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House of Lords

Thursday, 27 June 2013.

11 am

Prayers—read by the Lord Bishop of Bristol.

Overseas Development Assistance


11.06 am

Asked by Lord McConnell of Glenscorrodale

To ask Her Majesty’s Government when they will review the decisions taken on overseas development assistance in 2011.

Lord Ahmad of Wimbledon: My Lords, the department keeps its strategy under review. Indeed, since 2011 it has announced a new development relationship with India and South Africa. In addition, the multilateral aid review is being updated, with full publication planned for the end of 2013. That, of course, relates to the international organisations with which we work. Our policies continue to evolve with the progress that countries make on issues of governance, economic development and, of course, the ability to self-finance themselves out of poverty.

Lord McConnell of Glenscorrodale: Between 1993 and 2005, Burundi lost almost one in 20 of its population during the civil war, and today it is still the 10th poorest country in the world. Despite that, and despite the fact that it is increasingly stable, the UK withdrew all overseas development assistance to Burundi two years ago. Given that the Government have been willing to review the decisions on India and South Africa in one direction, would they be willing to reallocate some of that money to Burundi and reinstate a programme?

Lord Ahmad of Wimbledon: The issue of Burundi is an important one, and I acknowledge the efforts that the Burundi Government have made. The review that was done on the allocation of bilateral aid resulted in the decision to which the noble Lord just referred. Nevertheless, I assure him that DfID continues to support Burundi through a range of other channels. For example, DfID contributes to multilateral efforts in Burundi by providing 15% of EU funding and more than 14% of World Bank funding. DfID is committed to development in Burundi and will continue to support it through efforts with international organisations.

Baroness Jenkin of Kennington: My Lords, can my noble friend say what DfID is doing to support developing countries in improving their capacity to collect taxes?

Lord Ahmad of Wimbledon: My noble friend raises a very important point. In all DfID funding, this concern has been expressed across the board, by both the previous Government and the current Government. My right honourable friend the Prime Minister has taken up this issue personally. Indeed, in his golden thread, he sees the rule of law and good governance

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within countries as essential features of continuing support. Indeed, we are looking at countries such as Pakistan, where tax collection is very low, to ensure that tax levels and collection rates are improved domestically.

Lord Richard: My Lords, can the noble Lord say something about the relationship that the Government seem to be proposing between Ministry of Defence expenditure and DfID expenditure? What sort of expenditure is meant to be covered, what sort of events are now meant to be part of the DfID budget as opposed to the MoD budget, what proportion of the DfID budget is covered by this, and how does it affect the overall commitment to funding of 0.7% of GDP?

Lord Ahmad of Wimbledon: I am delighted to say that, as no doubt the noble Lord heard, my right honourable friend the Chancellor announced yesterday that DfID funding will continue to be at 0.7%. Indeed, we are the only country to do so and we are leading on this, which is something to be proud of. On the issue that he raises of the Ministry of Defence and the FCO, we continue to work across government with DfID to ensure initiatives that can be run and where there are economies. The Building Stability Overseas initiative is a great example of how DfID, the MoD and the FCO work together. However, DfID funding is for DfID purposes and, as my right honourable friend announced yesterday, is being protected at 0.7%.

Lord Chidgey: My Lords, my noble friend mentioned Pakistan in an earlier answer. I believe that the Government plan to more than double aid to Pakistan to more than £350 million per year, making it the largest recipient of UK aid, dependent on progress with reforms at federal and provincial level. I think my noble friend will be concerned by reports from global aid agencies of a failure to deliver effective provincial health organisations, while at the same time dismantling the national federal systems, which is compromising the country’s vaccination programmes. Are the Government now reviewing Pakistan’s aid package in the light of what appears to be a failure to achieve the reforms required?

Lord Ahmad of Wimbledon: First, I say to my noble friend that we should be encouraging countries such as Pakistan. For the first time, we have seen a successive Government take over and democracy and corporate governance in the country are being strengthened. We should welcome that. Certainly, as a key partner in various initiatives, Pakistan is very important to the future of our relationship. The noble Lord raises an important point about the work done with the Global Alliance for Vaccines and Immunisation. I pay tribute to the work it does, particularly in countries such as Pakistan; indeed, it is about to announce a new initiative to tackle the measles epidemic that is sweeping Pakistan. However, my noble friend the Minister for Pakistan, who happens to be sitting right next to me, has several times raised the importance of ensuring that aid at local and regional levels reaches the people we intend it to assist.

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Lord Collins of Highbury: My Lords, to be a little more probing on an earlier Question, will the Minister tell us which departments have been allocated ODA budget in 2015-16?

Lord Ahmad of Wimbledon: I think I have made my position clear. We as a Government have ensured that DfID funding at 0.7% will be protected. That is unequivocal; it was made clear by the Chancellor and the Secretary of State, and we should welcome this. As for international development, we are not only playing our part but leading the way on the world scene. We can be very proud of that.

Lord Howell of Guildford: Would my noble friend give a warm welcome to DfID’s proposals to reactivate and reinvigorate the Commonwealth Development Corporation? It was originally a superb instrument for promoting entrepreneurship, small business and farm development throughout the developing world, particularly the Commonwealth. It rather lost its way, but now, with DfID’s help, it is getting back on stream again; it is a very good instrument. Does the Minister recognise that we have strong support for what DfID is doing?

Lord Ahmad of Wimbledon: I thank my noble friend, who of course comes to this with great knowledge, for enlightening the whole House on that initiative. Of course the Government welcome this—it is important that DfID plays its part. The family of Commonwealth nations is an important part of Britain’s development programme across the world. The more we can work in collaboration with institutions such as the Commonwealth in demonstrating development and progress in the developing world, the better.

Lord West of Spithead: My Lords, everything that has been said shows how important aid is in terms of our position and status in the world and what one might loosely call impacts on soft power, although I hate that term. Does the Minister agree that perhaps we should relook at whether DfID should be back within the Foreign Office? Even though there might be a loss of some ministerial jobs, the whole thing might be approached with a closer focus.

Lord Ahmad of Wimbledon: I assure the noble Lord that DfID and the FCO work in close collaboration, perhaps best demonstrated by the two of us sitting on the Front Bench together. Collaboration across departments is very important. I take the noble Lord’s view on board, but it is important to sustain DfID’s work on the world scene, and its independence and autonomy is an important part of that.



11.14 am

Asked by Baroness Symons of Vernham Dean

To ask Her Majesty’s Government what is their policy on arming the opposition in Syria.

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The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi): My Lords, seamlessly the FCO now appears at the Dispatch Box. No decision has been made to send weapons to the Syrian opposition. The agreement to lift the arms embargo for the Syrian national coalition sends a clear signal to the Assad regime that it has to negotiate seriously, and that all options remain on the table if it refuses to do so. Our priority remains to advance a political transition that ends the conflict, allowing refugees to return to their homes, and to prevent further radicalisation in Syria.

Baroness Symons of Vernham Dean: My Lords, I thank the Minister for that response. I am sure we all recognise the dilemma that faces anybody who wants to see the end of the Assad regime. However, the Government argued long and hard to secure lifting the EU arms embargo, so can the Minister explain how sending arms to Syria will decrease the violence there, particularly as, if it were to happen, it is likely to incite more arms to go in from Russia to support the Assad regime? Can the Minister also tell the House how the Government could be certain that any arms exported to Syria did not fall into the hands of al-Qaeda or other terrorist organisations that we believe are fighting alongside the legitimate and indigenous Syrian opposition?

Baroness Warsi: The noble Baroness raises important questions, and we can see from the way the House is responding that these are questions that other noble Lords want answering too. I have a huge amount of respect for the noble Baroness, but it would be wrong of me to start hypothesising about a decision that has not yet been taken. I can assure her that a decision has not been taken at this stage to supply arms to the Syrian opposition. I hope that she and the House can take great comfort from the fact that when we have, for example, supplied non-lethal assistance to the opposition, we have been incredibly cautious about ensuring that even that equipment, whether in the form of humanitarian support or indeed armoured vehicles, does not get into the hands of extremists.

Lord King of Bridgwater: Would my noble friend agree that many in this House welcome the fact that no decision has been taken to send arms to Syria or to aid the insurgents? Many of us hope that it never would be taken. The most urgent and important challenge now is to get Russia and China, together with Iran, on board in a wide-ranging conference, so that proper attention can be given, and quickly, before this terrible Sunni-Shia split spreads right across that region with serious consequences. At the same time, the other most urgent thing is help for Jordan, which faces the most appalling refugee problem at the present time.

Baroness Warsi: I am acutely aware of the issues that my noble friend raises. I think he will accept that it is important that we continue to respond to the situation on the ground, and that we can see that the Government have responded at various stages as the situation on the ground has changed. However, 93,000 people have now died and over half the population

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has been displaced. There are no no-risk options and no perfect solutions. For that reason, we must continue to monitor the situation on the ground and to respond to it.

Lord Low of Dalston: My Lords, does the noble Baroness not accept that the bankruptcy of the international community’s policy towards Syria stands revealed for all to see? The failure to intervene more robustly earlier has brought about the very situation that was given as the reason for not intervening, and the failure of the supposedly game-changing use of chemical weapons to change any games robs the West of its last vestiges of credibility, showing it up as little better than an ignominious rabbit trapped in the headlights.

Baroness Warsi: Given our own history of intervention, it is important that we get appropriate legal and international support for what we do. That is why the Prime Minister has consistently tried to get agreement at the UN Security Council. It is no secret that Russia has not been prepared to move to get that agreement, but—my noble friend referred to this—we still believe in having a conference where the UN, the US and Russia sit round the table with the opposition and members of the regime to try to find a political resolution. As for chemical weapons, I think noble Lords will understand why it is important that we are incredibly clear about what weapons have been found, where they have been found, who has used them, and that there is international agreement, based on the evidence that we have so far, before we start using that as a basis for intervention.

Lord Hughes of Woodside: My Lords, the noble Baroness has said that all options are available for negotiation. Does she mean that the Government have abandoned their policy, as I understand it, of saying that regime change is a prerequisite for any negotiations?

Baroness Warsi: Our position has always been that it is for the people of Syria to decide who should govern Syria. Hearing the views of the Syrian people and seeing the conduct of Assad, we find it difficult to see a solution whereby Assad would remain in power. However, I am clear, and the Government are clear, that this has to be a decision of the Syrian people.

Baroness Falkner of Margravine: My Lords, given that the Foreign Secretary and the Prime Minister have assured the House of Commons that there will be a vote prior to any decision to give arms to the Syrian opposition, what are the arrangements to consult the House of Lords, particularly if the Commons is recalled in a recess?

Baroness Warsi: Both the Prime Minister and the Foreign Secretary have been clear that the House of Commons will have the opportunity to discuss the issue, should any decision be taken in the future on providing arms to moderate elements of the opposition in Syria. It would very much depend on whether the House was sitting, but I can certainly speak to the

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Foreign Secretary and ask the necessary House authorities what would happen in that situation, if it were to arise, and possibly write to my noble friend and put a copy in the Library.

Lord Ashdown of Norton-sub-Hamdon: My Lords, it is an unchallenged fact that huge sums of money are now going from Saudi Arabia and Qatar to help fund Salafists, Wahhabists and extremists in jihadism, not just in Syria but elsewhere throughout the Maghreb. Have the Government done anything to try to persuade these two Governments to stop it?

Baroness Warsi: My noble friend asks such a wide question that I could spend an hour trying to answer it. It may be that I can speak to him at the end of Questions.

Africa: Development


11.22 am

Asked by Baroness Kinnock of Holyhead

To ask Her Majesty’s Government what assessment they have made of Africa’s development prospects as set out in the African Economic Outlook2013 report.

Baroness Northover: My Lords, we recognise the importance of economic growth and we support such growth across Africa to hasten poverty reduction. As the latest African Economic Outlook report says, sustaining economic growth requires capable, accountable government, well balanced tax systems, new and growing businesses, investment, for example in infrastructure and education, and freer trade across African borders.

Baroness Kinnock of Holyhead: I thank the noble Baroness for her response. Is she aware that the chair of the Africa Panel, Kofi Annan, has pointed out that some companies are using unethical tax avoidance, transfer pricing and anonymous company ownership to maximise their profits while at the same time millions of Africans suffer inadequate nutrition, health and education? NGOs, civil society and responsible businesses, such as Rio Tinto, are therefore calling for mandatory transparency rules. Why, then, did the Government not take an active lead in pursuit of the same objectives by pressing for the inclusion of mandatory rules in the G8 communiqué?

Baroness Northover: My Lords, as my noble friend Lord Ahmad said on an earlier Question, the previous Government and this one have taken this matter forward. As the noble Baroness recognises, it was very actively addressed at the G8. She will also appreciate from her time in government the difficulties of taking it forward. I hope she will pay tribute to the progress that was made in this regard because we all recognise that this is extremely important. We need to ensure that companies operating in Africa contribute to the development of African countries.

Lord Chidgey: My Lords, in relation to elections in Africa, the AEO report notes that aspects of democratic change, such as the institutionalisation of state structures

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that respect citizens, social and political rights and foster political and economic transparency and accountability, have not yet taken root in many African countries. What measures are the Government taking to address that in their search for aid effectiveness across the DfID programme?

Baroness Northover: As my noble friend will be aware, this is clearly a major concern and it is also flagged up in the report. I note with some interest the greater success and prosperity among those countries in Africa that are making progress in this regard. Those countries should very quickly be able to see that it is in their self-interest to take this forward for their greater prosperity.

