its final report. We will consider tabling amendments to the Bill when and if appropriate. The Government have committed to ensure that both Houses will have enough opportunity to consider and debate any amendments tabled.

The noble Lord, Lord Bilimoria, asked about promoting trade beyond Europe. UKTI is working with the Foreign Office and applying a range of criteria to prioritise its focus on emerging and high-growth markets.

The noble Lord, Lord McFall, and the noble Baroness, Lady Kramer, asked about the break-up and sale of RBS and other banks. The government shareholdings in RBS and Lloyds Banking Group are managed on a commercial and arm’s-length basis. UKFI works closely with those banks to assure itself of their approach to strategy. Its objectives are to create value for money for the taxpayer and to devise and execute a strategy for realising it in an orderly and active way over time.

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My noble friend Lord Forsyth suggested that quantitative easing has exaggerated the liabilities of pension funds because of low interest rates. We recognise that quantitative easing is a major tool designed to affect the economy as a whole to meet the 2% inflation target over the medium term. Over 2011-12, companies with defined pension schemes have seen their scheme deficits more than double from around £100 billion to £250 billion, but the recent fall in gilt yields cannot be ascribed to quantitative easing alone. Factors such as flight to safety from the eurozone also have an impact.

Lord Forsyth of Drumlean: I realise it is rather late, but the point that I was making was that the assessed deficit is based on gilt yields, not corporate bond yields. If the Pensions Regulator were to change that view, huge sums of money that are not required but appear to be required because of the fall in gilt yields would not be put into pension funds.

Baroness Hanham: I thank my noble friend for that extra explanation. I shall carry straight on because I might just get a few more of these done.

The noble Baroness, Lady Hayter, asked whether private landlords will be required to check the immigration status of tenants. Many landlords already carry out some identity checks. An additional requirement, such as taking a copy of a passport, should not be too burdensome.

My noble friend Lord Tugendhat asked a number of questions, as did the noble Lord, Lord Monks. They are all quite technical, so I hope they will forgive me if I reply in writing.

There were questions about the consumer Bill that will come before us in the not-too-distant future, and there will be a great deal of debate and discussion on it.

My noble friend Lady Byford raised the question of rural broadband. I am sure she will appreciate that, during the passage of the Growth and Infrastructure Bill a few months ago, there was considerable discussion of rural broadband and the necessity for it including the permitted development rights and the limitation of those. The Government absolutely recognise that rural broadband is essential, not only to promote industry and its facilities but also for individuals.

My noble friend also asked whether local authorities have sufficient resources for planning, based on the new permission for agricultural buildings to be converted. We are giving all authorities a 15% inflation-linked increase in fees. Some have managed to deliver significant improvements in their services despite other reductions.

The noble Lord, Lord Mawson, speaks with great experience and he and I have discussed issues like this before. I note with concern what he was saying about neighbourhood budgets and communities. Perhaps we might discuss that further some other time.

I will probably run out of your Lordships’ patience as time goes on. I will deal with two more points and then answer the others in writing.

The noble Lord, Lord Warner, spoke about youth unemployment as well as other important matters. The 16-17 year-old unemployment level fell by 5,000 to

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192,000, down 21,000 from the same time last year. The 18-24 year-old level rose by 25,000, but that is down 25,000 from the same time last year. The proportion of 16-24 year-olds not in employment, education or training has fallen over the year and is currently at 15%. That is too high and needs to come down. I accept entirely what noble Lords say: youth employment is one of the real problems that we need to address. The noble Lord also asked about the resource transfer from the National Health Service to social care. As he will know, all government spending is being reviewed as part of the spending review, including social care funding.

Finally, my noble friend Lord Trenchard asked what we are doing about excessive regulations where primary legislation is not required. The deregulation Bill is not all we are doing to reduce regulation. We are also making changes through secondary legislation, but this Bill will help us meet our target to repeal and reform at least 3,000 regulations in this Parliament.

I must just respond to my noble friend Lord Tope on city deals because he was so nice about me. At the moment there is no plan for rural deals. Of course, some rural areas are caught up within the city deals and are helped by that. The Government plan to devolve to all local enterprise partnerships, rural and urban, the single local growth fund.

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I apologise for gabbling and being rather short. Where I have not answered, correctly and in appropriate detail, points that have been made, I will do so in writing.

The debate adjourned until Tuesday 14 May.

London Local Authorities and Transport for London (No. 2) Bill [HL]

In accordance with Private Business Standing Order 150A (Suspension of bills), the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent. The Bill was presented and read a first time. It was then passed though all its remaining stages pro forma and sent to the Commons.

City of London (Various Powers) Bill [HL]

In accordance with Private Business Standing Order 150A (Suspension of bills), the Bill had been deposited in the Office of the Clerk of the Parliaments together with the declaration of the agent. The Bill was presented and read a first time. It was then passed though all its remaining stages pro forma and sent to the Commons.

House adjourned at 10.59 pm.