House of Lords
Olympic Games 2012: Olympic Truce
Lord Bates
To ask Her Majesty’s Government what specific initiatives they are planning to implement the Olympic Truce for the 2012 London Olympic and Paralympic Games.
Baroness Garden of Frognal
My Lords, the UK will be promoting a fresh resolution calling for the continued observance of the Olympic Truce for the 2012 Games and is currently working with overseas partners in 15 countries and planning activity in a further three on International Inspiration, a sports programme targeted at countries in development. Other initiatives are being considered by the Foreign and Commonwealth Office and we expect to learn the results of this work shortly. The London Organising Committee of the Olympic and Paralympic Games is also undertaking truce-related programmes.
Lord Bates
I thank my noble friend for that Answer and for the encouraging progress that has been made. Can she confirm that this Olympic Truce resolution is a resolution of the General Assembly of the UN, which quite specifically calls on all signatories to pursue initiatives for peace and reconciliation in the spirit of the ancient Games during the London 2012 Games? This year, the resolution will be not only signed but proposed by the United Kingdom Government. Does she agree that it therefore presents a unique opportunity to hand on a legacy from the London 2012 Olympic Games not only in medals won and land reclaimed but in the lives changed and saved and in the health and humanitarian aid extended?
Baroness Garden of Frognal
I thank my noble friend and of course I agree with what he says. He is tireless in his work to achieve successful outcomes for 2012 through the Olympic Truce, which indeed presents a unique opportunity for the UK to lead on proposals for the sort of peace and reconciliation that he suggests. In previous years, these truce agreement proposals have not resulted too often in major outcomes, but that will not prevent us from trying again this year. It will, of course, be for the United Nations to agree policy actions.
Baroness Billingham
My Lords, we must congratulate the noble Lord, Lord Bates, on his tenacity; I think that this is the third or fourth time that we have debated this and we are all becoming much more familiar with it. It is encouraging to hear today a significant change in the Minister’s reply. In the past, however charmingly she has replied, all that she has sent the noble Lord has been a “Dear John”, but maybe things are now changing. Having watched the cricket yesterday, do we not remind ourselves of the potency of sport for peaceful objectives? Having seen Pakistan and India sitting side by side and embracing each other, I wish his project well. I hope that the Minister will continue to use that as an example of sport and peace and the ways in which they can go together.
Baroness Garden of Frognal
I thank the noble Baroness for her kind words in among that. I am not quite sure where the question was, but if it was whether we agree that sport is an excellent forum for international co-operation, the answer is yes, indeed we do. The Government have some major programmes to encourage sport among young people as well as to support our major adult sporting events.
Lord Higgins
My Lords, does the noble Baroness accept that some of the finest athletes in the world, particularly long-distance runners, come from areas that are now troubled by war in one form or another? The idea of the truce was that people in those circumstances could get to the Games. Does she accept that we should do everything possible to ensure that good athletes can do so? Will she also recognise that few athletes remain at the top for more than four years and that if they are prevented from attending they have therefore lost a once-in-a-lifetime opportunity? Not only are they disappointed, but so are the people who hoped to beat them.
Baroness Garden of Frognal
My noble friend speaks from his own experience as an Olympic athlete and of course I agree with what he says. We in the UK will do what is in our power to encourage people from disadvantaged countries to attend and compete in the Games. A great deal of that depends on the response from those individual countries as well but, as I have said, that will not stop us trying.
Lord Low of Dalston
My Lords, what success are the Government having in brokering a truce between the noble Lords, Lord Coe and Lord Moynihan?
Baroness Garden of Frognal
The noble Lord raises an issue that has been in the news just recently. The two organisations that the noble Lords represent normally work closely together for the good of the outcomes of the Olympic Games and I have no doubt that, in the greater interests of delivering a highly successful 2012 Olympic Games, any disputes will soon be resolved.
Lord Faulkner of Worcester
My Lords, does the Minister agree that it would be in the interests of peace and reconciliation if the directors of Tottenham Hotspur Football Club were to abandon their extraordinary attempt to go to judicial review over the legacy issue of the stadium?
Baroness Garden of Frognal
My Lords, Tottenham Hotspur’s decision is probably slightly wide of the Olympic Truce, but I note what the noble Lord says.
Lord Addington
Would it not be good if the idea of a truce were extended by this Government and indeed all our allies to all the major sporting gatherings—world cups, championships and so on—so that those taking part paid some attention to international activity outside? That would be a real legacy to take away and it would not be confined to an event that takes place once every four years.
Baroness Garden of Frognal
I entirely agree with my noble friend. Sporting activities of any sort provide opportunities for co-operation internationally. We recognise that there is a high degree of competition between countries, but that does not alter the fact that there is tremendous camaraderie between sportsmen and sportswomen in any one sport. For them to get to know and befriend their counterparts in other countries can only be to the good in building international relations.
Baroness Heyhoe Flint
My Lords, does my noble friend feel able to mirror the Spirit of Cricket campaign that the MCC has promoted in furthering cricketing causes in Afghanistan, which was promoted originally by my dear late friend Lord Cowdrey?
Baroness Garden of Frognal
My noble friend raises an important point. Once again, the use of the Olympic Truce for these sorts of developments has to go through the United Nations, but inevitably we are hoping to build up programmes with other countries. I mentioned the International Inspiration programme, which aims to bring the benefits of sport to 12 million children in 20 countries. We are trying to expand that; it is an ambitious programme but it might be a feasible one.
Trade Unions: Ballots
Lord Lea of Crondall
To ask Her Majesty’s Government whether they intend to remove the threshold of 40 per cent of the electorate having to vote “yes” in ballots on trade union recognition in order to secure a positive result in addition to a simple majority.
Lord De Mauley
My Lords, the Government have no plans to change the statutory procedure for the recognition of trade unions.
Lord Lea of Crondall
I thank the noble Lord for confirming this double standard. There is a high hurdle—a double hurdle, in fact—for trade unions to jump, but in the Government’s proposals for a radical change to the constitution there is no such double hurdle at all, simply a vote of 17 per cent to 13 per cent or whatever. I have two questions for the Minister. First, given that on 16 February the noble and learned Lord, Lord Wallace of Tankerness, opposed the Rooker amendment on the ground that it would be a deterrent to people turning out because they might not know whether their votes would count, are workers not deterred as well? Secondly, if on 5 May the turnout is 37 per cent, will the Government repeat Mr Clegg’s comment on the Barnsley by-election that 37 per cent was “an abysmally low turnout”, or—surprise, surprise—will they say, “That was astonishingly high”, and that 25 per cent or something like that is a perfectly good basis on which to change our constitution?
Lord De Mauley
My Lords, the two cases are completely different and there is no reason why the balloting arrangements should be the same. The voting constituencies in union recognition ballots, averaging a few hundred, are tiny compared to those of referendums. The workforce concerned is often co-located and can be easily accessed. It is therefore much easier in this case to ensure a large turnout, provided that the workers are genuinely interested in union recognition.
Lord Razzall
My Lords, I am sure that the Minister will find it ironic that the noble Lord, Lord Lea of Crondall, should at the same time be advocating the removal of the threshold in trade union recognition ballots and the introduction of a threshold in the AV referendum. I find that absolutely extraordinary and no doubt the Minister does as well.
Lord Peston
My Lords, I do not think that the Minister has even understood the Question that has been put to him, but consistency and rationality are not exactly hallmarks of the present Government. Does he recall that the threshold amendment that we are talking about was passed in your Lordships’ House on the basis of a full argument? Why is there a different set of criteria here, given that your Lordships voted for a threshold in the first place?
Lord De Mauley
My Lords, I hear what the noble Lord says. I suggest that we have had a fair amount of debate on the subject over recent months and I suspect that more may be occasioned in the future. There is little precedent for thresholds being applied to referendums in the United Kingdom. There was no threshold in the referendums on Scottish and Welsh devolution in 1997, the Belfast agreement or the Greater London Authority in 1998, or in the north-east referendum in 2004. Also, no threshold is specified for mayoral referendums under the Local Government Act, despite very low turnouts having been seen in practice in some cases.
Lord Grocott
My Lords, the Question was fundamentally about whether the Government are adopting a consistent position in respect of determining the validity of a decision. Can the Minister simply explain why, when we are changing the constitution of the country, presumably for a very long time, the Government feel that there is no necessity even for the level of a threshold that is required for the recognition of a single trade union? It seems to most people to be a totally contradictory position.
Lord De Mauley
My Lords, let me say, if I may be so bold, that that was not what the Question was about. The Question was about union recognition ballots. The Government’s position on that is, “If it ain’t broke, don’t fix it”.
Lord Geddes
My Lords, for the avoidance of doubt, is the noble Lord, Lord Grocott, not slightly misinformed? We are not voting for a change in the constitution on 5 May. We are voting as to whether we should have such a change.
Lord Young of Norwood Green
My Lords, this is a complex issue that is probably worthy of a lengthier debate; in seven minutes, even without hesitation, deviation and repetition, we are going to give it only a cursory examination. I trust that the Minister will agree that the seminar at No. 10 this week on encouraging employee engagement, an approach started by the previous Government, is a path worth pursuing. Will he also agree that, during the recent recession, trade unions with enlightened employers agreed to things such as a shorter working week, temporary lay-offs and delayed pay increases to save jobs, using this period also to engage in additional training? Surely the Minister will agree that encouraging constructive dialogue between trade unions and enlightened employers is a much better way forward than trying to restrict trade union recognition.
Lord De Mauley
My Lords, I cannot find anything in what the noble Lord said with which to disagree. I will leave it at that.
House of Lords: Prayers
Lord Roberts of Llandudno
To ask the Chairman of Committees what consideration can be given to widening the scope of House of Lords Prayers into devotions encompassing other Christian traditions and the faiths that are represented in the House.
The Chairman of Committees (Lord Brabazon of Tara)
My Lords, as noble Lords are aware, the Prayers read at the beginning of each Sitting of the House are read by one of the Lords Spiritual. The Lords Spiritual sit by virtue of being representatives of the established church, and the Prayers reflect that. Any changes to alter the Prayers would need to be considered by the Procedure Committee and agreed to by the House. There are currently no plans to alter the arrangements for Prayers.
Lord Roberts of Llandudno
In Wales, we do not have an established church, but is it not time for Prayers in the House, including the present Prayers, to reflect the diversity of the different faiths and denominations that we have not only in the House but in the United Kingdom? Is this not an opportunity for us to consider having a minute of silence and reflection in addition to the Prayers?
The Chairman of Committees
My Lords, the practice of Prayers in the House is believed to have started in about 1558, and was common practice by 1567. The present form of Prayers probably dates from the reign of Charles II. Recent changes to the form of Prayers included allowing a choice from a range of Psalms, which was agreed by the House in 1970, and again in 1979, and one or two other minor changes. It might be a little premature to consider changing them now.
Lord Anderson of Swansea
As a Welsh non-conformist, like the noble Lord, may I assure the Minister that many of us are wholly satisfied with the timeless sentiments and superlative prose of the present Prayers? However, may I ask the Bishops’ Bench to consider one little matter as an act of fellowship and togetherness—that at the end of Prayers we all repeat the Grace, as happens in the other place?
The Chairman of Committees
I would need to discuss the latter point with the Bench of Bishop but I entirely agree with what the noble Lord said in the first part of his question. I do not believe that there is anything in the Prayers which could possibly be seen as offensive to members of other religions.
The Lord Bishop of Ripon and Leeds
My Lords, I hope that we will take on board the point which has just been raised. The noble Lord, Lord Roberts, makes an important point about how the House is to demonstrate its inclusivity while retaining what is good and worthwhile in its living heritage. In this year of celebration of the King James Bible, and its continuing inspiration 400 years on, will the Chairman of Committees comment on whether our Prayers, which date from the same era, also embody virtues which are simple, eternal and unifying?
The Chairman of Committees
I am sure that the right reverend Prelate is right. If there are further recommendations for changes to the Prayers used, I would be happy to look at them.
Lord St John of Fawsley
Does the Chairman of Committees agree that he has expressed the view of most Members of the House, though not all? I agree with him entirely that we must not interfere with the rights of the Lords Spiritual. At the same time, I believe in the idea behind this Question. We can best meet it by respectfully and humbly offering advice to the right reverend Prelates either in private or in public. Is he aware that I have put down a Question for Short Debate which contains the suggestion that we have a debate on the ecumenical movement between different churches and faiths? May I suggest that we have it in the dinner hour as the noble Lord would then be in peril of hearing me speak, which would get him out of purgatory?
The Chairman of Committees
The noble Lord makes some interesting points, but I am not sure that any of them require an answer from me.
Lord Hughes of Woodside
My Lords, I declare an interest as an honorary vice-president of the British Humanist Association. Without commenting on the established church, I will say that my personal preference is that we should not have Prayers at all. If we have to have an opening ceremony in which religion may play a part, will the Chairman of Committees make sure that the views of humanists are properly taken into account?
The Chairman of Committees
My Lords, the noble Lord questions why we have Prayers. It is a strength and a defining feature of the House that its practices are a matter for its own governance. These customs and practices can be altered, but after consideration by the Procedure Committee and then by the House as a whole. I remind noble Lords that attendance at Prayers is voluntary, not compulsory.
Lord Elton
My Lords, may I assure my noble friend that the concerns of humanists are entirely met by prayers by Christians in this Chamber every day?
Lord Clark of Windermere
Does the Chairman of Committees accept that there is a feeling that we need to move forward on this? Perhaps I might suggest that we bear in mind the sentiments best reflected in Hymn 279 in the Primitive Methodist Hymn Book, which begins:
“When wilt Thou save the people?
Oh God of mercy, when?
Not kings and lords, but nations,
Not thrones and crowns, but men!”—
and I include women in that.
The Chairman of Committees
I am grateful to the noble Lord for informing me of the contents of that hymn, but I am not entirely sure I agree that it is the sentiment of the House that we should move on this matter.
Lord Elystan-Morgan
The noble Lord has properly reminded the House of the traditions of its ancient past. However, with regard to the immediate future and the anticipated reform of the House, can he confirm that there have been consultations with the representatives of Christian denominations other than the Church of England, and indeed on a wider basis, with regard to the future composition of spiritual representation?
The Chairman of Committees
My Lords, I thought that we might come to the arguments about reform of the House. I am pleased to say that I have not taken part in any consultations on reform of the House. I understand that we will see proposals for reform fairly shortly. It will then be in matter, if and when there is a new House, for that House to decide whether it wants Prayers and, if so, what form of Prayers it wants.
Lord Cormack
My Lords, I am sure that the noble Lord, Lord Anderson of Swansea, spoke for many of us when he endorsed the present form of Prayers and made the plea for the Grace to be said together. However, will my noble friend agree that many in this House who are not of the Christian faith, such as my noble friend who sits beside me who is a Hindu, warmly welcome the sentiments contained in the Prayers and the majesty of the language in which they are uttered?
The Chairman of Committees
The noble Lord is absolutely right. I tried to give that impression in an answer I gave earlier.
The Earl of Sandwich
My Lords, may I suggest to the Chairman of Committees that we introduce variety in the Collects? There is a wonderful range of Cranmer Collects. Could he say how the committee represents the church's views? Is there a permanent member of the committee from the church?
The Chairman of Committees
My Lords, the noble Earl wrote to me about the possibility of using different Collects. I have the matter in hand and I will come back to him in due course, after I have consulted the Bench of Bishops.
EU: European Financial Stabilisation Mechanism
(13 years, 7 months ago)
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Lord McAvoy
To ask Her Majesty’s Government what discussions took place between the then Chancellor of the Exchequer, Mr Alistair Darling, and his successor, Mr George Osborne, before the decision was taken to join the European Financial Stabilisation Mechanism on 9 May 2010.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, the European financial stability mechanism was created following agreement by a qualified majority of member states at ECOFIN on 9 May 2010. All contact between the Treasury and the then opposition parties in that period followed the agreed Cabinet Office guidelines for the 2010 general election. Both my right honourable friend the Chancellor and the previous Chancellor set out their accounts of the discussions in their written evidence to the Political and Constitutional Reform Committee.
