The Prime Minister has also announced details of the new school sports premium, which will see £150 million a year going directly into the hands of primary school head teachers for them to spend on improving the quality of PE and sport for all their pupils. This will complement the £1 billion already being invested in youth and community sport. I would also like to mention the launch of the Britain on Foot campaign, led by the Outdoor Industries Association, which is working with other organisations to get us fitter, healthier and happier by encouraging us to

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participate in outdoor activities. The Department of Health’s Change4Life programme is also an integral part of Britain on Foot.

I do not have a brief for health matters but I am encouraged to hear what the Department of Health is doing, working with Natural England, to fund the expansion of the Living Streets Walk once a Week to school scheme, which was specifically mentioned by my noble friend Lord Greaves. The Department of Health is also involved in creating Walk4Life as a sub-brand of Change4Life and Natural England is championing Outdoors for All on behalf of the Government.

I would like to mention quickly the national parks. I am very conscious that the noble Lord, Lord Judd, and my noble friend Lady Miller of Chilthorne Domer are particularly involved in national parks. They are, indeed, national treasures for their wildlife, landscapes and cultural heritage. For millions of people they offer amazing opportunities to experience the natural environment, engage in outdoor activities and contribute to the economy and quality of life in our country.

We have had a fascinating debate. As someone new to your Lordships’ House, it is a great privilege for me to learn from the experience that is always displayed on these occasions. I now better understand that outdoor activities are key not only to our personal well-being but to the nation as a whole. The Government recognise the importance of all these activities and many government departments are co-ordinating to ensure that the public sector plays its part. It is very clear that many businesses, communities and organisations in the private sector are equally determined to achieve more. The activities of last year’s golden summer of sport show us all what we can do. We must now fulfil the next stage by encouraging even more participation in outdoor activities with all the benefits they undoubtedly bring.

1.23 pm

Lord Greaves: My Lords, I am more than grateful to everybody who has taken part in this debate, which has exceeded my wildest expectations. I am very grateful to the Minister for his comments, which I will read very carefully. I am also grateful to him for covering in detail many of the current initiatives which I did not have time to cover in my opening speech.

The noble Lord, Lord Haworth, reminded me of when members of the Mountaineering All-Party Parliamentary Group walked in a long crocodile up Blencathra, otherwise known as Saddleback, in the Lake District. He and I, as befits Members of your Lordships’ House, were proceeding at a stately pace at the back of the group. One of the people who thought they were looking after us stopped, waited for us to catch up and asked, “Are you two okay?”. We said, “Yes, of course, we are sweeping up to make sure nobody gets lost”. I pay tribute to that group, of which I am a member, which does a very good job.

My noble friend Lady Miller of Chilthorne Domer talked about playing outdoors when she was a young person. That reminded me that for the first 11 years of my life I lived on the edge of a very built-up, working-class area of Bradford—Bradford Moor—but across the main road was the huge great open air playground of Myra Shay, which had a stream going through it. We

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used to dam the stream there as well and fish for sticklebacks, minnows and others. I do not think that would be allowed nowadays as it would be considered far too dangerous. The important point here is that children nowadays are often provided with activities which give them a thrill but are totally and utterly safe. Many of the things that I did in my childhood, with semi-official approval, would never pass a risk assessment. However, we are all exposed to risk in our lives in all sorts of ways. Learning to cope with risk and to deal with it is very important. I do not think that we are quite getting the balance right at the moment with the whole compensation culture, health and safety and so on. I am sure that outdoor activities have a part to play here. People have to realise that many outdoor activities are dangerous by their very nature but there is nothing wrong with that. What is important is being able to cope with that danger. In many cases, modern equipment has been developed for use in caving or skydiving or whatever which was never available in the past.

I desperately tried not to blush when the noble Lord, Lord Judd, spoke about me. I thought that I would write down his comments and if I ever apply for a job again, which is not very likely given my age, I will appoint him as a reference. I was very grateful to him for his comments. I get off the train at Preston. The noble Lord, Lord Judd, cheers up at Preston when he looks out of the window. He can look east and, if it is a nice day, he will see the wonderful whaleback hill of Pendle. That is what really cheers him up when he gets to Preston.

A delightful and wonderful wheelchair bound lady lives in Colne. Her ambition in the next few months, together with her friends, is to get to the top of Pendle Hill despite her disabilities. My noble friend Lord Addington said that the great outdoors mean different things to different people. The great thing about this huge range of sporting and recreational activities is that they are not like cricket or football, they are activities where you set your own challenge and level. For one person taking a walk round the park is the same as undertaking an extreme rock climb or discovering a new cave is for somebody else. It is all to do with individual personality and that is why these activities are so wonderful.

I thought that the noble Lord, Lord Judd, was going to lead us in a rendition of “Hills of the North, Rejoice”, but perhaps that would have been inappropriate. The great Scottish rock group Runrig has what I think is a great song entitled “I’m Alive on a Lifeline”. Part of it reads:

The rockface inclinesHold her, leave herRise to glory Over mankind”.

All outdoor activities provide the people who take part in them with that kind of experience. That is why they are so wonderful and why the small amount of government money, local authority money and other public money which goes into them has such a huge leverage—I think that is the modern word—and why we should do our absolute best to maintain and protect it.

Motion agreed.

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Economy: Growth

Motion to Take Note

1.28 pm

Moved By Lord Soley

To move that this House takes note of the current level of growth in the United Kingdom economy.

Lord Soley: My Lords, the international financial collapse in this country and many other countries around the world produced a situation which in many ways was very similar to that of the 1930s and had a devastating effect on the economics of family life here and elsewhere. It is not something that was born and bred in the United Kingdom, as some people say. If anybody has doubts about the seriousness of the problem, they should look at the excellent BBC money programme on the subject—the second part of which was on last night, and there is a third part coming soon. One of the things that slightly troubled me about the speech of the noble Lord, Lord Deighton, in the debate on the Queen’s Speech, was his comment that,

“we need to complete our work in fixing the financial system so that it is able to sustain growth in the economy”.—[

Official Report

, 13/5/13; col. 143.]

He was absolutely right to say that. However, if we wait until we have fixed the financial and banking problems we will, frankly, have to wait at least four years before we can expect growth.

Although I, like everyone, hope that the outgoing chairman of the Bank of England is right, I cannot be sure. I have not argued much about whether we are in a second-dip or third-dip recession, but few people in this country or elsewhere would disagree that we have been bouncing along the bottom. Events in the euro area will be a further challenge to us, as I am sure the Minister will be the first to agree. Although I accept that there is a need to reduce the deficit, the key problem is growth. If we do not get growth into the economy we cannot deal with the deficit quickly enough. We will be constantly chasing our tail, trying to cut the deficit without getting back to growth.

Contrary to popular opinion, the United Kingdom has on many occasions had far worse debt-to-GDP ratios—sometimes up to 225%. Britain has never defaulted and has had one of the best reputations in the world for financial management, and we still have it. Interestingly, the Government were concerned enough to say that if we were not careful we would lose our triple-star rating, but when we lost it they said, “It doesn’t matter so much anyway”. It does not matter that much. If we can get growth to go back into the economy, we will deal with the deficit.

I remember a Minister—I cannot remember who—saying that future generations would never forgive us because we would be burdened with this debt for generations to come. This might be a good time to remember that we finally paid off the debt for the Napoleonic wars in the late 1990s. My worries when I was at school did not include the debt which had been dumped on us during the Napoleonic wars. Britain has always borrowed and done what most other advanced

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economies do; they grow themselves out of the debt problem. That is why growth is so important and what we should focus on.

As a politician I know the temptation among all political parties to blame the Government whom you are trying to replace for just about everything which has happened anywhere in the world including the weather—in fact, particularly the weather. At the last general election it was clear to me that the outgoing Labour Government had already lost the argument on this subject. The then Conservative Opposition and the Liberal Democrats were going round saying that this was the most desperate situation that we in this country had ever been in, but that was not true. It was not true that the deficit was the key problem. The international financial collapse caused the problem.

We talked ourselves down in that election. Once you do that, people will naturally pull back. They will not spend money—they tend either to save it or to wait to see what will happen, and that adds to the problem. The debt-to-GDP ratio showed only small changes between 1970 and 2010, and a number of economists are now stating that much more clearly. They say that history suggests that the current radio of debt to GDP is not alarming. If my views on that do not satisfy noble Lords, let me quote the IMF’s World Economic Outlook of October 2012. It states:

“Throughout the past century, numerous advanced economies have faced public debt burdens as high, or higher, than those prevailing today”.

That was the view of people such as Robert Neild, the Cambridge economist, and others who have said that the debt-to-GDP ratio is not alarming. That does not mean that it is desirable or that we should not reduce it, but it suggests that we have had the argument the wrong way round for the past few years, and that is what troubles me. I suppose that I am a natural Keynesian, and I felt that although we had to give the Government space in their deficit-reduction programme, the position should have been reversed and we should have been saying that growth comes first. If you do not get growth, your debt problems will be far worse.

I should like to provide another quote from the IMF’s World Economic Outlook. It states:

“First, support for growth is essential to cope with the contractionary effects of fiscal consolidation. Policies must emphasise the resolution of underlying structural problems within the economy, and monetary policy must be as supportive as possible”.

Again, I am not arguing that getting the right public sector and public debt relationship is unimportant. I am saying that you should use your fiscal policies to underpin policies for growth. The coalition’s focus on cuts in expenditure is a repetition of the 1930s, and only recently has it begun seriously to address growth. That is what I should like us to do a little more, and I hope that the debate will focus on it.

The key question is, “How do we get growth?”. Recently, the Government have rightly been saying that we need to do more on infrastructure, and they have mentioned a range of issues. I should like to deal with a couple of those issues.

It is beginning to be recognised—certainly by many economists—that you need to have a more balanced approach to how much you borrow in order to invest.

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It is no good borrowing simply to pay off debt. We all know that and no one has any doubts about it. Borrowing to invest, as long as that investment is leading to growth, is not a bad thing. That balance is right.

I agree that infrastructure is a crucial element that gives us opportunities. The United Kingdom’s infrastructure is not as good as it ought to be. I refer to the remarks of the noble Lord, Lord Deighton, who said:

“We are committed to creating a single local growth fund for the key areas of skills, housing and transport. The final size of the fund will be set out at the spending round next month”.—[Official Report, 13/5/10; cols. 140-41.]

I look forward to that. Quite rightly, he focused on two of the big issues that are always good for generating growth: transport and housing.

What has troubled me not just about the current Government but for a considerable time is that when they talk about transport, they are referring to rail and road and do not mention aviation. The Minister knows my strong views on Heathrow. Before he gets worried, I should tell him that I am not about to embark on a debate on Heathrow; this issue goes much wider. I have always argued that growth in aviation is crucial, and is important for the regions. The Government have placed great emphasis on high-speed rail. I agree with that and do not have a problem with it. However, high-speed rail deals with the transport of people, not of goods, whereas every aircraft that flies out of this country with passengers also usually has in its belly large quantities of high-value export goods. I shall mention Heathrow once and try not to mention it again. Only 0.001% of flights in or out of Heathrow are cargo aircraft. All the cargo comes and goes in passenger aircraft. The same is true for all our local regional airports. If you want to encourage exports, we must allow aviation to grow.

Therefore, my first question to the Minister is: are the Government taking seriously enough the contribution that aviation can make to growth? There is enormous potential there. It is no good telling people in Exeter that the high-speed rail line will help them because it will not. However, flights from Exeter airport to other airports around the world will help them. Birmingham Airport, which is currently trying to expand, needs to have permission to go ahead—again, because Birmingham can export more if it has growth. Therefore, the growth factor is very important.

There are two other points that I want to make in relation to aviation. First—again, the Minister will have heard this before—air passenger duty is a disaster for the aviation industry. It is massively outpricing us in competition with other countries and other airlines. We need to reduce air passenger duty. I know that we cannot do that quickly—it cannot be done overnight—but the duty is a major hindrance to the expansion of growth for the British aviation industry and that presents it with very real challenges at the moment.

The second thing that I have to say about aviation also applies to other areas of transport. One reason that aviation has not been focused on by successive Governments in the way that it should have been is the fear of climate change. I yield to no one in my concern about climate change. I first wrote about it back in the

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early 1980s and I still have the same views about it. However, I do not believe that you deal with it by closing down aviation. There is a terrible warning here from the way we conceded to the green movement the argument about nuclear power. Only now are we catching up with the green movement and saying, “Yes, we must have nuclear power”, when the whole argument against it was what held us back early on. The same is happening with aviation and we have to be very alert to that. All sorts of efforts are now being made—frankly, they should have been made earlier and I have been very critical of the aviation and aerospace industry on this—to deal with climate change issues through, among other things, fuel research, which is showing real possibilities.

The other area that I want to touch on is housing, which every political party is saying is important. We now have the Green Investment Bank and a business investment bank. It may interest the noble Lord, Lord Newby, that many years ago in the 1980s, when I was dealing with housing in the House of Commons, we put forward a proposal for a housing investment bank. The proceeds from the sale of council houses, which were very high at the time, would be placed into a housing investment bank, which would then receive matched money from the building societies and big building companies. They were very positive about that process and they wanted to do it. Unfortunately, the receipts from council house sales were simply used to cut taxes, whereas if they had gone into the investment programme, that would have been far more effective. I ask the Minister to look again at this possibility.

I am in favour of selling public housing up to a point. However, that housing must then be replaced, and you do that by having sufficient income from the sales to fund a replacement programme. That would enable us to have a steady housebuilding programme, instead of what tends to happen in this country, which is a lurching from excessive building to none at all. We have gone backwards and forwards with some pretty disastrous consequences, as we saw in the 1950s and 1960s.

My final point concerns the other area on which we need to be much more focused—the emerging countries. We have tended to talk about just the Brazil, Russia, India and China group but we really must not forget Africa. I have seen some very interesting articles. The other week, Chuka Umunna in the House of Commons made a very good point about this. Nigeria has a dramatically growing economy, as have many other countries in Africa with which we have good relationships. There is an expanding market there, particularly in high-tech goods. It is high-technology that can drive our expansion.