Baroness Meacher: I applaud the Government’s continuing commitment to the 0.7% figure for the aid budget. In view of the growing risk of weak countries, particularly in west Africa, being caught up in the trafficking of drugs, can the Minister give me some assurance about the priority being given to those very weak states to help them build up and develop governance institutions, the police, justice systems and so on in order to prevent them becoming narco states?

Baroness Northover: The noble Baroness is right and she will be aware that DfID’s priority is fragile states for those very reasons. I know that DfID has great concern about all the issues that she has flagged up and is doing its best to try to improve the governance and justice systems within those countries. Looking at the report mentioned in the Question, I note that half of African countries still depend on aid and the other half do not. Of the half that do, those are the ones that suffer the kind of fragility that she referred to.

Lord Lea of Crondall: China is obviously now making a bigger contribution to investment in Africa. China was not invited to the G8 and in some respects that might be a pity because China is now claiming that it is observing all international norms and that it is not an exceptional country, as it was thought to be. Is there some way in which the Government are encouraging dialogue with China to ensure that this is the case and that it is observing international norms with regard to investment in Africa?

Baroness Northover: The noble Lord flags up an area that has caused some concern. One of the reasons why Africa has been particularly resilient in the last period is because of trade with China and other developing countries whereas trade with the EU and the US has been dropping off. There is clearly a benefit for Africa. It is important to try to convey to those who are involved in trade in Africa that it is in their long-term interests to follow the kind of rules referred to by the noble Lord.

Baroness Berridge: My Lords, my noble friend the Minister commented on the half of the countries that depend on trade rather than aid. Can she comment on recent reports that there is a growing risk of piracy in the Gulf of Guinea and that there are more reports of

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piracy there than off the coast of Somalia? That, of course, is the massive trade route for all goods out of west Africa.

Baroness Northover: There are a number of challenges and my noble friend has referred to just one. There are many challenges in terms of trade out of Africa and within Africa. The international community and the African countries themselves are trying to take forward better inter-country trade and more effective trade out of Africa.

Lord McConnell of Glenscorrodale: Last week, Members of both Houses had the opportunity to have a very interesting dialogue with the new chairperson of the African Union Commission, who outlined very clearly her priorities and the priorities of the commission for the next few years. Is it now time for the UK, other European donors and the European Union to put in place a long-term strategy to build up the capacity of the African Union and its institutions to help the continent to support its own development rather than it always being done through bilateral relationships with ourselves and others?

Baroness Northover: The AU and African countries are building that kind of experience and are doing so in a way that might lead one to be cautiously optimistic. According to the report, more progress has been made where there is better gender equality, and I note that that is also represented in the AU.



11.30 am

Asked by Lord Roberts of Llandudno

To ask Her Majesty’s Government what action they are taking to tackle the underlying causes of rough sleeping and homelessness.

Lord Ahmad of Wimbledon: My Lords, we have provided £470 million over the spending period to prevent rough sleeping and tackle homelessness, including £34 million to the Greater London Authority to tackle rough sleeping across the capital, and £20 million to support the national rollout of the No Second Night Out initiative and protect vital front-line services. The ministerial working group on homelessness is continuing to tackle the underlying causes of homelessness and has published two separate reports on rough sleeping and preventing homelessness.

Lord Roberts of Llandudno: I am grateful to the Minister for that reply. Does he agree with the conclusions of the report produced yesterday by St Mungo’s, which suggests that the factors more often present in the lives of those who slept rough were, first, a traumatic childhood; secondly, drug and alcohol use; and thirdly, mental ill health? Will the Minister and the Government be ready to join with organisations such as St Mungo’s, which do tremendous work with the homeless and rough sleepers, in setting up a permanent group to look continuously at these issues?

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Lord Ahmad of Wimbledon: On my noble friend’s final point, of course the Government are always looking at such groups and how we can take good practice forward. I will certainly take that suggestion back to the department. The homelessness figures for London, for example, show that more than 53% of those who are sleeping rough are non-UK nationals. However, my noble friend raises the important issue of mental health and there are statistics to substantiate his point. Many people who find themselves homeless suffer from mental health illnesses, and it is important that that responsibility is not shunned in any respect.

Lord Laming: My Lords, further to the Question of the noble Lord, Lord Roberts, does the Minister agree that the vulnerability of a growing number of young people who are sleeping rough is the real cause for concern? Will the Government not just give further thought to their safety in the No Second Night Out initiative but address their needs and continuing well-being?

Lord Ahmad of Wimbledon: Again a valid concern is raised. I should add to the noble Lord’s comments that last year only six young people under the age of 18 were found sleeping rough in London, for example, out of about 6,500. That said, they are among the most vulnerable. Certainly young people between the ages of 18 and 25 are predominant among rough sleepers, and it is important that we look after their needs and future development.

Baroness Turner of Camden: My Lords, is the Minister aware that one of the reasons for homelessness, and in particular rough sleeping, may be that there is often a delay in benefits being paid? People simply do not know what to do, particularly if they are on their own, and they therefore end up sleeping rough.

Lord Ahmad of Wimbledon: On the point that the noble Baroness raises about benefits being paid, I know that we are considering moving from a three to a seven-day period. I heard the shadow Chancellor say in the other place only this morning—and certainly in his media appearances—that he would perhaps support the move to a seven-day period. It is important to share information so that we can get people who are entitled to benefits validly assessed and off the streets in order to develop their lives and those of their families.

Lord Hussain: My Lords, does the Minister agree that homelessness and rough sleeping have some connection with human trafficking? A BBC documentary of 27 February last year suggested that some rough sleepers may have paid huge amounts of money to agents abroad to come to the UK, only to find themselves on arrival homeless, out of work, suffering from various illnesses and ending up sleeping rough. What measures are being taken to tackle this complex issue?

Lord Ahmad of Wimbledon: My noble friend raises another important point. As I have said in a previous answer, 53% for example of the homeless in London constitute non-UK nationals. I share with him that it is important that the Home Office together with others

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take initiatives to ensure that people who travel to our shores are checked and vetted for their employment opportunities and whether they can afford to sustain their lives here. If not, that information needs to be shared with them at the port of embarkation, not in the UK. We are working with some of our partners in Europe to produce that information, and translating and making it available in Europe and other countries, to ensure that, before travelling, people are aware of what they are doing and that if they do not have a job or a place to live they need to reconsider their options.

Lord Kinnock: Is the Minister aware that while, to their credit, the Government are spending the £470 million that he mentioned in combating homelessness, they are simultaneously pursuing policies that will increase homelessness, notably the way in which the changes that they have made are gradually taking effect on housing benefit? How much extra have the Government committed to try to combat the further homelessness that will arise as a direct result of their policies?

Lord Ahmad of Wimbledon: Let us put the issue of the welfare benefit cap into context. In 2010-11, £201 billion was spent on welfare and pension payments. We simply cannot sustain that. The Government are ensuring that we tackle homelessness. I am delighted to say that my right honourable friend the Chief Secretary to the Treasury has just announced in the other place a new, three-year affordable homes programme for 2015 that adds close to £2.8 billion to what has already been committed up to 2015. The Government are taking action across the piece to tackle homelessness and the availability of affordable housing.

Business of the House

Timing of Debates

11.37 am

Moved by Lord Hill of Oareford:

That the debates on the motions in the names of Baroness Brinton and Lord Loomba set down for today shall each be limited to 2½ hours.

Motion agreed.

Future Investment


11.37 am

Lord Newby: My Lords, I refer the House to the “Investing in Britain’s Future” Statement made earlier in another place by my right honourable friend the Chief Secretary to the Treasury, copies of which have been made available in the Printed Paper Office and the text of which will be printed in full in the Official Report. I commend my right honourable friend’s Statement to the House.

“I am grateful to you, Mr Speaker, for allowing more time than is usual for a Statement, given the range of announcements to be made today.

Yesterday, my right honourable friend the Chancellor set out the difficult decisions that the Government have taken to continue the process of restoring our

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country’s finances. I pay tribute to his work to see the country through these most difficult of times.

Today, I will set out how the British economy can succeed in the global race by creating balanced growth and delivering lasting prosperity. Most past Governments of every colour have prioritised short-term convenience over the long-term national interest. Today, we change that. We are shifting the Government’s policy horizon to match the modern economy’s horizon, because the coalition Government want to make the right long-term choices for Britain.

I therefore announce the most comprehensive, ambitious and long-lasting capital investment plans this country has ever known. We are putting long-term priorities before short-term political pressures. I tell the House in all candour that these are not easy choices. There is no easy way to create jobs and prosperity. It is a difficult path, but the right one.

Today, it is clear that the British economy is moving from rescue to recovery. We inherited an economy in dire straits. Official statistics published this morning show that the recession in 2009 was even deeper than we first thought. We have made painful choices to get our economy back on the right track. We are making good progress—the deficit is down, jobs are up—but as we move from repair to renewal, we need to invest in the fabric of our nation. I can do that because we have chosen to find savings from day-to-day budgets, allowing us to recycle billions into long-term capital spending. That is not the easy choice, but the right one.

We can guarantee £300 billion of capital spending by the end of the decade. Today, I can set out our plans for more than £100 billion of that for the infrastructure of our country: the biggest public housing programme for more than 20 years, the largest programme of rail investment since Victorian times, the greatest investment in our roads since the 1970s, fast online access for the whole country and the unlocking of massive investments in cleaner energy to power our economy forwards, all at a price that we can afford to pay, without adding a single pound to our borrowing forecasts. Investing in stronger communities, in better infrastructure, in new sources of energy—that is how we will build a stronger economy in a fairer society, enabling everyone to get on in life.

At every stage of the process, we have sought to cut waste and inefficiency first, focusing on the back room, not the front line. We should not pretend that that is painless. Back-office efficiencies mean thousands of job losses. Contract renegotiation means rightly asking more for less from our suppliers. But that is the right way to make savings, while improving the quality of our public services.

Across government, we are using our capital budgets to help our public sector become smaller, more efficient and more effective. In 2015-16, we will invest £25 million in the best digital equipment for our police and £100 million in a new prison in north Wales—a scheme that will eventually save £20 million every year. More than £200 million is being invested over three years to increase the digitisation of Her Majesty’s Revenue and Customs’ customer services, a move that will save more than £50 million every year in administrative costs.

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I pay tribute to the Minister for the Cabinet Office and Paymaster General and his team for their expertise and insight in unlocking these savings. I am the first Chief Secretary ever to have had this pool of commercial expertise at my disposal during a spending round. They tell me that we can do more to save money for the taxpayer. So, working closely with the Minister for the Cabinet, I will conduct a further rolling efficiency review of all departments to unlock savings to support our economic priorities. I will strengthen the financial management capability in government, too. We will take action to sell off £15 billion-worth of public assets by 2020. Some £10 billion of that money will come from corporate and financial assets, such as the student loan book, and the other £5 billion will come from land and property.

The Government are the custodians of taxpayers’ assets. When we no longer need them we should sell them back at a fair price and not act like a compulsive hoarder. Too often, local and national government sit on an area of land that could be put to good use for the economy, housing or schools. Today, we say this to businesses and communities, ‘If there are any publicly owned sites out there that you can make economic use of, then tell us’. Unless Ministers can be convinced that the site is needed, we will sell that land at a fair price and we will use the proceeds to pay down our debt and invest in our economy.

Let us not forget that the plans we inherited from the previous Government included significant cuts to capital spending in this Parliament. We have added to those plans year-on-year with more money for investment in this Parliament. Some people say that we are not delivering, but since we came to office more than 30 transport schemes have been completed, 150 railway stations have been upgraded and we have built 84,000 affordable homes. However, we need to work more smartly to improve delivery. No single Government infrastructure project in recent memory has been quite as triumphant as the 2012 Olympic and Paralympic games, so we appointed Lord Deighton, the man who oversaw that success, to improve infrastructure delivery across government. He is working his way through Whitehall department by department, helping to develop clear delivery plans. Today, the Government are accepting his central recommendation that we take crucial infrastructure delivery out of the hands of civil servants and into the hands of commercial experts.

Our innovative UK guarantee scheme is enabling privately funded projects to go forward, too. It has already provided certainty to investors in the Drax power station and the Northern line extension. I can announce that UK guarantees will be available for two more years to December 2016. I can announce today that we will offer a guarantee of up to £500 million to support investment in the Mersey Gateway bridge and a multimillion pound guarantee to advance the new nuclear power station at Hinkley Point, a guarantee that could provide growth in Liverpool and a guarantee that could provide power to 8% of the UK’s homes. These deals are not yet done, but they are a major step forward for our country’s future.

Let me turn to how we will invest in stronger communities. The Government have made a very strong commitment to education. We have protected the schools

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budget, including the pupil premium. We know what parents want: a good school nearby in a good state of repair, and this is how we will give it to them. First, some buildings simply are not good enough, so we are rebuilding 261 of the worst schools as part of the Priority School Building programme. With the moneys I have committed today, we will complete this by 2017—two years early. There are many other schools in need of repair and investment. The previous Government stopped even checking just how many schools were in need of repair. We have started again. We will put £10 billion behind this, which will be enough to clear the urgent backlog. We are investing, too, to create 1 million new places in a decade across the country, including in Lancashire, Leeds and London—better buildings and a place for every child are the best investment in our future generation.

We will continue to invest in the health of the nation, too. The health budget will rise in 2015, including on capital. That means we can begin redeveloping the Royal Liverpool hospital next year, and I can also announce a further £150 million for health research infrastructure, including facilities for our world-leading work on dementia.

