The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord Henley)
My Lords, it has been quite a long time since my noble friend Lady Wilcox opened the debate, since when we have heard from some 52 or 53 speakers. As the noble Baroness, Lady Kingsmill, said, we have seen the House of Lords possibly at its best and certainly at its widest in terms of the number of subjects we have covered. It is now my job to try to respond to the wide range of subjects before us, covering a whole array of different departments: the Treasury, transport, energy and climate change, business and my own department, Defra, which I shall get on to in due course.
I shall start by offering my commiserations to the noble Lord, Lord Myners, because he told us that this was his swansong on the Front Bench. As many other noble Lords have said, we will miss him and we look forward to seeing him on the Back Benches. I think it was his noble friend Lady McIntosh who suggested that possibly it was the first of many swansongs and that he was going to become the veritable Frank Sinatra of the Opposition Front Bench by making repeated final speeches. I look forward to those. I also offer my thanks to the noble Lord, Lord Whitty, who offered me some very useful advice from Defra, the department in which he has held office, as has the Lord Speaker and the noble Lord, Lord Rooker. The noble Lord made the simple point that nothing is quite as complicated as people tell him.
I shall start by saying a word or two about my own department. As my noble friend Lady Wilcox emphasised in her opening speech, it is the Prime Minister’s ambition that this Government should be the greenest Government ever. Reducing greenhouse gas emissions, care for the environment and understanding the value of our natural resources should inform all that we do, and it is the responsibility of Defra to ensure that this imperative is understood by government and all others. We are there to explain and promote the economic value of natural resources so that they are managed better and so that those who come after us do not face hardship and disaster through their growing scarcity. We work to ensure a thriving biodiversity and wildlife by preventing habitat loss and degradation; we act to prevent deforestation and to protect the marine environment; we help businesses and communities to adapt to the effects of a changing climate; and we help those sectors for which we are responsible to reduce their greenhouse gas emissions and to contribute to the fight against climate change.
However, Defra is not only concerned with the environment; it is also an economic department. In fact, our departmental remit shows that you cannot separate the two. Therefore perhaps our most important job is to show just how the economics and the environment are intertwined.
During the course of the debate I heard repeatedly from this or that noble Lord that they hoped the Minister would in due course comment on their own particular issue. However, that will simply not be possible. I jotted down a range of different subjects, some of which were raised repeatedly, and I hope I will be able to comment on some of the bigger issues. I think noble Lords will understand that I shall not be able to answer every question that was put to me but, as the noble Lord, Lord Myners, put it, I shall do my best to write to all noble Lords—as I did in my previous incarnation as a Minister and as I am sure all Ministers do—in due course when I have collated all the responses from the different departments. However, as I said, I shall try to deal with one or two of the concerns that have been raised today.
I shall start with the Office for Budget Responsibility because that is where the noble Lord, Lord Myners, started. He asked a number of detailed questions which he would not expect me to answer at this stage and which I shall deal with by correspondence. However, I can give him the assurance that it will be independent—that is important—and that independence will derive from it having complete control over the forecasts it will produce. I was grateful that the noble Lord, Lord Bilimoria, saw that that was a positive step. On the detailed questions, as I said, I shall write to the noble Lord.
Turning to the deficit, the subject most mentioned by noble Lords—indeed, so many noble Lords raised the subject that I cannot list all their names—there were varied views on what to do about it but everyone accepted that it had to be tackled. Even the noble Lord, Lord Myners, accepted that the deficit had to be tackled but felt, as did others—but by no means the majority—that it should not be tackled too quickly. I shall quote the views of the Governor of the Bank of England on this subject. He said:
“The bigger risk at present would be for a new Government not to put in place clear and credible measures to deal with the deficit”.
We are currently running one of the largest deficits in the world. That is simply not sustainable and the longer we delay action the greater the risk of a loss of market confidence, which would mean higher interest rates for all.
I will give way to the noble Lord, Lord Lea of Crondall, just this once, but it is his third intervention in the course of the debate.
Lord Lea of Crondall
It is an important question. Perhaps the Minister could write to me and put his reply in the Library. Is he talking about the complete deficit or about a recession-adjusted deficit? How has it suddenly become a recession-related deficit of 11.1 per cent when it was only 2.5 per cent 18 months ago?
Lord Henley
That is a question that the noble Lord will have to put to the previous Government, who saw it rise to that level. I shall of course write to him in due course and, as I always do, put a copy of the letter in the Library.