Lord McAvoy
My Lords, I thank the Minister for his Answer. Which of the two following positions is correct—David Cameron saying that George Osborne objected to joining the mechanism or Treasury Minister Justine Greening, who signed the document, saying that cross-party consensus had been gained?
Lord Sassoon
My Lords, they are both correct. It may be helpful if I explain the situation a bit further. The discussion on which there was consensus concerned the process that would apply at the ECOFIN meeting on 9 May. There was no consensus on the question of the underlying policy matter. As my right honourable friend the Chancellor said in his written evidence to the Political and Constitutional Reform Committee:
“The purpose of the phone call was not to reach agreement, but for Mr Darling to consult me on the course of action he proposed. Given he was still Chancellor of the Exchequer at that point, representing the UK in a dynamic negotiating environment, it was for him to reach decisions. He did this, aware of my views”.
That is the evidence of my right honourable friend the Chancellor.
Lord Lawson of Blaby
My Lords, can my noble friend confirm that, whatever precisely may have happened on that regrettable occasion in the recent past, so far as the future is concerned there is firm agreement between us and the European Union that, when the present mechanism is replaced by a new mechanism in a couple of years’ time, we shall not be part of or bound by that new mechanism?
Lord Sassoon
My Lords, I am grateful to my noble friend Lord Lawson of Blaby, who, as is customary, brings us back to what is really important. I can absolutely confirm what he says. At the European Council on 17 December 2010, this Government did what the previous Government failed to do, which was to get agreement that there would be an amendment to the treaty that would achieve a permanent mechanism to be established by the member states of the euro area to safeguard the financial stability of the euro area as a whole. Therefore, it is indeed correct that, as of 2013 at the latest, the United Kingdom, being outside the euro area, will not be part of this mechanism. That is the critical point, which I can confirm.
Lord Davies of Oldham
My Lords, I agree that this is an important point of public policy. However, it should be appreciated that there is a significant matter at stake, because my right honourable friend Alistair Darling appears to have been accused by the Prime Minister of acting out of faith as far as the present Government are concerned. The document signed by Justine Greening, the Economic Secretary and therefore answerable to the Chancellor, related to the legislation. It is headed “Explanatory Memorandum on European Union Legislation” and the last paragraph is as follows:
“It should be noted that whilst agreement on behalf of the UK was given by the previous administration, cross-party consensus had been gained”.
Is an apology not due to my right honourable friend, who acted entirely properly and consistently with this note?
Lord Sassoon
No, my Lords. No apology is due. I have already tried to make it clear, but let me make it absolutely clear again. Consensus was reached on the process by which the ECOFIN qualified majority voting meeting would take place. That, as has also been made completely clear, is quite a separate matter from my right honourable friend the Chancellor making clear his position on the underlying policy matter. The two matters are distinct. The decision on the policy matter was for the then Chancellor, Mr Alistair Darling. He was the Chancellor at the time and he took the decision.
Lord Newby
In view of the stress tests on the Irish banks that were recently announced, will the Minister confirm that any further support that the Irish banks might need via European mechanism facilities that are already in place will not require any additional funding from the European financial stability mechanism?
Lord Sassoon
I am grateful to my noble friend Lord Newby for again bringing us back to important current matters. The results of the Irish banks’ stress tests, as I understand it, will be released by the Central Bank of Ireland at 4.30 this afternoon, so it would be inappropriate to comment on them. Of course, the Irish authorities have consulted Her Majesty’s Treasury, the Bank of England and the FSA about the impact of bank restructuring, and the Government expect that the forthcoming announcement will remain in line with the broad principles of the support package provided to Ireland. I would just add that the Government have made clear their commitment to ensure that the Northern Ireland banking sector continues fully to meet the needs of businesses and consumers in Northern Ireland.
Lord Pearson of Rannoch
In view of what the noble Lord has said, whatever Mr Darling and Mr Osborne may have said to each other is entirely irrelevant because the Commission had the nerve to bring forward the mechanism under a clause in the treaty—in fact, the clause is to allow member nations to help one another in natural disasters—which is decided by majority voting in the Council. Therefore, the British Government had no hope of avoiding our 14 per cent share of £50 billion, which we can ill afford at the moment.
Lord Sassoon
My Lords, without rerunning previous discussions with the noble Lord, Lord Pearson of Rannoch, on the precise interpretation of the articles, the critical thing is that under the agreement reached at the European Council on 17 December, and very much led by my right honourable friend the Prime Minister, it is clear that Article 122(2) of the treaty will no longer be needed for purposes of support in this form. Without debating what has happened in the past, let me just say that my right honourable friend at the European Council has secured complete clarity for the future.
Business of the House
(13 years, 7 months ago)
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Lord Strathclyde
That the debate on the Motion in the name of Lord Hollick set down for today shall be limited to three and a half hours and that in the name of Lord Turnberg to two hours.
Draft Defamation Bill
The Chairman of Committees
That the Commons message of 28 March be considered; that a Committee of six Lords be appointed to join with the Committee appointed by the Commons to consider and report on the draft Defamation Bill presented to both Houses on 15 March (Cm 8020); and that the Committee should report on the draft Bill by 19 July 2011;
That, as proposed by the Committee of Selection, the following members be appointed to the Committee:
L Bew, L Grade of Yarmouth, B Hayter of Kentish Town, L Marks of Henley-on-Thames, L Mawhinney, L Morris of Aberavon;
That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;
That the Committee have power to send for persons, papers and records;
That the Committee have power to appoint specialist advisers;
That the Committee have leave to report from time to time;
That the Committee have power to adjourn from place to place within the United Kingdom;
That the reports of the Committee from time to time shall be printed, regardless of any adjournment of the House;
That the evidence taken by the Committee shall, if the Committee so wishes, be published; and
That the Committee meet with the Committee appointed by the Commons on Monday 4 April at 4.00 pm in Committee Room 6.
Civil Contingencies Act 2004 (Amendment of List of Responders) Order 2011
(13 years, 7 months ago)
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Lord Strathclyde
That the draft orders and regulations be referred to a Grand Committee.
Economy: Growth
(13 years, 7 months ago)
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Lord Hollick
To call attention to the case for policies to support economic growth and to promote investment, innovation, technology, infrastructure, skills and job creation; and to move for Papers.
Lord Hollick
My Lords, today’s debate on growth draws on the impressive range of experience and knowledge in our Chamber. We have five maiden speeches to look forward to—from the noble Lords, Lord Kestenbaum, Lord Wood, Lord Collins and Lord Popat, and the noble Baroness, Lady Worthington.
One of the keys to growth is productivity, and in today’s time-constrained debate, although gratefully somewhat extended, that means saying more in less time. I will do my best. I do not wish to rehash the debate about the pace of the fiscal consolidation adopted by the Chancellor. That was discussed at length last week. Putting the public finances on a sound and sustainable footing after the financial crisis is an essential first step towards recovery, but we cannot cut our way out of our economic problems. We also need a credible strategy for growth, because growth matters. Small changes in the growth rate over the next few years can undermine the Chancellor’s deficit reduction plan, and if he chooses to stick to plan A that might well lead to even deeper and more damaging cuts. Low growth in the short term will make big differences to our standard of living in the long term.
A reduction in our long-term growth rate from 2.5 per cent to 1.5 per cent would reduce aggregate growth over the next 20 years by nearly 30 per cent. A prolonged period of low growth would inflict a decade of stagnation, a loss of international competitiveness, a sharp deterioration in public services and a generation of jobless young people. The Government now acknowledge this and have begun to turn their attention to growth. Growth in our economy is currently anaemic, and we still have the full impact of the cuts to come, with their inevitable blow to consumer and business demand and confidence. Food and fuel prices are rising, and the Japanese economy has been badly hit. Against that background, the risk to the OBR’s forecast is very much on the downside.
The Plan for Growth, published with the Budget, is a welcome document, and so are many of the measures announced in the Budget to promote growth. The plan is the latest in a long line of efforts to improve our economic growth rate, stretching back to the work of Neddy in the 1960s. Indeed, my noble friend Lord Layard and I are veterans of the 1996 Commission on Public Policy and British Business report, entitled Promoting Prosperity. What is striking about this 50-year body of work is that, after allowing for the impact of greater globalisation and the emergence of new technologies, there is a remarkable consistency of analysis, findings and proposed remedies. Underinvestment, low productivity, inadequate skills, lack of availability of finance and over-burdensome regulation are ever-present themes. This consistency points to the deep-rooted nature of the problem and the sheer difficulty and complexity of raising the growth rate in a developed country in a highly competitive world economy.
Another lesson from past growth initiatives and plans is the overriding importance of excellent and consistent implementation and execution of policy measures. Too often, Governments chop and change, introducing new wheezes which have a short-term political impact but fail to provide the consistent and predictable environment that business needs. Much is promised, but little is delivered.
Improving productivity is a key driver of growth and has rightly been a priority in all plans. Yet, despite a good relative performance over the past 15 years, UK productivity per hour is some 17 per cent lower than the US and 10 per cent below that of Germany. Our services sector, the largest driver of jobs growth, responsible for 65 per cent of private sector output, accounts for much of that productivity gap. Improved skills, not least management capability, greater innovation and improved levels of investment are necessary preconditions to improving productivity.
The Budget brought some notable changes to planning and important clarity on tax treatment of overseas profits, but only limited deregulation. Some old friends reappeared. Enterprise zones, despite their very modest record and short-term impact, are back in fashion. Better, surely, to make the whole of the UK an enterprise zone with time-limited measures to promote enterprise, investment and business formation. If the Government really believe in localism, allow our cities to introduce their own set of policies to attract investment, to develop clusters and to meet local training needs. Business and investors partner with cities around the world, and would welcome the opportunity to do so in the UK.
While that deregulation is promised, other parts of the Government are busy undermining proven ingredients of our success. The creative sector, where I spent much of my career, accounts for more than 7 per cent of GDP, and relies on the steady supply of richly talented individuals. That does not happen as a course of nature. The likes of James Dyson, Paul Smith, Ridley Scott, Simon Rattle, Keith Richard and Alexander McQueen all went to art school, where the wild and the wacky creative talents can flourish. Art schools have had significantly to up their intake of overseas students to make ends meet. That, and the high level of fees, risks choking off the very supply of talent, often from disadvantaged backgrounds, that we need to remain a world leader.
Reductions in the level of taxation on profits and an increase in the level of tax incentives to invest are guaranteed a very warm welcome, but have they been targeted effectively? In the light of the need to boost investment, I would favour tax breaks on investment rather than a faster reduction in the overall rate of corporation tax. Why does investment in capital goods receive favourable tax allowance treatment, when intangible investment in process improvements, creative ideas, skills and IT, all of which drive innovation and productivity and in many businesses are the most important components of growth, are disadvantaged? In addition to their aim to achieve simplicity in tax matters, the Government should also adopt the principle of neutrality.
The UK has long been a laggard in capital investment. Last year, investment sank to 15 per cent of GDP, down from a 30-year average of 17 per cent, compared with 19 per cent in Germany and 21 per cent in France. Two particular areas of underinvestment stand out: infrastructure and energy. In its report last November on growth priorities, the McKinsey Global Institute estimated that the UK needs to spend £350 billion on transport over the next 20 years to renew our strategic network of roads, railways and airports to expand capacity and help to close the productivity gap. A further £170 billion is required over the same 20-year period to renew our energy infrastructure. It is therefore regrettable that the Government have gone for a quick political fix on fuel duty by clobbering the oil companies and thereby putting the oil companies’ investment plans at risk.
The Government currently enjoy exceptionally low long-term borrowing costs and should and must be at the heart of this vast infrastructure investment programme. But here we come up against a persistent and wretched piece of Treasury dogma, which dictates that, unlike in most OECD countries and contrary to the rules operating in the European Union, all borrowing by the Government, even if it can be serviced from cash revenues, must be included in the PSBR. Of course, borrowing that has to be financed through future taxation must be included, but if the return exceeds the cost of borrowing, the borrowing should not count towards the PSBR. As my former colleague at the IPPR, Gerry Holtham has pointed out, a state infrastructure bank could turn the PFI model on its head and provide loan finance for the construction of a road which could then be leased to the private sector in return for a rental income which can service and repay the debt. Road usage forecasting is sufficiently robust to enable the risk to the taxpayer of default to be covered by an appropriate guarantee charge, which should be included in the PSBR.
The income to finance the renewal of our road network will flow from the long overdue introduction of road pricing, which can easily be deployed using the vehicle number plate recognition system that works very effectively in London. Charging consumers for the use of expensive public assets is a fact of life in most countries, but in the UK, the very threat of it leads to a serious outbreak of jitters in the Government. I have advocated its introduction to Ministers in this Government and their predecessor and have always been met with an enthusiastic response to the idea but a terror at having to take responsibility for its introduction. The very severe challenges we face require boldness and courage from the Government. Timidity simply will not do.
Road pricing is but one example of how Governments can open up new markets and foster demand without recourse to the Exchequer. This Government and their predecessors have been quietly and impressively working, using administrative and legal powers to create new markets in the energy sector. Feed-in tariffs and the upcoming Green Deal are two such examples. The costs of the solar panels installed under the feed-in tariff scheme are largely borne by the total population of electricity consumers. The Green Deal is likely to see a range of energy-saving technology installed in homes, paid for by loans from electricity suppliers, which will be paid out of fuel-cost savings. The green mortgage thus created will attach to the property until repaid, regardless of who the owner is. Both schemes will create many jobs quickly, boost the economy and encourage product innovation and manufacturing. Another more conventional idea floated by the Secretary of State at the Department of Energy and Climate Change just before the Budget, which sadly did not survive the Treasury cull, was to lower the rate of VAT to 5 per cent for a limited period for home refurbishment and repairs up to a limit of, say, £20,000. This would have created many new jobs quickly, improved the housing stock and brought some cash transactions that are currently not in the VAT net back into the VAT net—all at a modest cost to the Exchequer. Perhaps the Secretary of State’s suggestion is being held back for next year’s Budget.
Another opportunity to stimulate a market and create demand at no cost to the taxpayer is the provision of sophisticated healthcare technology to the home that can be monitored remotely and that will allow the elderly and infirm to remain safely and happily in their own home and to delay or avoid the expensive option of a care home. This could be financed out of existing local authority budgets.
Ready access to finance is the sine qua non of growth. SMEs complain about the lack of availability of loan finance and the steep cost of loan renewal. Project Merlin might help but needs to be very closely monitored. Many SMEs are held back by a lack not of loan finance but of capital, and while there are welcome increases in the EIS and VCT allowances for early-stage companies, the threshold levels are set far too low to help the one sector of our economy that can create the majority of new jobs that we so badly need. Again, timidity seems to have won out.
The Plan for Growth reminds me of my school report—“a worthy and promising start, but much, much more needs to be done”. The OBR’s judgment was more dismissive; it saw insufficient evidence that The Plan for Growth would do anything to raise long-term growth. I anticipate that your Lordships will identify today many ideas and opportunities that will help us to improve on that position.
Lord Higgins
My Lords, it is a pleasure to follow the noble Lord, Lord Hollick, and I congratulate him on obtaining this debate. He certainly made a very thoughtful speech. It is interesting that he presented no alternative to the Government’s views; rather, he presented a series of ways in which the present policy could be enhanced. Each of the items that he mentioned deserves careful consideration.
As the noble Lord pointed out, we had an opportunity last week to consider cuts and the rate and extent of them. I remain firmly of the view that the Government are doing the absolute minimum required to get the economy back on an even keel, because, as the OBR report and the Red Book make very clear, even at the end of the five-year period, despite all the cuts and the tax increases, the actual amount of debt will have gone up rather than fallen. The longer one delays in taking action, the bigger the amount that you eventually have to pay off in total.