Our new approach to housing is truly transformative. Our Help to Buy scheme is already getting people on to the ladder. But, put simply, this country does not have enough homes that people can afford. The previous Government allowed the number of affordable homes to fall by a shocking 420,000. A good home should not be a luxury for the few, but an achievable aspiration for the many. We are already ensuring that the affordable housing supply increases every year, not decreases, as it did in every year but one under the previous Government. But our housing associations have told me that they can do more. To do that, they need certainty on rents, alongside public investment. So today I can provide both those things: I can guarantee that social rents will be set at the consumer prices index plus 1% out to 2025—the longest period of certainty ever; and I can provide £3 billion more capital over three years from 2015 to deliver 165,000 new affordable homes. On average, that is more each year than in any of the past 20 years; it is more in three years than the previous Government managed in seven. And we can do all that because our approach gets twice as many houses as they did for every pound we put in, getting more for the taxpayer and more for this country. This spending round also funds over 2,500 more new homes specifically designed for older and disabled people, and £160 million for decent homes, mainly in London. I know that issue is important to many MPs, particularly my right honourable friend the Member for Bermondsey and Old Southwark (Simon Hughes). This is the most ambitious and significant investment in affordable housing for a generation.

Too many Members of this House, on both sides, have in recent years seen the devastation that flooding can cause in their constituencies. We need to work with the private sector to protect families from the threat of flooding, so we will provide £370 million in 2015 and increase that in real terms every year to 2020. More than 400,000 households will be protected over this decade. Insurance also has a vital role to play in

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helping households deal with the consequences when flooding does occur. I am pleased to tell the House that we have now reached an initial agreement with the Association of British Insurers on the future of flood insurance. The industry wants to do the right thing and so do we. We have always said that we wanted to find a solution that works for households at risk of flooding, wider bill payers and the taxpayer. The industry’s proposed scheme, known as Flood Re, promises to do that by effectively limiting insurance prices for high-risk households. Up to 500,000 households would be helped, with support targeted towards those on lower incomes. Support would be funded by a levy on insurers, something the ABI has promised us will not increase customer bills in general. Importantly, there will be no cost to taxpayers.

There remain many details to work through, so we propose also to take powers to allow us to regulate for affordable flood insurance should that prove necessary. We are seeking these powers in the Water Bill, which we are today introducing to Parliament. The Secretary of State for Environment, Food and Rural Affairs is today launching a public consultation on our proposed approach, and we welcome views on it. He will introduce our final proposals to Parliament as a government amendment in the autumn.

Local businesses, local communities and local authorities know best how to make the decisions to support growth in their area. For decades we have not given them enough chance to do so, but now we are. Yesterday, the Chancellor confirmed that we are establishing a single local growth fund to transfer funding streams to local enterprise partnerships, as recommended by Lord Heseltine, with £2 billion in 2015 and at least that in every year for the rest of the decade. In total, at least £20 billion will be under the control of LEPs to 2020. The details of how that will work are set out in the document published today.

We have also reached agreement with Greater Manchester on its innovative ‘earn back’ scheme, which will allow it to invest in its priorities, such as the Trafford Metrolink and the A6 to Manchester airport relief road. I know that many honourable Members, including my honourable friend the Member for Cheadle (Mark Hunter), have been campaigning on that for many years—as indeed has the Chancellor, for that matter.

The regional growth fund has also been a fantastic success, thanks to the drive of people up and down the country, led by my right honourable friend the Deputy Prime Minister. The £2.4 billion in this Parliament is safeguarding half a million jobs, spread across every English region. Furthermore, we are today investing an extra £600 million so that we can do even more to strengthen our communities.

For our economy to grow, however, we need those communities to be better connected. In the last two decades, rail passenger numbers have doubled, and that figure is set to rise by nearly 15% over the next five years. More people are using our railways than at any time since 1927, so we have set out a clear, long-term plan to cope with that demand. Last year, we announced that Network Rail had been funded to deliver the largest programme of rail investment since the Victorian

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era, and today I reaffirm that commitment. This investment will bring new life to our rail networks, upgrading stations such as King’s Cross, Manchester Piccadilly and Birmingham New Street, improving links from Liverpool to Newcastle through the northern hub and opening up a new line from Bedford to Oxford. We are also electrifying 850 miles of railway. By comparison, the previous Government managed nine miles in 13 years.

My honourable friend the Member for Westmorland and Lonsdale (Tim Farron) will be pleased to hear that Network Rail is conducting a feasibility study into electrifying the Lakes line between Oxenholme and Windermere. We are going one better in London, and from 2015, we will fund Network Rail to begin work on electrifying the line connecting Gospel Oak and Barking. Nowhere is fast commuter transport more important for our economy than in London, and our investment in Crossrail will support more than 120,000 additional peak-time commuters every day. The Government are committing £2 million to support a funding and financing study into Crossrail 2. The challenge for the Mayor of London now is to determine how at least half of the cost of the scheme can be met through private sources, ensuring that it will be affordable to the UK taxpayer.

Keeping London connected is crucial, but it must not be done at the expense of our other great cities. It is not good enough that the UK has just 68 miles of high-speed rail, compared with 1,000 in Germany and more than 2,000 in France. We want a high-speed line that connects eight of the UK’s 10-biggest cities, making daily commuting between them possible for the first time. Today, therefore, we provide long-term financial certainty for High Speed 2, setting a funding envelope of £42.6 billion for construction costs and £7.5 billion for rolling stock, and we are setting a clear budget for the scheme of £16 billion for the next Parliament.

Yes, that is a higher overall budget than previously put forward. We are learning from our Olympic experience and setting a long-term, realistic financial plan with the right contingencies. This is the longest and largest transport budget the Treasury has ever set aside, and the people running the project will have to deliver within it. This project will change the economic geography of our country, and I urge honourable Members to support it. It is not being built at the expense of a single other rail project. Taken together, we are supporting more than £30 billion of investment in rail, making this coalition the most pro-rail Government in history.

We also need to think of the remote parts of the UK that HS2 will not reach. Air connections are crucial to those regional economies, so to help maintain those connections, I can announce today that we will provide £10 million a year for a new regional air connectivity fund. I look forward to Howard Davies’s report into that and other aviation issues.

Millions of people rely on our road network. We have worked hard over the past three years to protect road users, cancelling fuel duty increases and saving 13p on a litre of petrol, but our road system has been decaying for decades, and without further significant investment now, by 2040, nearly a quarter of motorists’

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travel time could be spent stuck in traffic. I can therefore announce today the biggest programme of investment in our roads in 40 years. The Government will invest more than £28 billion over the six years from 2014 in the enhancement and maintenance of national and local schemes. First, we will take action to fix the backlog of maintenance that has left road surfaces crumbling in communities up and down the country. We are committing £10 billion of investment in road repairs between 2015-16 and 2020-21. More than £4 billion of that money will be spent on national road maintenance—enough to resurface more than 21,000 miles of road, which is the equivalent of London to Beijing and back—while the other £6 billion will be spent locally, allowing local authorities to fill the equivalent of 19 million potholes a year.

Secondly, we will deliver all the major projects in the Highways Agency’s pipeline. We will add two lanes to the busiest motorways, bringing another 221 lane miles to our road network, and we will tackle some of the most congested parts of our network, through projects such as the £1.5 billion A14 scheme between Huntingdon and Cambridge. This scheme is of strategic national importance and will unlock jobs, housing and growth in the region, as well as providing key relief for a major freight route. I am delighted to announce that we will be bringing forward the start of construction by almost two years, to 2016.

I can confirm today that there is more: the A19 between Newcastle and South Shields, the A63 in Hull, the M6 junctions between Birmingham and Manchester, the M5 junctions from Bromsgrove to Worcester, the A38 Derby junctions, the M1 junction near Long Eaton and south of Rugby, the A21 between Tonbridge and Pembury, junctions on the M4, the M23 Gatwick junctions and the A27 Chichester bypass.

This money will pay for us to identify and deliver solutions for the most notorious problem spots across the country. Any honourable Member from the Prime Minister down who lives in Cornwall or who has driven there for their holidays will want to see a better A303. Any hon. Member planning a trip to Scotland—Scotland as part of a strong United Kingdom—will want to see a better A1 north of Newcastle. We will also look at the A27 corridor, the trans-Pennine route and connectivity to Leeds airport.

We will ensure that these investments are delivered, because I can also announce that we are transforming the Highways Agency into a publicly owned corporation, an organisation that will have the long-term funding certainty and flexibility to deliver the best possible road network for the UK’s motorists. We are legislating to ensure that these reforms and this investment are guaranteed.

Where our predecessors left the road network on the hard shoulder, we are bringing it into the fast lane. We are not only building the roads of the future but developing the cars of the future. This Government remain committed to ensuring that the UK remains at the forefront of decarbonising road transport and investing in electric vehicles.

In the 21st century, good communications are not just about faster roads and high-speed railways, however; they are also about high-speed internet access. The

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Government have already committed £1.2 billion of public investment to fixed superfast broadband. I saw at first hand the impact that that investment is having on smaller communities when I visited Rothbury in Northumberland. It is crucial, if we want to rebalance our economy, that it is not just the biggest cities that have access to the fastest broadband.

The UK already has better broadband coverage, usage and choice than Germany, Italy, France and Spain, but we want to go further. I can announce today that we are providing a further £250 million to ensure that fixed superfast broadband reaches 95% of the population by 2017. We will work closely with industry to ensure that at least 99% of the UK population have access to superfast broadband—whether fixed, wireless or 4G—by 2018.

Let me now turn to how we support the private sector to deliver our energy needs. Some Members will know that I was privileged to spend my early years on the Hebridean island of Colonsay. Then, the island had no mains electricity. Unreliable diesel generators powered the island, and regularly broke down. Until mains electricity arrived, we never quite knew when the lights would go out. We do not want any community in our country to face that problem in the future. Our existing power stations are closing, as they are too old or too dirty to continue. They must be replaced and added to as our need for electricity grows.

Thanks to the hard work of the Secretary of State for Energy and Climate Change, we are ready to unleash the energy revolution that our country needs. Today’s news from the British Geological Survey of 1,300 trillion cubic feet of shale gas—double the previous estimate—confirms its huge potential for the UK. That is almost as much hot air as the shadow Chancellor produces in a year. The plans that we are setting out today provide the framework to kick-start this industry in a way that protects the environment and supports local communities.

As well as revolutionising the way in which we get our energy, we are transforming how we generate and supply it. As we face the challenge of climate change, we need to bring forward investment in low-carbon technologies. This country has massive potential in wind, wave and tidal. We need to harness it. We are putting in place a comprehensive energy policy through the Energy Bill that is in front of this House. This is an approach that we know will work for consumers and investors alike. Last year we made the unprecedented decision to set out funding plans for low-carbon generation all the way to 2020, providing up to £7.6 billion in real terms.

Now we can set out what this means for investors. We do this through setting strike prices. If future prices are below this level, we will guarantee a price to the generator, giving them the confidence to invest now. But if they rise above it, we will claw back money for consumers. We were planning to set strike prices next month, but we have been able to make faster progress so, today, I can announce that we are publishing the prices for renewable generation ahead of schedule. Prices have been set for key renewable technologies, including onshore and offshore wind, tidal, wave biomass and solar. The prices are broadly similar to those we

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would have to pay under the renewables obligation. We will set the price at the level we need to bring forward sufficient investment, but not a penny higher. As these technologies develop, costs will fall, so we will reduce the price too. For instance, next year we will guarantee generators £155 per megawatt hour of offshore wind. By 2018 this will fall to £135. We expect our reforms to bring forward 8 GW to 16 GW of offshore wind capacity. Industry asked for certainty; we have given it. Now industry needs to get on with it.

Yes, this approach has costs now but, in the long term for consumers, they will be more stable than they would otherwise have been. In fact, when this investment goes alongside our plans for energy efficiency, overall our policies could save an average of £166 per household by 2020. We are taking the right decisions now for the good of our country.

In addition, we need to guarantee that capacity will be available at short notice to meet spikes in demand, for instance through gas-fired stations. Today we can provide details on a new regime that will achieve this. The first auction for this new capacity market will run next year to provide certainty for the winter of 2018. But there is financial risk for construction, too. That is why we have set up a Green Investment Bank to back green energy projects. It has committed over £600 million already; for instance, it has invested in the Walney wind farms off the north-west coast of England, which are expected to provide energy to the equivalent to 300,000 households. We have already pledged to provide £3 billion for the bank and, today, I can announce that we will provide an additional £800 million so that it can expand further. Crucially this will include, for the first time, the power to borrow half a billion pounds in 2015-16 from government. This is a real milestone in green investment, delivering a key promise we made in our election manifesto, unlocking over £100 billion of private investment into our energy networks, and supporting jobs, growth and prosperity for years to come. Our energy policy is a win for consumers, a win for investment and jobs and a win for our climate; the greenest Government ever.

In the last three years we have re-secured for this country a very precious commodity: credibility. No one doubts that the coalition is serious about sorting out the economic mess that we have inherited. People have the right to know that we will continue to work hard to repair the economy, that interest rates will stay low and that we will get our country back on an even keel. But repair is not all we do, because people also have the right to expect that Britain stays one step ahead in the world, that we ease congestion on our roads and deliver faster broadband to make sure businesses in every corner of this country can serve their customers, and that we make sure all parts of Britain keep going. They expect that we will invest in a modern railway so that commuters get to work on time and home in the evening to see their kids. People have the right to expect that we keep spending serious money on the schools and hospitals on which all families rely, and that we make sure that the lights stay on in our homes, even when the demand on energy is surging.

The plans I have set out today deliver all that and more. This is an ambitious plan to build an infrastructure of which Britain can be proud and, in doing so, to help

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build a stronger economy in a fairer society where everyone can get on in life. I commend this Statement to the House”.