In conclusion, I hope that today we will look at how we can achieve growth. Over the past year or two, I have heard the Government shift their position away from simple deficit reduction to growth. Very recently, I have heard some of their suggestions on infrastructure, transport and housing in particular, and I should like the Government to say a bit more today about how they are going to deliver that growth. That is the key question. We could bounce along the bottom for a long time yet but, if we get growth going in the economy, frankly we will do what Britain did very

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successfully in the 19th and 20th centuries, which was to grow itself out of its economic problems. That is what most advanced countries do. I have the IMF on my side on this, as well as a large number of economists, so I think that I have quite a strong argument.

1.44 pm

Lord Marland: My Lords, I thank the noble Lord, Lord Soley, for organising this excellent opportunity to debate this matter. It is critical that we have debates such as this, and they are not to be confused with the manifest subjects involved with the Queen’s Speech. It is a slight shame that it is taking place in the graveyard slot of lunchtime on a Thursday but it is an important issue.

I also wish to apologise to the House for the fact that I have to leave after I have spoken because my boss has called me. There are very few people to whom I say yes but he is one of them. Therefore, I give my apologies if I have to leave.

The Prime Minister has put trade and the enhancement of British trade at the heart of economic recovery. I congratulate him on the leadership he has shown—he has led huge delegations all over the world. Wherever he goes abroad, he takes a very big delegation with him to further those efforts.

I have the honour of being the Prime Minister’s trade envoy and have visited roughly 30 countries in the past 18 months. To respond to the point made by the noble Lord, Lord Soley, I have been to Mozambique, Angola, two or three times to Algeria, Morocco and Libya. I am planning on being in Gabon in the next month and, I hope—if that is the appropriate word—Ghana in July. The noble Lord is absolutely right: Africa is an important area for us. It has been left unnurtured for far too long by successive Governments. We have been complacent over it and so we are going into overdrive. My noble friend Lord Green, the Minister for Trade and Industry, has also travelled extensively, taking big delegations with him.

We have reorganised UK Trade & Investment with a change of board, having brought in commercially focused people from industry. We have reorganised the way that they interface externally, working with our ambassadors, who are being driven by the Foreign Office to be much more outward-focused. We have set up a trade envoys programme. We have eight trade envoys from across the parties—Liberal Democrats, Labour, Cross Benches and Conservatives—to focus on territories on which we have not focused previously. We have a business ambassador’s programme, where business ambassadors who are leaders of industry across the country are sent to various countries, and I am also honoured to chair that programme.

I note in her place the noble Baroness, Lady Symons, whom I would call a friend, although she is not a “noble friend”. She is a friend to this country in the work that she does overseas, particularly leading delegations in the Gulf region. She has just returned from Saudi Arabia—a vital market.

We are establishing a Ministers travel programme, where Ministers will continue to lead trade programmes, and of course we have invested time and money in making the export guarantee fund a very flexible fund to support businesses.

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Everywhere I travel, I discover that people want the British offering. One feature of the Olympics was that they gave us self-confidence. They reminded us of the incredible bandwidth of skills that we have as a nation, from airlines to the arts, and from music to mechanical engineering and so on. The Olympics showcased those skills not only to ourselves but to the rest of the world. Excepting that bandwidth of skills, why do people want to do business with Britain? Simply, we are a transparent nation. Transparency is the key to how we do our business.

I had my misgivings about the Bribery Act but now I am completely behind it because it sets us above other countries which continue to indulge in corrupt dealings. It sets Britain apart, and that is something of which we should be unbelievably proud. Indeed, we can take our open government programme and what we have done through the Bribery Act to overseas countries which are desperately trying to find a way through this corruption. Of course, we also have the rule of law, which is a fundamental basis for doing trade and is being adopted by many countries.

I shall not dwell for too long on the headline deals that have been done in the past few months alone but they include a £10 billion contract for Shell in Abu Dhabi, a new cybersecurity programme in Kuwait, an award for the new Kuwait airport, companies being appointed for the metros throughout the Arab world, and warships being sold to Brazil to protect their coastlines against piracy. All manner of big sums are being generated through this trade activity.

The Government are creating the weather. Government is an enabler and it has to create the weather. In many ways, we are turning a marathon into a sprint. That is what we are driving ourselves to do. As Mervyn King says, there are signs of good news out there. However, the key point he makes is that this is not a time for complacency, and he is right. A damning statistic from the Federation of Small Businesses shows that only 20% of its members’ businesses export. That is a terrifying figure for a trading nation which, as the noble Lord, Lord Soley, mentioned, for years has gone out and exported its trade. Another damning statistic is that 70% of small and medium-sized businesses export only when someone from abroad has knocked on their doors to buy something. This is a damning and frustrating challenge not only for us in government but for the businesses themselves.

My plea to everyone in this House, the other House and elsewhere is to persuade the local companies you have got to know to get out there and trade and make investments overseas. We are doing our best to take the horses to water but they have to drink it. They will only do that if they work through UK Trade & Investment and the various business associations in which many Members of this House are involved, where they allocate funds for export and travel, and ultimately take the risk. However, the most important thing is that we have a Government focused like no other on helping them to trade.

1.51 pm

Baroness Kramer: My Lords, I join in the congratulations to the noble Lord, Lord Solely, on

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obtaining this debate. He is absolutely right—there is no more important issue than growth in our economy—and we in this Parliament and the Government have to focus directly on these crucial issues.

However, I would challenge him on his analysis of how we got where we are today. I fully accept that a financial crisis came—some say like a meteor out of the sky; others, who have looked at the banks, thought it was predictable—and hit us hard in 2007-08. This country was in no position to sustain that blow. We were at a point where the former Labour Government had raised public spending and public borrowing to a point where it offered no resilience. I can understand how the Labour Government got there. They bought into the idea that boom and bust had ended and that there would be a constant flow of substantial tax receipts coming from the financial services industry and that they therefore could let loose the leash on both spending and borrowing because there would be a constant flow of money coming into the Treasury. They should have recognised that we were at the top of an economic cycle—we do not end boom and bust; economies cycle—and every Government have prudently to take cognisance of that. So that is the situation in which we found ourselves.

We also found through that process that the underlying British economy was in very weak shape. We had become so dependent on financial services that we had bled much of the life out of our other activities, both in the service industries and manufacturing industries. We had allowed the balance to swing so heavily to London and the south-east that much of the north was being sustained only by having public service activities there—the private sector had not been building and thriving for a long time—and, worst of all, we had failed to recognise for more than a generation that the backbone of the economy is our small businesses. Twenty per cent of all the small businesses in the EU are in the UK. This is a thriving location for small businesses but it has not been receiving the kind of support that it needs to grow, to take risks, to create new jobs and to build its export base.

For the past few years, the rebalancing of that shift has been the work of this coalition Government. I am encouraged by the comments of Sir Mervyn King and the CBI made earlier in the week which suggest that they can finally see that we are going into a modest recovery. It is very dangerous in this current unstable international environment to focus too much on green shoots, but the same verdict is coming back from small businesses, from the accountants who spend time up and down the country with businesses and even from the commercial section of the banks. They identify that the beginnings of a real recovery are under way, in part because of the rebalancing and redevelopment of those abandoned areas. This work will turn out to be absolutely crucial.

I have often said before that the neglect that most appalled me, not only during the Labour years but during the Conservative years before, was in the area of building skills among our young people. The fact that there was a lack of apprenticeships and that the whole apprentice structure had been allowed to collapse was irrelevant in many people’s minds. There has been a turnaround in that area: more than 1.25 million

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young people are now either in or have gone through apprenticeships in the past couple of years. That will be important.

We all thought that any debate introduced by the noble Lord, Lord Solely, would undoubtedly touch at some point on aviation and I admire his self-restraint in not addressing the issue of Heathrow. I shall therefore limit my comments on this issue out of common respect to his self-restraint.

However, I wonder whether he recognises the inconsistencies in his own position. I agree that regional aviation capacity is the key issue we must look at. As he knows, that is not hub aviation capacity but very much point-to-point. One of the issues that the Davies Commission will have to take on is whether we should try to build a single London-style hub as our primary connection both within the country and outside. Should we have one main hub and a number of minor hubs? Should we build a balance between one hub and a number of point-to-points? We have to come up with a solution that manages and supports the rebalancing necessary for our economy. That means that it must service the north and the west as well as London and the south-east. That is one of the arguments that leads people to think that much of the London hub should now be shifted somewhere between London and Birmingham, potentially alongside an HS2 route, but there are a number of other visions.

The noble Lord also stressed the fact that aviation, usually thought of as passenger aviation, plays a crucial role in freight. I fully accept that. However, you cannot drag those words out of most of the aviation industry because it becomes impossible to argue for the use of Heathrow, an incredibly expensive and scarce resource, when you are doing a point-to-point freight movement. So that issue has to come into the picture and it will be interesting to see where it goes.

There are two issues I wish to address before I sit down. I shall certainly not use my full time today. One is an issue which is sometimes not addressed in the context of economic growth—that is, tax avoidance. I recommend a speech made on this yesterday in the other place by my colleague, Ian Swales, MP for Redcar. As he was discussing the problem that we face—the inherent reality that most multinational companies now effectively enjoy a corporation tax rate of zero because they export their profits to somewhere such as Luxembourg or outside the G20—he said that one of the impacts of that is greatly to disadvantage those very small and medium-sized businesses in our economy that we need to grow for the future. For example, a chain of three book shops within my local community have pasted on their walls that each book shop pays for a trainee nurse through its taxes on an annual basis, whereas Amazon, their great rival, effectively contributes nothing. Yet they face this price differential because, in effect, the international community has provided a taxpayers’ subsidy to the large multinational entities. We have to tackle the tax avoidance problem for that reason in addition to the failure of those companies to contribute as they should to the public spending that, as it were, pays for the society in which they participate and provides the basis for many of their sales. I think that the level playing field argument is an incredibly powerful one.

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In my last comments I wish to pick up on the remarks of the noble Lord, Lord Marland, on exports. I agree completely that building the exports of our SMEs is absolutely vital. However, sometimes I disagree with BIS about its focus on saying to small businesses, “Come on, go to China, Brazil and India”. It is wonderful if small businesses can export to those countries and I have no problem with that, but when you talk to these businesses, you find that many of them have had very bad experiences when they have tried to do it. It is quite risky to export to China if you have a patent you wish to protect. It is very difficult to export to the United States because of all its non-trade barriers. I have talked to quite a few small businesses, but I shall not use their names because they are quite hesitant about this, which have found that in the end they had to form a joint venture to sell into the United States and essentially surrender most of the upside of their additional revenues and the exports from their US operations. Instead, they just accept royalty payments because, without a joint venture relationship, it is impossible for them to operate on American soil.

From the small business perspective, the ongoing debate that David Cameron was leading on in the United States in his discussions with President Obama on an EU/UK trade negotiation to tackle many of these non-tariff barriers, is absolutely crucial. There is a real need for an awareness that this is the kind of thing we can tackle only as part of the EU. I lived in the United States for 20 years and I know a lot of people in the Administration. The chance that they would ever waste time on a UK/US debate along these lines is close to zero. I suspect the same for China and, indeed, for the various developing economies of the world.

We are at an exceedingly exciting point where there is great potential. We are starting to see movement in the economy, but it is crucial that we have sustainable growth, not growth created by a sudden surge in public spending that sparks a short-term response and transient behaviours. We need long-term, sustainable growth by getting new businesses off the ground and encouraging them to export. Any discussion is too much to try to include in this speech, but it is also crucial that the banks back up that growth with a credit supply, because it will be in huge demand as businesses begin take off when they see the end of the recession and can move into a much more investment-focused and expansionary mode. We are at a very interesting point at which the decisions and the way we shape this growth must be such as to set us up well for future years.

2.02 pm

Lord Bhattacharyya: My Lords, I congratulate my noble friend Lord Soley on securing this debate on economic growth. We all have an interest in this subject, but I should declare my interest as chairman of the Warwick Manufacturing Group at the University of Warwick. For more than three decades, we have been working very hard, helping companies to grow. A week ago the gracious Speech pledged that the Government would focus on, “building a stronger economy”—fine words, even if they are undermined by the recent rows about referendums. Britain’s economic situation is extremely weak. Yes, we have avoided a

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triple-dip recession and it may even be that the double-dip recession will be revised away, but that is little to boast about. After five years of recession, our GDP remains 2.6% below where it was before the crash. Our productive sectors have struggled, with manufacturing gross value added down 10% over the past 10 years. Construction has fared worst of all, falling into deep decline in 2012, and it is now almost 20% down on 2008. Nor will foreign growth rescue us. The European Commission, the IMF and the OECD all say that the eurozone will decline this year. Finally, devaluation cannot solve our problems. Sterling is almost a quarter below its peak, but many exporters are facing increased costs from raw materials and components, which means that we are not benefiting from the short-term competitiveness we enjoyed in earlier devaluations.

Our problems are deep and significant and they require great attention, but if we take the right decisions, they can and will be resolved. I have spoken many times in this House about the need to take a long-term view. The challenges we face have arisen as the result of years or even decades of too little innovation, too little investment, undercapitalisation and not enough support for the physical and social infrastructure which can deliver lasting growth. We must all pull together to change this. Step by step and day after day, we must follow a steady path that supports innovation, investment and infrastructure. I am encouraged that the leader of my party and the shadow Chancellor speak regularly on these issues, and commissioned Sir George Cox’s excellent report on long-termism. Even the Mayor of London now talks about the need to take a long-term view on growth, but unfortunately the Government seem mostly to be focused on the tactical short-termism that got us into this mess. We will not get a recovery from immigration crackdowns and referendums.

To be fair, the Government are doing some good things, mostly at the urging of the Business Secretary. We share the aim that all young people should take up training apprenticeships or go into higher education on leaving school, and I congratulate the Government on pressing ahead with high-speed rail. It is politically difficult, but necessary. While the science budget is declining in real terms, the Government have at least tried to protect it. However, sadly, this is where their long-term vision ends. Despite all the talk about growth, I searched the gracious Speech in vain for a mention of science, technology or research. In the press briefing that accompanied the speech, we heard much about scraping the barnacles off the boat, but these issues are not barnacles, they are the materials from which the boat is built. I want our Government to take a practical, long-term approach to creating growth.