Perhaps I may make another point. As the noble Lord also rightly points out, the time available for debate today has been extended, but it is still down to four minutes per speaker. It is very difficult to deal with the points that he has made in a speech of four minutes. We should seriously consider whether a really extended debate in the Moses Room in which we could go into the OBR’s report in depth, because it is a very good report indeed and raises a number of issues, would not be more to the advantage of the House than time-limited debates on the Floor of the House.
I distinguished last week between two ways in which the expression “growth” may be used. It may be used to represent the fact that existing spare capacity is being used up more and therefore there is growth, or it may be used to represent increasing the underlying productive potential, which the noble Lord largely concentrated on. The course which the OBR is setting in gradually mopping up that excessive capacity—it anticipates that the end of the cycle will come in about 2016—is the right way to go. That is very similar, I feel bound to say, to what was attempted back in the early 1970s, although unfortunately that was wrecked by a massive increase in import prices. We are faced with the same problem. It was stigmatised as a dash for growth. I do not think what we are now proposing is that, nor do I think that it was then. What we have to do is get a steady increase in the amount of demand in the economy.
As regards the underlying productive potential, certainly we need to have more investment but we also need more saving. The reality is that those who have saved prudently, particularly those on low fixed incomes such as my former constituents in Worthing, find that their savings have been seriously attacked. It is very difficult to think why anyone should save at the moment, given that it is virtually impossible to get a real rate of return on savings. Therefore, as far as the productive potential is concerned and the Keynesian relationship between saving and investment, I would very much hope that the Government will now take further steps to increase the level of saving and give some real incentive for savers in the sense of an actively positive rate of return.
I find that I am already out of time and I have a speech for about the next two hours. Alas, I shall resist that temptation. None the less, the noble Lord has got the debate off on a very sound footing and I look forward to hearing what follows.
Lord Newby
My Lords, I thank the noble Lord, Lord Hollick, for introducing this debate and I very much look forward to all the speeches, not least the maiden speeches. In my short time, I should like to say something about manufacturing. It seems to me that we have a unique opportunity to see growth in this sector. In a sense, the bankers have done manufacturing a favour in that banking no longer has the kudos, nor appears to many young people, I suspect, to be quite the wonderful career that it did.
There is no doubt that within and among young people there is a huge interest in this sector. I have done some work with the F1 in Schools and Greenpower charities, both of which set engineering tests for schools to enable children to get a taste of engineering and to promote engineering as a rewarding career. There is no doubt that the enthusiasm with which these programmes are taken up demonstrates a very large interest. Demand for engineering as a career is not a problem.
The issue is how we should put the structures in place to enable young people to take it up easily. I should like to commend two initiatives in the Budget. The first is the university technical colleges, which will promote vocational training. This area has been consistently underplayed. Many educationalists say that children should not specialise at an early age but my work with organisations such as the Prince’s Trust and SkillForce persuades me that for many children a vocational route is clearly what they want and is apparent at a relatively young age. Anyone who wants to see a case study should read the autobiography of Stuart Pearce, the under-21 England manager. He was hopeless academically but was a terrific electrician, which is what he did before he went into football. Many children know at a relatively early age that they do not want to study many academic subjects but that they are really interested in vocational subjects.
Secondly, this Government have increased the number of funded apprenticeships in the previous Budget and in this Budget by 125,000, which is very welcome. The challenge is on the private sector to take them up now that they are available. The manufacturing sector having been keen to ask the Government for additional support for apprenticeships, the ball now is in its court. I hope that the Government will press it hard to make sure that these apprenticeships are taken up.
Another issue promoted in the Budget which the sole voice of the noble Lord, Lord Bhattacharyya, has reminded us about over the years in your Lordships’ House is the value of promoting high-value manufacturing via partnerships between the industry and universities. The decision to promote and to support high-value manufacturing, technology and innovation centres—surely that is the least elegant phrase among all the acronyms that the Government have come up with—is extremely welcome. The first, in Sheffield, on its own will generate 400 jobs and will enable the specialist engineering sector in that area, which Boeing and others have supported, to flourish further.
More generally, I have considerable sympathy with the proposals of the noble Lord, Lord Hollick, for investment. We support road pricing and I would support the proposal which I am sure the noble Lord, Lord Skidelsky, will be speaking on: a national investment bank. The Treasury will argue against many desirable things. That should not be a reason for our not doing them. The noble Lord, Lord Hollick, said that at this point we should be bold and that timidity will not do. We need to tell the Treasury that, as well as everybody else.
Lord Kestenbaum
My Lords, I begin by expressing gratitude for the generosity and warmth with which I have been received into your Lordships’ House. I have experienced kindness and consideration from everyone I have encountered. I have also discovered that the wisdom residing in this House is quite extraordinary. My sponsors, my noble friends Lord Sainsbury and Lord Puttnam, did much to ease my nerves, and the dedicated staff have been a remarkable source of guidance—in one case literally, as a distinguished doorkeeper gently stopped me from walking straight into a broom cupboard on my very first day here.
Perhaps this challenge of losing and then regaining one’s bearings is an appropriate personal metaphor. As my family name, Kestenbaum, indicates, home until the traumas of the 20th century was Germany. Leipzig and Frankfurt were our origins. At the time when Europe turned dark, our family, together with millions of endangered others, fled. It was a circuitous route, first to the United States and then to Japan, where I was born, then back to the US, and finally, as a child, to Britain. It was here that our community learnt that this country did not expect you to make a choice between loyalty to one’s faith and loyalty to the national interest while both are pursued with dignity.
But as I enter into this debate on economic growth, it is no coincidence that I should reflect on the two economies in which I grew up: Japan and the United States. My parents, while bringing up a young family in Japan, saw at first hand what has since been dubbed the Japanese economic miracle, a transformation in the standard of living powered by growth. But the lost decade of the 1990s, as it became known, is yet to be found. The United States, our family’s pre-war refuge, became the world’s largest economy not least by virtue of new technologies which saw GDP per head grow sevenfold in the 20th century. But despite this, more recently President Obama has said that the US economy, in order to grow, will need to reach a level of innovation not seen since the space race. So I am grateful to my noble friend Lord Hollick for calling urgent attention to this matter. We are now learning the same lesson as those other economies—that growth is not a national birthright, and the heady days when economic power was concentrated in the hands of a few are over.
In recent years my colleagues and I have been privileged to back some of Britain’s brightest young entrepreneurs. During my time as CEO of NESTA, and now as chief executive of Lord Rothschild’s family investment interests, we have scrutinised thousands of business plans and met hundreds of young high-tech innovators; and I have watched their concerns, particularly among a group of young entrepreneurs in Manchester with whom I worked closely. Those talented graduates did not just want to build new businesses, they wanted to feel that the embrace of new ideas and new technologies was central to our national purpose. The prize is great. Research published last week by NESTA entitled Vital growth shows that these fast-growing, innovative businesses continue to punch way above their weight, with just 7 per cent creating half of the new jobs. As your Lordships consider ways to increase this number, we might also consider the lessons of those Mancunian entrepreneurs. Innovation has to be embedded in our culture—it must be central to the national story.
This national culture of innovation so often provokes false choices, either a constant flurry of well-intentioned interventions or staying firmly out of the way. After all, say some, Thomas Edison did not need state aid to create the incandescent lamp—a lot of pluck and a little luck was all it took, so the argument goes. Yet an economic culture that produced innovators like Edison and others did not emerge by chance. Edison benefited from a postal service, new roads, public libraries and a stable banking system. All these were the public goods that made innovation flourish and showed how economic growth is built on a tapestry of skills, science, finance and regulation all working in tandem.
So often this interplay takes place where one might least expect it. Many of the high-tech entrepreneurs that I have worked with in recent years took their inspiration from Silicon Valley. The conventional wisdom is that, “There’s an economy entirely sustained by individuals”, and yet, subtle and intelligent public policy is everywhere in Silicon Valley. Defence spending funded a generation of microwave technology there that created the foundations for the semiconductor industry; the procurement strategies of DARPA kick-started hundreds of technology businesses. This combination of technological talent, supportive public policy and effective financing mechanisms is at the heart of great innovation economies.
This debate focuses quite rightly on the conditions for economic growth, but perhaps I may make one final, wider observation. Growth as a public policy imperative can do much: it can create jobs; it can reduce welfare dependency; it can over time help finance public services—it can do all these things at its best. But rapid economic growth simply for the relentless pursuit of wealth alone will do nothing for the long-term health of our nation. Economies never measured progress by the yardstick of growth in isolation, but, rather, how that growth made for a better society. So this debate, I suggest, is as much about the society that we wish to build as it is about the economy which will help build it.
I offer thanks to your Lordships’ House for giving me the opportunity to make my maiden speech on a subject that I feel will underpin many of our concerns in the months ahead.
Lord Bilimoria
My Lords, what a privilege it is to follow the absolutely superb maiden speech of the noble Lord, Lord Kestenbaum. This is a debate tailor-made for his Lordship. He has hit the ground running, showing the invaluable input that he will bring to this House, particularly in the field of innovation and enterprise where he has had huge experience. He made his mark in this country as the former CEO of NESTA, the National Endowment for Science, Technology and the Arts, the largest endowment in the UK, fostering innovation, and the country's biggest source of seed finance for technology start-ups.
Our House is renowned for its wisdom, and, of course, it follows that there is a certain maturity of age among our distinguished Members. With Jonathan, we have someone so young and yet with so much varied global experience which he will bring to bear here, having worked as a venture capitalist, having been the chief executive of my noble friend Lord Sachs’ Office of the Chief Rabbi and with his involvement in the arts and in higher education. He may very well have walked into one of our broom cupboards, but he has certainly made a grand entrance today and we look forward to many future contributions.
I thank the noble Lord, Lord Hollick, for securing this crucial debate. Last week's Budget had so much that was music to the ears of the entrepreneurial community: encouraging start-ups; increasing the entrepreneurs’ relief limit; and the setting-up of enterprise zones—and, let us not forget, had it not been for enterprise zones, we would not have Canary Wharf today. The support for apprenticeships is tremendous, although I am yet to be convinced about the university technical colleges concept. StartUp Britain is terrific; however, we must remember that, as the noble Lord, Lord Kestenbaum, referred to, and as Professor Colin Mason has pointed out, 6 per cent of UK businesses with the highest growth rates generated half the new jobs created by existing businesses. Professor Mason tells us:
“The UK’s problem is the lack of high-growth firms”—
the gazelles—
“which go on to be ‘companies of scale’, rather than not enough start-ups. We need quality, not quantity”.
The reduction in corporation taxes is great news, but as the Chancellor said:
“high tax rates can do real damage … They crush enterprise, undermine aspiration and often undermine tax revenues”.—[Official Report, 23/3/11; Commons, col. 957.]
Those were the Chancellor’s words. The sooner the 50p tax rate is abolished, the more attractive Britain will be and, in fact, the tax take will go up. As for a property tax, this will take us back to the dark ages. I hope that this idea will be quashed before it can even get off the ground.
I am president of the UK India Business Council, supported by UKTI. At our annual summit in Manchester this month, the Indian High Commissioner, His Excellency Nalin Surie, said of India: “Our growth is your opportunity”. Yet British business is scratching the surface. We need to do much more to encourage British business to go global, particularly to countries such as India.
I have voiced my concern about the drastic cuts that the Government are making. Of course, we need to make savings, but it is what you cut that matters, and you do not have to cut everything. For example, cutting so severely investment in higher education will really harm this country. This, combined with a crude immigration cap, is seriously hampering higher education and business. We need to encourage growth and to keep investing in our infrastructure.
I have just returned from a business delegation hosted by the Emirate of Dubai, and in spite of all the problems that that country has experienced recently in terms of debt and a huge property crash, it is continuing to benefit from the phenomenal investment in world-class infrastructure and becoming a world-class hub in the region as a result of that investment, attracting 10 million tourists a year as well as trillions of dollars investment into Dubai.
This year I graduated from my nine-year president's leadership programme at Harvard Business School— I suppose that I am a slow learner. My study group presented me with a wonderful book, The Rational Optimist. Of course, I hope that they were referring to me. With all Britain's problems today—high inflation, low growth, high unemployment, a giant deficit, huge debt and far too high public spending—we are still one of the most open economies in the world. We still have so much of the best of the best in the world, be it advanced engineering, higher education or science. Only this week it was announced that Britain is in the top three in the world in the publishing of science papers—ahead of France and Germany. I bet that by 2050, the giants of India and China will be the two largest economies in the world, but I also bet that this tiny country will still be in the top 10.
Lord Popat
My Lords, it is with a great sense of honour and privilege that I speak for the first time in your Lordships’ House.
I am grateful to all noble Lords, and to the staff of the House, who were particularly helpful in allowing my Guru Moran i Bapu to witness my introductory ceremony in the Chamber. It is his teachings of truth, love and compassion that are the guiding principles of my life. His presence was in itself an historic occasion, as no Indian spiritual leader had ever attended this House to witness such a ceremony, and for me it was a great honour.
As some of you may know, I was born in Uganda and came here at the age of 17 under very difficult circumstances. In January 1971, I accompanied my father to drop my sister at Entebbe Airport, from where she was flying to study in the UK. At the stroke of midnight, the army of Idi Amin, the then dictator of Uganda, took control of the airport and ordered all flights to be cancelled.
Our family knew that our time in Uganda was limited, and in May of that year I moved to Britain, working in a Wimpy bar. The following year, Idi Amin expelled 30,000 Ugandan Asians, ordering them to leave within 90 days. They left behind a prosperous past and walked towards an uncertain future. I would like to thank the Conservative Government then led by the late Sir Edward Heath, who, along with a number of voluntary organisations, helped my fellow Ugandan Asians in our hour of need. We have never forgotten this lifeline that we were given, and I am proud to say today, 39 years on, these very same people are some of the most hard-working and patriotic in the country.
The powerful emotions that I feel today are simply explained. This country can boast that here, in Britain, people in genuine need of refuge can find a safe home, live in peace and rebuild their lives. If that was not enough, we were given the same rights as those who were born here, including the right to vote, which is a gift that we particularly cherish, yet that right is superseded by the privilege of joining your Lordships' House. From what I have witnessed in your Lordships’ House, and what I have learnt during the last 40 years, Britain's tolerance, decency, fairness and justice are its finest qualities. It is testimony to the tolerance and generosity of this country that the Hindu community is explicit in being proud to be British and proud to be Hindu, seeing no contradiction between the two. On the contrary, it is a mutual reinforcement.
I decided to take the title of Lord Popat, of Harrow, because for 30 years I have been a member and am now president of Harrow East Conservative Association. My parents lived in Harrow and I see this as a tribute to them, to whom I owe everything. My only regret is that they are no longer here to share this with me.
Over the past 40 years, the Ugandan Asians who came here as refugees have played a very successful role in Britain’s economy and are now a central part of Britain’s economic fabric. After training as an accountant, I myself have run my own business—and this brings me to the topic of today’s debate. The past decade of government reminds me of President Reagan’s pointed insight into the Government’s view of the economy:
“If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidise it”.
It is about time we broke this cycle.
Our difficulties are bank borrowing, a complicated tax system, endless employments regulations and a planning system recently described by the noble Lord, Lord Wolfson, as glacial. Small businesses are responsible for six out of 10 jobs in the UK. They are the engines of economic growth, and last week's Budget saw a series of welcome announcements, including the commitment of no new regulations on firms with fewer than 10 staff for three years, and the simplifications of the tax code. This will help to create new jobs, growth and prosperity, and I look forward to doing all I can to assist the Government in furthering this agenda.
Lord Hamilton of Epsom
My Lords, we have heard two maiden speeches, which have gone to remind us all of the richness and variety of the membership of your Lordships' House. We are very privileged to have with us the noble Lord, Lord Kestenbaum, with his experience of the Japanese and the US economy, which are two very different economies from our own. I think it is also true to say that he is extremely proud of his Jewish blood. We should pay tribute to the Jewish immigrants who come to our country, who have done so much to make it move forward and have shown so much enterprise, which has made us the country we are today. I declare an interest as I have a certain amount of Jewish blood myself on both sides—but unfortunately not enough.