11.37 am

Lord Adonis: My Lords, I thank the noble Lord for laying the Statement before the House, but perhaps I may also express surprise that the Minister with responsibility for infrastructure is not in the House to respond to questions. The Government describe this as a major Statement on infrastructure, so the House would expect him to be here, unless he has a compelling obligation elsewhere of which I have not been informed.

I offer the noble Lord my commiserations that the Statement contains so many words chasing the construction of so little real infrastructure. Can he confirm that the £300 billion of infrastructure investment that the Chancellor trumpeted yesterday is a forward projection right to the end of the decade, with no new funding for this year or next, and a real-terms cut in capital investment in 2015? Can he confirm, as the Office for Budget Responsibility has, that in the three years since 2010 the Government have actually spent £5.6 billion less than the previous Government had planned on infrastructure? Can he also confirm that, in consequence, in 2010 the Government cancelled a string of shovel-ready infrastructure schemes, some of which they are now trying to reinstate although, of course, they are no longer shovel-ready? These include the cancellation of 715 new and refurbished schools and a string of major road schemes, including upgrades of the Al, the A14, the A19, the A21 and the A47.

Turning to the national infrastructure plan, which in reality is the longest fairy tale since “Snow White”, can the noble Lord tell us why of the 576 projects in the last version of the plan, 80% have not even been started, and why only seven have been completed, five of them started under the previous Government?

On housing, can the noble Lord confirm that the Homebuy scheme, which the Chancellor said would support 100,000 home purchases and stimulate housebuilding, has so far supported only 2,000 purchases, suggesting that it will take half a century to meet its goal?

On energy, despite what the Statement says about shale, can the noble Lord confirm that investment in energy infrastructure has decreased in this Parliament? Specifically, can he tell us when he expects the Government and EDF to sign a real contract to build Hinkley Point as the first of the proposed new nuclear power stations?

On transport, will the noble Lord confirm that Crossrail 2, which is highlighted in the Statement, does not even yet have an agreed route let alone a funding plan, and that construction could not start until the 2020s or even the 2030s?

To take a specific immediate project of considerable economic importance to the country—the A14, which links the port of Felixstowe with the Ml, the M6 and the Midlands, a project which was cancelled in 2010 and is now being revived—can the noble Lord tell us when he expects construction to start and finish and whether part of the new A14 will definitely be a toll road, as announced last year, since there is still no

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published plan for how the tolling will work on an A road with the prospect of mass diversion on to untolled roads going through Cambridgeshire villages? Can he also tell us when we will see the actual plans for the delivery of each project in the Highways Agency pipeline as promised in the Statement?

Surely the Minister is also aware that there is a gaping black hole in the Government’s entire transport infrastructure plan, namely airport capacity in the south-east of England. The previous Government published plans to expand Heathrow which the private sector would have financed entirely. The present Government cancelled that plan and then did nothing for two years. Then, last year, the Prime Minister appointed a commission, but the commission will not even report for another two years. Does the Minister accept that five years of total inaction on extra hub airport capacity serving London, which is desperately needed by business, exemplifies the Government’s failure on infrastructure?

On HS2, the plan for which I published three years and three months ago, can the Minister tell us why this is moving ahead at a snail’s pace? Why is there still no Bill to grant planning powers for the first London-to-Birmingham section of the line, and do the Government still stand by their pledge in 2010 to enact such a Bill by 2015, something which is now an absolute impossibility given the hybrid Bill procedure?

The only thing high speed about the Government’s infrastructure delivery is the speed at which Ministers read out long lists unrelated to real projects being delivered in the real world. Will the Minister confirm that in the real world, 84,000 construction jobs have been lost since 2010; that the World Economic Forum ranks the UK lower than Barbados for infrastructure delivery; that, again according to the ONS, infrastructure spending in the first quarter of this year plunged by 50% on the previous quarter, and by 40% on the same quarter last year; that the pensions infrastructure platform launched in 2011 to help deliver £20 billion of new roads, railways and utilities, has so far raised commitments of just £2 billion, none of which has yet been invested; and that the UK guarantees scheme announced in July last year, with the promise of up to £40 billion of projects, has so far guaranteed only a single project? The Chief Secretary spoke of two more today—the Mersey Gateway bridge and Hinkley Point—but he then concluded by saying that these are not done deals.

Summing all this up, it is hardly surprising that John Cridland, the director-general of the CBI, said yesterday:

“While the Government talks a good game on infrastructure we’ve seen too little delivery on the ground”;

or—even more damning—that the director-general of the British Chambers of Commerce has described the Government’s national infrastructure plan as,

“hot air, a complete fiction”.

11.43 am

Lord Newby: My Lords, I am extremely grateful to the noble Lord for his tour d’horizon. He asked why the Minister for infrastructure is not here. There are two reasons why he is not here: first, in the spirit of the

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coalition, I am repeating the Statement as my colleague Danny Alexander made it in the other place; and secondly, the Minister for infrastructure is spending every moment of his waking hours ensuring that the infrastructure programme moves forward more rapidly.

Lord Adonis: Does the Minister not regard himself as accountable to this House?

Lord Newby: The Minister for infrastructure does regard himself as accountable to this House; that is why he made the Statement here yesterday and why he will make further contributions to the work of your Lordships’ House over the next few weeks.

The noble Lord made a number of scathing comments about the forward projections in the infrastructure programme. Perhaps I may remind the House that this is a proposal for long-term planning for infrastructure. What was the long-term legacy left by the previous Government of whom the noble Lord was a member? It consisted of a note that said, “There is no more money left”. His Government presided over what we now know was a GDP falling by 7.2%, which we have spent the last three years turning round. We are now doing what everyone involved in infrastructure wants to happen—that we set out a long-term, credible plan for infrastructure development. He talks about the level of planning and the expenditure planned. However, this Government, and these plans, would generate a degree of expenditure on capital investment and infrastructure over this decade that is greater than that achieved over the lifetime of the last Labour Government. These are ambitious plans that we are determined to carry out.

The noble Lord raised a very important point about the speed at which things happen. This is one of the reasons why my noble friend Lord Deighton is now part of the Government and why, for the first time, we are setting up in each department dedicated teams with commercial experience to enable infrastructure expenditure to take place on a sensible and sustainable basis.

The noble Lord talked, for example, about schools. We are delivering a school building programme with a cost per school that is 40% less than was achieved under the previous Government. This is absolutely essential if we are to undertake the degree of new expenditure required.

The noble Lord talked about affordable housing. This Government will deliver more affordable housing than the last Labour Government, and in much worse economic times. The noble Lord talked about whether plans to stimulate the housing market and house purchases had been successful. He will know that the announcements made by the Chancellor at the general election have already resulted in many people who would otherwise not be able to afford a deposit for a house, being able to get a house. Not only are mortgage approvals at their highest level for a considerable time but private sector housebuilders are now saying that they are making significantly enhanced plans to increase housebuilding. These are real, positive developments in an area where everybody agrees we needed to do more over a number of decades, and now we are doing more.

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The noble Lord raised a number of questions about rail. He asked why we have not got an agreed route for Crossrail 2. We are looking at developing the route and at the detailed feasibility plans for Crossrail 2. I remind the noble Lord that we are in charge of the biggest rail construction programme since Victorian times—not just High Speed 2, but also a huge electrification programme that completely puts into the shade anything achieved by his Government. As for the pace of High Speed 2, we are bringing forward the hybrid Bill and a paving Bill.

The main reason for the delay on High Speed 2 is, as he knows, that we have undertaken a huge public consultation. Many aspects of the scheme have been changed because very strong public opinion was expressed against certain aspects of the original programme. For example, there will now be more tunnelling. Is he saying that he would rather we tried to bulldoze the whole thing forward without that consultation and without ensuring that when the scheme goes ahead, it is done with the minimum of disruption to the communities through which the railway will pass?

I know that the noble Lord has considerable interest in the A14. This is a programme that will cost £1 billion. We have announced today more detail about the balance of funding and the fact that we are now going to be getting £100 million from the local authorities that stand to benefit from the road. He said that he was not sure whether it is still planned to toll the road. As the document makes clear, it is still the plan to toll it, but the details of how that will be done have yet to be finally worked out. I am sure that he will barely be able to contain himself until they are.

The noble Lord said that there is a gaping black hole in our airport policy. There is no gaping black hole in our airport policy; rather a process is under way which will lead to proposals for a new hub airport in the south-east—

Noble Lords: Oh!

Lord Newby: I am sorry, for an enhanced hub airport. I do not want either to enthuse or depress the noble Lord as to what the outcome of that process will be. He knows as well as I do that no conclusion has been reached and, equally, he knows that all parties went into the last election with very clear plans for what they would not like to see happening in terms of enhanced capacity. As with High Speed 2, we need to try to produce something that is not just deliverable but capable of generating significant public support.

He commented on the fact that we have not made as much progress on the UK guarantees scheme as he would like to see. As he said, we have made considerable progress with the Mersey Gateway bridge and at Hinkley Point. He asked when there will be a real contract with EDF for Hinkley Point. There will be a real contract as soon as we have a sensible contract that is fair to both parties. The noble Lord and the whole House know that if it was easy to sign contracts on nuclear energy, perhaps his Government would have done that. We will certainly be doing it more quickly, but it is not easy in this environment to reach agreement on these extremely complicated, long-term, multibillion pound contracts. Again, is he saying that he would

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prefer that we rush into an arrangement like some of the PFIs, which have turned out to be extraordinarily bad value for the taxpayer, rather than make sure that we get it right? We are committed not only to doing this, but to getting it right.

This programme sets out the biggest degree of capital expenditure in the railways since Victorian times and the biggest capital programme for the roads since the 1970s. It puts forward affordable housing plans that are significantly greater than the noble Lord’s party was able to achieve when it was in Government. It gives me great pleasure to commend it to the House.

11.53 am

Lord Howell of Guildford: My Lords, does the Minister accept that these long-term plans—in some cases very long-term—are mostly welcome, but that the problem lies in their delivery and implementation over the years? He may be too young, but does he recall that back in 1980, I announced in the House of Commons on behalf of the Government the introduction of a programme of nine new giant pressurised water reactor nuclear power stations, but only one ever got built? Of course, life would be very different today for our power sector, and we would have much more opportunity for low carbon, if we had those machines in place but the programme failed. Will he make sure that his colleagues in government, particularly in the Department of Energy and Climate Change, are fully aware of why the failures occurred, why the vast stabilisation and drop in fossil fuel prices undermined most of the economics of nuclear and why the political resistance built up? There are lessons to be learnt there which, unless they are absorbed properly, may yet damage our own attempts to move to a low-carbon, long-term nuclear base load for electricity.

Lord Newby: My Lords, I am happy to give that assurance but the noble Lord underlines what has been a leitmotif of the nuclear programme. On paper it has looked a lot better in a number of respects and easier to deliver than has been achieved in practice. What we are committed to trying to achieve when we set our face to get new nuclear capacity is that we are able to deliver it on a reasonable budget and within a sensible timeframe.

Lord Howarth of Newport: My Lords, will the Minister confirm that, as a result of the postponement of major capital projects until the later part of the decade, they will incur significantly higher interest rate costs than they would have done if they had been planned and financed earlier? Will he also confirm that, as a result of the postponement of employment-generating projects, the social security bill will be significantly higher than it would otherwise have been in the interim?

Lord Newby: My Lords, the Bank of England has expressed the view that low interest rates are here to stay for a significant period ahead. Only an idiot would predict what interest rates will be in 2020 but if we look at the next three or four years, I do not think that anybody would say that interest rates were going

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to rise significantly, if at all. As for whether employing lots of people to build houses or roads means that fewer people are unemployed, that is self-evidently the case. That is why we are keen to get these programmes moving as quickly as we can.

Lord Shipley: My Lords, I thank the Minister for the Statement on infrastructure investment, in particular the commitment to removing bottlenecks on the A19 in Tyne and Wear, both to the south and to the north of the Tyne Tunnel. May I ask him about the proposals for the A1 north of Newcastle and the western bypass? As I understand it, there is a feasibility study to consider problems and solutions to the A1 north of Newcastle. The solution is clear; it is the dualling of the A1. I interpret the Statement as saying that the Government are now moving to the next stage of dualling the A1 north of Newcastle and that we should have cause quietly to celebrate.

May I ask him one thing on affordable housing? I welcome the Statement that has been made today. Has any further thought been given to increasing the borrowing cap on local authorities? The average debt on a council house at the moment is £17,000. There is enormous headroom to increase borrowing. It should not be on the public balance sheet, following decisions to make this a trading account from April last year. There is the capacity to deliver around 40,000 to 50,000 council houses as a consequence of raising that borrowing cap if the Government would do it.

Lord Newby: My Lords, in respect of the A1, the noble Lord is absolutely right. There is a commitment to a feasibility study. Upgrading the A1, as he says, means dualling it. I think that quiet optimism strikes the right note. Obviously, if local authorities had their borrowing powers increased they would be able to do as he says. As he knows, the Treasury down the ages has set its face very firmly against such a move. I would be happy to raise his suggestion again with my colleagues in the Treasury.

Baroness Armstrong of Hill Top: My Lords, does the Minister accept that the north-east has suffered most since the last general election? Our unemployment is higher than any other region’s and the prospects coming from the spending review yesterday mean it is likely to increase rather than decrease because of the push on public-sector employment. The change in benefits will also have a significant effect in the north-east.

Despite all that, we are a region that always looks to be optimistic. I hope that the Minister’s noble friend is right about the A1—I have a bit more scepticism—but that is not enough. What else will the Government do to make sure that they invest in the region that is paying the greatest cost but still manages to be one of the best exporting regions in the country? The Government are letting the north-east down. People in the north-east want to contribute to the future. What will the Government do to enable them to do that? Maybe some affordable housing before the next election would be a good idea.