One way that can be done is by supporting reshoring, which when I put it in plain English means bringing back the jobs that left Britain due to globalisation and cheap labour overseas. In both manufacturing and services, rising wages abroad and technological innovation at home could mean that these jobs come back, and we should make such a return our priority. A recent RSA/Lloyds Banking Group report, Making at Home, Owning Abroad, argues that more than 200,000 jobs could be created through reshoring. The question is less whether jobs can come back to the West, but

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which countries they will return to. How can we encourage inward investors to choose Britain? The first way is through procurement.

In America, there is an expectation that those who get government help will return their back-office and IT functions to the US. That is why “Buy US” clauses have appeared in many bailed-out companies’ purchasing contracts. Today, a combination of informal pressure, immigration rules, tax changes and US wage competitiveness means that companies such as General Electric and General Motors are creating IT jobs in America, not in India. Indian outsourcing companies are facing tough times because of this. Their growth and profits are down, and the outsourcing market is projected to stagnate or even decline. Yet the UK seems to be uninterested in supporting the reshoring of its own money. The NHS spends millions of pounds on offshoring IT and data management. For example, half of the NHS shared business services staff are based in India. If we were to demand that such direct government spending was done in the home market, we would immediately create many hundreds of thousands of jobs in Britain.

The next rule of procurement is that it should act as a capacity and innovation builder for British business. Many people ask me, “Why can’t we have a Google or an IBM in this country?”. Britain is a small country. The reason those companies succeeded in the beginning was by growing in their internal market. Government procurement must be such that it helps small companies to create an internal market and then grow. If we use procurement to support innovation through a major extension of the Small Business Research Initiative, we would help UK businesses develop new products and services for both the home and the export markets. As I said, we are a relatively small country. We do not have the critical mass to support innovation in the domestic market unless we focus resources on it directly. This is needed to help small companies grow.

Next, we must transform our approach to skills so that investors want to create jobs in Britain. The government response to the Richard report was full of warm words but kicked the question of funding for skills into the long grass. We need to find a better response. We do not need government to spend more but our businesses to invest in their people. We should create sector training boards, with the power to issue training levies, as they do in construction, so that all firms have a common incentive to invest in their employees. If we approach skills in this way, we might be able to rid ourselves of our cumbersome skills bureaucracy. Some object that this means a new tax on business. I understand this concern, but if firms train their people they will more than get that money back.

Perhaps I might make a counterproposal. I am no fan of corporation tax. As the IFS says, much of corporation tax is,

“passed on to workers in the form of lower wages”.

Ideally, I would like to see corporation tax fall to 15%. Of course, that would be expensive and people would argue that it cannot be done. So why not reduce or even abolish corporation tax for firms with a tax liability of less than £10,000 which are subject to sector skills levies? Such firms contribute only £2 billion

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of corporation tax receipts—less than 5% of the total—but they represent more than half the companies that pay the tax and their profit is essential to the future growth of Britain.

The next challenge is to help our businesses secure finance. At the micro level, I have much sympathy with the arguments of the noble Lord, Lord Young, in his report Growing Your Business. I agree that support for small business should be extended, with start-up loans made available to all entrepreneurs, as should the enterprise finance guarantee. But we need to go much further. As the noble Lord, Lord Young, says,

“when banks started to remove the manager from their branch network they inadvertently broke many of their links with SMEs. This has had a disastrous effect”.

I have long argued for a dedicated business bank with real scale, preferably with a regional or sectoral focus, so that lending decisions are made by bank managers who know their businesses. Such a bank could be focused on the sectors supported by innovation catapults, thus making investing in British innovation and British production in key sectors more attractive to both inward and domestic investors. I am delighted that my party has embraced this proposal as part of its policy review.

Next, if we are to reshore contracts in advanced sectors, we need to transform our overall innovation capability. This means reforming our research funding councils and boosting innovation agencies such as the Technology Strategy Board. We pride ourselves on being a great nation for science, but our real-terms R&D budget is declining and we are doing little to get the maximum economic benefit out of what we spend. I am pleased that our research councils are giving more attention to economic impact, but we have to do much more to ensure that the research we fund contributes to economic growth.

Let us compare our approach with America’s. In his State of the Union address, President Obama said:

“Our first priority is making America a magnet for new jobs and manufacturing”.

He announced a $1 billion investment in innovation institutes to encourage the return of manufacturing. In Britain we have to fight for years for an extra few million. Whether it is the huge American investment in innovation, the Canadian reform of research councils to make applied research their top priority or Germany’s Fraunhofer Institutes, KfW and Sparkassen, it is other countries that are trying to secure long-term growth through industrial innovation. We are far behind, and falling further. All parties share the blame for this, yet there are many on all sides of your Lordships’ House who regret these missed chances.

Outside politics, this agenda is widely shared. Last week I attended a seminar at the Royal Society, where scientists, entrepreneurs and business leaders discussed how to bridge the academic-industrial divide to support growth. For the first time the Royal Society has taken on that challenge. There is a real opportunity for growth here, if only we seize it. We should use procurement to stimulate demand and get scale for innovation; push firms to invest in skills, and give tax incentives to smaller firms; use business banks to support innovation investment in sectors and regions with high growth

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potential for reshoring manufacture and services; and refocus research funding and increase applied technology funding to encourage both inward and domestic investment in innovation. Of course, the obvious question is: how we can pay for such a programme? It is not easy but it could be done.

Today there exists a rare opportunity to borrow cheaply to invest for the future. We should take it. However, that will not last long and we will certainly need to be fiscally very tight for a long time. The key is gradually to switch resources from unproductive to productive spending—what used to be called the costs of failure. That means pay restraint, reducing welfare and housing benefits over time, and perhaps removing benefits from those on above-average incomes. It may even mean more co-payments for public services so people understand the cost of the services they use.

None of this will be easy, but if sustained restraint helps encourage the job-creating, technology-led growth we need, it will all be worth while. Our growth problems are significant and real. But by backing the skills, ingenuity and ability of our people, they can—and will—be solved.

2.16 pm

Lord Bates: My Lords, it is always a privilege to follow the noble Lord, Lord Bhattacharyya, who has done so much to promote Britain at home and abroad in terms of economic growth. I listened very carefully to what he said and I think a lot of his remarks will probably be more warmly received on this side of the House than his own Front Bench, particularly when it comes to identifying the importance of tax reductions and controlling public expenditure, as well as the focus on enterprise.

As the noble Lord was talking, particularly about developing IT, I should have been paying more attention but I was flicking through pages 4 and 5 of the excellent House of Lords Library briefing that has been prepared for this debate. I found a lot of very encouraging things. Some things, I have to say, had passed me by, such as the tenfold increase in the annual investment allowance for small enterprises; the introduction of a seed enterprise investment scheme offering investors 50% income tax relief to encourage investment in early-stage companies; doubling the lifetime limit on gains for eligible entrepreneurs’ relief to £10 million; providing 100% business rate relief for small businesses seeking to get going; a £200 million growth accelerator scheme designed to provide business coaching for high-potential firms, which 4,000 SMEs have signed up with; start-up loans and, of course, the Funding for Lending scheme. I commend those pages to the noble Lord but I very much appreciated his contribution, and his record.

Of course, I also pay tribute to the noble Lord, Lord Soley, for securing this debate and the measured way in which he introduced it. My only disappointment is that more colleagues from the Back Benches did not want to take part in it. I know that we have just had the debates on the gracious Speech but this really is the most important issue for our country at the present time—because everything else flows from it. If growth gets under way and strengthens, revenue yields will

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grow and therefore we will have more to fund the public services that we talk about. That would have been good but I thank him for securing this time.

In his opening remarks, the noble Lord made mention of the farewell comments of Mervyn King as he presented his final quarterly review of economic outlook as Governor of the Bank of England yesterday. I thought that it was cause for encouragement. Certainly, the front page of the Financial Times today was very positive—you do not often see there reasons to be cheerful, and nobody could necessarily accuse Mervyn King of being an unbridled optimist. When he says:

“There is a welcome change in the economic outlook … and growth is likely to strengthen over the course of the year … That’s the first time that I’ve been able to say that since the start of the financial crisis”,

it should give us some cause for optimism. Of course, everybody immediately then rushes to say, “Well, we don’t want to be overoptimistic; we’ve got to be cautious”—my noble friend Lady Kramer reminded us of the “green shoots” of recovery described by my noble friend Lord Lamont—but there is a balance here, because part of what leadership and government are about is creating confidence in the economy. Confidence is hugely important, whether you are a Premier League football team, a small business or a Government. It is hugely important that people have confidence in our economy. We are led to believe that corporations are currently sitting on a mountain of some £750 billion of cash which could be invested to drive forward the economy. While we all need to be cautious, we need also to talk up our economy and the fact that Britain is becoming internationally more competitive, having fallen substantially down the competitiveness league tables produced by the World Economic Forum. We are now steadily climbing back up and re-entering the top 10.

Many noble Lords travel extensively around the world—the noble Lord, Lord Marland, referred to the excellent work of the trade envoys. I was in Kuala Lumpur last weekend and met SP Setia, which is investing in the Battersea power station redevelopment. It has £600 million of investments. I met there our tremendous team of UK Trade & Investment representatives, including Tony Collingridge, which had been instrumental in bringing that investment to the UK. I met many other people there who thought that SP Setia from Malaysia had got a cracking deal and wanted to know whether there were any more going in Britain, because they regarded Britain as the most favourable destination for foreign direct investment in Europe. That is a great thing. I sometimes wish that we could spend more time overseas seeing ourselves as other people see us, as Robert Burns chided us to do, because we might then be very encouraged.

A few weeks earlier, I was in Shanghai with the McLaren motor racing company, which is undertaking significant investments. The Chinese appetite for British advanced manufacturing technologies is incredible. We should take pride in British engineering, manufacturing output and in the way we are moving forward, albeit slowly, to a projected 1.2% growth in the current year and a return to pre-recession, pre-crisis levels in about 12 months’ time and about six months ahead of normal.

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This will come in sharp contrast to other parts of the world; for example, in Europe. The same newspaper has heralded the encouraging performance of British business in terms not just of growth figures but of greater confidence, as evidenced by the Purchasing Managers’ Index report on new export growth, which had gone from expansion from contraction, tipping over the 50-point threshold for the first time in recent years. It pointed to the fact that 500,000 vacancies were being advertised in jobcentres, which was their highest level since 2008. Let us contrast that with the eurozone. We do not want to point to other people’s suffering, although, sometimes, when I hear the policy prescriptions put forward by the party opposite, they remind me of something that you can point to as if they were on “Blue Peter” and say, “Here’s one where we can actually see it being road-tested”. You have only to go across the Channel to see President Hollande putting forward his solutions for the economy. They are having a disastrous effect. His wealth tax of 75% is driving people through the Channel Tunnel to London to build up our economy rather than build up their own at a rapid rate. We need to remember that, in an age of intellectual capital, intellectual businesses are highly mobile and pay attention to tax rates, as the noble Lord, Lord Bhattacharyya, reminded us. At a time when we are reporting that we have perhaps come out of that phase of the recession, that is why the French economy has gone back into it. The unemployment rates are another indicator here that we have to look at. According to the Economist this week, the unemployment rate in France is 11% and rising; the UK’s is 7.9% and stable or falling. That is a very important indicator along with GDP.

The other thing that we need to look at is the number of new jobs being created in the economy. One and a quarter million jobs have been created in the economy since 2010, which is the fastest rate of job creation that we have witnessed since 2000. Moreover, for every one job lost in the public sector, six jobs are being created in the private sector. That addresses one of the points made earlier about one of the objectives that we set out with being to rebalance the economy away from relying just on financial services towards relying on manufacturing—we are seeing a growth in exports. We need to move away also from overdependence on the public sector to a more balanced economy. We are seeing a rate of growth in new enterprise that is almost unprecedented, with 471,466 new businesses, new enterprises, established in the past year. Anyone who has ever set up a business will know that the first year is incredibly tough, and the number of start-ups which go out of business in their first year is tragically high, but the ones which stay the course are where the growth will come from—in employment, in revenues and in taxes. Therefore, the fact that we have an enterprise-friendly culture in this country is important.

Perhaps I may offer a note of caution about the growth figures for an unusual reason. Understanding national accounts is something which I never really got to grips with—even when I was a Treasury Minister, I have to confess; understanding corporate accounts comes a little bit more naturally. National accounts are incredibly complex and faceted. We chase after this half-time score of the GDP growth rate every

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quarter, and sometimes we are happy and sometimes we are sad. Knowing what goes into a lot of indicators is a bit like the old argument about pasties: if you knew what went into them, you perhaps would not eat them quite so readily. We have to get better at measuring what is happening and following the right KPIs for the growth of our economy.

The GDP figures are collected by way of a survey, as those who have worked in that area will know. The mix of the survey, which is organised by the Office for National Statistics, includes 6,000 manufacturing companies, 25,000 service sector companies, 5,000 retail companies and 10,000 companies in the construction sector. I am always suspicious of round numbers. We should look into this and ask why we define progress and growth in our country by that mix of samples. How often is that looked at? I encourage my noble friend, who I know takes these matters seriously and perhaps understands them much better than I ever did, to undertake a review of what goes into the GDP statistics. That in itself would make for an interesting debate. At the time that the first data are released, only 40% of the information is in and available. That is why we constantly get revisions and it comes down. At the end of the day, it is only a survey.

In business, the only thing that people watch when they are in charge of the finances is cash. You can waffle your way through a P&L account or set of accounts but you cannot waffle your way through the cash you have in the bank. That is one of the things that we should benchmark ourselves against. There are some better indicators. VAT receipts would be a very good indicator to use to track the health of the economy: they are reported quarterly and are one of the highest levels of adhered-to taxes. We have to look again at the basket of what we are measuring to ensure that we make the right judgments and policy prescriptions for the economy.

When we talk about cash at the bank, the reality is that we seem to be doing a little better. We have not paid down any of the debt and our overdraft currently stands at £111 billion but that is down from £159 billion three or four years ago. The deficit is down by a third but there is still a very long way to go before we ever get to the point we need to reach of paying down some of the debt as well. That has now been moved to 2017-18. It is encouraging that that cash element in the transaction between what is going out of the government bank account and what is coming in seems to be heading in the right direction and confirms the optimism of the Governor of the Bank of England.