I also pay tribute to my noble friend Lord Popat. I spent a certain amount of time in east Africa, in Kenya rather than Uganda, and I know the massive contribution that was made there by the Asian community. Of course, it was a tragedy for Uganda when Idi Amin decided to kick it out. There was a terrible moment here when we hesitated before actually agreeing to allow those Ugandan Asians to come to this country. What a good thing we did. Uganda’s loss was certainly our gain. Once again, we benefited from incredibly entrepreneurial immigrants who played a very massive role in the growth of our economy and the movement of our enterprises. My noble friend is, indeed, very welcome in our House, and we are very lucky to have him here.
I congratulate the noble Lord, Lord Hollick, on launching this debate. I was extremely glad, as my noble friend Lord Newby was, that he raised the whole issue of road pricing. Road pricing is certainly something that should be embraced by our Government. It has the effect of actually getting motorists to contribute to the costs of the driving which they do, but I can understand why the Government are hesitant. The motoring community is certainly one that Governments rather hesitate before they antagonise them. But I think that this is the way forward, and I hope serious consideration will be given to road pricing. We have to be very brave if we are going to do it, and we have to price existing roads to pay for future roads. I totally accept the noble Lord’s point that technology has now moved on and has made this possible.
I would like to address the question of what I would describe as the phoney war about the whole business of deficit reduction. There is a concept being put forward by the shadow Chancellor, Ed Balls, that somehow there is a rather easier way of addressing the deficit. There is a suggestion from the Labour Party that if by some extraordinary circumstance it had actually won the last election it would have stayed with the Budget of the former Chancellor, Alistair Darling. I do not think there is the slightest chance of that happening whatsoever. If we had a Labour Government today, in total or global terms their deficit reduction plan would be very similar to the one that this Government are putting forward. If they had been in power Labour, too, would have taken £6 billion-worth of savings in the current year. It is a complete load of nonsense to suggest that there is somehow an easier way of approaching deficit reduction when the problems that we have are so massive. The reason for that is that although Chancellors love to pretend that they are in total control of the economy, the bottom line is that they are not. The people who have massive influence on our economy are those in the markets.
If we had gone ahead with the Darling Budget and had done nothing to change it, we would now be paying much higher interest rates than we are on our debt. That would merely roll forward the problems that we now have of increasing debt. This is one of the sadnesses that I have with the Budget which we have just seen: we are watching the total amount of government debt climb, in the OBR’s forecast, from £759 billion in 2009-10 to £1,359 billion at the end of the Parliament. I would like to see us repaying debt. It is very sad that we are going to inflict this enormous burden of debt on future generations.
Lord Wood of Anfield
My Lords, it is a privilege to be standing before you today. In particular, I am proud to be representing the cause and interests of redheads from across the political spectrum. I pledge to stand up for this minority in the years ahead. As an academic, my experience of public speaking has largely been limited to university lecture halls. I was given three tips by an academic colleague before my first lecture that I have obeyed religiously ever since. First, always insert a joke just after halfway through to wake your audience up if they are in danger of falling asleep. Secondly, never distribute your hand-out before you begin speaking or else your audience will pick it up, walk out and get a cup of coffee instead of listening to you. Thirdly, like Cicero, always make your points in groups of three. This advice has stood me in good stead and I pledge to repeat this formula during my contributions to the House in the years ahead.
I have felt not just a slight sense of awe but a great sense of humility since beginning my time on these famous red Benches. That is in part because, as a student and teacher of politics, I am acutely aware of the wisdom, distinction and contribution to Britain of generations of noble Lords who have come before me and served in this House, and in part because, at its best, I know that this House can provide an opportunity for scrutiny, reflection and collaboration in a political system otherwise short of such qualities and a place to speak up for those whose voices do not often get heard.
I am also humbled by the fact that I am surrounded by many of the people, on all sides of this House, who inspired me first to study, then teach and then practise politics. I had a sense as a teenager that politics was, as Tony Blair once said,
“the place for the pursuit of noble causes”—[Official Report, Commons, 27/6/07; col. 334.],
and could offer the possibility for ideas and collective action to change our country for the better. I believed it strongly during my time working for the former Prime Minister, Gordon Brown, to whom I will always be indebted and whose dedication to public service is second to none. I still believe it passionately and I hope my time in this House fuels rather than dims that optimism. Lastly, I thank noble Lords from all sides of the House for their kindness, in particular my noble friends Lady Nye and Lord Kinnock for their encouragement, friendship, cups of tea and hand-holding.
Growth is of course the necessary condition for meeting the aspirations of the British people and funding the public services on which we all rely. My point today is that we should take this opportunity as a country, as we emerge from the international recession, to move beyond a simple concern with what Keynes called,
“the growth of the cake”,
as,
“the object of true religion”.
In particular, we need to focus on three crucial aspects of economic growth. First, we need to aim not just for growth but for sustainable growth in which consumption is based on rising living standards, not excessively dependent on borrowing; where business profits rise as a result of investment and innovation, not simply through speculation; and where environmental sustainability is built in rather than bolted on to the business models of small and large firms alike. This is a long-term ambition. It cannot be achieved through a quick fix, and it requires thinking about how we reshape our economy in quite fundamental ways.
Secondly, we need to move on beyond the rather stale polarity of laissez-faire on the one hand and the demonisation of old-style corporatist industrial policy on the other, to work out not whether but how a Government can provide secure foundations for long-term growth and for raising productivity. Increasing the value of what we produce demands an intelligent role for government intervention: to stimulate greater innovation, modernise our infrastructure and ensure that our banks serve the investment and research needs of companies as well as they serve the short-term interests of their shareholders.
Thirdly, alongside our determination to restore growth, we must have equal determination to ensure that the proceeds of growth are enjoyed by the many, not the few. This is not the case at the moment and has not been for a while. In 1979, the top 1 per cent received under 6 per cent of Britain’s personal income; in 2005 they received over 14 per cent. For the last 30 years, 22 per cent of every extra pound earned has gone into the pockets of the top 1 per cent. Since the global recovery from the financial crisis began, real wages in the USA have increased by $168 billion and in Germany by €36 billion, but in Britain real wages have actually fallen while profits have risen by £14 billion.
In the United States a debate is raging about how growth can raise living standards for all, and whether it is globalisation, technological change, the competition for talent or political choice that is behind the increasing polarisation of rewards. In Britain that debate is only starting now but is long overdue. I hope that noble Lords agree with me that it is a subject to which we should devote some time in this House in the coming months and years, because doing our utmost to ensure that economic growth is not only strong and secure but shared widely is surely among the first duties of those who govern Britain.
Lord Skidelsky
My Lords, I listened with great interest, as I am sure we all did, to the attractive maiden speech of the noble Lord, Lord Wood of Anfield. He comes to the House from a notable academic and policy-advising background—Magdalen College Oxford, then No. 10 Downing Street. He will bring to our deliberations a much needed blend of theoretical rigour, practical experience and social passion. We got a flavour of all three in his maiden speech and it is certain that they will give distinction to his future contributions to our debates. I join other noble Lords in thanking the noble Lord, Lord Hollick, for securing this debate.
My proposition is quite simple: there is too little demand in the economy for robust growth, and the Chancellor’s policy of taking demand out of the economy is exactly the reverse of what is needed. The squeeze in public spending seems bound to stay, but there are two ways in which we can try to increase growth in the economy despite the cuts.
The first, referred to by the noble Lords, Lord Hollick and Lord Newby, is to set up a national investment bank with a mandate to invest in green projects, transport infrastructure, social housing and export-oriented SMEs. A limited fiscal commitment of, say, £10 billion over four years would allow the new bank to spend, say, £100 billion over that period with conservative gearing, provided that it was allowed to borrow. That is the key point. The Chancellor has taken a small step in that direction by giving the go-ahead to the green bank, but that will be allowed to spend only £3 billion and it cannot borrow until 2015, and even then only if the Government’s debt reduction target is being met, which I doubt will be the case. The Chancellor has lost a big opportunity to scale up the original idea. A principal merit of my scheme is that a national investment bank could create a new class of bonds, long term but with a slightly higher yield than gilts, which would suit long-term investors. It would thus be a way of mobilising pension funds for investment in the long-term future of our economy.
My second point is that we need to rebalance the economy away from financial services towards high-value manufacturing and creative services, two things mentioned by previous speakers. The banks have a key role to play in this, but for that we need radical banking reform. That has scarcely been started. I therefore support Mervyn King’s championing of a British Glass-Steagall Act to split the banking system into commercial and investment banks. We need to avoid like the plague repeating the situation when the core commercial banks were so riddled with bad bets foisted on them by their investment-banking masters that they ran out of money to lend to households and businesses—the very people requiring support in a recession. That is quite apart from the enormous loans and debts with which they have saddled the taxpayer.
This is not just a matter of rebalancing British banking to serve the needs of the economy; it is a matter of rebalancing power in the economy to serve the needs of the British people. As things stand, the banks are the permanent government of the country, whichever party is in power. Unless we can break their power, I fear that all that issues from our political processes and what we are saying in this House today will be a lot of,
“sound and fury, signifying nothing”.
Baroness Coussins
My Lords, the recent White Paper Trade and Investment for Growth contains one fleeting mention of the shortage of language skills. I declare an interest as chair of the All-Party Parliamentary Group on Modern Languages and urge the Government to strengthen their strategy by improving the UK’s language competence. None of the overarching objectives can be fully achieved without it.
UK companies do not seem to understand that the lack of language skills is an important barrier to growth. A survey in 2010 found that, across Europe, 33 per cent of businesses regard foreign language skills as “very important” when recruiting graduates, but the figure for the UK was only 5 per cent, with three-quarters of UK companies saying that they were “not at all important”. Can the Minister say what the Government can do to encourage businesses to invest in language training and to develop a better understanding of the benefits of language skills? We know that export businesses that proactively use language skills and the cultural knowledge that goes with them achieve on average 45 per cent more sales. Other research suggests that improving language skills could add up to £21 billion a year to the UK economy.
Another figure worth quoting, given the explosion in online sales, is that over 70 per cent of consumers require information in their native language in order to make an online purchase, while people who do not have good English are six times less likely to buy from an English-only site. It is self-defeating and inaccurate to think that English is enough. Only 6 per cent of the world’s population are native English speakers and 75 per cent speak no English at all. The relative amount of internet content in English is declining but that in Chinese is rising and there are more blogs in Japanese than in English.
Neither is English enough in the world of scientific research, which will inform commercial innovation. In China, there are 4,600 scientific journals, only 186 of which are published in English. Employers in the UK who are ahead of the game know that they do not just need people who can speak French and German, although these remain the most sought-after languages. Mandarin or Cantonese come next. With markets opening up in central Asia, Latin America and the Far East, employers also need Spanish, Russian and Arabic. If our school leavers and graduates are not able to offer these skills, employers will recruit overseas.
Sadly, our young people have less and less to offer in the way of language skills. Urgent interdepartmental work is needed between the Treasury, BIS and the Department for Education to make sure that the review of the national curriculum results in a better outcome for languages. Most state school pupils study no languages after the age of 14 and an OECD survey put Britain joint bottom of a league table of 39 countries in the developed world for the amount of lesson time spent on languages. This really is an important barrier to our potential for growth.
I ask the Minister also to speak to his colleagues in BIS to ensure that a further barrier is not created by abolishing the fee waiver for students spending a year abroad as part of their degree. This really would be a real own goal. Market reports consistently say that employers prefer to recruit graduates who have spent time living abroad as part of their course, whether they are linguists, engineers, lawyers or anything else.
It is ironic that we should have such a problem with languages when we have a hugely multilingual population. We should make more of this. Companies considering where to locate regard the availability of language skills as absolutely essential. The message about London’s linguistic diversity as an asset for attracting inward investment needs to be heard more loudly and proudly.
Finally, is the Minister aware of the EU report on the language industry itself, which is set to double in value to €16.5 billion by 2015? The report sets out ways for businesses, especially SMEs, to benefit from multilingual competence. Will the Minister encourage British businesses to take advantage of this potential for growth?
Viscount Eccles
My Lords, I am left wishing that I spoke more languages than I do.
That politics and sustainable economic growth are uneasy partners comes out of this debate very strongly. They do not fit well together. As the noble Lord, Lord Hollick, who introduced this debate, said:
“Much is promised, but little is delivered”.
As the noble Lord, Lord Kestenbaum, said, innovation has been and remains the key to the advance of science and technology. Of course, Governments are always behind the curve. They do not keep up with the front line of innovation. The noble Lord, Lord Hollick, took us back to Neddy, the late Lord George-Brown and 265 million tonnes of coal, if I remember rightly.
At the time, I was working for a medium-sized business that made pithead gear, mine car circuits, skip-winding plants and coal washery plants. We made a lot of them. I suspect that the average life of those plants as against the predicted and perfectly feasible life would not be better than half. They went out of commission one after another when they were still in totally good working order. As the noble Lord, Lord Sugar, reminded us in an interesting speech a week ago, Governments are really only good at scene setting. We need good technical education, as the noble Lord, Lord Newby, said, good roads, as the noble Lord, Lord Hamilton, said, and low taxes, but please keep out of the clockwork. Indeed, the noble Lord, Lord Sugar, said that Governments should always keep out of the clockwork because they do not understand the front line; they have never been in the front line, he said. That may be going a little bit far.
I was allegedly in command of a steel foundry in Stockton-on-Tees, where I was given good tips on which horse was going to win that afternoon. I was a part-time marriage counsellor. Steel foundries are quite dangerous. We used to take the factory inspector as close to the furnace as we could in order to minimise his visits. We did not have a serious hospital-type accident for the whole time I was there. The workforce kept me out of danger much more than I did them. As the noble Lord, Lord Sugar, said, we have arrived at a dependency culture, which means that we think that everybody else should solve our problems and perhaps we should not solve them ourselves.
That leads me, finally, to a health warning. The Government offer a lot of schemes. Governments always have. They say: “If you do this, you will get this grant at the end of the process”. I have suffered from these schemes for many years, but they never include a health warning. The health warning should say: “Please remember that when you apply for a government-based grant it is coming out of public money. It has come from the taxpayer and must be handled very carefully. You should calculate the amount and cost of time that it will take you to apply. When you have done that, double it”.
Lord Collins of Highbury
My Lords, first, I thank the officials and staff for such a warm introduction to this House. Not only did they make me feel extremely welcome, they made my husband, Rafael, feel extremely welcome to. Rafael has put up with me working very long hours for a very long time, first for the union Unite and then for the Labour Party. He thought that things would change when I took my seat here. Your Lordships can therefore imagine his surprise when I said that my Whip would require me to be here all night. Yes, it did take a lot of explaining.
Secondly, I thank your Lordships, not least for the fact that I am able to say “my husband”. These Benches have helped transform my life and the lives of countless other lesbian and gay people in this country. I am immensely pleased that it is no longer just noble friends on one side of this House who applaud progress in this area but noble Lords on every side of the Chamber. That consensus is a sign of this House at its best.
I am greatly indebted to my sponsors, the noble Baronesses, Lady Jones and Lady Prosser. Like myself, my noble friends—the “Margarets”—are products of the trade union movement. It was the Transport and General Workers’ Union—now Unite—which enabled me to leave its employment temporarily to attend university. My union provided me with many opportunities that I would not otherwise have had. I hope that noble Lords on the government Benches look to the trade unions when seeking inspiration for their big society.