Lord Newby: I absolutely agree that the north-east has had a high level of unemployment for many decades and compared to the rest of the country. I

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accept also that it has suffered particularly in recent years because there has been a high level of public sector employment there, which has fallen significantly. The attempts by the Government to shift priorities towards manufacturing and the private sector have already, in some respects, begun to bear fruit in the north-east. Nissan goes from strength to strength and the number of apprenticeships that we are funding helps people in the north-east, as elsewhere, to get skills that enable them to get jobs in the long term. That is how we will get sustainable growth in the north-east.

Lord Forsyth of Drumlean: My Lords, I seem to recall that we were discussing dualling the A1 when I was Secretary of State for Scotland nearly 20 years ago. What is needed now are projects that are actually happening on the ground. So what on earth are the Government doing, for example, in persisting with this HS2 project, which we were told yesterday has increased in cost by a third even before a single activity has happened on the ground? It is now set to cost more than £40 billion. It is perfectly possible to have privately funded projects, such as the third runway extension at Heathrow, going ahead, creating jobs and dealing with the very substantial disbenefit created by the chaos at Heathrow. Why is it jam tomorrow when we could have jam today?

Lord Newby: My Lords, the noble Lord is usually very good at reminding us about the financial constraints under which the Government are operating. It is not a case of jam tomorrow and no jam today. As I said earlier, in the housebuilding sector, we are putting more money into building affordable housing and all the big housebuilders have said in the past three months that they are increasing their plans for building private sector housing. The great thing about housing is that it starts quickly. As the noble Lord knows, we just do not agree with him on High Speed 2. We find it surprising, when the rest of Europe and much of the rest of the world are investing very significantly in high-speed rail, that some people in this country feel that it is not a sensible technology and a potential source of economic development.

Lord Higgins: My Lords, for many years, I campaigned for an A27 bypass around my constituency of Worthing. Just before I left the House of Commons in 1997, preparations were well advanced for this to happen. However, the project was dropped completely by the Labour Government. Can my noble friend give me an assurance that he will do everything possible to ensure that the appalling congestion on the A27 is relieved by the building of a bypass as soon as possible?

Lord Newby: My Lords, I apologise that I have not been able to flip through my papers to be absolutely certain what our plans are, if any, for the A27. I will certainly make sure that his representations are passed on to my colleagues in the Department for Transport.

Lord Roper: My Lords, will my noble friend accept that those Members of this House who will be engaged in the Committee stage of the Energy Bill are extremely grateful that in this Statement, the Government have brought forward the details of the arrangements for

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the low-carbon generators. However, as has already been mentioned, it makes no reference to nuclear, only to renewables. They are also grateful that the Government are bringing forward details of the auction for the capacity market from next year, together with this Statement today. However, will he tell us why there is, as far as I can see from the Statement, no reference to investment in network transmission, where there is certainly a need for work to be done in the near future?

Lord Newby: My Lords, I shall have to write to the noble Lord about network transmission. I know that this is something that concerns my colleagues in the Department of Energy and Climate Change, but I am afraid that I am not close enough to it to know exactly where we have got to.

Economy: Sustainable Jobs

Motion to Take Note

12.05 pm

Moved by Baroness Brinton

To move that this House takes note of the importance of sustainable jobs to the Exchequer and the British economy.

Baroness Brinton: My Lords, three years ago when this coalition Government were first formed, both the Liberal Democrats and the Conservatives made it plain that despite our political differences, and there are inevitably many, we had to come together to focus on the economy, moving the country out of recession, and to get spending back into balance. I think that most Governments across the world have found coping with the effects of the global recession challenging, and we are no exception.

Yesterday’s comprehensive spending review announcement showed that we are not through the tough times. However, talking to businesses, I am beginning to hear a different tone. The heads down, “let’s just survive this” approach is beginning to lift, and for some sectors, notably the knowledge economy, there are some signs of early growth. Vince Cable MP, the Secretary of State for Business, Innovation and Skills, has created an effective industrial strategy, investing £5.5 billion in supporting science, high-tech manufacturing and renewable energy to build jobs for the future, many of which will be competing globally.

This focus on the global market is critical to growth. Some 80% of the UK’s small and medium-sized enterprises are not exporting. While for many local businesses exporting is not appropriate, there are some that would really benefit. Statistics show that there is a 34% increase in productivity in the first year of exporting. It also helps with the survival rates of businesses. UK Trade and Investment has a key role in supporting local businesses as they take their first steps in exporting, which will strengthen their chances of survival and help them to grow.

They also need help from banks. I am pleased that the Secretary of State for BIS has launched the regional growth fund—£2.6 billion—to help leverage additional funding from investors, as well as providing clear

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expectations of the banking sector in its approach to lending to SMEs. To date, the first three rounds of the regional growth fund have leveraged £13 billion of private sector investment, and either created or protected half a million jobs.

I am less pleased to report that the banking sector still seems to be very slow in responding to this challenge. What measures are the Government taking to ensure that banks lend to small businesses? Without that finance, businesses will find it hard to create new, sustainable jobs.

Jobs are absolutely critical to the economy, and for an individual’s life chances. We need a strong economy to be able to compete on the global stage and we need sustainable jobs for a fairer society, helping everyone to get on in life. Yet business organisations continue to report that serious skills shortages are getting in the way of them competing effectively. Worse, many report losing business to international competitors. The UK Commission for Employment and Skills reports that 16% of vacancies are due to skills shortages; that is, there are not enough qualified applicants for specialist roles such as technicians. Nearly half of those businesses say that they struggle to meet their customer service objectives, and that they also have to delay developing new products or services.

Businesses also report that an estimated 1.5 million employees—that is 5% of the UK workforce—do not have the right skills to be able to carry out their job. This is known as skills gaps in the jargon. This often causes friction, with other staff having to help out, and difficulties in meeting quality standards. Nearly a third of businesses report that skills gaps have increased their operating costs and therefore reduced productivity. The UKCES highlights the importance of workforce skills, making it one of the five drivers of productivity; in turn, that increased productivity will help growth.

Skills are absolutely critical to sustainable jobs. Frankly, UK plc has not done well enough in the past. Future Governments must address this. Courses, particularly in science, technology, engineering and maths, at further and higher education levels, must be promoted and supported, particularly for these critical technician jobs. Core skills in literacy, numeracy and ICT must be strengthened, and it should not be possible to drop either literacy or numeracy at 16. Applied short courses should be available for 16 to 18 year-olds—for example, English for engineers, or statistics for humanities students such as my son, who went on to read psychology at university—that will help give them the skills they need.

Full-time study is not always appropriate for young people. For many, the best route into work is through an apprenticeship. This Government have created more than 1.2 million new apprentices. Last year there were 11 applicants for every apprenticeship, which says quite clearly that currently there are not enough employers offering apprenticeships. Those that do offer apprenticeships use them to train staff over a number of years, so that the progression from intermediate level, at which most young people start an apprenticeship at 16, to advanced level and on to higher apprenticeships is becoming more common.

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Last year there were 3,700 new starts for higher apprenticeships—a whopping 67% increase on the previous year—specifically responding to the skills shortages to which I referred earlier. Marshall Aerospace in Cambridge is one such employer to offer apprenticeships across the company, not just in technician roles. Young people from all over the country apply, knowing that they will be supported from the age of 16 right the way through degree-level courses and some postgraduate study for a satisfying job, which also helps the economy and exports. In evidence to the Work and Pensions Select Committee in 2010, the CBI presented data showing that 90% of higher-level apprentices found employment or self-employment at the end of their training and that 40% received an upgrade or promotion shortly afterward. Apprenticeships work.

Since Labour left government, across the country there have been 164,000 new apprenticeship starts in business, administration and law alone, showing that it is not just in technical subjects where there is a large growth. Businesses say how important it is for them to be able to train staff in the work that they want them to do, and they are also able to provide remedial help in literacy and numeracy.

Another myth is that apprenticeships are just for men. The majority of new apprenticeship starts are now women. Increasingly, they are starting in non-traditional female work such as construction and engineering. I concede that they are still very much in the minority but it is an encouraging start.

Unemployment is a scourge and youth unemployment particularly devastating. OECD figures just published show that young people aged 16 to 29 in Britain spend about two years and four months out of work, many having given up, more or less. Andreas Schleicher, the OECD’s deputy director of education, says:

“The short-term impact on individuals, families and communities beg for urgent policy responses; the longer-term impact, in terms of skills loss, scarring effects and de-motivation, will affect countries’ potential for recovery”.

It is worth pointing out that we do not do as badly as many of our OECD competitors. For Spain, the figure is 3.6 years, for Italy 3.5 years, and for Ireland 3.3 years. But he is absolutely right that this must continue to be a priority for this Government. That is why the Liberal Democrats pushed for £1 billion to fund the youth contract, aiming to create 410,000 job opportunities for young people, with a wage subsidy of up to £2,275 for employers taking on a young person.

The youth contract is beginning to work. The number of young people deemed to have been unemployed is beginning to reduce. The latest figures show a fall of 185,000—the lowest since the three months to May 2008, before the financial crisis.

There is also evidence to show that employers are unaware of the support available. What are the Government doing to ensure that employers get this information? Then further jobs will be created and we will see more young people who were formerly out of work starting on their careers.

I return briefly to the OECD report. The lower your skills level the more chance there is that you will be out of work. Of young people who are unemployed, a quarter are without five good GCSEs, 14% have

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good GCSEs but no further qualification, and 8% have a degree. That is stark. Skills are essential for jobs in the 21st

century. Young people without qualifications need both education and employment, whether apprenticeships or courses at their local FE college. Last year, further education colleges saw an 83% increase in applications from unemployed young people recognising that they needed to increase their skills level. Over a quarter of these moved quickly into sustainable employment as they left their college.

Liberal Democrats believe that careers information, advice and guidance are absolutely critical for young people. While welcoming careers advice now starting at the age of 13, we regret the removal of face-to-face independent advice to all pupils. We want to see more young people moved into vocational training and education that is right for them. The evidence from colleges shows that inconsistent rules about what type of courses are funded, the availability of local jobs and the difficulty of colleges in tracking student progress are the biggest barriers to working effectively with the unemployed.

Worse than that, the APPG for Further Education, Skills and Lifelong Learning recently heard of Jobcentre Plus staff pulling young people off courses at colleges, as it was—in their advisers’ view—time they went for a job interview. They thus lost their place on a course that would have given them a better chance of a skilled job. This silo working between departments needs to stop. Can the list of DWP-approved courses be agreed with BIS, rather than in isolation, to prevent this happening again? It is, of course, a waste of public money, as well as being demoralising for the young people concerned.

Despite problems like this, the youth contract and apprenticeships are clearly having an impact on youth unemployment, unlike the problems with Labour’s New Deal and the Future Jobs Fund during the previous Government, which did not create new jobs or help people into work, and were very expensive. For example, the Future Jobs Fund cost £6,500 for every job it created, and in Birmingham, only 2% of Future Jobs Fund placements actually led to jobs. Compare that to some of the figures that I have referred to earlier in this speech.

We are on the right track. Even though the road from the economic collapse in 2008 is hard, we are making progress. Sustainable jobs are a key part of the rebalancing needed in the economy. We have helped businesses to create more than 1 million private sector jobs since taking power, which has more than offset the number of public jobs lost—painful as that is. We have created 1.2 million apprenticeships and provided £2,000 worth of support for employers. We have created 110,000 work placements for unemployed young people. Being in work improves your health and well-being; it gives workers’ children a better start in life; and it helps prevent isolation and social breakdown. More than this, jobs created to help companies grow increase productivity and the UK’s ability to export and trade abroad, bringing in much needed extra wealth. It is a virtuous circle which will give us a stronger economy and a fairer society in which everyone has a chance to get on in life.

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12.19 pm

Lord Teverson: My Lords, I was at the final two debates last night, one of which was about small and medium-sized enterprises and exports. Many noble Lords commented that language was one of the challenges for small and medium-sized businesses in exporting. One of the most difficult areas of language, with which Google Translate would never deal, is sayings or colloquialisms. One of the first I ever learnt was, “To every cloud there is a silver lining”. I want to talk about the cloud, and then I will talk about the silver lining.

The cloud is literal: it is carbon emissions. It causes global warming and is a real issue. Now that we have passed 400 parts per million in carbon emissions and are moving towards higher temperatures, we have, as noble Lords know, the retreating polar ice caps and sea levels going up some 3 millimetres every year. It is carrying on. I was obviously delighted by my noble friend’s pronouncement about investment this morning, but I was even more ecstatic about President Obama’s recent pronouncement about the United States restarting its global and national engagement on climate change and global warming, particularly on restricting American coal emissions and making a major contribution to the reduction in global carbon emissions.

I say that because that agenda is being restated globally. Although we think of China as one of the world’s greatest polluters, it is a major agenda item there. I hope, particularly with the involvement of the United States, that the world will move forward on that. However, there is still a cloud up there that threatens our planet, our lifestyle and our economy into the long term.

What is the silver lining? It is clearly that this offers opportunities to us as a nation, uniquely, to take advantage of the technologies and how the way in which we live needs to change. As someone who often speaks on energy and climate change, that is why I supported the coalition so strongly when it was formed and the coalition agreement was authored: we were to be the greenest Government ever. I agree that we have struggled with that. We are still there and are still moving forward, but that aim and the policies arising from it—I will go through some of those—are the major reasons why we can look forward to growth beyond our recent track record and that of other European nations. Over the past couple of years, growth in green industries has been at around 2.5% per annum, while we have had relatively difficult economic performance elsewhere. Jobs have gone up in that area as well.