2.32 pm

Lord Davies of Oldham: My Lords, I congratulate my noble friend Lord Soley on securing this debate and concentrating on the issue that must be of prime importance to all of us: how we restore growth to a flatlining economy. Of course, there are rather fewer contributors today than there were in the economics debate on Monday. It is also true that just before the end of the previous Session we had a major debate on the issue, so one would have thought that the relatively small number of noble Lords participating in this debate reflects the fact that others have made their contributions already.

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This debate concentrates on growth. I hope that the Minister in replying will indicate where he thinks growth is coming from and acknowledge the danger our society is in from an economy that has flatlined, as ours has. It is all right for the noble Lord, Lord Bates, to indicate that six times as many jobs are being created in the private sector as are being lost in the public sector, but then why do the latest unemployment figures show a distinctive and frightening rise? Why are a million of our young people still unemployed? What does it mean for the next generation when jobs are so difficult to obtain?

I also appreciate the self-restraint of my noble friend Lord Soley on aviation, which is nothing like the self-restraint of this Government, who have pushed aviation policy not into green shoots but into some distant long grass before any decision will be taken. Let us look at long-term investment by the Government. In aviation we have to wait a considerable time before decisions will be taken, and the much-vaunted HS2, which we welcome, is also a considerable period away from any significant investment being made. In the depths of a recession at least certain factors ought to work to the country’s advantage. After all, sterling has depreciated by almost a fifth. Yet has that produced a significant increase in exports? No, since that devaluation of sterling we have seen our balance of payments deficit get worse.

No one should underestimate the problems that accrue from the crash of 2008, but our challenge to the Government is that they have pursued the wrong priorities. The noble Lord, Lord Bates, compared Britain with France. There was never a mention from the government side comparing Britain with the United States of America. Has no one from the government Benches looked at the Michigan economy and seen what the response has been to a Government who pumped in resources to save two of the biggest car manufacturers in the world and to sustain employment and their balance of payments position by ensuring that such critical industries were not lost? Of course, for our Government such action would be complete anathema.

We are content to see austerity being pursued to such an extent that no one in our society with resources has the confidence to invest. Quantitative easing goes to banks, but banks do not have the confidence to lend to industry. In industry, many of our major companies are awash with resources, with £670 billion in cash, but they do not invest either. Why? Because the pursuit of austerity and impoverishing our people throttles demand. What is actually happening is that there is very limited purchasing power in the economy. It is of course right that we pay some regard to the activities of the Government in seeking to promote small businesses, but every noble Lord knows that the contribution made by small businesses to our balance of payments and exports is quite limited, although I note the points made by the noble Baroness, Lady Kramer, and agree with a number of them. We have to get our major areas of investment right, and at the present time we have not because of the absence of demand.

My noble friend Lord Bhattacharyya indicated how we could improve crucial aspects of the supply side of industry. There is no doubt that the Minister ought to

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respond positively to his recommendations in this debate. With such a low level of demand in society, it is extraordinarily difficult to get investment going again. It is not as if the Government exude confidence by their actions. After all, their austerity targets are missed. We were meant to see the deficit disappear by 2015, but we are now working to a longer-term cycle of 2017, with a certain elasticity even in that. We were meant to make ourselves pristine for the credit agencies, but two of the credit agencies have reduced our three-star status. We were meant to hold our heads high in the international world, but a visitation from the IMF has been presaged by serious criticisms of the Government’s position for having produced an economy so devoid of growth.

That means that the Government are patching up rather than following an intelligent strategy. They have to patch up. Think of the schemes that have already failed. Think of Merlin, which was meant to give some substance to the banks. Think of the insurance strategy, which the noble Lord, Lord Bates, welcomed because the north of England was included, whereas London and East Anglia were not. The problem is that the strategy produced only a tiny fraction of the jobs that it was predicted would follow.

Even in the most recent Budget, have the Government learnt lessons? Of course they are right that we should address the issue of housebuilding and achieve stimulus in those terms, but they have not suggested that the resource should be directed at the first-time buyer. They are not even suggesting that the resource should be directed only at someone buying their first house. It looks as if all that they will do is give a further twist to the house price spiral, thereby making even more remote the opportunities for people with limited resources to get into the housing market.

When we are critical of the Government about demand, it is because every Budget under the Government has significantly reduced purchasing power. The Government must recognise that if they slash benefits, many of which also apply to people in work, they are cutting demand. They must appreciate that if they direct their significant resources to the elite in our society, particularly those who enjoy millionaire status, it will be such an unfair society as to be demoralising for people who work hard but receive very little. One statistic of which the Government should take note is the significant fall in real wages since 2009. That is not just a real reduction in purchasing power among people at work but a worrying reduction in confidence.

If all that was the result of government incompetence, we would have real worries, but it would always be hoped that lessons could be learnt. It is not government incompetence. This strategy is pursued by a Government who believe fundamentally in a smaller state, who want significantly to reduce public expenditure and, in doing so, deliberately create circumstances in which there is higher unemployment and lower demand in society. That has underpinned the whole strategy of the Chancellor of the Exchequer and the Prime Minister since 2010, and that is why the Minister must respond on the state of the economy, which at present is a cause for concern on every side.

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2.44 pm

Lord Newby: My Lords, I thank the noble Lord, Lord Soley, for initiating this debate because he asks the single most important question facing the country: how do we get more growth? He and the noble Lord, Lord Davies, have a relatively straightforward answer. Sadly, we believe that it is the wrong answer. Their answer is to borrow more. It was not the answer of the previous Labour Government. The Fiscal Responsibility Act required the Government to have halved the deficit by the financial year 2013-14. I am not sure whether the Labour Party has finally and formally renounced that legislation, but that was the course that it set.

The noble Lord, Lord Soley, points out that we had 225% of GDP borrowing after the Second World War, but I should have thought that he could see that the circumstances at the end of the Second World War were so fundamentally different in almost every respect from those of today that that is not a useful analogy.

There are a number of reasons for getting the deficit down. In my view, the most clearly demonstrable one is that a higher deficit and an incredible fiscal consolidation programme would undoubtedly lead to higher interest rates. Why is it that at the end of last week the UK was paying 1.84% on its debt, the US was paying 1.86%, Italy was paying 3.89%, and Spain 4.25%? The answer is: because this country has a credible economic policy in which the markets believe. Without that, there is no reason why our interest rates could not rise by 1% or 2%. Bear in mind that a 1% increase in interest rates means that a mortgage payer with a £100,000 mortgage is paying out an extra £1,000 per year, leaving aside the additional costs to industry and the additional billions of pounds extra that the Government will be paying to service their debts.

When the Government came in, national debt was running at 11.2% of GDP. That was possible in a crisis. I do not think anybody believes that such a level of national debt, which seems to be the level that the Opposition are talking about—we still have national debt running at more than 7%—is sustainable. The noble Lord, Lord Soley, talked about Keynes. People disagree about Keynes, but I am pretty certain that he never advocated sustained levels of borrowing over a long period. He knew, as everyone else knows, that although such a thing is possible, and desirable, over a short period, it is not possible in the long term.

Today, in part, we have been discussing another of Keynes’s aphorisms, which is hugely important at the point at which we find ourselves in the economic cycle: his emphasis on the role played by “animal spirits”, to use his phrase, on investment decisions and a whole raft of economic decisions. Indeed, that was the burden of the speech by my noble friend Lord Bates. At this juncture, the turn in the cycle that we are clearly seeing will accelerate because the view of people in the markets—“animal spirits”: what people are saying to each other—is changing positively.

I would like to address specifically several of the points made by the noble Lord, Lord Soley, about the components of growth. Indeed, most of these features have been about one or more components of the growth picture. I start with infrastructure, where there

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was widespread agreement that more needed to be done. Last year, according to the World Economic Forum, the overall quality of our infrastructure was 24th in the world. We do not believe that this is good enough, which is why we are investing more in transport infrastructure in this Parliament than was the case under the previous one. Our railways are seeing the largest programme of investment since the Victorian era. Incidentally, I am pleased to see, as I am sure the noble Lord, Lord Soley, is, that the amount of freight carried on the railways is going up significantly, which reverses a very long-term trend and is very welcome.

Total public and private investment in infrastructure between 2010 and 2012, at £33 billion per year, is higher than that of the final five years of the previous Government. At Budget 2013, the Chancellor unveiled an increase in capital spending plans by £3 billion per year from 2015-16. That is in addition to the £5.5 billion of investment in infrastructure announced in last year’s Autumn Statement. This included £1.5 billion for the road network.

The noble Lord, Lord Soley, and my noble colleague Lady Kramer talked about airports, which is clearly a significant component of the nation’s infrastructure. I do not believe that there is total agreement that we need to have a major national airport hub in this country, but the Government believe that it is a requirement. As noble Lords know, the Airports Commission, headed by Sir Howard Davies, is looking at airport capacity in the short and the long term. We are looking forward to seeing his interim report later in the year. In the mean time, Heathrow has spent £1 billion upgrading and Gatwick is spending £1.2 billion, so it is not as though our airports are atrophying. We know that it is a long-term issue and has been a long-term problem with no consensus within or between parties, but that is what the Davies commission is looking at.

The noble Lord, Lord Soley, talked about housing, which again is a long-term challenge. All parties have taken their eye off that issue over the past decade as house prices have risen inexorably and the proportion of the population owning their own homes has risen. There are three components to improving the stock and appropriateness of housebuilding. First, we have to make it easier to build houses. Secondly, we have to help to supply more houses. Thirdly, we have to make sure that there are no artificial restraints on demand for housing.

We believe that the National Planning Policy Framework, which we published in March 2010, has had some effect in a positive direction. The proportion of planning applications being approved is at a 10-year high, a significant proportion of which are around housing. As for building more houses, we already have an £11 billion commitment in the spending review. The Budget 2013 announced a housing package totalling £5.4 billion, including the Help to Buy and mortgage guarantee schemes. There is a lot of activity on that front. However, I agree with most noble Lords that we have to do more, and we are actively attempting to do so in three strands: to make it easier to get planning, to help have more finance to build houses, and to make it easier for people to afford a mortgage.

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The international component of our economic activity is clearly crucial. To rebalance the economy, we need to export more. Last week’s evidence of a narrowing of our trade deficit is a positive sign that UK exporters have faced significant challenges in recent years. Yesterday’s data confirmed that the recession in the euro area, which is our most important export market, continued in the first quarter of this year. Therefore, as the noble Lord, Lord Marland, explained, we are right to be looking more widely.

In the period 2009-12, our goods exports to China increased by 96%, to Brazil by 49%, to Russia by 133% and to India by 59%. Last year, while our exports to the rest of the EU fell by 2.5%, our exports to the rest of the world rose by 1.2%. While we look elsewhere, we should not forget that we are still exporting 42% of our goods and services to the eurozone. As we try to get more SMEs involved in exporting, many will go to the eurozone because it is so much easier for a whole raft of reasons. Getting on a plane or a train to get to a potential export market in an hour is very different from going to Brazil or China.

I have seen that with a small manufacturing company in West Yorkshire which exports mainly to Europe. Through its website, out of the blue it has had a couple of orders from Brazil for £25,000, which is pretty good for this company. The question is what it will do to capitalise on it. It has no idea who the people are who have asked for this export. The directors have had a long discussion about whether they should go to Brazil. Eventually, they decided that they would go but the cost, in time and money, meant that that was a very difficult decision. If that order had come in from Spain, they would have been off straightaway. Therefore, as we rightly put more emphasis on the rest of the world, we must not ignore the fact that the bulk of our exports are to the EU and will remain to the EU. The EU is where people dipping their toe in the export market will start.

Over the past year, we have increased UKTI’s budget by £70 million to help to deliver world-class services to move SMEs into exports and to focus our activities on the high-growth market. I hope noble Lords will feel that we are making a real impact in that crucial area.

My noble colleague Lady Kramer discussed the challenge of corporates paying the right amount of tax, an area on which we the Government have put a lot of additional emphasis. At the G8 meeting, we made clear that international tax avoidance and rebalancing the rules around taxation are our top priority. At the recent meeting of G8 Finance Ministers, which included George Osborne, it became clear that we had the support of all the leading countries to look at this. It is not something that we can do unilaterally. It has to be done on a global basis. I think that for the first time ever there is a global consensus that we have to do more around corporate tax avoidance.

In that respect, I should like briefly to mention the personal and corporate tax avoidance in tax havens where up to now there has been a huge degree of secrecy. There is a growing momentum of considerable proportions to open up data about people and companies that have set up entities, which until now have been secret, in the principal tax havens of the world. It is

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worth while looking at what has happened in the past year. Having signed an agreement on the automatic exchange of information with the US in September, we have done the same with the Isle of Man. In March, we reached agreement with Jersey and Guernsey. In April, France, Germany, Italy, Spain and the UK agreed to develop and pilot multilateral tax information exchanges. Also in April, we set out our priorities around tax transparencies for the May European Council. Most significantly of all, perhaps, within the past month the overseas territories have agreed to greater automatic information exchange with the UK. Here, we are talking about the Cayman Islands, the BVI and other places that have had a degree of secrecy which we believe is simply no longer acceptable.

The noble Lord, Lord Bhattacharyya, spoke with his unrivalled knowledge about the constraints on innovation and investment. I had a great deal of sympathy with much of what he said, particularly about supporting reshoring, which to a certain extent is happening anyway. However, as he suggested, I am sure that the Government should look at ways of doing more. I am particularly aware of an initiative that my noble friend Lord Alliance is heading up on the textile industry and which is bearing considerable fruit. His view is that the potential from reshoring textile manufacture, so that we can have the just-in-time manufacture of textiles in the UK, could be as much as 250,000 jobs in the north-west. This is potentially a huge thing.

I agree with the noble Lord, Lord Bhattacharyya, that we could be doing more. I was particularly interested in his suggestion of how we might use public procurement to help. We should look at that further, and I will discuss it with my colleague Vince Cable, because it seems an interesting idea. I say in passing that the suggestion that we should be emulating the Americans to increase car manufacturing here seems to ignore the fact that car manufacturing has increased here substantially, without government bailouts but with government support. That is because we have had fantastic investment by companies such as Tata, which have completely turned around iconic British brands by investing more than £100 million of their own money in innovation and investment. They are working very closely with the universities, possibly including the university of the noble Lord, Lord Bhattacharyya, and are placing their own research people in those universities. That has happened without direct government subsidy, on the American model, but because this is a good environment for that kind of activity.