It was my own experiences as a child that drew me to politics, as I imagine was the case with many of my noble friends. The death of my father meant that my mother was faced with the loss of her husband, her home and her livelihood in short succession. She was determined to provide for her children and her hard work and resolve secured our future. Yet my mother would have been the first to acknowledge that things might have turned out very differently had it not been for the progress achieved through politics. It was the Equal Pay Act that transformed my family’s income and provided a level playing field for women like my mother. It was changes in the law that gave my mother protection from exploitation and it was changes in the law that enabled her to become an economically active individual rather than being dependent on the state. Politics is the personal and in the necessary task to reduce the deficit my fear is that this has been forgotten. I am further concerned that amid all the talk of rolling back red tape, we must be very careful that we do not also roll back those 30 years of progress through politics and forget that politics is the personal.
I know that my mother would have been very proud if she could have been here today to hear me speak. Her struggle then is the struggle of thousands of working women now who support their families and grow the economy. If we make it harder for them to work, and drive down the economy, we will only make it harder on ourselves. I hope that noble Lords will take these points on board.
Finally, I, too, thank my noble friend Lord Hollick for making this debate possible.
Baroness Prosser
My Lords, it gives me great pleasure to welcome my noble friend Lord Collins of Highbury to this House on the day of his maiden speech. I am one of the “Margarets” to whom he referred. I first met my noble friend in the 1980s when I came to the Transport and General Workers’ Union as a paid organiser—in retrospect, a naive newcomer—experienced in local politics, which I quickly learnt did not equip me well to deal with the internal macho politics of the trade union movement.
My noble friend helped me find the right path. He was junior to me but he was an operator who knew just what was going on both nationally and regionally, and certainly who was doing what in central office. He knew the union rule book inside out and backwards and he made himself indispensable to the then and subsequent general secretaries. We became firm friends and I learnt of his kindness, his commitment to what is right and his generosity of spirit. He supported me during my year as president of the TUC, travelling with me at home and abroad, making sure that I spoke to the right people and steering me clear of those deemed best avoided. Our close friendship and constant companionship at union events led to us being known in the T&G as “Victoria and Albert”. Both my noble friend and I moved on up the union hierarchy, working closely with our then general secretary, Bill, now the noble Lord, Lord Morris of Handsworth. Our leadership of the T&G marked a particular high point in the union's recognition of its diverse membership with a black general secretary, a woman deputy general secretary and a gay assistant general secretary. I often thought that if the old GLC had still been in existence, we would have been given a grant. I was immensely proud when my noble friend was appointed general secretary of the Labour Party. He has devoted energy, commitment and political skill. I trust that he will be well remembered for it.
Turning to the subject matter at hand, I, too, thank my noble friend Lord Hollick for placing this debate on the agenda today. I want to concentrate my remarks on the positive impact on economic growth made by government investment in the training and upskilling of the workforce. In particular, I draw attention to the Women and Work Sector Pathways Initiative, a skills programme designed to help alleviate the estimated loss to the economy of between £15 billion and £23 billion per year through the underuse of women's skills and capacity. This is the figure quoted in the Women and Work Commission report launched in March 2006, which persuaded the then Chancellor of the Exchequer to allocate dedicated funds to help rectify the situation. The programme commenced in mid-2006 and continues to this very day—the last of the financial year 2011. During this time, more than 23,000 women have benefited from training, retraining or upskilling. Investment in the scheme by the Government up to the year end March 2010 has been just over £14 million, superseded by the employers’ contribution over the same period of just over £20 million in cash and in kind.
The programme is under the umbrella of UKCES and delivered by participating sector skills councils. Over the past year, 13 sector skills councils ran 14 programmes, including land-based skills, textile and fashion, PSV driving, construction management, financial services, tourism, and so on. The aim of the scheme is to target women in sectors where they are underrepresented or where there are skills shortages. The UKCES has commissioned Leeds Met University to evaluate the programme and in its latest report, which covers April 2009 to March 2010, the writers expressed concern that the economic downturn may have had an adverse impact on employers’ willingness to engage in training. This was not, however, the case and employers and participants alike have again expressed high levels of satisfaction. Some 92 per cent said that they would like the programme to continue and 85 per cent of participants said that they would like to continue with further training. Only 7 per cent of employers said that participation entailed too much paperwork or bureaucracy.
So here we have a successful training scheme, described in glowing terms by employers and participants alike, capturing more than 5,000 women per year, costing less than a measly £5 million per year—and what does the Minister do? He decides to merge the scheme into a general scheme entitled the Employer Investment Fund. The women's programme will continue until the autumn, while the other aspects of the new scheme get sorted out and organised. Of course I desperately hope that the new arrangements prove as successful as those of the past five years. Of course I desperately hope that women workers will not yet again be dropped to the bottom of the agenda—but I am not holding my breath. I thank noble Lords and emphasise that these are all essential ingredients to a financially healthy scheme.
Lord Stoneham of Droxford
My Lords, I congratulate the noble Lord, Lord Hollick, on initiating this debate, and the maiden speakers on their first speeches in the House. It is a gamble to deal with the structural deficit in one Parliament, and to do it primarily by public spending reductions. However, the strategy has already had one major success in reassuring the bond markets so that the UK can borrow more cheaply than countries with lower deficits. Tight fiscal policy, combined with easy monetary policy and a competitive exchange rate, provides the best choice for avoiding a sovereign debt crisis while ensuring acceptable increases in growth.
The problem is that the alternative is a bigger gamble still. It was right in 2008 to allow a rise in public borrowing to restore growth and avoid a calamitous rise in unemployment, but the second highest deficit in the OECD must now be corrected. No one yet knows how public spending cuts will affect them, and this is creating uncertainty in the economy. That is one of the principal reasons to get on with consolidating the public finances rather than dragging out the process over two Parliaments. People will always assume the worst until it is done. For some it will be painful, but for many it will not be as bad as they anticipated. Consumer spending will be weak in the coming year, but all attempts to promote growth on mounting consumer debt will end in tears. It is business investment and exports that must provide the impetus.
There are encouraging signs. The economy is already two-paced. Despite the understandable gloom in areas where public spending is strong, manufacturing and exports have prospects and growth that they have not experienced in a decade. We want to get other businesses out of the mentality of cost cutting to maintain profit margins and to now start planning for growth.
The actions of the banks are one of the keys to future growth. I think that we all have doubts about whether they will respond when the country needs them, but if we are to get the uplift in business investment that we need, they must lend more to business and particularly to SMEs, because they are their only source of capital and finance. The Government's dominant shareholdings in the banking sector must be used to set targets for the lending that the country can reasonably expect from the banks. The lack of borrowing capacity in the green bank was a principal disappointment in the Budget, as the noble Lord, Lord Skidelsky, highlighted.
The other key requirement is to achieve stability in the outlook for interest rates. Any move upwards must be avoided now, but at some later stage it will be better to have the certainty of a modest, gradual and inevitable move upwards, rather than to have consumers and businesses fearing the worst. The economy always takes longer to respond and policy-makers hope. It takes time to change direction. However, we must be patient and hold our course. As uncertainty lifts, the economy will start to pick up.
Baroness Worthington
My Lords, it is a great privilege to stand before you today to give my maiden speech. I will begin by thanking my sponsors, my noble friends Lord Eatwell and Lord Bassam of Brighton, and my mentor, my noble friend Lord Puttnam. I also extend my gratitude to all the staff of the House who have made me and my baby son feel very welcome. My elevation coincided almost exactly with my becoming a mother—in effect, two life sentences in one week. I am most grateful for the tolerance and patience that everyone has shown towards me as I try to balance these two important new roles. I am grateful to my noble friend Lord Hollick for tabling an important debate as it allows me the opportunity to offer some thoughts on the issue I know most about: the need to tackle global climate change with sustainable economic policy.
Climate change is the political and moral challenge of our time. Each year brings fresh evidence of the consequences of gambling with our planet's atmosphere. Future generations will judge us on how we act on this issue more than on any other. To date, sadly, our progress has been too slow. In preparing this speech, I looked back through Hansard and was interested to see that in March 1991, a week after the Budget had been published, the House held a debate on global warming. A great deal has changed since then, but sadly some concerns expressed by noble Lords two decades ago are still very pertinent today.
The good news is that in 2011 our economy is less reliant than it once was on the burning of fossil fuels. The carbon intensity of our economy has steadily fallen. The bad news is that this has not necessarily been done deliberately: it is largely due to a decline in our heavy industries and manufacturing, and to the dash for gas. To consciously reduce emissions is a much harder thing to achieve, as we have discovered in a succession of well meaning but largely ineffectual climate change policies throughout the 1990s and 2000s. This is why, when I worked at Friends of the Earth, I felt that we needed a new legal framework to begin the process of decarbonising our economy.
Having set up the campaign for new climate laws, I left Friends of the Earth to join energy company Scottish and Southern—poacher turned gamekeeper, if you will. There I was fortunate to work closely with the CEO, Ian Marchant, who was a great inspiration. My recruitment was his idea and I think that his intention was to shake things up a bit—both his organisation and my own preconceptions. Until that point I had campaigned to shut down dirty, old, coal-fired power stations, two of which Scottish and Southern owned. I still believe that we need to shut down our old coal, but I now have a lot more respect for the men and women who work tirelessly to keep the lights on. Our task is to ensure that they can continue to do so without a negative impact on the environment.
While at Scottish and Southern, I was seconded to the Department for Environment, Food and Rural Affairs. There I was able to view life through yet another prism and came to better understand the process of government. I became part of the team tasked with drafting the Climate Change Bill. When the Act entered the statute book in 2008 it was a world first, committing the UK to delivering emissions cuts of 80 per cent by 2050 using a series of successive carbon budgets.
With a climate Act in place, what has changed since 1991? The only mention of the environment in the Budget Statement of the then Chancellor, now the noble Lord, Lord Lamont, was in relation to an increase in fuel duty; yet 20 years of high fuel taxation has proved only that it is very difficult to price people and goods off the roads unless there is an affordable alternative.
Last week's Budget at least contained a few more references to climate change, but it was still a long way from being a green Budget. Fuel duty was frozen, but with no clear plan for weaning us of our addiction to oil. The green investment bank, as previous speakers have said, has its hands tied. The carbon floor price is merely an expensive way to deliver no environmental impact, with no guarantees that anything will be built. Under the previous Government, an investment of just over £20 million secured jobs in an electric car manufacturing plant in Sunderland. I am sad to say that the scheme that enabled that investment no longer exists.
I am conscious that time today is limited. There are many issues relating to climate change and energy that I hope I can return to in subsequent debates. We need to have a deep debate about the role of nuclear power. The recent terrible events in Japan remind us of the risks inherent in a technology that was developed primarily for Cold War military application. A civilian nuclear programme based on inherently safer, thorium-fuelled reactors could engender a paradigm shift in how we view nuclear power.
Britain has a history of delivering industrial revolution. This revolution towards a sustainable, low-carbon economy will not be easy; it will involve countering a large number of powerful opposing forces and vested interests. However, as Archimedes once remarked, “Give me the right place to stand and I can move mountains”. I hope that in this Chamber, I am standing in the right place and that, together, we can move mountains.
Lord Broers
My Lords, we have had a series of outstanding maiden speeches in this debate, and it is my privilege and pleasure to thank the noble Baroness, Lady Worthington, and to congratulate her on a truly excellent maiden speech. She brings to this House a wealth of knowledge on climate change matters, as she has clearly demonstrated. She has worked on these crucial issues with the energy industry, advising Scottish and Southern Energy. She then brought her expertise to government, working on the Climate Change Act, and she helped the Government in their campaign to inform the public about the importance of these issues. Her contributions to public understanding have been noteworthy, and I know that we all look forward to her helping this House deal with, for example, the complexities of carbon trading and the EU Emissions Trading Scheme, not to mention the green investment bank. We welcome her warmly.
I was pleased to find in the Budget some real, if insufficient, attempts to tackle the major issues that confront us—those of low productivity, lack of spending on R&D by industry, out-of-date and inefficient infrastructure, and expensive financing. Many have said that we must restore our industrial base and our infrastructure.
I start with infrastructure. I regard banking as just another element of infrastructure. As with housing, energy and transport, it should be efficient and low cost, and I fail to see how this is consistent with banks seeking profits of the order of 20 per cent or more. Would we be happy if our rail operators made similar profits? Where our banks are operating overseas, it might be justified on the basis that their practices contribute to the current account, but here they should be taking professionally calculated risks on industrial initiatives rather than gambling on obscure hedging instruments. I totally support Mervyn King in his attempts to separate these issues but I do not find much in the Budget to assure me that they will do so.
I join others in pointing out that we need to increase our manufacturing output. Our deficit in manufactured goods remains at about £50 billion. It is encouraging that manufacturing is now growing at 12 per cent, but at this rate it will still take 15 to 20 years to recover what we have lost in the past 12 years. Coutts and Rowthorn have pointed out that an increase of only 10 per cent in manufactured exports, combined with a 10 per cent fall in manufactured imports, would generate a £45 billion improvement in the current account balance, which is equal to the total UK net earnings from financial services and insurance and more than one and a half times that contributed by all other services. To do this, we need more competitive products, and to create these we need a broad spectrum of creative engineering.
The good news is the Government’s acceptance of Hermann Hauser’s technology innovation centres but, if these are to succeed, industry must concentrate its R&D resources in them, as do the Germans. The enhancement of the enterprise investment schemes are also good news. They will stimulate the formation of new companies and appropriately reward our courageous and professional venture capitalists and angels.
The overall problem of course is much larger than can be resolved with the TICs and by new start-ups. Overall spending on R&D must be increased. At 1.8 per cent of GDP, our spend is 40 per cent lower than that of the US, 30 per cent lower than that of Germany and 20 per cent lower than that of France. Our situation is unbalanced. We have a science budget of £4.6 billion, which supports a science base that is second only to that of the US and is our greatest asset, but this is not matched by our spending on development, which should be several times higher. The TSB is doing a brave job with its budget of roughly half a billion but the rest must come from the private sector, which does not seem to be happening.
The reduction in corporation tax will help, as will the progressive increases in R&D tax credit, but why is the change in R&D tax credit restricted to SMEs? Only the large companies can mount the prime manufacturing projects that we desperately need, and it is the large companies that sustain the SMEs. I ask the Minister to explain the Government’s thinking on this.
We have a great opportunity to increase manufacturing output by building our new energy and transport systems. However, sadly, much of this may come from overseas. There is hope that these foreign-owned companies will manufacture those systems in the UK, but surely it would be better if, to take the words of the Chancellor in concluding his Budget speech, more of it carried the labels:
“‘Made in Britain’, ‘Created in Britain’, ‘Designed in Britain’ and ‘Invented in Britain’”.—[Official Report, Commons, 23/3/11; col. 966.]
These are courageous words but it will take more than the changes in the Budget if we are to succeed in doing this. I ask the Minister to reassure us that there is more to come.
Lord Bhattacharyya
My Lords, I join those who have thanked my noble friend Lord Hollick for securing this debate. I also support the remarks about the excellent maiden speeches that we have heard.
As the director of Warwick Manufacturing Group, I declare an interest as a professor of engineering and as someone who has worked for 40 years in the field of manufacturing here and abroad. I am also a long-time student of the gap between speeches and the shop floor.
The Chancellor’s Budget speech referred to a “march of the makers”. Apprenticeships, the UTCs, extending the Enterprise Investment Scheme, the Manufacturing Advisory Service and the green investment bank are some worthwhile modifications of programmes set up under the Labour Government. They are welcome but the “makers” have heard fine words before and have been let down. The devil is in the detail and in how things are implemented. Sadly, we have never been good at that in the United Kingdom. We do not want a repeat of the “white heat of technology”, which in the 1960s promised much but delivered little.
Today, manufacturing is enjoying a surge in exports and profits, driven by exchange rate gains, increased competitiveness and sticky wages. Quite a lot of that comes from inward investment, some of which I have been privileged to bring in myself. However, there are major issues to be addressed if this growth is to be sustained. In the 1950s, British gross capital formation was a little over half that of Germany and Japan. It stood at 16 per cent of GDP. Today, capital formation is 15 per cent of GDP—still significantly below our main competitors. In 2009, as the noble Lord, Lord Broers, said, UK investment in R&D shrank both in cash and real terms. Business R&D fell significantly. There was a recovery in 2010, but by the final quarter we were flat-lining again.