Green jobs and growth will really help us in three main areas, and they are not always the ones that we think about; we sometimes think about investment in wind farms and that sort of area, but I will come back to that. One of the key areas is competitiveness. We often hear about how shale gas has reduced energy costs in the United States and about how, because of that, US industry has become more competitive. However, that is an economy that thrives on energy inefficiency. That is the background to the power of the United States: wasteful carbon emissions and energy use making it the great manufacturing and industrial nation that it was.

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In this country we have a very different model for potential energy efficiency. For the long term, we can perhaps reduce energy costs for business through the lower gas prices that we are yet to see from any shale gas development, but clearly we can ensure that we can do so through energy efficiency. That is why the programmes that the Government have brought forward, particularly the Green Deal, are important for our future not just for our homes but for businesses as well.

That initiative has only just started. The Government have been absolutely right to make sure that the programme has had a fairly soft start so that we learn, as that process goes forward, that it does not rely on public expenditure, making it future-proof against budgets and Chancellors of whatever colour taking decisions. Once that investment programme works, it has the benefit not only of relieving fuel poverty and reducing fuel bills but of making our industry more competitive and producing a large number of real jobs in the semi-skilled area, which are so important, as well as the skilled areas as we move through the long term to the future.

I think that we have made the right decision on energy-intensive industries, although I was somewhat iffy about this at the time. I have to admit that we risk increasing carbon and energy costs and offshoring energy-intensive industries. By doing that, we just shift those emissions geographically from the UK, where there is relatively better environmental regulation, to other economies where perhaps that is not the case. Therefore I welcome a transition for those industries, and it has to be a transition until we have a much more level playing field across the rest of the world.

Moving on from competitiveness, we come to investment. In the green economy, we have, as my noble friend the Minister has already announced, a huge programme of potentially £100 billion for energy investment. Much of that will be very highly skilled work, which will be local and will produce local jobs and local skills. We have to make sure that we get the current Energy Bill on to the statute book and make some of the detail better than it is at the moment, but we have a real focus on making sure that that happens.

In Sunderland in the north-east—I will probably defer to my noble friend Lord Shipley on this, as he knows that area better—Nissan has been producing Leaf electric cars since April this year. It is the only plant in Europe to do so, and provides some £450 million of investment and 500 extra jobs. In addition, we have a number of potential wind farm sites. In Scotland we have AREVA, where we hope to have another 750 jobs. We will see if those arrive. This is all about making sure that the industry has confidence in the green economy.

Apart from investment and competitiveness, we will make this business work only if we have the skills in the economy to drive it forward. This requires two things. The first is certainty about government policy. The Government have not always been hugely successful in that between the Department of Energy and Climate Change and the Treasury. It is much better now, given the deals that have been done and the road map that

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we have before us. In addition, we require investment and skills. That is why the Government’s target, particularly in BIS, to increase investment in apprenticeships is really the right way forward. We have a great opportunity there.

I conclude by quoting John Cridland, who I think has already been mentioned once this morning. He said:

“it is easy to understand why some people are fearful that ‘going green’ might further dent the economic recovery. For me, this is a false debate”.

He goes on to say:

“tackling head-on the critical challenges of energy security, affordability and climate change … isn’t a lofty ideal to aspire to—there is a hard-nosed economic argument that moving to a low-carbon economy can drive significant business investment and create many new jobs across the country”.

I think that is the fundamental view of this Government in their growth and economic strategy, and they must keep to it. We will have in the end not only the greenest economy but one of the most successful economies, not just in Europe but in the world.

12.29 pm

The Earl of Shrewsbury: My Lords, I congratulate the noble Baroness, Lady Brinton, on instigating this important debate and thank her for providing your Lordships with the opportunity to discuss a subject vital to the economic well-being of this country.

In these austere times in which we live, it is not rocket science to realise that jobs are extremely difficult to come by and that each and every opportunity that exists to create jobs must be exploited to the full. SMEs provide vast opportunities for job creation. They simply must be encouraged, be it through the ability to borrow funds for expansion, or through the simplification of bureaucracy and unnecessary red tape, or excessive interference by Government. I will address that latter point in this debate.

I live in an industrial part of the West Midlands, very close to JCB, which is an enormous success story in Staffordshire. I agree entirely with what the noble Baroness said about apprenticeships and the creation of such—and JCB creates them. It employs about 10,000 people and has an engineering academy, which is to be applauded. For many years I have taken a considerable interest and have acquired friends in various industries both within and outside that region. I am well aware of the many obstacles which normally face SMEs. Recently I have been made aware of situations in which a government agency is making life exceptionally difficult and, tragically, sometimes terminal for some businesses in areas where it is difficult to obtain employment. That body is the Environment Agency.

I would be among the very first to acknowledge the absolute necessity of having an agency that is charged with protecting the environment and regulating the various industries which deal in potentially hazardous material and the recycling and disposal of such materials. However, I am aware of a number of cases where the all-powerful EA has acted in a thoroughly heavy-handed manner and shown itself to be the judge, jury and executioner. I have attended meetings with the EA and have received details of actions taken by it with regard to one particular firm based in Sheffield, the 4R

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Group. I have no interest in or connection with that company, but it contacted me on the recommendation of a mutual friend.

The company alleges that the EA’s local officer took action which is most likely to have the effect of closing down that business, rendering the staff unemployed and meaning that waste material that was being processed and sold to the agricultural sector as a thoroughly useful fertiliser will now be forced to go to landfill. In short, it is alleged that the EA posted some details on its website without any adequate consultation, which had the effect of frightening off the customers of the company. Those customers were fully satisfied with the product that they were purchasing but did not wish to risk the wrath of the EA, which can be very dangerous indeed. However, the company had the benefit of the opinion of one of the absolute experts in that field, the leading QC Stephen Tromans, and other expert legal advice, which stated that it was complying with the European directive that governs this area. It appears that the EA takes very little notice of the European directive’s spirit and purpose. Instead it follows entirely its own agenda, leaving its target businesses to let the issues be tested in the courts. Such actions are sometimes lost by the EA and sometimes not brought by the business due to the vast cost of litigation and because the EA appears to have bottomless taxpayer-funded pockets. This is disgraceful. These are small businesses that are struggling to survive.

Add to this sorry tale the bureaucracy and red tape involved by the agency, with the very lengthy times of turnaround of applications for end of waste status, and it is easy to see that the agency’s actions, repeated in numerous cases throughout the waste recycling industry, are holding back opportunities for the employment of hundreds of people while sending thousands of tonnes of perfectly recyclable material to landfill. That is bad for the economy, bad for the environment and bad for employment, and thoroughly bad for the nation’s finances.

In the case of a company with which I frequently discuss matters of this nature, the agency’s intransigence and plain obstructive behaviour regarding the classification of a recycled material which enjoys the support of major cement manufacturers in the UK has cost the business around £4 million in potential profit over the past three years, with the consequential loss of tax revenue to the Treasury and potentially an extra 15 to 20 jobs in a region that needs them badly.

In conclusion, the examples I have given point fully in the direction that the Government need urgently to commission a root and branch review from the very top to the bottom of the Environment Agency, to investigate its practices and culture and fix whatever is wrong. Until that is done, job creation and profitability in the recycling industry will suffer, and with it the economic well-being of this country.

12.34 pm

Lord German: My Lords, I apologise to the House for missing the first few moments of this important debate. I congratulate my noble friend Lady Brinton on bringing it to the House.

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From a perspective looking at the figures behind what is happening in the field of employment and unemployment, there are of course some very welcome signs of improvement. It would be wise to note at the beginning that the direction of travel is correct. For example, unemployment in the UK over the past year has fallen faster than in Germany and the G7 as a whole.

Since the 2010 election, the number of people who claim the main out-of-work benefits has fallen by more than 300,000, while the youth claimant count—a very important figure—fell by 2,500 this month and is lower than it was at the May 2010 election. The other side of the coin is that private sector employment is up 46,000 on the latest quarter, which more than offsets the 22,000 jobs that were lost in the public sector. If you take that as a whole since May 2010, private sector employment is up by 1.3 million jobs, while of course public sector jobs have fallen by 423,000 over the same period.

The direction of travel is good and encouraging but there is no reason for complacency. It is important that we continue to tackle what is of fundamental importance for our people. For those of us who want a fairer society, ensuring that people can get into work will have dramatic effects on health and well-being and on future life chances, for them and for their families. For those who want to see a stronger economy—of course the subject of this debate covers both those topics—each new job adds an average of about £9,000 to the economy. For those who just want to reduce welfare spending, the best way to do that is to get people into sustainable, well-paid work, not to slash support for the vulnerable.

I will concentrate on the demand side. Today we have clearly had some important news. This morning we published the latest figures on the UK Government’s Work Programme, the Government’s main vehicle for getting long-term unemployed people into work. The key headline message that I take from today’s figures is that the Work Programme’s performance has significantly improved. It is designed to help people who are at risk of becoming long-term or very long-term unemployed. Many of those supported by the Work Programme are in receipt of benefit for nine or 12 months before joining and are then supported for a minimum period of two years. The Work Programme has not yet been running for two years, so today’s signs are very encouraging.

The Work Programme not only supports people into employment, but is also designed with the crucial aim of keeping them there. It encourages long-term private sector employment and is not just a short-term fix. Today’s figures show that 132,000 people have escaped long-term unemployment and got into lasting work, normally for at least six months. This is a large increase compared to the first year of the scheme. However, that is not the whole story. Far more people have started work but have not yet reached that target point of six months in work. Therefore, today’s figures from the Government are only for those who have been in work for six months or longer. However, figures from industry that were published last week showed that 321,000 people who were on the Work

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Programme have now started a job. The Work Programme is helping people who would otherwise have been consigned to the unemployment scrapheap.

There has been a significant and very welcome improvement from the providers. About half of the contract holders are now getting more jobseekers into lasting work than the level to which they were contracted by the Government. Last year not a single one managed that. We also know that, unlike the short-term job focus of previous schemes, which left many people on benefits after they had been completed, most people now stay in work well beyond three or six months.

The evidence of that improvement is clear. Figures this morning show that contractors are measured on how many participants they get into work each year, as a proportion of people who are referred to the scheme in that 12 months. As I just said, in year one of the scheme, not a single provider met its contractor level of getting 5.5% into work for that period. However, in the second year providers got an average of 31.9% of jobseeker’s allowance claimants below the age of 25 into sustained work. They were contracted to get 33%, so it is very close. For jobseekers aged 25 and over, the providers got an average of 27.3% into sustained work, against their contracted level of 27.5%—almost exactly bang on target.

More people are getting into work within a year of joining the Work Programme. The UK Statistics Authority has said that it was wrong to claim that only 3.5% of people got into work in the first year of the scheme. It says that the performance is best measured by counting how many people got into sustained work in their first year on the scheme. While on this measure just 8.5% of those who started the programme in June 2011 completed at least six months of work in their first year, this success rate dramatically increased to 13.4% for the more recent recruits who joined in March 2013.

This is a clear and demonstrable improvement. If you join the Work Programme now, you are more likely to get a lasting job. Of course, the Work Programme is also designed to give taxpayers a good deal. Providers are paid when they get jobseekers into work, rather than getting most money up front, regardless of success. Significantly, more people being helped by the Work Programme are moving off benefits and into work, and providers are keeping them in sustained employment. Most claimants have been on benefits continuously for nine or 12 months before even joining the Work Programme. Now providers are either exceeding or hitting the level set out in their contract for getting jobseekers into long-term work after substantial improvements in performance.

Last time it was too early to say whether the programme was working. Today’s figures reinforce the point that we now know where we stand. Unfortunately, the figures also reveal some weaker parts of our agenda, mainly related to the people who move into the Work Programme from employment and support allowance. The numbers of ESA claimants moving off benefit and gaining a job are lower than I would have hoped. Previous attempts to help these claimants into work were not successful. We still have a lot to learn about what works for ESA claimants. We have to work with

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those providers to improve performance for this group and build expertise in supporting those who are hard to help.

There is a ladder of helping people back into work. The rungs may be very short, and it may take a long time to get to the top of the ladder and into employment. First, people may have to be encouraged into self-belief. They have to have confidence in themselves and know their self-worth. We have to learn from those who have experience and expertise in that area. The term that is used for this in the Work Programme is the “black box”. I always thought this was rather a strange term to use when talking about a work programme. It gives me the impression that when you open the lid there is darkness inside and you do not know what is there.

What it really means—and the purpose of the black box approach—is that it allows providers helping people back into work to use whatever approaches they find work for those groups of claimants: localised results helping people individually. I hope that the Minister will tell us in his summing-up what approaches have been the best. Which are the ones we have to learn from, because these particular groups on employment support allowance are the most difficult to help? It is important that we learn lessons from the best providers and learn them rapidly.

The other area that is still of concern is youth unemployment. It is good to note that it has fallen, but it is still far too high. I know that we have to use the international comparators, which include all full-time equivalent students, so full-time students are included in the figures. However, if they are stripped out of the figures there are still 659,000 unemployed people in that youth category. I know that this is down 13,000 over the last quarter, but it is still a great problem because it has a scarring effect on young people. It is a distinctive scarring effect, because it is caused solely by the single experience of being unemployed. This brings a loss of personal esteem and of earning potential and can persist for decades. Youth unemployment, of course, can also lead to an increased crime rate.

This is not a new phenomenon. Over the years from 1993 to 2011, the figures show a substantial growth in the unemployment rate for 18 to 20 year-olds. Crucially, the bar of five GCSEs or more shows the level at which young people can escape from youth unemployment in a large way. One of the crucial things we have to do is ensure that people reach that standard of skills. That is why the apprenticeship programmes are also crucial to building up those skill levels. That five GCSE bar, the bar between level 1 and level 2, is the one that distinguishes between those who gain employment and those who do not.