We have a raft of initiatives on the table. There are the Catapult centres, whose work includes high-value manufacturing, initiatives on science and innovation and capital projects from the research partnerships fund. We have done a raft of things to help small businesses to generate capital and have access to it, from abolishing stamp duty on shares and expanding the small business research initiative to £100 million and having further funding committed via the new investment bank, which we are in the process of establishing.

For three-quarters of his speech, the noble Lord, Lord Bates, did a tremendous job in helping the movement of animal spirits in a positive direction. Then he

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slightly undermined that by saying that the figures on which we are placing a certain amount of hope are perhaps not worth the paper they are written on. I paraphrase slightly. However, I think we will have in the UK what has just happened in the US, where the basis of the GDP figures is being looked at. I believe this is the case, although it may not be on exactly the same basis as he wants. The sad thing is that if the consequence of that rebasing of GDP leads to GDP figures going down, everybody will say that this is the Government’s fault for being completely incompetent, while if it shows them going up, that will lead to everybody saying that they have been fiddled, so I do not place too much hope on that. A consistent series of figures is probably the best that can be done. Although it does not necessarily reach an absolutely precise representation of the truth, that is good enough.

Lord Bates: If the noble Lord will allow me, I just need to correct for the record that I did not say that the GDP figures were worthless. I never used that term. I simply queried the mix between the construction and service sectors—be it 5,000, 10,000 or 12,000—and whether that mix was under review in order to ensure that we are accurately reflecting the performance of the economy.

Lord Newby: I apologise to the noble Lord. As I was saying, I believe that the ONS is doing a pretty fundamental review of that at the moment.

The Government are under no illusions at all about the challenges ahead in respect of growth. Implementing our ambitious programme of reform and securing strong, sustainable growth will not be easy, but the Government will not deviate from their course. The prizes in the global economic race are great and we are determined to win more of them.

3.05 pm

Lord Soley: My Lords, I am very grateful to everyone who took part in this debate. In his opening comments the noble Lord, Lord Marland, described vividly the work he is doing around the world to encourage British exports. I very much support that. Indeed, I was quite excited, so maybe we ought to have a word outside afterwards. I must declare an interest as the chairman of the Good Governance Foundation. He mentioned corruption and the rule of law, which is precisely what we are trying to dothrough the company. The amount of work available for British universities on promoting the rule of law is considerable.

The noble Lord, Lord Bhattacharyya, gave a very good speech on a wide range of things. I simply say to him that science and technology deserves a debate on its own when it comes to growth. The high-tech part, which I work with, deserves so much to be put forward. The noble Lord, Lord Bates, also mentioned the importance of confidence in the economy, and I entirely agree with that.

I was slightly disappointed by the Minister’s response because I feel that he slipped back a bit. Yes, Keynes did say to take interest rates into account, but in view of the fact that the noble Lord referred to the long

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term and the short term he should also remember that Keynes said, “In the long term, we are all dead”. That is perhaps worth remembering, but the important point was really what the IMF and various economists are saying. I simply remind the Minister of the quotation I gave from the IMF report: that many advanced countries had debt to GDP ratios much higher than we have now, and they have dealt with them through growth. It is the alarmist approach, which I thought the Government were moving away from, that undermines confidence, because it says to people, “Oh, we are like Greece”. Well, we are not. That was a silly argument in the first place. Britain is in a much stronger position and we should not talk ourselves down in that way.

Finally, because a number of people chided me again for my interest in aviation, let me say one thing about why this is so important. This is not about hub airports but about airports generally. It is not about the Davies report. I gave evidence to that and will do so again. It is that Britain invented the Industrial Revolution. The second stage of that revolution resulted in railways, which produced the first country in recorded history where manufactured goods could be delivered from one part of the country to the other in large quantities. In other words, we had the world’s first integrated manufacturing economy.

This is such an important point because what aviation is doing for the global economy today is what railways did for the British economy in the 19th century. We lost our lead on railways after the end of the 19th century. We still have the second most advanced aerospace industry in the world. Do not let us lose our lead in this as we did on railways, otherwise we will regret it deeply. Aviation delivers goods, and people, all over the world, and it does not require public money. Most of it can be done with private money, so your Lordships can relax a little more about debt. I thank everyone for this debate.

Motion agreed.

Adoption: Adoption Legislation Committee Reports

Motion to Take Note

3.09 pm

Moved by Baroness Butler-Sloss

To move that this House takes note of the reports of the Adoption Legislation Committee on Adoption: Pre-Legislative Scrutiny (1st Report, Session 2012–13, HL Paper 94) and Adoption: Post-Legislative Scrutiny (2nd Report, Session 2012–13, HL Paper 127).

Baroness Butler-Sloss: My Lords, I was delighted and honoured to be asked to chair the first post-legislative scrutiny Select Committee on the current adoption legislation. As we went along, we also became a pre-legislative scrutiny committee. Consequently, we published an interim report to express our views on the first two clauses of the Children and Families Bill in December 2012 and our final report in March 2013.

I begin by thanking the committee staff and our specialist adviser, Professor Harris-Short, for their dedication—I use that word deliberately—extremely hard work and the efficiency of their support in the

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evidence-gathering and in writing the two reports. I am also very grateful for the enthusiasm and enormously valuable input from the members of the committee. It would be invidious to single out any particular organisations among those which gave evidence, and we are extremely grateful to all of them for their invaluable contributions. In writing each report, we felt that we were running to keep up as we received, and had to digest, the Government’s adoption initiatives at short notice. Our committee staff wrote and rewrote the reports to meet those initiatives and our views on the adoption clauses in the Children and Families Bill.

We heard evidence over several months and made a considerable number of recommendations. In the time available, I will pick out several of those that I consider the most important and refer to the Government’s initial response. Inevitably, I shall omit important issues. As we considered the evidence presented to us, we had very much in mind the right of the child to be brought up in his or her birth family, whenever possible, and the right of parents and their children to respect for their family life. Children should not be removed from their birth family unless their welfare requires it, but, sadly, not all children are able to remain with their birth families. The welfare of the child is the paramount consideration.

It was abundantly clear to us from the evidence that there is no need for far-reaching changes to the adoption legislation. The main issues of concern we found were the unacceptable delays in the adoption process, failures of the processes and practice, and the shortage of adopters. Even for babies and young children, who are seen as easier to adopt, the delays are significant. The average age of a child at adoption is three years and eight months, and the average length of time taken from entry into care to adoption is two years and seven months. The longer children wait to be placed, the more difficult the adoption outcome for them and for the adopters.

From the evidence presented to us, we identified numerous failures of procedures and, particularly, of practice contributing to those delays. Consequently, much of the evidence we received focused on those failures and how they might be addressed effectively. Our recommendations have therefore been largely directed to those issues. They are set out at some length in our final report. The initial response of the Government sets out sensible steps to be taken—and steps that are being taken—to reduce delay, but there is nothing much new or that we did not know before we started our investigations.

There is undoubtedly potential for more children to be adopted. Adoption is unique as a change of the status of the child who becomes the child of the new family. The Government are to be congratulated on recognising the importance of adoption and seeking practical ways to improve the situation in guidance as well as proposed legislation. However, there are not enough potential adopters and, further, there are many children suitable for adoption and placed for adoption—that is, ready from the court procedures to be adopted—but who are not adopted for lack of available adoptive parents. In March 2012, there were 4,263 approved adopters and more than 4,600 children who had completed

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the adoption process and were ready to be matched with adopters. The process of matching is slow. In addition, there were many more children for whom an adoption decision had been made but who had not completed the court process. Until now, potential adopters have been largely recruited by individual local authorities and retained by them on their books. The national register is an excellent initiative and will, I hope, mean that approved adopters will be more widely available, which should improve the matching process from a wider pool.

However, adoption is only one relatively small solution to the large numbers of children entering the care system. For various reasons, adoption is not appropriate for many children. On 31 March 2012, there were 67,050 children in care, of whom more than 60,000 were placed away from their families. Proper provision has to be made for these vulnerable children who need to be looked after away from their birth parents. All these children need to be loved, cared for and provided with stability and long-term security. Most of them may be cared for by other members of their family, friends, special guardianship or long-term fostering. However, a danger was articulated to me by a district judge this week that the 26-week requirement for the completion of care proceedings may concentrate on process rather than on the welfare of the child and may create injustices through the inability of some social workers to make adequate assessments of the birth family and of the wider family who might otherwise be able to take over the care of the child. I therefore stress the importance of early family conferencing throughout all local authorities.

The committee was concerned that the Government’s proper concern with and focus on increasing adoption may risk disadvantaging those children in care for whom adoption is not an option. Improving the outcomes for all children should be the priority. All routes to permanence merit equal attention and investment. In the initial response, the Government have set out a number of steps already taken to improve the fostering process and commissioned research on special guardianship.

The committee believes that early intensive work with birth parents where there is capacity to change has the potential to allow the children to remain safely with their parent or parents and would reduce the number of children entering the care system. There are excellent government-supported early-intervention initiatives, but the committee was concerned that a substantial sum—£150 million—is to be removed from early intervention to help local authorities improve their adoption procedures. The Government’s initial response has, rather surprisingly, been to point out that fostering for adoption is a form of early intervention. That is true, but it removes the child from the birth family. Early intervention, working with the birth family, can be successful and, if so, the child can remain in the family and fostering for adoption would not be necessary. It would be most unfortunate if the potential benefit of early intervention were to be undermined by the greater focus on adoption.

We are told that a significant increase in the budget is being allocated to early intervention. I should like to

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hear from the Minister how that increase is to be distributed. I provided the Minister with my draft earlier today.

On post-adoption support, most children are adopted from the care system and most of them, other than babies, will have had unhappy experiences in their birth family, which is why they have been removed from the family. Adoption provides the opportunity for the adopted children to have a secure and stable childhood. It does not rid them of the unhappy early part of their lives. Some of these children present major problems for their new, adoptive families and both the children and their new parents often need a great deal of practical help, counselling and therapeutic help. It is much to the credit of the Government that they now recognise the importance of post-adoption support. The adoption passport will be available online to be accessed by potential adopters and sets out the help which may be available to them.

The committee recommended that there should be a statutory duty on local authorities and other service-commissioning bodies to co-operate, to ensure the provision of post-adoption support. The Government have not responded directly to that recommendation—it would be fair to say that they avoided doing so—and I hope that it will be seriously considered when the Children and Families Bill reaches this House.

We invited adopted and looked-after children to come and talk to some of the members of the committee; we are indebted to the Children’s Rights Director, Roger Morgan, for arranging for these children to come. Both groups ranged in age from about 17 down to eight and were most informative, particularly the younger children when they developed sufficient confidence to tell us what they really thought. The two points I pick out today were said by both groups of children. First, they were not consulted. They did not expect that their views would be accepted, but at least they might be asked. Most of them were very critical of independent reviewing officers whom they had not met or who were not helpful to them; to the contrary were one or two children whose independent reviewing officers had done a very good job with them. Some children were critical of their guardians, who neither spoke nor listened to them. I am disappointed that the Government have rejected our recommendation that IROs should be genuinely independent—it is an important issue—but I hope that something effective will be done about the IRO case overload.

The second point the children raised concerned the training in schools of other pupils about the meaning of adoption and the meaning of being “in care”. Much more importantly, however, they focused on the training needed by teachers. Two adopted children told us that they were criticised by their teachers for being unable to complete a family tree. They were actually put in front of the class and told that they were being unhelpful. I cannot believe any teacher could be so insensitive as to tell an adopted child that he or she was not supportive of the class when they were unable to produce a family tree of their new family. I am glad that the Government are looking at this important issue of teachers.

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I turn briefly to outcomes and data. The Government have rightly concentrated on the importance of improving processes, but there has not yet been sufficient focus on outcomes. Some adoptions fail, with disastrous results for the child and for the adopters and with considerable additional cost to the state in taking a seriously damaged child back into care. We need much more data and research on breakdown and how it can be avoided. The Government say that they are looking at it. I hope very much that they take some effective steps to find out what lies behind these breakdowns.

It would also be helpful if a child’s passage from the moment of going into care to being placed in adoption, and thereafter, was monitored so that one has a graph of what happened to that particular child, which might also help with the issue of breakdown. We need much more data and research on breakdown and how it can be avoided, and I do not apologise for saying that again.

The other recommendations the Government have rejected are likely to figure in amendments to the Children and Families Bill when it comes to this House. I beg to move.

3.24 pm

Viscount Eccles: My Lords, it is a great privilege to come immediately after our splendid chairman. Age before beauty, of course, as one of the lonely men on the committee, my goodness, it was a pleasure to serve under our chairman and to have such a riveting and exciting time studying a very difficult subject.

I will not follow in any detailed way what has been done, what the law is and what is now proposed. I would like to speculate a little on the relationship between Government and local government, and all the other agencies that are involved in the very complicated matter of care and permanent placements.

Clauses 1 to 3 of the Bill all do things that are entirely relevant to what we studied. There is a new duty, a change in the rules about how you look at matching on grounds of ethnicity, and in Clause 3 there is the headmaster’s stick behind the curtain, which is the possibility of directions. I have to admit to a personal dislike of any clause that has directions in it as there is no parliamentary procedure for appealing against the decision of a Secretary of State.

However, that may be—let us hope that Clause 3 never needs to be used—when thinking about these complex matters we need to remember quite a number of things. A lot of very expert people are involved in these complicated matters: not least, of course, the courts. Views about child psychology and the best interests of the child are a moving target. I was an economist at one time and, as noble Lords will know, no two economists agree. I am not sure that any two child psychiatrists entirely agree either. There is a very wide intellectual background to these matters and of course there are wide differences on the ground.

The demographics of Bradford are not the same as those of north Yorkshire and Hackney is very different from Southall. The divergences of circumstances on the ground—between local authorities and between individual circumstances—are enormous. As the chairman has already said, we found—and the evidence completely

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supported this—that the behaviour within the existing system is much more important than the probably helpful tweaks that can be given to it in legislation. This issue of the behaviour within the existing system will stay with us. That is why I am very interested in how the Government approach their relationships with local authorities in a matter such as this.