The longer that we delay action on the deficit, the greater is the risk of that loss of market confidence. As I said, that would mean higher interest rates for all, stifling recovery and making challenges ahead even harder.
Lord Myners
I am grateful to the Minister for allowing me to ask just one small question. It is clear that the size of the deficit will be a function of the expected rate of economic recovery and growth; the two interplay. I believe that the Minister said that the OBR would make independent forecasts. Will he confirm that it will make economic forecasts as opposed to auditing or commenting on Treasury forecasts?
Lord Henley
The forecasts of the OBR, as I made clear, will be independent. It is for it to make those independent forecasts. I was trying to stress its independence. I shall write to the noble Lord on that in greater detail, but its independence was his principal concern. He will have a chance to see the first of those forecasts quite soon, as I understand that the first of them will be out before the Budget. If I am wrong about that, I shall let him know in due course.
One should also refer to the OECD’s recent economic report, which argues that a more rapid fiscal consolidation would help the recovery by leaving room for interest rates to remain lower for longer. That will support spending by households and by business. The importance of taking action this year is underlined by recent events in the eurozone. Failure to take action would put that recovery at risk.
I turn to questions asked about tax. Noble Lords mentioned CGT, income tax and tax avoidance—that was the noble Lord, Lord Oakeshott. We heard confessions from the noble Lord, Lord Desai, about his having to resign from the pre-1997 opposition Front Bench for his views about that. As I remember it—the noble Lord will no doubt correct me—he had to resign from the opposition Front Bench more than once.
Lord Henley
I remind the House for its amusement that the second occasion on which the noble Lord was sacked, or it might have been the first, was the result of his having informed the House, or perhaps the world more generally, that his then leader—we shall not mention which leader it was—was no economist. That struck me as a statement of the obvious, but he was sacked nevertheless.
Many noble Lords have raised CGT, VAT, income tax and tax generally. The noble Lord, Lord Myners, pressed me to give an explanation of what was going on. I have to remind him, first, that I am not a Treasury Minister and, secondly, that I think he knows the date of the Budget. Neither the noble Lord nor any other noble Lord expects me to second-guess my right honourable friend. It is very tempting to do so, but it is one of those occasions where one has to say that it is beyond my pay grade. The noble Lord will have to wait three weeks until the Budget to hear answers on those matters.
I appreciate that time is moving on, so I shall say a little about policy on climate change, which was another subject that attracted a great many speakers. I was grateful for the support that came from many noble Lords, but I noticed the concern expressed by two sceptics—I think that that is the right word—on my own Benches, my noble friends Lord Lawson and Lord Reay. As the noble Lords, Lord Whitty and Lord Hunt of Chesterton, and my noble friend Lord Jenkin put it, there is a need to convince the public on this issue. It might be more than just the public that we have to convince; it might be some of my noble friends. Certainly, there are matters that we need to look at here, and a great number of matters on which I shall have to write to noble Lords in due course to deal with their concerns. For example, the noble Lord, Lord Whitty, raised the question of the Government’s commitment to the renewable heat initiative. That is something that we are committed to supporting, but we still need to consider the various options for promoting it most efficiently.
We will look at all the other renewables that noble Lords mentioned—and my noble friend Lord James referred to the possibility of tidal power on Dogger Bank. As my noble friend himself admitted, some pretty great technological challenges face us in an area such as that. I also give an assurance to my noble friend Lord Teverson that we will certainly push the EU to demonstrate leadership by tackling the levels of international climate change and supporting the increase in the EU emission reduction target to 30 per cent by 2020.
There were some fairly technical questions from my noble friend Lord Jenkin and the noble Lord, Lord Giddens, on the carbon floor price—questions that are slightly beyond my level at the moment. That is something for other departments, but I can give an assurance that we will introduce a carbon floor price because we recognise that the long-term certainty of the carbon price is one factor that affects investment decisions in low-carbon electricity generation. The exact timing of its introduction needs to be considered further but will need to fit the objective of increasing incentives for low-carbon generation. I note the concerns expressed by my noble friend Lord Jenkin on the speed of planning decisions.