There was some interesting analysis by the think tank CentreForum last year, which simplifies some of the issues. It stated:

“Academic research has been unable to find any robust evidence to substantiate the claims that rising levels of immigration or the introduction of the National Minimum Wage is responsible for the rising levels of youth unemployment”.

We should bear that in mind. This Government have focused their attention on universal credit and helping people back into work. It is work in progress and I hope that there is even better to come in the months ahead.

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12.47 pm

Baroness Sharp of Guildford: My Lords, I join others in thanking my noble friend Lady Brinton for introducing this timely debate. The subject is the importance of sustainable jobs to the Exchequer and the British economy, and there is a certain truism in that statement. Obviously the more jobs that we can create, the more tax revenues there are for the Exchequer, and the less it has to pay out in welfare payments—so it is very good for the Exchequer—and the more jobs that we can create the more we add to GDP and therefore to measurable growth, which is the yardstick by which we currently measure success in the economy.

What do I mean by sustainable jobs? There is in fact considerable churn among the unemployed. Some 70% of those who register as unemployed find jobs within six months. However, there are differentials between different quintiles of income distribution. Of the lowest-earning quintile, the bottom 20%, 30% of those who were unemployed had spent less than a year in their current job. This compares to only 7% of workers in the top quintile spending less than a year in their job. Of those in the bottom quintile, 24% were in temporary, not permanent, jobs. One-third of those claiming jobseeker’s allowance claim benefits again within eight months of starting work; 8% of them work less than 16 hours a week.

The good news that we heard from my noble friend Lord German about the way in which the Work Programme is becoming effective perhaps makes one a little more optimistic about what Jobcentre Plus can achieve. However, to some extent its role is to place people in jobs, with the emphasis on getting them off welfare and into work, and perhaps too many of the jobs are short-term and non-sustainable. This is disproportionately the case for the bottom 20%, many of whom have very low or no qualifications, a point again picked up by my noble friend Lord German.

The group I am particularly worried about comprises young people in the 18 to 24 age bracket who now find it extremely difficult to find jobs. As my noble friend Lord German mentioned, the group that experienced unemployment in the 1980s and the 1990s is now referred to as the lost generation, as the unemployment had knock-on effects on their self-confidence and their ability to hold down jobs. Many of them have experienced substantial periods of unemployment since then. It is noticeable that in this recession there has been relatively less unemployment. Nevertheless, 12% of the 22 to 24 age group who make a new claim to Jobcentre Plus have spent at least half of the past four years on benefit, so while there is good news here we also have to address problems, such as the paradox raised by my noble friend Lady Brinton in introducing the debate, of there being very high levels of skills shortages in some industries. Currently, 16% of vacancies exist because employers cannot find people with the critical skills. As I think she mentioned, this applies particularly to intermediate skill levels—the three-year apprenticeships for craftsmen and the two years on top of the three-year apprenticeships to gain the equivalent of higher national diplomas or foundation degrees. We are particularly short of people qualified at technician level.

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As my noble friend Lord German mentioned, although there is no relationship between youth unemployment and immigration, it is certainly true that many employers are importing people with these skills because we are not growing them ourselves. As I say, a somewhat difficult paradox exists at the moment, as we know we have these crucial skills shortages, which are limiting the degree to which some of our new industries can grow, yet we do not have the skilled people to fill the vacancies that need to be filled. We are failing to train our own people to fill these vacancies, so the apprenticeship programme is very important and is a great success story, and we are beginning to see some of these vacancies being filled due to that programme. However, that takes time. To train somebody to HND level can take five years. We are beginning to see this progression within the apprenticeship programme, but it is a slow process.

As I say, the fact that 1.2 million young people now have apprenticeships is good news. However, those apprenticeships are still disproportionately at level 2: that is, one or two-year apprenticeships whereby participants qualify immediately as plumbers, electricians, retail workers or workers in hospitality or care services. The level 2 qualification is now the minimum qualification that is required. We are seeing more young people going on from a level 2 qualification to gain a level 3 qualification, which is the craftsman qualification, but sadly not nearly enough are doing so. Of the 1.2 million, only about 300,000 are going on to the higher-level qualification. We need to see many more of them proceed to the level 3 qualification. Indeed, the Government have made it known that they would like to see most apprentices move on to a level 3 qualification.

The other problem that has arisen is that these apprenticeships have been taken up disproportionately by 19 to 25 year-olds, and indeed by those in the 25-plus group, as opposed to 16 to 18 year-olds. In many senses this is very good and reflects the fact that employers want to take on as apprentices those who have some experience of work and who they can rely on to get to work on time. Nevertheless, it creates something of a problem for the 16 to 18 year-olds. For that reason, the Government have created the trainee programme, which is a pre-apprenticeship training programme. Yesterday, we had the good news that this pre-apprenticeship training programme is now being extended to the over-19s. It had been concentrated on 16 to 18 year-olds, but its extension is good news. However, it is very important that we get more of these younger people into apprenticeships that not only provide them with very satisfactory training programmes but help them to get satisfactory, sustainable jobs over the longer term.

This raises three questions that I would like to put to the Minister. Are we doing enough to make sure that these young people know about the opportunities that are available in the apprenticeship field? Raising the participation age in schools means that next year those aged 17 will stay on in education or training. Training is very important, but many of them, perhaps too many of them, may be told by their schools that the choice is for them to stay on at school in the sixth form and take subjects that may or may not include some form of vocational training, rather than being

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told about alternatives such as apprenticeships or other more practical vocational college courses. We need to look to the schools careers service, but that is experiencing real problems. Indeed, it has collapsed to a considerable extent. Does the Minister feel that the careers service is sufficiently engaged in schools, particularly in advising young people aged 13 to 14 to know what opportunities are available, as they face crucial choices at that age?

Secondly, is Jobcentre Plus geared too much towards finding short-term jobs rather than helping young people into training to enable them to get sustainable jobs? I, too, was present at the APPG meeting at which two principals from FE colleges gave evidence that indicated that a number of young people were taken off college courses by Jobcentre Plus in order to fill short-term job vacancies. Rather than thinking holistically about what was necessary to train the young people, they were pushed into short-term jobs that were jobs not careers, if you like, and were not given the opportunity to develop a career. Should we not learn rather more from the Scandinavians, who see unemployment as an opportunity for people of all ages to upgrade their skills and move into higher levels of employment within their range?

Finally, it is entirely in this country’s interests to minimise unemployment and maximise job creation, but in doing so it is also vital to upgrade the skills profile of the population. We have succeeded in encouraging a lot of young people to go on to university, but far too many still leave school with no, or low, qualifications. They are the ones who find it difficult to find jobs. I suggest that for these young people unemployment should be seized upon as an opportunity to undertake training to gain a career and a sustainable job and should not be seen just as time out before being pushed into another short-term job.

12.59 pm

The Lord Bishop of Bristol: My Lords, like other speakers in your Lordships’ House this morning, I would like to thank the noble Baroness, Lady Brinton, for introducing this significant debate about the importance of sustainable jobs to the Exchequer and to the British economy. To this, I would add their importance to the millions of people whose lives are currently blighted by unemployment, and the communities in which they live. With the noble Lord, Lord German, and the noble Baroness, Lady Sharp, I am thinking in particular of the nearly 1 million young people who are out of work.

I want to use this opportunity to highlight the potential contribution that co-operatives and other social enterprises have to offer to sustainable job creation. In delivering the spending review yesterday, the Chancellor talked about the need for growth, reform and fairness. The growing social enterprise sector meets all three of these criteria, providing a business model that delivers sustainable economic growth while fostering innovation and social change.

Damage to the reputation of the important parts of the UK economy in the wake of the financial crisis and concern about the social impacts of the recession and public spending cuts have brought social enterprise

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to the fore. People want a different way of doing business that is about creating shared value, not just profit—where the motivation is more than just making money, where the proceeds are reinvested locally for the benefit of the whole community and where employees and customers are actively engaged in decisions that directly affect them.

Here are a few statistics that demonstrate the potential of this sector, courtesy of Social Enterprise UK. At present there are around 70,000 social enterprises in the UK, contributing at least £24 billion to the economy and employing more than 800,000 people. Social enterprises are twice as likely to have grown in the past year as other small and medium-sized businesses, and 82% of social enterprises reinvest their profits in the communities where they operate. Social enterprises create more jobs relative to turnover than mainstream businesses, and 39% of all social enterprises operate in the 20% most deprived communities in the United Kingdom, helping to create jobs where they are most needed.

This is a dynamic and fast-growing sector with the ability to create and sustain employment. One in seven social enterprises is less than two years old, more than three times the start-up rate for small businesses generally. At the same time there is a core of older, well-established social enterprises. Nearly half of all social enterprises have been trading for more than 10 years.

Jobs created in this sector are sustainable in other ways, too. Research shows that employee engagement correlates with increased productivity and performance. Engaged employees are much less likely to leave their organisation and are more likely to report high levels of job satisfaction. For a voluntary sector organisation, income from social enterprises can provide a more reliable source of income than external grants.

Enough of the statistics. Now for two examples that I hope will show why I believe that social enterprises have so much to offer. The first is an initiative set up by Portsmouth’s Anglican cathedral to support entrepreneurs and business start-ups. The Cathedral Innovation Centre provides entrepreneurs with office space, start-up loans and mentors, helping to create jobs at the same time as providing a new purpose for underused buildings. There are already nine businesses at the Portsmouth Cathedral Innovation Centre, including a computer games firm, a catering company and a business that redevelops old land for wider civic use. Together they occupy 14 desks and are currently recruiting three new apprentices with support from the centre. With hardly any resources, they have levered in-kind support worth around £500,000. The initiative is also being funded by local people who are being asked to invest £75 or more as shareholders. Discussions are already taking place to open similar centres in Derby, Cheshire, East Anglia, Bournemouth and the north-east. As the noble Baroness, Lady Berridge, who attended the official launch in May of this year, said:

“This isn’t just one cathedral innovation centre, but the start of a movement. It’s about providing jobs, which is the best expression of hope [and] providing a real sense of self-worth”.

The second example is Worth Unlimited, a Christian charity based in Birmingham, which has established a family of social enterprises offering skills training and

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employment opportunities for disadvantaged young people at risk of social exclusion. One of these social enterprises is the DevenishGirl Bakery, which produces a range of home-baked cakes using locally sourced, organic and fair trade ingredients, as well as vintage tea parties and picnic hampers. Young unemployed people are given accredited training in how to run a small business, as well as practical cookery and personal development skills. The six-month programme is specifically designed to help move the young people they work with into sustainable employment, whether through job creation within the organisation or other opportunities outside the enterprise.

These two examples illustrate that, as a church, we are not just about high-flown rhetoric; we are very much on the case and very willing to partner with others who seek to meet the noble goal of sustainable jobs for the young. I am also encouraged that the Government, too, are beginning to see the huge potential of the social enterprise sector. I urge the Government to do all they can to maximise the contribution of social enterprise to economic growth and sustainable job creation.

1.07 pm

Lord Kirkwood of Kirkhope: My Lords, it is a signal pleasure to follow the right reverend Prelate because I agree with every word that he has said. He was absolutely correct to concentrate on the contribution that social enterprises can make to our economy. I can say that as a non-remunerated, non-executive director of the Wise Group in Glasgow, which is a social enterprise that has been involved in employability for the past 30 years. It adds value to the provision of support for unemployed people in a way that I think other more statutory government bodies struggle to do. I am very pleased to endorse everything that the right reverend Prelate has said.

This is a very timely debate. I add my congratulations to those already offered to my noble friend on securing the time. I want to take a slightly different approach to the debate and I want to start by making a political point. I hope I can carry the House with me on this but I am very concerned about the potential stigmatisation of the unemployed. In my experience, which is mainly derived from my work in the Wise Group, people in households that suffer worklessness are strivers as much as anyone else and they try to better themselves and their families.

Of course, I have been in politics long enough to know that a game is played but I do not say that pejoratively. I know that there are points to be scored in the public debate in trading positions and policies as part of the coming and going of politics, but I am worried. I have been concerned about this policy area for some time and I have never known the psychological effect to be so bad on people who suffer unemployment. My plea to my noble friend on the Front Bench—this is certainly not directed at him personally, as he knows—is that he will take the message back from me, if from no one else, that we need to be careful about our use of language.

The second thing that I want to talk about is the environment of unemployment and welfare-to-work, which has substantially changed, certainly since I was

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initially elected to the House of Commons in 1983, and whose development I have been following during that time. It is now harder to make work pay. Colleagues are probably now familiar with the substantial change that is encapsulated by the fact that the majority of poor, working-age adults and children in the United Kingdom now live in families containing at least one worker. That is a hard prospect for policymakers and none of this is easy. The adage that we all used to hide behind, because it was true 10 or 15 years ago, that you could work your way off benefits and out of poverty is not necessarily true at all. We therefore need to weigh that in the balance when we make changes.

The environment that we are now in is characterised by no guarantees of secure work in contracts of employment. The labour market that we now face has a problem about low wages, temporary jobs and zero-hours contracts, which used to be peculiar employment devices used in proper circumstances and for understandable reasons in industries such as hotels, catering and entertainment. These contracts are now being used much more widely, including in education and health. If we do not recognise that, we are not properly doing our job as policymakers. It has also been suggested to me that a massive 20 million hours a month of underemployment persists in the United Kingdom labour market. That is completely new and none of us has properly started to address it in a way that is necessary.