Of course the financial relationship does not help. The fact that local authorities are responsible for such a small part of their own funding does not help at all. I do not want to draw parallels with the governance of the eurozone and the monetary problems that arise from that, but there are parallels. If you split these responsibilities in a quite draconian way, it does not help and it contributes to the public not turning out in very large numbers in local government elections and coming to think of their elected representatives as delegates—a very non-Burkean position. Centralisation makes the question of the postcode lottery more difficult. Dealing with children in care in Kent will remain a very different matter from dealing with children in care in Northumberland or—again—Hackney.

In pursuing these difficult judgments about whether a child should be taken into care, and how quickly a decision should be made about the best possible placement, when to go to court and so on, we need throughout the system—in the department, in local authorities, among elected members and in social services departments—confidence, professional certainty and an acceptance that now and again the judgments that are reached in pursuit of minimising delay will have risks to them, and occasionally will turn out not to be as successful as we would have hoped.

The Government’s initial response to our December and March efforts was pretty general. I have read it carefully and I am not filled with certainty that everybody in the system knows how to handle these matters in the best possible way. I suppose that that is inevitable. Therefore, the question becomes whether the difficulties are properly recognised, and whether there is a dialogue about them and an acceptance that we have to get on with thinking about this very carefully, even if we are somewhat uncertain about the right answer. Otherwise, uncertainty will have to be rationalised out and so will become indifference and certainly delay. Therefore the central issue is how the Government intend, in their relationship with local authorities, to impart a degree of confidence that will lead to a degree of certainty and a willingness to make decisions in a timely fashion. That goes right through all the people involved in the system, including the adoption agencies and all the other people who contribute to the very important wish of all of us to see a greater number of successful adoptions.

The challenge is to ensure that when John Humphrys gets into a dialogue on a problem that has arisen—and problems will arise—everybody in the system, when they are interviewed, can say, “We thought this through together, we are all in it together and not one of us is trying to make sure that somebody else carries the blame”.

3.33 pm

Baroness Armstrong of Hill Top: My Lords, I thank the House for appointing me to this committee. It was my first Select Committee at this end of the building,

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and I enjoyed being part of a very thorough piece of work with a very interesting and varied group of people, with very different expertise and experience. Of course we were expertly chaired by the noble and learned Baroness, Lady Butler-Sloss. I had the enormous privilege of encountering her chairmanship much earlier in both our careers, when she chaired the Cleveland child abuse public inquiry. I was new to the House of Commons but I had been working as a social worker in the north-east, so was involved and interested in the issue. I was also serving on the then Education Bill Committee in the Commons. This was, I think, in 1998—the Bill became the 1998 Act. I was able to learn from her work and report in getting a much firmer framework for child protection in this country. She was immensely gracious to those of us who were new to Select Committee work in this House, and very tolerant of our different approaches, and I am very grateful to her for that. I am also grateful that she has today given us a much more expansive report, in a sense, of the overall conclusions of the committee, because I want to concentrate on a much narrower area of the committee’s considerations. However, it is important for noble Lords to remember the whole context in which the committee was working.

Adoption is, of course, an important option for children who are not able, for whatever reason, to be cared for by their birth parents, but it is sometimes forgotten that the pattern of adoption has changed significantly over the past 50 years. No longer is it dominated by newly born babies, probably put up for adoption because their mothers were out of wedlock. These days, that is not the main reason for children coming into care or, indeed, being placed for adoption. Many of the children who are placed for adoption today will be from what the Government often call “troubled families”, which means that many of them will have had very traumatic experiences in their childhood and will be very damaged by the neglect, violence or abuse that they have already suffered.

The report is trying, in the areas with which I am concerned, to establish that careful balance between the importance of achieving early permanence for vulnerable children alongside that key recognition that the best place for a child is to be raised within the family network, provided that it is safe and in their best interests. I remember as a social worker many moons ago just how anxious and obsessed were many adolescents with whom I worked because they did not have contact with their birth parents or their early family. It did not matter what we did in the care system; they wanted to know, wanted the reasons and wanted to see what we could do to establish contact. Today, if they go down the adoption road, that is very difficult for them. For me that means that we have a responsibility to take early intervention seriously. The committee felt that the careful balance that I am talking about could be met only by effective early intervention. Again, my experience as a Minister in tackling social exclusion was that there are good evidence-based programmes around the world on early intervention. There is now a lot of knowledge and work around that, and we have a responsibility to use that knowledge, now that we know.

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There is increasing evidence of the importance of the time from conception to the age of two in the development of a child. We know that this is the crucial phase of human development. It is in this period that children form those solid psychological and neurological foundations to optimise lifelong social, emotional and physical health, and that of course then has such an important effect on their educational and economic achievement. Lack of attachment, neglect and abuse all have serious detrimental effects on children, and severely affect that development.

I commend to the House a report that has been published since the committee deliberated this issue from the special interest group for nought to two year-olds set up by the Government. The report was co-written by Sally Burlington at the Department for Education and George Hosking, CEO of the Wave Trust. I remind the House of my interest as a trustee of that organisation. I hope the Minister has been briefed on that report as it clearly points out that the most effective interventions are often preventive rather than reactive. The report says that preventive interventions address risk factors likely to result in future problems for particular families without waiting for those problems to emerge. That is precisely what I urge the Government to do. Although we considered early intervention we were not able to look at that report, but I think that many of us on the committee agree with that finding.

We heard from the NSPCC about some of the work that that organisation has done in this area. I talked about evidence-based programmes such as the Family Nurse Partnership, and continue to do so. Indeed, some people think that I am obsessed with those programmes. I had the privilege of witnessing the Family Nurse Partnership in the United States of America and then persuading my Cabinet colleagues to fund pilot programmes in this country. It became clear from that work that health visitors and midwives are the key to achieving better health and well-being for children in their foundation years. We are simply not sufficiently innovative in how we use their knowledge and expertise to understand what is happening to children and prospective parents in these most vulnerable families. If we used their work much more creatively, we would be able to take decisions which could well achieve the Government’s ambition of providing more early placements and early decision-making. We have the opportunity to change the manner in which parents behave, or are likely to behave, towards their children. We now know about that from the Nurse Family Partnership; or the Family Nurse Partnership, as we have rechristened it. We know what can be done. We know how we can change the behaviour and ambition of young mothers undergoing their first pregnancy. That should be the overarching ambition in early intervention.

The challenge for the Government is to get the legislation right to ensure that families are given the right support at the right stage to avoid problems of neglect and abuse so that the child’s interests are attended to before damage is done. If that work is guaranteed, if there is no prospect of the parents’ behaviour changing, or of other appropriate kinship carers, families or friends taking on the care of the child, permanent solutions should kick in quickly. We

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have just not been good enough at this. We have not been good enough at early identification or early intervention to optimise the child’s opportunities. Too often potential carers among family and friends are not investigated at an early stage: it comes as an afterthought. Too often there is insufficient support for kinship carers. Earlier this week, I popped into the Family Rights Group reception in the Palace of Westminster. Members of that body gave evidence to the committee. At the reception we heard about the experience of kinship carers, which was incredibly moving. However, we also heard their pleas for greater support.

I accept that there is, on occasion, risk in kinship placements. Anyone who has listened to the remarkable story of my very good right honourable friend along the Corridor, Alan Johnson, about his experience of kinship care, knows that taking a risk is important. He had a remarkable social worker who was prepared to take that risk and leave him with his sister who was 16. However, such risk should be mediated by the guarantee of support, and that is the issue on which many kinship carers feel we let them down. The Government sort of acknowledge that in their response to the report, but I want more action on that. I would like them to take account of the recommendations of recent research by Oxford University for the Family Rights Group, which gives us a menu of how we might provide that support more effectively.

I know that I have not covered many other aspects of the report. I conclude by saying that sometimes the rhetoric from the Government about adoption overshadows the other things that the committee knows are important—indeed, our chairperson has identified them as being important—such as early identification and the menu of different forms of permanence for children in care. It is important to recognise the complex jigsaw of ways forward, and I know that that is where the Government are, even if the rhetoric sometimes belies that. We have responsibility to ensure that the legislation that we are shortly to consider enhances opportunities for the most vulnerable children. I look forward to that.

3.47 pm

Baroness Hamwee: My Lords, I, too, sincerely thank our chairman and all who advised and assisted us, who, from where they are sitting probably want to join in this debate. They joined in very helpfully in the committee. They made it an enjoyable and productive process, about which I want to say a word.

I have been involved for some years in judging awards, mostly in the local government field but more broadly, to scrutiny committees and scrutiny branches of organisations. I have been increasingly aware that scrutineers are being involved by their executives in co-operative and forward-looking, not merely reactive, responsive work. I hope that we have fulfilled something of that function in our work. Our chairman has referred to some of the evidence given by children and their carers about their experiences of care and adoption. She, like me, might sometimes put quotation marks around the word “evidence” but they contributed to our consideration. I have been wondering about whether, as Bills come before committees of Parliament, there

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might be more scope for combining our current work with the sort of post-legislative/pre-legislative scrutiny that our inquiry became. This is done more by the Commons than it is by us. Is there room for more liaison? Perhaps I should pause while I am struck by a thunderbolt for suggesting any such thing. However, I hope that both Houses can continue to explore new ways of looking at what we are doing.

Like other noble Lords, I found the leapfrogging government announcements somewhat frustrating at the time but, with hindsight, I recognise that there was more of a pattern to them than it felt when we were doing it.

I have come across some amazing people in the adoption world. I first became involved with adoption towards the end of the 1970s, and I want to use this opportunity to put into Hansard the names of two couples who formed the agency, Parents for Children, with which I worked. Both couples—Sheila and Michael Crawford and Hilary and David Chambers, who also founded the Parent to Parent Information on Adoption Services that later became Adoption UK—were adopters of children with considerable disadvantages. With the first director, Phyllida Sawbridge, some really ground-breaking work was done in this country with, as I said, children who had multiple disadvantages.

Last year, I met Phyllida Sawbridge again, and we reminisced about, bluntly, the advertising of children who needed to be adopted, requiring permanence, and about other mechanisms, such as activity days, when potential adopters met children, involving picnics on Parliament Hill and that sort of thing. I wonder about the wheel sometimes being reinvented.

I was quite young at the time and maturity gives one a different perspective. What it has given me is a perspective on the importance of identity—one’s own identity. The first report that the committee produced dealt with the Government’s proposal regarding changing legislation concerning the place and consideration of religion, race, language and culture. We felt that our proposal gave those matters appropriate weight and an appropriate place, and I am sorry that when the Bill was published it was clear that the Government did not accept what we had to say.

Legislation is not everything—that was something that we felt time and again in our work—but changing the legislation, as the Children and Families Bill will do if it is unamended in this regard, sends a very particular message, and it is not a message that I am comfortable with. A parent’s understanding and a child’s sense of who he is seems to be one of those issues which is rather susceptible to the swings of the pendulum in thinking. The noble Viscount, Lord Eccles, referred to this as a moving target—a phrase that I may adopt at some point.

Another pendulum is where responsibility lies between the local and the national. I am naturally a localist but I found myself thinking again and again during the committee’s work that adoption is in some sense a national service.

The committee has expressed concern about the Secretary of State’s power to direct local authorities to outsource recruitment, and reference has been made to that. We encourage the Government to allow time

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for the sector to develop alternative proposals. I am not entirely sure what the Government mean in their response by saying that they will not impose a solution,

“unless it becomes clear that the sector as currently constituted is unable or unwilling to address these problems”.

The response goes on:

“We will, however, not hesitate to intervene if the sector is unable to make the urgent changes that need to happen”.

That sounds to me more top-down than I am comfortable with.

The Local Government Association, in its briefing for today—and I have no doubt that it will brief us extensively for the Bill—makes the point that, as many adoptive parents say, the relationship between adopters and their council lasts long after they adopt. It says:

“This is why it is so crucial that we have a joined-up adoption system”.

The committee identified issues regarding social workers’ training and continuing professional development and status following Professor Munro’s report. I was not left with complete confidence that the Government had understood what we were saying in this regard.

I understand that each local authority is accountable for its own performance but we heard interesting and encouraging things about joint working and consortia, to use the term quite widely. I hope that the Government’s response rejecting joint scorecards and joint inspections does not mean that they are rejecting out of hand ways in which authorities can work together. Like others, I was disappointed by the way in which the early intervention grant had been regarded, although we have been given information about new moneys which will become available.

The committee was fortunate to have members directing us to evidence and data. One of the areas in which more information is required is the breakdown of placements. Our chairman has referred to this already. I know that work is being done in this area but I am not clear how breakdown is defined and, in particular, whether any longitudinal work is going on or whether the Government, who I know have already commissioned some work, are looking only at the relatively short term. A problem with a placement arising from a child’s background may evidence itself perhaps only in the teenage years, and it may be quite difficult to untangle the components at that stage.

We have raised the issue of value for money and the costs and benefits of adoption support in this context and we learn from the report—or, at any rate, I learnt; others may have known of this before—of work commissioned from the Childhood Wellbeing Research Centre. I have given the Minister notice—not very much notice, I am afraid—that I would be interested to know the terms of reference of that work, how it is being carried out and, in particular, of course, who is being consulted. I have looked at the centre’s website and I notice that one of the partners in the work is part of the Coram Foundation, which has much experience, including in concurrent planning, but presumably a wider trawl is being undertaken.

The committee argued for post-adoption support, not only an assessment of adopters’ needs. I understand there is a lack of information as to how assessments

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are carried out by local authorities and adopters report varied experiences. There seems to be no model for the assessment—I would not necessarily support a single model—and that means that there is no benchmarking. I wonder how evaluation of the assessments is being undertaken.

The Government’s response to our reports also referred to work on a social impact bond. Again, I hope the Minister will be able to say more about developments for funding mechanisms which the Government are monitoring. I think I have used almost all the words which were applied to this issue in the report. It was a very short paragraph.

Finally, let me raise a narrow point which the noble and learned Baroness had in mind but did not develop—she is leaving it for the Bill—and that is access to information by the descendants of adopted people. We have evidence of the need for a change to the legislation. A woman who was affected was not herself adopted, but her father was, and she made an application to the court. She said:

“I believe that knowing my origin is an important part of who I am, and having access to my father’s birth information would restore my sense of identity and belonging. Society’s attitude towards adoption has been changing for some years, and these are amendments which should reflect a more open approach”.