We need better incentives for the private sector to invest in developing improved products and systems. While the R&D tax credit changes are useful, the reductions to capital allowances work in the opposite direction. Further, the research funding system is so complex and distant from commercial reality that many small companies get little advantage from participating in R&D programmes. In this House, we have debated impact many times and, while I agree that evaluation based on commercial impact is not right for all subjects, in applied sciences and engineering it is surely essential.
Why do we need such commercial clarity? We need it because, although manufacturing is fashionable today, experience tells us that existing schemes and centres will stick a “manufacturing” badge on their projects to secure funds without delivering what we need. We need clarity on impact to prevent that. Indeed, we are already seeing the bizarre situation of projects trying to secure funding from government and talking about a 15-year strategy before being sustainable and delivering commercial impact. That is far too long. However, many good things have happened. I agree with the noble Lord, Lord Newby, about what the Technology Strategy Board does when it comes to technology and innovation strategy. However, it does not have much money. If it were doubled or tripled, it would still be a minuscule amount compared with what is needed—it is at the front end of all our approaches to the manufacturing industry. The perennial problem of underinvestment is exacerbated by the inability of business to obtain finance.
I do not want to repeat what the noble Lord, Lord Skidelsky, said regarding an investment bank, but it would be dishonest of me to say that the Budget was bad for manufacturing. However, if we are to succeed, we need more than a splash of fuel. We need to supercharge the engine. Time will tell whether this Government’s deeds match their words.
Lord McFall of Alcluith
My Lords, I thank the noble Lord, Lord Hollick, for securing such a vital debate today and congratulate all the maiden speakers on such excellent speeches. I wish them well in their journey in the House of Lords.
Growth is essential to reducing the public debt ratio. Cutting the deficit without that being accompanied by strong growth will end up in disaster. Let us remind ourselves of the Labour Government in 1997. From 1997 until 2002, the Labour Government stuck to the Conservative spending targets and the UK net debt fell from 42 per cent of GDP to 29 per cent of GDP. They did that precisely by growing the economy, not just by cutting spending alone. There are economic growth policies consistent with debt stabilisation but the problem for this Government is that they have scared the population witless with their austerity message. “Vote for us and death tomorrow” is not a good slogan, so they will need to change. They realise now that there has to be a different mantra. They have to give people some hope and something to look forward to.
The recent Budget, as people have indicated, is a big gamble because it is taking more than £100 billion out of the economy and, at the same time, there is an ambitious 3 per cent growth target by 2015. That can be done only by investment. We need investment in our communities, our infrastructure and most of all in our people. Let us remind ourselves of the lessons of the 1980s. If the slack in the economy persists for too long unemployment becomes structural. That is why we need investment today.
The Labour Government left some good legacies for this Government—some positives on which they should build. For example, the labour market performance is better than in previous recessions, although unemployment is now going up for both young people and the population in general. Company liquidations and home repossessions are fewer than they were in previous recessions and the large depreciation in the currency has most certainly helped drive the export market. We are in an environment of historically low interest rates and it would be folly to disturb that in the present climate. We need to exploit the relative price changes and complement these policies by making use of the low interest rate environment and by complementing behavioural changes induced by the increased oil prices to promote a low carbon economy. We must also ensure that we maximise the boost to tradables by the fall, or depreciation, in the currency.
These are extraordinary times and the crisis is not yet finished, as we can see in the Republic of Ireland today. It has had its bailout but almost all Irish banks will be nationalised today as a result of it. The crisis is still working its way out in Europe—in Greece and Portugal. Given the crucial importance of the European market for our exports, the Government need to be careful in their attitude to possible future bailouts. If they do not engage in this process, that will further risk reinforcing the divisions with those both within and without the currency. There is no doubt that there will be implications for our foreign policy, which is very sensitive to the Government as we stand today.
Extraordinary times demand extraordinary measures. I would not be advocating, as others have done, an investment bank had it not been for extraordinary times. I called for the very same in a Guardian article, “Britain needs a state bank”, on 9 January 2009. Sadly, the Government at the time did not take that up, but it is very important if these objectives to growth are to be attained. If there is a European investment bank, why cannot there be a UK investment bank? If we have a network of post offices throughout the country, why cannot the post office network be used to ensure that the Government achieve their ambitious lending targets?
Today the Government are offering cheap finance. If we ensure that the debt is indexed, finance can be done at 1 per cent and we need only get money back to service the debt. Mention has already been made about the attitude of the Treasury to public investment. The HMT approach to public investment needs revisiting. Given the big gamble, the Government need to show boldness, as my noble friend Lord Hollick said, and not timidity. We need policies that are consistent with these ambitious targets and I suggest that one beneficial step would be to change the slogan from “Cuts, cuts, cuts” to “Investment, investment, investment”.
Baroness Warsi
My Lords, I remind the House that when the clock hits “4”, four minutes are up.
Baroness Greenfield
I thank the noble Lord, Lord Hollick, for the opportunity to discuss this wide-ranging topic. As a neuroscientist at Oxford and Chancellor of Heriot-Watt, I shall focus on innovation in universities by considering four bottlenecks along with some examples of how we might deal with them.
Bottleneck one is the limited talent pool of young scientists forming the next generation of researchers. Currently only 16 per cent of A-level candidates opt for one or more science subjects, so how can we sell science effectively to bright sixth formers? Just one idea could be a twinning scheme where graduate students sign up for an ongoing relationship with a local school, thereby themselves gaining invaluable experience. The continuing mentoring that could ensue, as well as work experience in the twinned lab, might completely transform the career plans of a 16 year-old.
Bottleneck two is the diminishing talent pool resulting from the sub-optimal retention of women in science. One crucial issue here is the conflict of pregnancy and its aftermath with the demands of a highly competitive research career. Returner schemes, such as those pioneered by the Daphne Jackson Trust, would ring-fence funds for fellowships for anyone who had taken time off from research for primary childcare responsibilities. However, only the Government could have the resources to roll out a returner fellowship competition to an extent that would make a real national impact.
Bottleneck three is the lack of a cohesive strategy for optimising translational research. Universities generally have limited patent budgets, which can force technology transfer offices to form spin-out companies too early so that a very high proportion fail and patent applications may be dropped before any value can be realised through licensing. Meanwhile, investors are often wary of a technology that the scientists are unable to explain to them in terms that they can understand. Such investors may also view the work as: too high risk; at too early a stage; too little, given the funding required, to give a good return; or having a burn rate that is too high and exits that are not obvious.
One possibility around these cultural minefields could be to set up venture capital syndicates that do not invest as such but give some private sector grants. Modest but highly timely amounts of money could be awarded, with the financial burden diluted by the collective membership. In return, however, each individual member of the syndicate would have privileged access to the research as it was developed and therefore first refusal to purchase the IP and perhaps develop the spin-out as and when the work matured and as and when people felt personally that the time was right. The notion of private sector grants is not in the national culture of either academics or, indeed a venture capitalist, so the Government could be perfectly positioned not to contribute financially but rather to act as a kind of co-ordinating broker.
Bottleneck four lies in the current attitudes of non-translational but potentially highly innovative basic research. Surely for originality to flourish we first need to let a thousand flowers bloom, but the current peer review process is open to criticism—especially and typically when money is tight—of being risk averse. In addition, currently only 10 to 15 per cent of research council grants are successful. Let us assume that that does not mean that some 90 per cent of British academics are simply poor scientists. A very heretical, yet perhaps effective, change might be to abolish the peer review system and research councils altogether and divide the available funds along with the vast sums saved from the bureaucracy equally between eligible scientists. Of course, there would need to be careful thought as to where the boundary conditions of eligibility were set, along with potential penalty measures.
It would be a fascinating paper exercise at least, to see how much money would be immediately available to each scientist to explore their particular scientific challenge, unencumbered by insecurity or lengthy futile applications. Given breathing space, scientists could once again truly maximise original thinking and regain the confidence for developing innovative theories that challenge existing dogma. Why would such an intellectual nirvana help the more practical issues that we are debating today? Bear in mind the fact that quantum theory concerning the inseparable nature of waves and particles, when it was developed at the beginning of last century, seemed to be a highly abstract notion. Now, however, this improbable theorising has led to lasers, transistors and modern computers, as well as an understanding of molecular bonds and X-ray crystallography without which modern molecular biology would not be possible. To those four bottlenecks, there are no easy answers, but those are at least some suggestions for unblocking them.
Lord Soley
My Lords, I echo the congratulations to the noble Lord, Lord Hollick, on securing this wide-ranging debate, and welcome the excellent maiden speeches, which are a good indication for the future of this House.
I want to focus my very limited time on the importance of aerospace and aviation policy. I have a straight request to the Government: please get an aviation policy. I do not accept what the Secretary of State said in his letter published in the Times yesterday, in response to wide-ranging comments in the Times from many businessmen and from the City of London that if we do not attempt to protect our premier hub airport we will diminish in importance.
I should say at this stage that I no longer have an interest to declare, because I am no longer campaign director of Future Heathrow. Believe me, everyone in this country has an interest in preserving a premier hub airport for Britain. We are the only country in continental Europe and among the emerging nations of Brazil, India, China and others which has not either already expanded or is expanding its airports, particularly hub airports. Hub airports are the way the global economy interconnects. It is the way that the European economy is connected. It is the way that investment decisions are made about where you can meet.
In the limited time available, let me give one or two simple facts to the House. A few years back, Heathrow could fly you to 240 destinations worldwide. Now it is 180, and the airport is full. Frankfurt can fly you to 307. Frankfurt sits in the middle of the largest, richest market in the world and can fly you to 307 destinations. What is its pitch in China, India, Brazil and everywhere else? Come to Frankfurt for your investment decisions and we can fly you on to wherever else you need to go. This Minister, more than any other, will know that Frankfurt has a burgeoning financial sector. London does not have to have the only and premier financial sector in Europe, and we will not do if we continue to hand the business over to Frankfurt. When the chief executive of Schiphol Airport in Amsterdam heard about the British Government’s recent decision not to have any expansion of airports anywhere in the south-east, the response was the same as before: “Good news for Schiphol; bad news for London”. Schiphol will fly you to 21 British regional cities; Heathrow will fly you to seven.
This is not an argument about the environment. I yield to no one in my concern about climate change—I wrote my first article about it back in 1981—but I do not believe and never have believed that you can solve the problem of climate change by hairshirt policies such as telling people, as the Government recently did, that they want to decrease the demand for flying. We have to be cleverer about it. I have been telling the aviation industry for a considerable time that it needs to sharpen up its act in conveying the message. Frankfurt has reduced its CO2 emissions below its level in 2004, although it has doubled its expansion. If the Germans can do it, we can.
When Dubai’s hub, rather immodestly called the world hub, comes on stream, it will also bypass Heathrow for many from the Middle East and the Indian subcontinent. Many big companies located around Heathrow have already moved. Where have they moved to? To Amsterdam, to Frankfurt—less so to Paris—but increasingly to Madrid. BA's tie-up with the Spanish airline means that many of the flights now coming in from Brazil and the rest of South America go not to Heathrow but to Madrid. I say to the Government: if you do not get an aviation policy, this country will marginalise itself in the global and European economy. We will pay an awfully high price for that and will not do anything to improve the climate.
Lord Empey
My Lords, it is good that once again we are discussing matters that go to the very heart of our economic future. I, too, thank the noble Lord, Lord Hollick, for securing this debate. We have also had a banquet of maiden speeches in the House today, and it has been wonderful to hear them; they certainly enrich our proceedings.
Investment, innovation, technology, infrastructure, skills and job creation are the buzzwords we all use when talking about our nation's ability to regain economic momentum. Members may be aware that this autumn, WorldSkills 2011 will be held here in London. WorldSkills is a biannual event which was last held in Calgary in 2009. I had the privilege of attending that event as Skills Minister, along with members of the previous Government. We saw many of our young people competing with their peers from all over the world, and the UK did very well, obtaining many medals for excellence in a variety of disciplines. Even higher targets have been set for London this year. WorldSkills is a bit like the skills Olympics, although the association does not like to call it that. It gives young people, whether they are training to be tradespeople, beauticians, gardeners or workers in aerospace, the confidence to take on the best in the world.
However, my main point is that whatever training is provided or acquired by the state, the most important thing cannot be manufactured: the right attitude. I fear that the attitude towards work, especially manual and manufacturing work, is severely deficient in this country. There has been much criticism that thousands of people have come into this country, mostly from within the EU, and gained almost half of the new jobs created during the boom years up to 2008. Why did that happen? Many employers told me that the big difference between the indigenous and migrant workers was their attitude and work ethic. There were no duvet days for many of those migrant workers, no sick days, and they were always available for whatever overtime they were offered.
I know that such comparisons are dangerous. Many of those migrant workers did not have families so were freely available without other commitments. Also, many were highly skilled, so businesses did not need to pay to train them. Nevertheless, there is some truth in the anecdotal stories about their attitude to work that needs to be taken seriously. We are also in danger of leaving a pool of disillusioned indigenous workers, many of them in our inner cities.
The workforce of this country built up this nation's wealth for centuries, and many paid a heavy price with their health and often their lives. I have seen with my own eyes the skills that many of our people possess and which, under continuous upskilling of our existing workforce, they can acquire. However, there is a missing link. In many cases, people do not connect the acquisition of a skill with a rewarding lifestyle. Too many people have been sent to training schemes that have not led to a job. That has undermined the principle of work paying, as those schemes are frequently seen as a waste of time. We have much to do to break that cycle, particularly in concentrated geographical areas of our country.
I hope that the Minister can confirm that Her Majesty's Government will do all in their power to promote the type of work ethic that once made this country great. Without restoring a meaningful balance in our economy, particularly in manufacturing, we will never develop the ability once again to create the wealth that will pay for the public services that all of us so desperately want to be delivered. The information and ideas that have come from different parts of the Chamber today have demonstrated that we have the ideas that can lead us back to the greatness of our industry as it once was.
Baroness Warwick of Undercliffe
My Lords, I am delighted to be able to contribute to this debate, in which we have enjoyed some marvellous maiden speeches. I congratulate my noble friend Lord Hollick on securing this opportunity to follow up last week's wide-ranging and illuminating debate on rebalancing the economy.
I strongly believe that a strategy for economic recovery must prioritise our strengths in innovation and high-level skills. High-level skills are the currency of today's knowledge economy, and I want to concentrate my remarks on the critical role played by the UK's higher education sector in providing and developing those skills. This is a subject on which I have spoken previously in this House and elsewhere, and which I explored on many occasions during my time as chief executive of Universities UK.
Higher education has been called a global powerhouse for knowledge economies. That is certainly the case in the UK. Our universities and higher education colleges have an unparalleled record in fostering innovation, enterprise and skills and in helping to create wealth and job opportunities. I know our Government understand this. Indeed, the coalition Government acknowledge that universities are essential for building a strong and innovative economy. This reflects a widespread political recognition of the importance of higher education to the UK achieved over the past decade and the unprecedented political and financial commitment given to this highly successful sector by the previous Government. This was achieved in part because the universities themselves were able to produce the evidence to convince government that higher education was a worthwhile investment, not a cost.
As we consider a growth strategy and await the higher education White Paper, I urge the Government not to lose sight of this essential point: if we are not to fall behind competitor nations, many of which are investing heavily in universities, we cannot afford to row back on our investment in knowledge and knowledge transfer. Despite the years of additional investment, we still spend less on higher education than the OECD average. Meanwhile China and India are already turning out more engineers and more university graduates than the whole of Europe and American combined. Of course the public funding climate has changed. Universities understand that they have to shoulder their share of the cuts, so last week’s Budget’s encouragement to our research base in the form of changes to R&D tax credits and an additional £100 million in capital expenditure for science was very welcome. The spending review also gave some protection to the science budget in cash terms. However, these chinks of light should not blind us to the scale of the cuts being applied to higher education. Universities are by their very nature long-term organisations. World-class research, the creation of new ideas, products and industries and the development of a highly skilled workforce are all long-term benefits. Like other noble Lords, I refer to the OECD 2010 innovation report which concluded that Governments must continue to invest in future sources of growth, such as education, infrastructure and research. Cutting back public investment in support of innovation may provide short-term fiscal relief but will damage the foundations of long-term growth.