I wish to make a final point about the context because I have noticed from working with a client group in Glasgow that the level of uncertainty about being in work has changed significantly. Even if you can get people off benefits—and you can if you give them proper support—they go into a world of work that is full of uncertainty. It has one of the most destabilising effects on households because you never know just how long it will be before you are going to have to switch back to benefits, low-hours contracts or low-pay contracts. I accept that universal credit will help, at least in theory, if we can introduce it safely and as soon as possible. However, we need to do more to address uncertainty in the workplace, which is a serious problem.

I listened carefully to what my noble friend Lord German said about the Work Programme, of which I have some experience. I am interested to hear that the figures for the second year of the programme are now available. I should be grateful if my noble friend, if he has the figures, could differentiate between the minimum performance levels that are in the contracts for the prime providers—levels that I have always thought were unrealistically high; and the DWP was not sensible in setting them at these levels. As far as I can recall, the JSA 25-plus minimum performance level for providers was 27.5% of the referred group, the JSA 18-24 cohort figure was 33%, and the ESA caseload was 16.5%. These are not targets. DWP expectations were much higher. I have not had the benefit of access to the latest figures and I look forward to studying them as soon as the debate concludes because I am interested, but I should be reassured if my noble friend could confirm that if the minimum performance levels are not reached by prime providers their contracts will be re-examined. That was the promise made: if they did not reach these

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levels in year two, the contracts would be at risk, and rightly so because the figures for the first year were de minimis. That was perhaps understandable in year one but we would be looking for serious progress in year two. I am not satisfied that we are looking at only minimum performance requirements. We should look at the DWP expectation levels for these client groups in order to test whether we are making progress in the Work Programme.

It is also foolish for the DWP to offer people who have done their two years on the Work Programme and have still not found work to the Troubled Families programme run by the department. These client groups are chalk and cheese. The Work Programme people are there because they are required under the jobseekers commitment to be there. The Troubled Families initiative, which I support and was pleased when it was given extra money from the Government in the past few days, is a voluntary programme. In my experience, you cannot put conscripted people into a programme that was originally designed for volunteer clients and have any expectation that it will succeed. That idea needs to be rethought.

Finally, given the £248 million underspend on the Work Programme—I think we can all understand that an underspend might be a consequence of not having as many people on the unemployment lists as we had anticipated in the first year—can my noble friend confirm that the full amount for the programme will be spent supporting moving people from benefits into work? It is a flagship, essential and crucial programme, and I wish it well. I support it but I have some serious concerns about how it is being implemented. In fact, it may well be that we should talk to colleagues on local authorities about increasing their involvement in delivering and implementing some of these national programmes, some of which have been more successful than others.

I wish briefly to raise two other matters before I sit down. First, can we work more with employers? It is absolutely right that we concentrate on supply-side measures, upskilling people, and helping people who are furthest from the market. There remains a problem of “parking and creaming” in some of the schemes and I understand that we will need to address that issue. However, can we get alongside employers more systematically? They need help as well if they are offering contracts of employment to people who have sometimes been out of the labour market for more than two years. That would be a development that would help the Work Programme to improve and be more successful.

Finally, there are three priorities, all of which have been touched on by colleagues in their excellent speeches in this debate in which I am pleased to take part. The three priorities for me include youth unemployment, which affects just shy of 1 million young people. They in particular suffer from the precariousness of unemployment—and employment, even when they get jobs. We really need a concerted cross-party approach to youth unemployment. Also, nearly 36% of the caseload is made up of people in long-term unemployment. It is a proxy for household distress, which the Troubled Families programme is beginning to address. If people are unemployed, have been through

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the Work Programme for a full two years and still cannot find their way into the labour market, we should treat them more holistically. A multiagency approach such as that provided in the Troubled Families programme—it is a horrible name and I wish we had a different one—is important. Finally, there is the hard-to-reach group, who are the third category of clients whose chances we need to do more to improve in the future.

1.20 pm

Lord Cotter: My Lords, this debate is timely and essential, as noble Lords have said, and we thank my noble friend Lady Brinton for introducing it.

We need jobs—at least, many people of all ages need them—but I am particularly concerned about young people’s jobs, and for those we need growth in this country. This is a widely held view. As the CBI said just the other day:

“We believe that the government’s priority must be to protect spending that promotes growth”.

At one time this nation of ours was a great manufacturing country. The tide has changed, but we still have the potential. However, in recent years we went off the rails for many reasons, some of which were in our control, some of which were not. We are a great country when it comes to innovation and imaginative ideas. Many great inventions stemmed from the UK. It is therefore welcome that in the spending round that has just been announced, protecting and thus encouraging investment in science is the right thing to do, and the Government intend to do that.

I welcome the Government’s stance, but can the Minister say as a matter of record what our level of investments in R&D in this country is? Among the G7 at one time we were at the bottom, or second to bottom. Can the Minister clarify that? It is only through growth that we in this country are going to turn the corner and increase jobs. We are living in a time when much is changing in technology. We need to be in the forefront, which means that it is key that we maintain science resources and capital budgets. That is a good story, because the Government intend to do that.

In the struggle that our young people are having to find jobs, there is not such a good story to be told. Time and time again, as noble Lords have already said, when the issue of careers advice and guidance is raised, the message is still that this is just not being done effectively. Only yesterday I was a meeting and was told that once again apprenticeships—this route to jobs—are still not being mentioned in schools. This has been going on for years and years. In many parts of the country, certainly when I have had meetings with educators in the south-west and elsewhere, the message is the same: the advice and preparation for work are just not good enough. I get this from employers as well, who say that sometimes young people are not prepared for the work ethic. This is of great importance.

To go back to the point about manufacturing, we have not been encouraging enough pupils to go for the hands-on vocational jobs over the last few years. If I had a pound for the number of times I have heard the cry, “We need more engineers”, I would be quite well off. It happens time and again, and it is going to take a

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while correct it, but we must do just that. It is my contention that it is just not adequate to say that our young people can look up the opportunities for jobs on the computer. As has been said already, they need more face-to-face encouragement and help to find jobs.

Incidentally, on the practical side of life, it is welcome that the Government are planning more university technical colleges. Further education is a vibrant and vital sector in many parts of the country, as I can attest. In Weston-super-Mare, for example, our local college, Weston College, is spearheading apprenticeships, which my colleagues have referred to before, is successfully working with local employers to create local partnerships, and is in all senses providing a hub of activity. I know that this is also happening in further education colleges throughout the country.

The Government have a number of schemes to try to help people into jobs, but to assist in this they need to concentrate on growth and on encouraging various sectors to provide the necessary jobs. I will mention one sector in which for a number of reasons I have a personal interest, and which, like other colleagues, I have raised in this Chamber: the hospitality and tourism industry. This offers jobs over a complete range of abilities, from the unskilled to those with top skills. For that reason, and because it is a major source of jobs throughout the country, we look to the Government to encourage people to come to this country as tourists. On a little negative note, I regret to say that it is an area that needs more sharpening up.

I have in my hand Travel GBI, which has the headline:

“Tourists put off from UK visits by ‘wall of tax’”.

The Minister will know that this problem has been raised many times and that the Government say time and again that they are aware of it. I will raise it again, because I think it is so important, particularly because I have an interest as secretary to the All-Party Parliamentary China Group and in the difficulty that Chinese tourists have in coming here. When they come here they spend something like 10 times as much as the average tourist from other countries, yet we lag severely behind even a close neighbour, France, where the tourism level is 10 times higher than it is here. I do not want to end on a negative note, and I hope the Minister will reassure us again that we are looking at this serious issue.

The tremendous increase in apprenticeships is very welcome, and has been mentioned by many colleagues. Apprenticeships are, of course, a direct way into work. My noble friend Lady Sharp and others have said that there are concerns about ensuring that this is the real route to real jobs.

Finally, I know that the Minister shares the view, as we have talked about it before, that we must talk about apprenticeships and training, but I make the plea that in training and for all who are concerned with it in this country we give a very high priority to training for management. Sometimes we do not attain the very best level of management, and we are seeing this increasingly day by day in various spheres of activity. Without good management, we cannot create and keep good jobs.

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1.28 pm

Lord Shipley: My Lords, I thank my noble friend Lady Brinton for initiating this important debate on sustainable jobs, in which the word “sustainable” is of crucial importance. This is about creating growth and long-term employment opportunities for everyone who wants to work.

We should note some helpful trends in the overall position on jobs in the past year or so. There are almost 30 million people employed in the UK, which is up by 432,000 from a year ago. Unemployment remains stubbornly and worryingly high at 2.5 million. It is, however, down by 88,000 from a year ago. More than a million jobs today are held by the over-65s. Nearly 10% of those aged over 65 are now employed, which is the highest level since records began in 1992. I welcome that. It is in part a sign of the times and, no doubt, with the rise in the pension age that figure will continue to rise.

In vacancies, there has been another helpful trend. In the latest quarter, there were 518,000 job vacancies, up 48,000 year on year, which is the highest number of vacancies since 2008. In March—the latest figures we have—there were 24 million private sector jobs, up 46,000 from December 2012, and 5.7 million public sector jobs, down 22,000 from December 2012. We can see a reduction in public sector jobs but an increase in private sector jobs, and we should note that, despite the loss of public sector jobs, 1 million private sector jobs have been created since 2010.

Nevertheless, there are major disparities. The employment level in the south-east outside London is 75% but in my home region, the north-east of England, it is 67%. There are some 458,000 people who have been unemployed for more than two years. I agree with my noble friend Lord Kirkwood of Kirkhope about the stigmatisation of those who are unemployed through no fault of their own. We need to be very careful about our use of language. There are 458,000 people who have been unemployed for more than two years, and we need to get that figure down. There are 401,000 people aged 18 to 24 who are on jobseeker’s allowance. That figure is down 63,000 since May 2012. There are 950,000 unemployed people aged 16 to 24. That figure is down 60,000 since the previous year, but it is still worryingly high. The Government have recognised the geographical and sectoral imbalance across the country that needs to be addressed.

Sustainable jobs depend on growth. Skilled people are needed to do the jobs that drive growth, and can drive exports and reduce imports. As we know, with more people in employment, tax revenues will rise. I shall address the first of those four statements on growth. I have no doubt that government actions are helping. The funding mechanisms include: the regional growth fund that my noble friend Lady Brinton referred to, and I declare that I am deputy chair of its advisory panel; the single local growth fund which was announced yesterday by the Chancellor; the £500 million committed for superfast broadband in rural areas; the Green Investment Bank; the business bank due next year; and, as announced in the Budget, the reductions in national insurance to give employers a £2,000 cash payment to make it easier for them to take on staff.

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We should note the success story on apprenticeships. This Government have created more than 1 million apprenticeships. We want to double to 200,000 the number of businesses that offer apprenticeships. There are 5 million businesses in the UK, but only 100,000 offer apprenticeships. I feel optimistic that the Government are doing a lot to deliver growth, but one of the barriers is skills and vocational education. We need to enhance the offer in vocational education to give people skills to do jobs rather than, as we have done in the previous decade, encourage very large numbers of people to go to university, at the end of which they may not have the skills to undertake some of the jobs we need done. For example, there is a critical shortage of engineers at senior levels.

I shall make a point about gender: there is a shortage of women in business. Just one in 10 engineers is a woman and just one in 20 engineering apprentices is a woman. Something needs to be done about encouraging girls at school and in education to become scientists and engineers. When I read that in half of state secondary schools not one girl is doing A-level physics, I become very concerned about the career pathways that are being discussed with pupils.

We need to understand why we have unemployment at the same time as we have skills shortages. Employers in all parts of the country say the same thing: there are serious difficulties in recruiting skilled staff in engineering, processing and manufacturing. We have a large number of young people who are unemployed—410,000 of them in receipt of JSA—but at the some time we are being told by employers that there are many jobs that they want to fill but they cannot find qualified people to fill them. We have to get a far better balance between those two things.

My noble friend Lord Teverson talked about the language issue in imports and exports. It is a major barrier for firms exporting from the UK. Another problem has emerged in a recent survey undertaken by the British Chambers of Commerce. It is the lack of knowledge about regulation in other countries. That chamber of commerce survey showed that 60% of chamber members say that they do not export. We need more companies to export, and that means that UKTI, local enterprise partnerships, British embassies and local authorities have to make it a greater priority because exports drive growth. I am proud to live in the one region of this country that has a positive balance of trade. The north-east of England exports more than it imports. We should build on the potential of that record.

One of the problems we have is that we import too much because our indigenous supply chain is not strong enough. If we imported less by building up our own supply chain, we would reduce the amount that we buy from overseas. I particularly pay tribute to the Government for the fact that we now have an industrial strategy in place, with a British supply chain as an important element.

I mentioned the number of long-term unemployed young people. Sustainable employment is part of social inclusion. We have to make sure that everybody is able to take part in the future growth of this country. That

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means that jobs need to be created, preferably though apprenticeships, for everybody. It is an obligation not just on government but on the private sector, the voluntary sector, the third sector and the public sector. We all have to do everything we can to get everybody who wants a job into one. There have been many schemes in recent years: the Community Programme, Employment Action, the Community Action Programme, the New Deal, Step Up, the Community Task Force and the Future Jobs Fund. History suggests that it is difficult. There have been so many of these schemes, but I was somewhat surprised to discover yesterday that there are 33 different funds and schemes supporting young people in England at a combined cost of more than £15 billion per year. There are two ways of looking at 33 schemes. You can say that each one has a specific aim and is doing a specific job, and that may well be true, but it is also possible that it simply confuses the landscape so that those who want to employ more people find it more difficult to do so and young people find it difficult to engage because they do not know where they should be engaging. We need to look at that very carefully.