The Government responded that:

“This is a complex and sensitive issue which needs careful consideration before any change to legislation could be considered”,

and went on to say that they are in discussion with the Law Commission. Can the Minister say today what considerations there are which are greater than or different from those applying in the case of adopted people? I might be able to imagine them, but I would be glad to hear them at this point.

We were asked to look at legislation and of course, as has been said, what we found was that there were issues mostly around practice. For reasons of time, I will not rehearse the arguments about the importance of early permanency, but I want to end by going back to some of my own early experiences, which still apply. In essence, although it is not the whole of it, if permanency is not achieved early, a child becomes a child who is difficult to place.

4.01 pm

Baroness Howarth of Breckland: My Lords, I, too, had the honour of being a member of the committee, although for a large part of the time I was being looked after by the National Health Service, so I can thank the chair for her excellent work more objectively than the other members of the committee and, indeed, I can thank my colleagues. Between them, they have made a superb contribution to the thinking around the needs of vulnerable children in our communities. I want to concentrate today on that wider aspect.

Noble Lords who take part in debates such as this will know the sinking feeling that you get as you listen to the speeches that have gone before—I am sure that those who are to speak after me are having the same thought—and you realise that most of the points that you want to make have already been made, but I would say to the Minister that in this instance I think that that is important, because it reinforces the central

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message. I felt that the noble and learned Baroness and my computer had been in collusion, but I can assure him that they were not. I have known the noble and learned Baroness down the years because she was president of the Family Division when I had the somewhat mixed experience of being the deputy chair and then chair, like the noble Baroness, Lady Pitkeathley, of the Children and Family Court Advisory and Support Services. That experience of children is something else that I bring, apart from being a social worker.

The Government are right to concentrate hard on this aspect of children’s needs because, as the Minister must know, there really is a crisis at the moment in childcare. Care applications in April 2013 were 20% higher than in the previous year. We really cannot continue on that sort of trajectory. To quote the chief executive of CAFCASS, the number of children legally freed for adoption but without an adopter available is increasing relentlessly. As has been said, the figure is just below the 5,000 mark. Not only do we need to ensure speedy but appropriate planning for these children, but we must stem the flow by questioning what it is in our society, our services and our systems that brings so many children into care. What can we do better in order to support children at home?

Apart from the possibility of safe reunification with one or both parents—sometimes it is with one parent if the other parent can be distanced; I will return to that later—children can find secure, loving relationships through kinship care, permanent fostering, special guardianship and good residential care. We have seen that, as special guardianship has increased, sometimes adoption has gone down. That has been seen as a reduction in adoption but what we should be looking for is permanence, not a particular answer. Children often need combinations of care at different stages of their childhood and the development of their family. By overemphasising one—adoption—we may demean the others. Different pathways also require a variety of support services. We acknowledge gratefully what the Government have proposed through the adoption passport, recognising the wide need of adopted children, but we regret that the provision of the services identified is not to be a statutory duty. We hope that the Government will look again at this through the Children and Families Bill.

It has been said several times this afternoon that the committee endorsed the importance accorded to the right of a child to be raised within their birth family wherever possible. If I could say that in bold and underlined, I would do so. I have spent enough of my working life, as many of my colleagues know, developing safeguarding programmes, dealing with the worst of neglect or harm and indeed the murder of children by their parents, to have a more than realistic picture of what life can be like for some children left in unsafe situations. Indeed, we know from consultation directly with children that top of the list of things that they look for is to be safe.

However, I also spent enough years as a social worker involved with families with complex problems to know that, with clear assessment, proper planning and support services such as Sure Start and Home-Start, parents can make changes. We have heard about the

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NSPCC programme, which has had very good outcomes. All this will lead to positive family life, but it takes skill, time and, especially, good social work intervention, and that is where there is a key difficulty for local authorities at the moment. In this regard, where parents have the capacity to change, the committee was clear that evidence in favour of that early, intensive intervention to address family problems is compelling.

As I said, local authorities, particularly their social workers, are under severe pressure. It was therefore with deep concern that we learnt that adoption reform is to be funded by taking money from the early intervention grant. I ask the Minister directly: how can good early decision-making based on these clear assessments be achieved, with permanency planning being prioritised one month after entry into care, without the financing of a skilled workforce to carry this out? Social workers continue to have a bad press and remain undervalued in terms of pay and conditions of service, and I wonder sometimes why any person joins the service. But we need teams who can approach every new situation with a broad understanding of children and their families, where adoption is fully integrated into child protection and family support. We need a more rounded approach, which we had at some point in the past.

The Government’s response to our recommendation that,

“the Government need to give further consideration to the practical effect of the proposed change … on social work culture and practice”,

was simply to say that further information to support the Bill’s provisions would be provided. Is the Minister in a position to provide the information or will that come at a later stage? What will be done to support and develop social workers in their practice? As our chair has done, I draw attention to the position of independent reviewing officers and ask what is to be done to ensure that their decisions are independent of their employing authorities and their workloads are manageable. We heard during the inquiry of one case where a reviewing officer really took the brunt of a serious mistake and then discovered that his workload was totally impossible. Anyone carrying that workload was likely to make a mistake.

The committee came to the conclusion that concurrent planning is essential and I am delighted that CAFCASS and the Association of Directors of Children’s Services are undertaking work on early permanence analysis. This approach reflects the concern and commitment of those working for children—people who know that a week in a child’s life is a long time. I welcome the Government’s response to make it a duty of the local authority to place a child with carers who may go on to be their permanent carers at a very early stage. However, I hope that care will also be taken in ensuring the human rights of families, which means having the right length of time for social workers to engage and make their decisions. In saying that, I again acknowledge that there are times when immediate intervention must take place.

It has been said previously that we have no evidence, except anecdotal evidence, of the broad success or failure of adoption. I found this astounding having

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been involved in childcare statistics for many years. We urge the Government to undertake research that, by gathering statistics of adoption breakdown, would give some basis for planning. While everyone in the children’s social care field welcomes any plans to reduce the time taken by care proceedings, I repeat that there must be enough time to make appropriate plans. Nothing that I have said in support of social work with birth families indicates a lack of value for adoption; it simply indicates a need for a balance. I have direct personal and professional experience of the security that a good adoptive family can achieve, but we must assess each child’s situation on its merits.

To meet the expectation of the UN Convention on the Rights of the Child, we must wherever possible ensure that the child is an active participant in their future. We have heard how often children felt that things were being done to them rather than with them. The Royal Borough of Kensington and Chelsea has recently introduced an advocacy service to ensure that children can be properly heard and their views incorporated into decisions at the child protection conference stage. That is a good deal earlier than family conferences. When the child is old enough, it is essential that their views are known. The NCB only yesterday published a report, Time to Listen, showing how advocacy can enhance children’s involvement. If we are to get the placements right, including adoption, we must know what the children think and feel. It does not necessarily mean that that will the right plan, but how can you make a good professional assessment without listening to the children? Recent events in Oxford surely illustrate what happens when they are not heard. I wonder what else the Government are doing to encourage child participation and advocacy.

I repeat: a week in the life of a child can be a lifetime. Whatever path we take to ensure that each child has a happy and secure permanent placement must be found with skill and application. I look forward to the Children and Families Bill and to the Minister’s response to the issues raised today, but I ask him and his colleagues to remember that, while leaving a child in an unsafe situation and without adequate support can be a death sentence, removing a child from parents is for them a life sentence. Those difficult decisions, keeping the child always at the centre of consideration, require professionals who can deliver what the Government in partnership with local authorities need to do. It is practice rather than legislation that will make the difference. I hope to hear what the Government are going to do to ensure that that practice is adequate.

4.14 pm

Baroness King of Bow: My Lords, it has been a great pleasure to serve on this committee. One of the things I liked most about it and this subject is that we were more or less able to approach it from a non-party-political angle. No one in this House would not want to see Britain treat its most vulnerable children in a fairer manner. I say that almost as a disclaimer at the beginning before I have a little bit of a go at some of the Government’s approaches to this issue.

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Clearly, I welcome the Government’s desire to improve life chances for children in the care system but you have to look at who these children are. I was shocked and must confess my ignorance because I did not realise that when we talk about children in care today in Britain some 56% of them are over the age of 10 and will never realistically be adopted. Although I am evangelical on the subject of adoption—even more evangelical than the Secretary of State in the other place as I have three adopted children—to focus on adoption at the expense of other permanent care solutions would inevitably be to neglect over half our children in care. That simply is not an option.

The best way to help children in care is to change circumstances in their birth families so that they are not taken into care in the first place. That is why every single member of the committee to speak so far has brought up the subject of early intervention and the fact that the grant was raided, manoeuvred or manipulated. Whatever word you want to use, the Government announced they were taking £150 million from councils’ early intervention grants. The Government argued they were doing so because adoption is a form of early intervention. Of course that is true but the whole point of “early” early intervention is to prevent children being removed from their birth families in the first place. In that respect, adoption is not early intervention but an act of last resort when all else has failed.

Worryingly, we heard time and again that either families today are failing more and more often or their failure has now become unacceptable. Whatever the reasons for that, the upshot is clear: we heard again and again that the water table is rising. All the professionals we took evidence from were alarmed by the rising tide of children coming into the care system. If more money is taken out of early intervention then even more children will be put up for adoption. The NSPCC has said:

“Whilst we welcome more support for adoption it simply doesn’t make sense to take the money from the early intervention pot. This funding actually helps stop family breakdown which often leads to the need for adoption in the first place”.

I understand that the Minister will state that early intervention funding is increasing in 2014-15, up from 2011-12, but I have been told by various local authorities that this does not make up for all the money that they have lost.

While we are on the subject of money, I want to mention post-adoption support. This was one of the committee’s most important recommendations. We proposed a statutory duty to co-operate so that families which adopt Britain’s most vulnerable children receive the professional help they need. Of course, they do not know when that help will be required. It might be six weeks after they adopt a child or it might be six or 10 years. We are talking about children who have been abandoned, neglected or abused—whether physically, emotionally or sexually. They may be withdrawn when they arrive at their new families. They may be physically aggressive towards their new parents. I have spoken to many adoptive parents who were literally taken aback at what hit them when newly adopted children arrived in their families. The idea that these new parents should be left to deal with the consequences of early abuse and neglect is unconscionable. It is also financially

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irresponsible. The costs of adoption breakdown are met by the state and it is invariably more expensive to take a child back into care than to give those families the help they need at the appropriate time.

The Government themselves state that there is a strong moral and financial imperative for providing high-quality adoption support. I welcome that statement, but if they are to stand by it, will they please undertake to review the committee’s suggestion of a statutory duty? If the Minister does not think that a statutory duty to co-operate among the different agencies that provide such services—such as the NHS, adolescent mental health services, or whatever—is appropriate, will he agree to review that advice on statutory support, as it is a lifeline to adoptive families?

I also welcome the Government’s commitment to equalising rights between adoptive parents and non-adoptive parents. I was contacted by an adoptive parent who was forced to return to work early. She was not eligible for statutory maternity pay because her child was adopted and she worked freelance. If you are freelance and you have a baby, you receive SMP, but if you are freelance and you adopt a baby, you do not. I know that that is true because the same thing happened to me. I submit that I am more able to deal with that situation than many freelancers. It is iniquitous and a clear case of discrimination that if you adopt a baby and are freelance, you do not get the same support as if it was a birth baby. That is despite the fact that an adoptive child has an even greater need than a birth child to form healthy attachments with its new parents. I should be very grateful if the Minister would undertake to write to me on the issue, if he cannot give a response at this point.

Social impact bonds have been mentioned by other noble Lords. The Government say that they are monitoring innovative funding mechanisms such as social impact bonds. Do they have any plans to use social impact bonds to fund post-adoption support? What more can the Minister tell us about that?

I end by thanking the chair of our committee, the noble and learned Baroness, Lady Butler-Sloss, for her excellent leadership. I imagine that her breadth of experience on the subject is almost unparalleled in this House, notwithstanding the many experts we have here. I also thank those who so ably helped the committee in its work. It was an absolute pleasure to serve on the committee, but it will mean something only if the Government can take firm and clear steps in the areas that we have outlined so that our desire to give Britain’s most vulnerable children a fair chance in life becomes reality.

4.23 pm

Baroness Walmsley: My Lords, this debate has been interesting, stimulating and challenging, as was membership of the committee. I am sure that the debate will continue to be as stimulating. Being on such a committee, so ably led by the noble and learned Baroness, Lady Butler-Sloss, was a great honour and pleasure. One felt that one was doing something really worth while. I very much thank her, the members of staff who supported us and all those who gave an enormous amount of time to present us with evidence.

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It was the evidence to which we listened and responded and which has been produced in our report. If we are interested in evidence-based policy, we should listen carefully to what those people said, which we have reflected in our report.

I have been involved with adoption since I was three years old, because at that point I suddenly acquired a little brother. This was not because my mummy had had a big bump in her tummy. At that age, I did not realise that that was a bit odd. I acquired a little brother through family adoption. A close member of the family died immediately after she gave birth and the baby became my little brother. Subsequently, his older siblings became regular visitors to our house and became sort of second-stage members of our family.

It is because of the great success of that adoption that I very much understand the need and importance of an adopted person to understand their identity, and where they belong in a family and more generally. I very much support what my noble friend Lady Hamwee said as regards the importance of information about the person’s background in aiding their ability to understand their own identity.

I am still involved in adoption because I now have an adopted granddaughter. This is a transracial adoption which so far is highly successful and I am delighted. It has shown me how adoption is a two-way street. The adoptive parents go through all the hassle of being approved and all the decision-making because they want to add to their family. They want to give a child a loving home. However, the child brings something terribly important to that family and we must never forget that when adoptive parents give the wonderful gift of a home to a baby, the child also brings something very important to that family.

It is because of that experience that I shall focus on racial matching. Current legislation on racial matching came in under Section 1(5) of the Adoption and Children Act 2002. It states that consideration has to be given to,

“religious persuasion, racial origin and cultural and linguistic background”,

when placing a child for adoption. Of course, with a baby there is not any language, but there is for most children who are adopted.