I wish to make two further short points about how we can best nurture our high-level skills. We must continue to support ways of transforming research into innovation, build stronger links between the UK’s science and research base and industry, create more spin-out companies and attract overseas investment to the UK. We must provide an environment in which international collaboration can flourish. That means a student visa system that is understood to be welcoming to international scholars. Of course abuse must be tackled, but the Government must also ensure that our ability to attract the best students is not harmed as a consequence. As Vince Cable has acknowledged in another place, we cannot measure where our investment should be in monetary terms alone. If we are to be players in the global knowledge economy, we cannot afford to lose momentum in our investment in higher education. To stand still in this regard is to fall behind.
Baroness Wheatcroft
My Lords, the prime requirement for growth is a stable economic environment. That is the golden rule. Noble Lords will recall that the previous Government had a different rule. In his first Budget, Chancellor George Osborne had to report that Gordon Brown’s golden rule about restricting the country’s borrowing had not quite been met. In fact, the target had been missed by £485 billion. Rules may be made to be broken, but surely not by £485 billion. Restoring the nation’s finances is the prerequisite for a thriving business economy. There are other things that a Government can do to foster business, and last week we saw some welcome steps in that direction, particularly with the reduction in corporation tax, and a firm commitment to reduce the 50 per cent rate of income tax is also something that will encourage the business community. There is plenty of evidence to demonstrate that punitive tax rates do not enhance a nation’s wealth.
What is truly important for businesses is the degree of certainty and clarity about the regime in which they operate and the taxes and regulations that apply. The Government have indicated that they understand that tax is unduly complicated and that there is a need to simplify it. The noble Lord, Lord Wood, in his admirable maiden speech, suggested that a joke half way through a speech would be welcome. I do not really have one, but I refer noble Lords to Tolley’s Tax Guide. It now runs to 1,897 pages, which is an increase of 185 per cent since 1999. That is not really funny. Businesses need a break from too many rules and too much regulation. Although the Government are moving in that direction, there is still plenty of scope for a scythe to be wielded.
The animal spirit of true entrepreneurism will win through if we do not put too many obstacles in its way. Britain has some great businesses, but we need more. We are in the forefront in the services sector, but despite the understandable talk of the financial world needing to slow down a bit, manufacturing is actually already a greater contributor to our economy than financial services. There are some great success stories. We cannot compete with the low-cost economies of the world on price, but we can on quality and design. I was cheered yesterday to hear of a business in Lancashire that weaves its own fabrics and turns them into high-quality furnishings. It is called Herbert Parkinson, and it is owned by the John Lewis Partnership. It employs 300 people, and last year its sales exceeded £47 million. This year it will top £50 million. It succeeds because it produces the quality and design that customers want. British companies will not undercut the prices of Sri Lanka or Turkey, but we can compete with the world’s best when it comes to quality and design.
We hear repeatedly that smaller companies and entrepreneurs find it hard to raise the finance they need to foster this sort of quality. If that is the case, I have one potential solution. Our larger companies are currently sitting on huge amounts of cash. I fear that the investment bankers will be knocking on their doors, trying to persuade them to buy their rivals and spend their money that way. That would generate welcome fees for the bankers, but we know that rarely do such takeovers bolster the nation’s wealth. It would be better by far that those big companies back smaller entrepreneurial outfits, providing them not just with cash but with confidence and contacts. Tax breaks for such investments have been mooted. Xavier Rolet, the chief executive of the London Stock Exchange, has suggested it. I do not think tax breaks should be the reason. I think that companies need to invest and nurture smaller businesses, and I encourage the Government’s business council, which is doing some wonderful work, to encourage just this idea.
Lord Mitchell
My Lords, 11 years in your Lordships’ House and for the first time, I have lost my speech. Actually, it was left on the Northern line, so while somebody was having a lot of fun reading it, I was having a quiet panic in the Bishops’ Bar, trying to reconstruct it. Anyhow, here goes.
First, I thank my noble friend Lord Hollick for securing this debate. He started as an entrepreneur, he ran a major media group and now he is with one of the premier private equity companies in the world. He is the quintessential businessman. I, too, am an entrepreneur. I have started three companies from scratch, built them up and eventually sold them. It is great. I have loved being an entrepreneur and I would recommend it to anybody. Seeing companies grow and develop and seeing your staff grow is fantastic. However, there is a dark side to being an entrepreneur as well. It is terrifying not being sure that you can meet the payroll, there are problems with the banks, all sorts of things wake you up in a cold sweat at two in the morning and the stress is enormous. So when I hear the Government say that 300,000 public sector employees will, as a result of all the cuts, somehow find another job because of private sector growth and the entrepreneurial society that we are going to form, I simply do not believe it. I cannot conceive that somebody who has been working in the public sector for 10 or 20 years is somehow suddenly going to come out and become an entrepreneur. It absolutely does not make sense to me.
The tone of today’s debate has been, “What is wrong with the UK economy?”. I want to devote the two minutes and 15 seconds that I have left to what is right. It is a very exciting story. The noble Lord, Lord Kestenbaum, in his excellent speech, talked about Silicon Valley. We now have a Silicon Valley in this country. It is not in Cambridge; it is three miles from here and it is a revolution. It has the most wonderful title of “Silicon Roundabout”. It is to be seen around Old Street and Brick Lane—indeed, that whole area. It is the east London cluster development and it is better than anything else in Europe. It is fabulously exciting and it needs an awful lot more publicity.
I suppose that one of the things that people always said about Silicon Valley was that it was clusters of people with similar ideas in life getting together after work. I recommend to any noble Lord taking a drive around Silicon Roundabout to see the bars, the restaurants and the unbelievable enthusiasm around there. It is full of young people all working in small businesses in creative industries such as applications for iPhones, music, advertising, fashion and movies, in all of which London is to the forefront. As I said, young people are doing all this. There is something about that area that Cambridge would never have and the City and the West End never have. It is edgy and cool and it attracts these sorts of people.
How did this area come about? It did not come about under this Government or the previous one either. It was spontaneous. It just happened. It has just grown like Topsy. Why? First, low rents were available. Secondly, it was close to the centres of finance, fashion, theatre and advertising companies. It has produced these raw entrepreneurs, to the extent that today American companies such as Cisco and Google have decided to invest in these areas and in these companies. It is very exciting.
These companies are now running out of space. Where will they go to? After the Olympics in 2012, many of them will work in the Olympic park and, for the first time anywhere in the world, an Olympic Games will have a true legacy made up of high-tech and creative industries.
Lord Morris of Handsworth
My Lords, in this debate I have noted a broad measure of agreement right across your Lordships’ House—agreement on the fundamental requirements for sustained economic growth, many of which were so ably set out in the introduction by my noble friend Lord Hollick. I associate myself with his comments.
We all believe in a stable economy that is underpinned by sound monetary and fiscal policies, we are all committed to the pursuit of excellence at every level of our education system and we all support an economic model that is based on investment, research and innovation. We all want to see Britain leading the world in its exports, supported by a robust and transparent finance sector. Of course, with my background I am proud to say that in Britain we have the most flexible labour market in the European Union. Therefore, if I am right about the fundamental requirements for economic growth I am bound to ask what is holding us back; why the German economy is growing in a recession throughout Europe; why the US, China and India are growing world exporters while growth forecast in our country is being revised down and down; and why investment is being reduced time after time in sector after sector.
However, investment is not just about investment in plants and machinery; it is also about people. That is why I use the term “socially responsible”, because that is one of the requirements for economic success. The well-being of this or indeed any nation directly correlates with the economic performance of the country. The society in which we live expects certain norms to be part and parcel of social and economic policy. That is why it is so important that we start right at the beginning in the early years.
Of course, what we have experienced recently are cuts in the social infrastructure. That will not deliver growth. There is no growth to be had in cutting swimming pools or indeed closing parks and libraries. In the long term, some of the policies that we are following will in themselves retard growth. The increase in university tuition fees will probably deter some of our young people from taking those vital steps towards higher education. One of the engines of economic growth, particularly in the venture capital sector, is our pension funds. The recent decision to change the contribution rates will mean that less and less is available for that important sector. To conclude, we have run out of options by following cuts. The only option left to us is to go for growth.
Lord Rees of Ludlow
My Lords, noble Lords might have read about the winners of the 2010 Nobel physics prize, Andre Geim and Kostya Novoselov. They are both Russians who came to the UK in 1999, to Manchester University, where they were given freedom and support for a speculative request, which paid off massively. They discovered that carbon atoms could form a sheet just one atom thick—a new material called graphene with astonishing strength and novel electric properties. They needed time but no costly equipment. The clinching experiments involved strips of Sellotape. Graphene might be the basis for transformative technologies, but its development will not be so cheap and it will be fully as intellectually challenging. Engineers like the noble Lord, Lord Broers, would endorse the message of the old cartoon showing two beavers looking up at a hydroelectric dam. One is saying to the other, “I didn’t actually build it, but it’s based on my idea”. Will the UK deploy the resources and expertise to benefit from discoveries such as graphene?
This episode prompts other concerns. Would younger counterparts of these two Russians today make the UK their preferred destination? Would they even get entry visas? Do our brightest and best young people perceive a spirit of enterprise in a country in which science and engineering offer good career prospects? Even in the privileged environment of Cambridge—I declare an interest as a professor there—my younger colleagues seem ever more preoccupied with grant cuts, job security and so on, and prospects of breakthroughs will plummet if such concerns pray unduly on the minds of even the brightest.
In research, international excellence is all. The difference in pay-off between the very best and the merely good is by any measure thousands of per cent. Therefore, most crucial in enhancing value for money for taxpayers is not scraping a few per cent in efficiency savings; it is maximising the chance of big breakthroughs by attracting and supporting top mobile talent and sending positive signals to the young.
In his state of the union address in January, President Obama asserted that his nation faced another Sputnik moment due to the rise of the Far East as a competitor. He argued against cuts in R&D investment with a neat metaphor. He said that you cannot make an overweight aircraft more airworthy by removing an engine. That message is even more vital for the UK. Science and innovation are essential engines if we are to rebalance our economy away from an overdependence on the financial sector. What is needed is a 10-year or 15-year road map, which offers hope that, after four years of declining real-terms funding, science can share the fruits of the recovery that it should help to generate. We can surely afford it. The total UK science budget is now less than the bonus pool for London bankers.
We do not know what will be the 21st-century counterparts of the electron, the double helix and the computer. Nor do we know where the great future innovators will get their formative training and their inspiration. But the UK will decline unless it can sustain its edge in discovery and innovation, get its share of these key people and ensure that some of the key ideas of the 21st century are generated and, even more important, exploited here.
Lord Patel
My Lords, it is a pleasure to follow my noble friend Lord Rees and I will continue the theme that he started. First, I declare an interest as chancellor of the University of Dundee, where I also worked for nearly 40 years. The university’s College of Life Sciences and Division of Signal Transduction Therapy is a model of the largest collaboration of academia and pharma in the United Kingdom. It is about such collaboration that I wish to speak today.
The Academy of Medical Sciences report, Academia, Industry and the NHS: Collaboration and Innovation, and the NESTA report, All Together Now: Improving Cross-sector Collaboration in the UK Biomedical Industry, highlight the opportunity that the UK has, with its world-leading pharma industry, biomedical science and National Health Service, to produce innovations and economic growth. The pharmaceutical industry is changing its model of R&D investment to that of more extramural funding, which I believe provides opportunities for the United Kingdom.
An ageing population and the increasing use of healthcare in the BRIC countries means that the industry has huge growth potential. Countries such as the USA, Singapore and France have recognised this by increasing their investment in research capabilities. We have strong research universities in life sciences, as evidenced by the high citation impact, which beat even the United States of America. But we underexploit the resources that we have—the NHS, universities, and large and small pharma.
While strong institutions, enabling regulations, funding and people with research skills are important, what is lacking across the country is collaborative mechanisms, and the fora, incentives and metrics that promote and encourage interactions between the players. Collaboration allows a better use of resources, avoids duplication and improves access to specialist facilities and expertise, which importantly improves the capacity for innovation. Big pharma is increasingly looking for external partners for drug development. Industry currently funds around 10 per cent of biomedical research in UK universities. If universities were to increase this to 15 per cent, it would mean an extra £100 million, which still would be only 8.5 per cent of extramural R&D funding of pharma companies.
There is a risk that the UK will remain static while other countries grow. One indicator of the extent of such collaboration could be an analysis of the levels of clinical trials activity in each hospital trust. Currently, the number of patients enrolled in clinical trials is low and falling. Collaboration would produce company growth in the private sector and increase income in the public sector. As pharma grows, R&D spend will grow. By 2015, there could be an additional £3 billion in external R&D funding. We need the right infrastructure, an electronic patient record system to support research and reform of the VAT system to encourage collaboration, and to develop more specialist support services.
The UK should accelerate the development of electronic patient records to support medical research and aim to become the world leader. Scotland has made a success of this and provides a valuable research resource. Industry can help by providing more industry placements and secondments. The intellectual property model of universities, NHS and pharma needs to change from getting income to developing research further. There needs to be more sharing of research facilities to reduce costs. Similar arguments could also be made to pricing policies for research that involves risk sharing.
I hope the Minister agrees that in our world-leading pharma, leading research universities and the NHS, we have fantastic opportunities to bring about innovation and treatment of disease. The Government should examine ways to see how best to bring this about.
Lord Haskel
My Lords, first, I congratulate my noble friend on this debate. I should also like to commend the Minister for his perseverance. This is the third Thursday on which he has been on that Bench. I am very pleased that this debate has moved on and that we have not heard a lot of speeches which continuously tell us that all our troubles have been down to the previous Government.
I agree with my noble friend Lord Hollick that the Government’s paper, The Plan for Growth, has many hopes and aspirations. Who of us does not support balance in the economy and growth in manufacturing, investment, skills and science and technology? We all share, and have shared, these aspirations for many years. When I talk to people in business today and ask them what they consider to be the most important factor for their future prospects, the answer is not tax, regulation, or the five things that the Government list in their paper. It is people such as those who my noble friend Lord Hollick listed and the noble Lord, Lord Hamilton, spoke about; as a Jewish immigrant, I thank him for his words. It is not people who are anxious to avoid tax. As my noble friend Lord Kestenbaum said, it is people who want to be part of a national effort to build our economy. But this topic is entirely absent from this paper. It is the modern style of outward-looking, entrepreneurial people-based management which seems to be the hallmark of most new successful businesses, about which my noble friend Lord Mitchell spoke.
The noble Viscount, Lord Eccles, spoke about government grants. Yes, the Government do try but their finance is available in small packets for specific purposes. Schemes are announced all the time. One such scheme, announced in May 2010, was a tax break for the first 10 employees of a new business set up in Britain’s poorer regions This scheme received special mention in the Economist on 3 March. A government source described the take-up as “incredibly low”. It was incredibly low not because of bureaucracy but because this fragmented attitude no longer works. Trying to tease out individual causes does not seem to work any more. Businessmen have to bring it all together. At the end of the day, you either have confidence in the people and the project or you do not. As everyone knows, it is people who matter, which is where our priority should lie.