I turn to the question of whether nuclear power needs subsidy, a point raised by the noble Lord, Lord Giddens. We believe that it does not need public subsidy and, on that basis, energy companies have already come forward with plans to build and stand up to 16 gigawatts of new nuclear energy. Certainly, we are keen on new nuclear energy, and I can give that assurance to the noble Lord, Lord O’Neill of Clackmannan. On his more detailed question about the funding for Sheffield Forgemasters, as he will be aware, the Treasury has asked all departments to look at all spending approvals since 1 January this year, which would include that project. Due diligence is required because of the budgetary position that this Government inherited from the Government of whom the noble Lord was such a supporter, to see whether those plans are affordable and consistent with government priorities. If they are consistent with that, they will go ahead—but that is all that I can assure him of at the moment.
I shall say a word or two about regional development agencies, which were raised by the noble Lord, Lord Bhattacharyya, and the right reverend Prelate the Bishop of Liverpool, who spoke about the regional development agency in my area and his area—the Northwest Regional Development Agency. My noble friend Lord Bates spoke of One North East, the RDA covering Newcastle. As my right honourable friend the Prime Minister stated last Friday, an early task of this Government will be to reform and refocus regional support and the RDAs. Therefore, we will be looking at all the RDAs. He stated that he will assign Ministers and senior MPs to some of our biggest cities with responsibility to work with local communities to help to drive forward economic development by ensuring that blockages in Whitehall are dealt with. We will certainly want to look at the RDAs—but I think that the RDAs in the north might be a special case.
With regard to electricity supply, the noble Lord, Lord Oxburgh, talked about a looming crisis. The noble Lord stressed that there had been, I believe, 17 Energy Ministers in the past 10 years. It seems, then, that while he rather politely put it as a looming crisis of our own making, it is possibly a crisis of the party opposite’s making if it was changing Ministers that often and not making the necessary decisions. We recognise that there is a need for a systemic approach to developing a framework that will both deliver energy security and meet our climate change objectives. We have proposed a set of interventions, including an emissions performance standard, that aim to deliver a secure, low-carbon, cost-effective and competitive energy sector. Our electricity market reform project will ensure that we deploy the right mechanisms in the right way at the right time.
A number of noble Lords talked about agriculture, principally in relation to problems that my noble friend Lady Byford raised about the Rural Payments Agency, which was also mentioned by the noble Lord, Lord Greaves, and others. I declare an interest as a recipient of funds from the RPA as a farmer. We are all aware of the problems within the agency, and the department will be seeing what it can do about dealing with them. We will also be looking at changes, as asked for by my noble friend the Duke of Montrose and others, in the common agricultural policy. I believe, and I think that everyone in this House would accept, that that means genuine reform of the policy. We will certainly push for that as and when we can.
Moving on to some of the issues raised about the Royal Mail and the postal services Bill by the noble Lord, Lord Whitty, we understand the concerns on all sides about the future of the Royal Mail and the real affection in which it is held. However, the Government are now looking at the detail of how to ensure that the Royal Mail can benefit from a degree of private sector capital and discipline and how it can modernise—possibly, as I think one of the right reverend Prelates suggested, in partnership with employees. We will announce details of our plans in due course, but I stress that we will seek to modernise the Royal Mail in conjunction with its employees.
I shall say a quick word about transport, the final department that was covered. We had a great many suggestions from the noble Lord, Lord Bradshaw, some more radical than others. I think that he suggested a purge of an entire division within the Department for Transport; I am not sure quite how brutal that purge would be, but no doubt he can let us know.
We also heard comments from my noble friend Lord Glasgow about high-speed rail being not purely a local English matter but a British matter. Like my noble friend, I have an interest in high-speed rail in that I live more than three and a half hours away from London under the current regime. I refer the noble Earl to the commitments that were made in the coalition document: this will be a truly British high-speed rail network. At this stage, one has to say that the timing is another matter. These things are very expensive but the commitment is there and it is a commitment to a high-speed railway that would be truly British, rather than taking us merely as far as Birmingham or Manchester.
I end by saying, again, that I will in due course write to all noble Lords. I hope that I can answer all the questions that have been put before me. As my noble friend Lady Wilcox said earlier today, any sensible family or business knows the dangers of too much debt. The debt is the first thing that we must concentrate on. We cannot recover without reducing it. That will be the Government’s first aim. I was grateful for the endorsement of the noble Lord, Lord Myners, for that. We must do that while adhering to the values, as my right honourable friend the Prime Minister said, of freedom, fairness and responsibility, and of knowing and respecting the value of our natural environment.