That was put in legislation because racial issues are an important consideration in the identity of the child. When the Select Committee was taking evidence, we heard pretty unanimous evidence that people felt that there was not a lot wrong with the Government’s intention when that recommendation was put into what was then the Bill. However, there were a few cases—this should not be overemphasised—where there was excessive delay in the system because the practice was not quite right. Some social workers took that part of the legislation as a message to say that racial matching was an overriding consideration when matching a child with a family. Most people told us that that was not widespread but it was accepted that it occasionally happened.

Clearly, the Government are very keen to reduce delay from whatever cause. Therefore, they have looked at this issue and said, “We are going to cut it out

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completely from the legislation”. The Children and Families Bill before us, which, I imagine will go through in 2013, has removed that consideration. Our Select Committee recommended something slightly different. Accepting that racial matching is an important factor and that the adoptive family must be aware of the needs of the child because of the racial part of his or her nature, we need to put it in somewhere. It has to be taken account of by practitioners. It should not be an overriding consideration but it is important. We suggested that it should go in the previous subsection, subsection (4) of the Adoption and Children Act, as part of the checklist. But I do not see anything like that in the legislation before us to implement that recommendation.

We have to remember that where you have an interracial adoption which involves a visible difference between a child and the rest of his or her family, they might as well have a sign on their forehead saying, “I am adopted”. To me, that is a great thing to have because it means that your family has chosen you. You have not just happened. Your family wants you and there is no doubt about that, which is a wonderful thing. Most of these adoptions are highly successful, but really only when the agencies work with the parents to ensure that the parents understand that this is an element they have to take into consideration when bringing up that child.

That is why our committee, which was remarkably unanimous on most issues, felt that this issue should not be taken out completely but should be in the checklist. I am a little confused because I understand that when this was being discussed in a committee in another place the Minister, Mr Edward Timpson, for whom I have a great regard, assured the committee that it was going to be in the checklist. However, it is not being put into the legislation, so I wonder whether my noble friend the Minister can clarify that matter because I think the committee all felt very strongly that while it should not be an overriding consideration, it is a very important one and must be taken into account when finding the right family for the child.

Of course, we have a problem because black and ethnic minority and mixed-race children are overrepresented in the cohort of children waiting for adoption and we do not have enough parents of that kind of ethnicity coming forward and asking to be adoptive parents. One way of solving that problem is to try to get more of those parents to come forward and foster and maybe move on to adoption, or just to go straight to adoption. I am sure that the Government are taking initiatives in that direction, which is very welcome, but we need to do more.

Personally, I think it is quite dangerous because of the message it sends out to practitioners, which has been mentioned. Those practitioners who took the wrong message from the previous legislation might swing in completely the opposite direction and say, “The Government do not want us to take any notice at all of ethnicity when matching children and families”. We know that is not the Government’s intention. The previous Government’s intention was not that it should become an overriding factor but because of what happened, we need to think very carefully about the message if we take it out completely.

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Perhaps I could move on to a couple of other issues in relation to overseas adoption. First, I am very disappointed that the Government have rejected our recommendation to extend priority access to schools for children adopted from care overseas. Why not? This is very mean-minded, as we are not talking about a large number of children. These children, as much as any who have been adopted from care in this country, have gone through difficult situations and if the parents have chosen the school they think is most suitable for them, they should be given their wish.

Secondly, there is the visa applications delay. It is complete agony for parents who have gone through all the processes of being approved to be parents of a child adopted from overseas to then have to wait for a visa application. It comes as no surprise when a visa application is put in for a child to be adopted from overseas; the parents have been going through this process for years. Is there no way in which some kind of conditional visa could be issued, subject to the proper approvals and the adoption going through with the authorities both in this country and the country of origin of the child, so that could then be ratified quickly once the adoption has gone through? It is not a good start to the adoption of a child from overseas to have to be separated from the new parents.

Finally, perhaps I might say a quick word about family group conferencing. Again, best practice is something that we as a Government should be doing everything to disseminate. I noticed that where we recommended that family group conferencing should always happen, the Government’s response to our report said that it is not appropriate in some cases and that the family has to agree to it. You could always make it conditional on the family agreeing to it. At the very least, should we not be saying in guidance that family group conferencing should always be considered as long as the family accepts it? It can reduce delays, which is what we all want. We can avoid situations where family members come forward at the last minute, when all the other processes have gone through, so that we have to do all the assessments and there will be further weeks of delay for that child. We have heard that every week’s delay is bad and contributes to the damage that that child suffers. I hope that the Government will consider those few suggestions.

4.35 pm

The Earl of Listowel:I add my thanks to the members of the Select Committee and to my noble and learned friend Lady Butler-Sloss for their hard work and for this debate. Their work could hardly be more timely or the committee’s membership more expert and authoritative. I declare my interest as a patron of the National Association of Independent Reviewing Officers, a trustee of the Michael Sieff Foundation, a patron of Voice, which provides advocacy services for looked-after children, the Who Cares? Trust, which provides publications to children in care enabling them to know their rights, and the Caspari Foundation, which provides support for children with learning difficulties in schools.

I thank the Government for their welcome endeavours on adoption. We have been extremely fortunate to have had an outstanding Minister for Children in Tim

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Loughton MP, and his successor, Mr Edward Timpson MP, seems set to be equally remarkable. The commitment of the Secretary of State, the right honourable Michael Gove, is deep and derives from his personal experience.

I strongly support the Select Committee’s call for stronger rights to post-adoption support and highlight the need for the Government to extend their zeal to the full range of placements and services for vulnerable children and families. I praise the developing policy on children’s homes, which is not mentioned in the report but can be considered one route into placement stability. Will the Select Committee reconsider its recommendations on independent reviewing officers? Having heard what I have heard, I think the committee may well be right, but it is a contentious issue. It is very worrying that IROs have such high case loads. I join the Select Committee in asking the Government to gather more information about adoption breakdown.

On Her Majesty’s Government’s response to the report from the committee, I have mentioned independent reviewing officers. Much has already been said about the comments on post-adoption support, but I shall highlight one area. The Government have commissioned the National Institute for Health and Clinical Excellence to produce materials for health professionals and will be looking to NICE to consider how teachers might be provided with a wider range of resources in this area. I commend the Government’s work in this area. I know its importance from the Caspari Foundation. It is essential that teachers have a better idea of child development and of what happens with children who have experienced trauma. I hope the Minister has a chance to speak with Charlie Taylor, the head of the National College for Teaching and Leadership, about these matters. He is well informed about them as a former head teacher of an EBD school.

The importance of expertise in the family court was mentioned in the debate. I highlight the need for the best expert witnesses to advise the courts in these matters. I understand the Government’s concern that in the past too many expert witnesses have been appointed in the court. This may perhaps have been because of a lack of confidence in judges, but in reducing the number of expert witnesses and saving the courts money I hope the fact that the court still needs to attract the best expert witnesses is not overlooked. As has been mentioned, there is a lot of contention about the judgment of psychiatrist and psychologists. One needs to attract the best of these people, to give the best advice and have the best outcomes for children.

There are concerns about the reduction of payments to expert witnesses. It causes me concern because we need to attract the best experts and get the best evidence for these courts. The noble Baroness, Lady Armstrong, raised the importance of the first two years of life and intervening early to prevent such problems as we are discussing today. She talked particularly about the importance of health visitors and midwives in early intervention. I take this opportunity to say how concerned I am about the need for the best support for children under two. I was pleased to hear the Minister’s recent comments on the changes in childcare ratios, insisting that whatever happens the result will be better childcare. Indeed, it must.

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Reflecting on a time not so long past, I recall the noble Earl, Lord Howe, making an eloquent case for the assessment of adopters’ needs and for duties on local authorities to meet those assessed needs in the course of past adoption legislation. I remind your Lordships of the young man I worked with a few years ago in north London. I had a summer placement on a play scheme and this 10 year-old was just about to be placed for adoption. In the lunch hour, he would rock himself in a tractor tyre in the setting. During activities, he would simply walk away and a member of staff would have to trail him on his journeys. He repeatedly got himself into arguments and fights with the other children. One saw in him what one would expect in a child who has experienced multiple trauma, multiple losses of carers, abuse or neglect. He had regressed to a much earlier stage of his development: he was more an infant than a 10 year-old in many ways.

Adopters need to be supported when they adopt such challenging young people. I am grateful for the recognition of this in the Government’s response. The prospect of inadequate support and a further placement breakdown, a further trauma or loss for the child, is unthinkable but not so unusual. As has been pointed out many times today, we simply do not know how often placement breakdown happens, and the details of why. That needs to be addressed.

Adopters also need to be supported in managing any contact the child may have with his biological parents and his siblings, and in speaking with the child about his past. Yesterday, I spoke with a care leaver about his experience. He repeated what he had said in the past: good communication is key to a child’s success through care. Adoptive parents need to have the confidence to be honest with their adopted children. The current film release “The Place Beyond the Pines” has a scene in which an adolescent tells his mother that she had lied to him, before he leaves the house to seek revenge for his father's killing. He had been told by his mother that his father had had an accident rather than that he had been shot dead. That moment seems uncanny in its appropriateness to our debate today. The young man says to his mother, “You are a liar”. One would not wish that to happen in any adoptive situation. Unless adoptive parents are really well supported, there may be similar difficulties when adolescence comes.

I will make a few comments on the challenges of adolescence. I have worked with 16 to 23 year-olds over a number of years. I have witnessed a teenager self-harming, have come across girls who may have been at risk of being groomed, have spent time both with young men who can suddenly start an outburst of anger and hatred from seemingly nowhere and with young men who in depression, as has been mentioned already, are unable to stir from the couch on which they lie.

It is generally accepted that children in the course of their development go through a period of latency between the ages of five to 10 years-old and then, as they enter adolescence, a period in which they recapitulate their earliest development, from nought to five, with its jealousy, tantrums and all its uncontrollable feelings. However, in adolescence, they experience this in bodies that can act on these impulses. They can hurt themselves

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or others, they can take what is not theirs, and they can set the house on fire if they choose to. Adopters need help, therefore, when their child enters adolescence. Early trauma that may have lain dormant will more than likely reappear in these years. Adopters need a right to the assessment of need and to services when their child enters adolescence.

I will now say a few words in praise of the Government’s developing policy on children’s homes. The Select Committee asks the Government to look across all placements for vulnerable children for routes to permanence and not to restrict its attention to adoption. I hope I can reassure members of the committee and the chair that progress is being made in the small but important area of children’s residential care.

There is scarcely time to do justice to this topic. The coverage on the front pages of the Times, the Guardian and the Daily Telegraph yesterday on the abuse of girls as young as 12 who were in the care of Oxford local authority illustrates both the need for action and the distance we need to travel. This is just about a year on from the conclusion of the Rochdale case.

I will quote from the website of Ann Coffey MP, who has led work in this area and who refers to information released by the Government on 4 April of this year, which says:

“In future the police will be given the names and addresses of children’s homes in their area so that they can better protect vulnerable children. Rules will also be changed so that children’s homes in unsafe areas—such as in the same street as a bail hostel housing paedophiles—can be closed down or refused registration. There will also be stricter rules on out of area placements where children are placed in homes miles away from their home areas. Almost half of all children are placed in children’s homes out of their areas and this makes them susceptible to sexual predators … In future the government wants a decision to place a child in care away from their home town to only be made by a senior council official, who will have to be satisfied that the placement is in the child’s best interest. The new rules will also set out a requirement for the placing authority to consult with the local area authority before they place a child in a home. There will also be a duty on homes to notify local area authorities when children move in from other local authority areas and when they leave the home. … Better and more intense training will be set up for staff working in children’s homes and rules tightened to ensure that existing staff have completed minimum qualifications within a set period of time”.

I could go on. I pay tribute to Ann Coffey, whose report last year on children missing from care, facilitated by the charity the Children’s Society, led directly to these changes. Indeed, she sat on one of the working groups leading to this policy.

I hope your Lordships will find the Government’s progress on children’s homes encouraging. I am confident that they will feel, as I do, that much more needs to be done. However, the Government should be commended for a good start in this area. I conclude by repeating my thanks to the Select Committee, and I look forward to the Minister’s response.

4.47 pm

Baroness Jones of Whitchurch: My Lords, I thank the noble and learned Baroness, Lady Butler-Sloss, and the committee for their very impressive work on the adoption legislation.

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Both reports that we are debating today represent a thorough and wise insight into the real issues being faced by adoption agencies and families around the country. I was impressed that the Committee has drawn extensively on its witness interviews and the evidence it had received and that, as a result, its recommendations are not based on ideology but on cold, hard facts and real experiences. As such, we see the reports as a genuine opportunity to embrace some fresh thinking in this area.

We remain proud of the fact that the last two pieces of adoption legislation in 2002 and 2006, introduced by the previous Government, genuinely transformed provision and put children’s rights at the heart of the process. However, we also see the need to reflect, learn and move on, and I hope that we can do this today.

I also hope that the Minister is genuinely minded to listen and engage with the debate given the imminent arrival of the Children and Families Bill in your Lordships’ House, which will result in the opportunity for these issues to be debated even more widely. While on this subject, can the noble Lord update us on the proposed timetable for the Bill’s arrival in this House, as there seems to be an ominous silence on that matter?

Having read through the reports again, I was struck also by how little the legislation requires changing. This point was made by a number of noble Lords. The more fundamental challenges that we face are about funding, training, the quality of reports, joint working and improved communication. I hope that these issues will not be lost when we finish debating the Bill, and that we can find a way to return to them. Perhaps a post-post-legislative scrutiny report will be required from the committee. I am sure that it would do a very good job.

I will highlight some issues in the report where there might be differences of approach between us and the current Government. A number of points that I will make echo those raised by the noble and learned Baroness, Lady Butler-Sloss, in her excellent introduction to the debate. First, we believe that the benefits of adoption over other permanent care solutions have been overstated. As the report points out, adoption is a sensible route out of care only for a proportion of children, and there is a danger that the current emphasis on this option will skew resources away from those providing equally beneficial forms of care. This point was made eloquently by my noble friend Lady King. Therefore we believe that it is essential, when a child’s future care options are assessed, that all potential provisions are considered on an equal footing, including long-term fostering, kinship care and special guardianship. We would like to see this in the Bill.