Lord Birt
My Lords, the UK economy in London and the south-east is measurably as productive as any in Europe, not just because of the City’s world-leading financial services—something that we threaten at our peril—but, just as importantly, because of the vibrancy of London’s creative and business service sectors. However, overall, UK productivity persistently lags behind our leading competitors, as many noble Lords have pointed out. What can the Government do about this? Economic value is not created by Governments but by individuals who have insight and ability, and access to capital to realise that insight. Yet many individuals and businesses in recent years have been experiencing something akin to a cataclysm. The economy has taken a veritable body blow. Thus Government can most help business by engendering a stable economic framework, something that Governments the world over, along with regulators and financial institutions, have all too conspicuously failed to do over the past few years. Learning and applying the lessons of this widespread policy failure is the first priority both globally and nationally, and none of us can be certain we are there yet, as the chastening news from Ireland today reminds us.
In the UK, we look increasingly to the global labour market for rare and valuable skills. Overall, our own education system focuses insufficiently on the need to arm individuals and to provide the UK economy with the skills needed at every level to power modern business. For decades, our high-level educational outcomes have lagged behind our competitors, and that needs to change. Moreover, overly rigid immigration rules will block the entry of vital skills and talent, and thus threaten our productivity even further. So too, amid the realities of the global economy which I daily live and breathe, will internationally uncompetitive tax regimes for individuals and corporations. High tax rates will not prompt an immediate exodus, but I have seen at the margin the impact they have, and it is adverse to our true national interests. I should declare my own interests as a director or shareholder of several companies operating both nationally and globally; these are listed in the register.
Other factors are reducing our productivity. The principles that underpin the UK’s planning regime are admirable, but the interminable length of many of our planning processes and the fact that there is no economic penalty for all those who can cause delay—often very considerable delay, and many of them from the public sector—is enormously value-destructive. Our economy is also handicapped by the worst transport infrastructure by far in the developed world. The individual who wrote in a recent business department paper that the UK has a “well developed infrastructure network” should be sent immediately to Holland, where I was last week, to compare, for instance, the superb Dutch road and airport infrastructure with the UK’s own. Perhaps the Chancellor, when next contemplating his admirable aims for promoting UK productivity might reflect, when travelling to his own constituency in the north-west on the M6, that it is Europe’s worst and most congested strategic route, and then remind himself of the trivial investment in current spending plans for improving our national road infrastructure.
In conclusion, if we are ever to bring productivity in the UK up to world standards, the Government will need to roll up their sleeves and focus on getting the big things right, on addressing the stubborn, difficult and often politically unappealing challenges that have long held back and still hold back the UK economy from fulfilling its true potential.
Lord Layard
My Lords, long-term growth depends on the accumulation of capital. I want to make just one point about each type of capital: human capital, physical capital and social capital. Human capital is of course much the most important as it accounts for over half of the value-added in our economy. As a country we do quite well at the production of human capital in our universities and sixth forms. We have a good and well understood system. But we have absolutely no well understood system for producing skills for the other half of the population. It is an area of scandalous neglect which has persisted for many decades.
Eventually, the previous Government produced what I consider to be the central solution, which is to ensure that everyone who wants it can have access to an apprenticeship. This was established as an entitlement in the Act passed in 2009. Anyone with five passes of any kind at GCSE would be entitled to an apprenticeship place. As a result, every 14 year-old would be just as likely to see a way forward if he wanted to go down the apprenticeship route as he would if he took the sixth form route. This was to happen by 2013 and in my view it was the single most important policy for growth that was introduced in the previous Parliament. But, incredibly, the present Government’s Education Bill, if it is passed, will cancel this reform. Instead, the Government are offering 12,500 extra places a year for unemployed youngsters. One wonders at their thinking. How can it make sense to wait for a person to become unemployed before they can get a proper education? We have got into an extraordinary frame of mind in this country. For that group of people we have stop-gap measures and programmes. We want a proper system for the half of our population whose talents we have failed to develop to enable them to become skilled and have a proper stake in our community. Will the Government please let the reform in the 2009 Act stand? They did not oppose it before, and surely the need is even more obvious now.
I turn to physical capital. What we need are incentives to invest, which means good prospects for growth and financial inducements for the creation of new capital. But instead the Government are spending money on cutting corporation tax, which mainly provides a windfall gain for existing capital. If we had time-limited tax allowances for new capital creation, that would be of benefit in the long term and bring forward the recovery.
Finally, social capital is a much neglected asset of ours, but it is crucial to the mobilisation of our human potential. Social capital is what the big society is all about, so I find it difficult to understand why we are seeing the destruction of so much social capital at this time. Every day we hear of people in the third sector being laid off. They are often people who have been mobilising the assets of dozens of volunteers. We learn from the National Council for Voluntary Organisations that the charitable sector is annually going to be losing at least £3 billion of state funding. If the Government do not want to shoot their big society programme in the foot, these cuts should surely be the first ones to reverse.
Lord Flight
My Lords, first, I congratulate the noble Lord, Lord Hollick, on initiating what I think has been a very constructive debate. I also congratulate all the maiden speakers on their excellent contributions. I feel passionately that this country should do better. I am a lover of its history and I observe what has happened in the past: how self-help, a strong work ethic and a dissenting culture got industry and commerce going in this country. We have had interesting contributions today from the noble Lords, Lord Kestenbaum and Lord Popat, on the importance of the entrepreneurs from the immigrant communities. In the past, it would have been Huguenots and others.
I do not think that there is perhaps such agreement on the conditions that are likely to see us doing much better and that saw us doing so well in the past. I am no apologist for it, but I think that they are essentially to be found in capitalism. I have lived and worked in Hong Kong and I have been a great follower and lover of India. I observe how both of them, India latterly, have done so incredibly well. Living standards in Hong Kong are now much higher than here as the result of a much more open capitalist economy where entrepreneurs can prosper. In my textbook, if the public sector is much more than 40 per cent, you are heading for trouble, and in my textbook, if small businesses are tied down by too many regulations, they will not prosper. I was particularly interested in the speech made by the noble Lord, Lord Mitchell, about Brick Lane. Indeed, that is exactly the sort of entrepreneurial new area colony we want to see. I am glad it has happened, but I think it has more to do with good luck than a perfect environment.
I do not believe that any government-contrived go-for-growth policy will work. The Heath Government tried it and it ended in disaster. Governments can make the right environment for the economy to do better, and this Government are doing pretty well at it, but there are no government quick fixes.
Productivity growth in the past decade fell by 25 per cent, from 2 per cent to 1.5 per cent per annum. I regret to comment that it was very obviously the result of the overexpansion of, and negative growth in, the public sector. The poor old private sector was having to run faster and faster and was being squeezed by resources going to the public sector. The coalition Government have got things pretty well right. On the whole macro issue of keeping our credit-worthiness, they have succeeded. I would have liked there to have been no increases in tax—if anything, tax cuts—and more radical sorting-out and reform of the public sector. I return to my main point: you will not get the economy going if you go round putting up taxes too much.
However, the trends do not look too bad. Corporate profitability was up 37 per cent last year—admittedly, on a terrible previous year—and it was remarkable that 420 jobs were created in the private sector in a year that none of us thought was particularly encouraging. It is clear that we are set for exports and capital investment to lead growth and for, I hope, an economy that will have a higher savings and investment basis to support it.
I want particularly to rebut what I am afraid I view as rather Luddite and misguided economic attacks on the financial services sector. The main criticism is of two individuals whose reckless behaviour led two major banks into bankruptcy and to a failure of monetary policy—for which the Bank of England was responsible —and of regulatory policy. But banks are not the whole financial services sector by miles. It is surely appropriate that a mature economy such as the UK should have a large amount of activity in that sector—I might add that it is a great deal larger in Hong Kong. The biggest bank in the world, HSBC, came through it all without any trouble and any need for public sector or taxpayer support.
Let us remember that that industry generates some £100 billion of exports, some 1 million jobs and £55-odd million of tax revenues, and that London contributes something like £50 billion a year to the rest of the economy. London has been the great success of this country.
Baroness Northover
I remind your Lordships that this is a time-limited debate and that when you hit four on the clock, you have had four minutes.
Lord Lea of Crondall
My Lords, I shall not surprise the House by saying that the analysis of the noble Lord, Lord Flight, is totally the opposite of mine. His is the ideological analysis that lies behind the present Government, a Government who are driving the economy to the wall. Perhaps he and I could have a bet on it.
The noble Lord compared us to Hong Kong. Hong Kong’s logic is effectively to be understood as part of China. It is an enterprise zone for the Chinese economy to some extent and it has a degree of inequality that even the noble Lord, Lord Flight, I assume, would not advocate for this country. The model set by our country with its history, as a northern European country playing a successful part, along with Germany, Holland, Sweden and others, in European society, is not one I hear spoken of as part of the ideology coming from the other side. In fact, the noble Lord’s speech could be summed up as: private sector productive; public sector unproductive. Are people in education not productive? Are people in health not productive? These are caricatures.
I recognise that a question has to be put to the Labour Party and people such as me: what is the alternative? To the wonderful march on Saturday, in which 500,000 people took part, the Government’s response was that we did not put forward an alternative. I do not think that putting a sticking plaster on the present arrangements is the solution, whether it be the operation of the auditors—a mutual admiration society as analysed in our own Economic Affairs Select Committee report published yesterday—or typical boards of directors or the merchant banks. As was pointed out by my noble friend Lord Eatwell the other day, boards of directors in this country do not represent anybody apart from themselves. The churning of shares means that the idea that shareholders are in some meaningful sense the people to whom the board is accountable is fanciful. That the boards’ remuneration committees have pushed up directors’ salaries such that the gap between their pay and that of the average worker is 10 times greater than it was 20 years ago is a scandal. In my view, it is based on fraud in some cases and a lot of these people ought to be locked up. So mine is not exactly the same line of thought as that of the noble Lord, Lord Flight.
In the middle of all this, what is it that Britain is lacking in the four cylinders of its motor car engine firing at the moment? Let us look at the way in which the German economy operates, with its supervisory boards—which I advocate for this country. Let us take a fundamental look at the Victorian company law which we operate even now, more than 150 years since it was written; it is essentially the same. I offer an anecdote. A CEO of a company in this country went to Sweden and the first question put to him was: “How is this takeover, if it goes through, going to help our world market share?” That is not the experience of board members in this country. They are part of a cabal, answerable only to themselves.
Lord Mawson
My Lords, the sector that is always neglected when politicians and civil servants look at growth strategies is the faith community. On 22 February last year, I led a debate in your Lordships' House that explored the future use of nearly 50,000 church buildings standing in the middle of virtually every community in the United Kingdom. Building on this debate, on 25 March last week I hosted a national conference at Gorton Monastery in Manchester where the noble Lord, Lord Wei, spoke about the big society. Here, I must declare an interest as a director of the social enterprise, One Church, 100 Uses, which organised the event.
There are many church assets and resources in communities across this country that do not receive the recognition they deserve. At Trinity United Reformed Church in Gosforth, Newcastle, the congregation is leading a business improvement district bid built on the back of the work that has been done during the past decade reconfiguring three church buildings and establishing an enterprise hub which is now redefining the centre of the town. Today, this church is a major local employer.
Gorton Monastery, the conference venue, is today run as an enterprise specialising in banqueting, conferences, weddings and business bookings. Yet a decade ago, this was a cathedral-like building that stood derelict and desecrated. Following a £6.5 million restoration scheme, led by the social entrepreneur Elaine Griffiths and her team, the Monastery Trust, this formerly unused asset now sits alongside the Taj Mahal and the ancient ruins of Pompeii in having being listed among the 100 most endangered heritage sites in the world.
Another national example is the Bromley by Bow Centre in east London, which I founded—I must therefore declare an interest. It grew out of a local church congregation of 12 elderly people. It now has 31 established businesses and has an active business partnership with the multinational company G4S and other leading corporates. Together, they create innovative solutions, based on business principles, for some of our most challenging social issues. Is not the big society about businesses and social entrepreneurs working together?
However, while I am delighted that many churches are embracing the idea of the big society, there are significant problems that will hinder their existence. We all know that the macro growth of the British economy depends on the success of thousands of small businesses like those I mentioned. These entrepreneurial cultures take time to build. To undermine them when they are starting to fly is not wise in the long term. The present financial cuts, made irrespective of local context, are threatening the additional unpublicised services that are deeply embedded in thriving entrepreneurial centres.
In East London, at the Bromley by Bow Centre, the CEO, a businessman by background with considerable financial skill, is struggling to shave more than £1 million from his budget because of the scale of the cuts that the organisation faces. He is losing vital services. Despite the rhetoric from the Government, social enterprises are often being disproportionately disadvantaged by the cuts when resources are allocated from central pots and from local authorities.
I suggest that the big society depends on micro businesses as exemplars to lead the way. I therefore request that the Minister actively explores practical ways to identify, promote and foster economic growth within this emerging entrepreneurial sector across the UK. Much of it is based in some of our most challenging communities. The social sector is formed from many shoots and distinctions need to be drawn to protect these young entrepreneurial flowers. Will the Minister please inform the House how the Government plan to empower social enterprises in some of our most challenged communities?
Lord Davies of Oldham
My Lords, it is a delight to follow that constructive contribution from the noble Lord, Lord Mawson. It was partially trailed by my noble friend Lord Layard, who indicated this aspect of social capital is something to which the Government should pay attention with the concept of the big society. I hope that the Minister will address himself to that point. Of course, these contributions are a reflection of the fact that we all owe an enormous debt to my noble friend Lord Hollick for choosing this as a subject for debate today. It has given the House an opportunity to be constructive and thoughtful about positions for the future in circumstances where we all appreciate that the country faces tough times ahead. It is important that we are able to chart the routes to the future which promote the well-being of our society. Typically, my noble friend Lord Hollick indicated in his speech potential areas of entrepreneurial growth to which I hope the Minister will respond.
Also in the debate, we had five maiden speeches in which all noble Lords rose to a significant challenge today. They had to express, as we all feel, the privilege of being Members of this House and of having the opportunity to address your Lordships. They wanted to make sure that they made their constructive contributions to this serious and important debate today, and they had to do all that in four minutes. I hope that the House will be more generous to all those noble Lords in future when they make their contributions, but I congratulate them all today on the way in which they presented themselves to the House. We all look forward to hearing from them in the very near future; at greater length, I hope.
As my noble friend Lord Haskel indicated, this is the third economic debate we have had on successive Thursdays. In past weeks, we have somewhat aired our differences of perspective on economic policy. An element of that inevitably underpinned this debate. It was brought to the fore by the noble Lord, Lord Skidelsky, and supported by my noble friend Lord McFall who indicated another perspective that is different from the Government’s—a perspective showing that the Government are taking great risks with the economy and the welfare of our society. Her Majesty's Opposition have been articulate in identifying an alternative route, of which the outstanding feature is that the Government are bent on reducing the deficit within the minimum period of time—a single Parliament. In doing so, they are asking the country to be subjected to cuts that will affect the well-being of large sections of the community. But those cuts also affect the growth potential of the economy.
In this debate, noble Lords have identified where these cuts may do harm to the important, long-term economic development aspects of public investment. I know that the Government stress only the private at the present time. None of us doubts the importance of the private sector in terms of growth, but one cannot set at nought the public sector. Nor can one cut it without engaging on a strategy of some risk.
As a number of noble Lords identified, our education sector will be under great pressure. Our universities will be significantly starved of public resources and will have to depend on the free market in terms of the response of students. We do not know whether that will lead to a reduction in resources for the universities because students are unable or unwilling to pay, and we do not know the impact on recruitment. However, we do know that when these reductions take place the impact on research in our country, and on the development of a great deal of the fundamental basis on which creative activities can take place in the economy, may be seriously hurt.
In particular, it seems that we are the only country engaged on cutting the science budget, while all other countries regard it as an essential investment. We have a significant contribution to make in science and have a prime position in terms of our world role. However, we must be careful about the danger of losing that position as a result of the Government’s strategy.
It was indicated in the debate that we should not underestimate the creative sector, which is an important growth area of our economy. It was referred to by my noble friend Lord Kestenbaum. Creative activity and the genius of British people, which is translated into effective and constructive activity in the media and the whole world of the creative arts, is a growing part of our economy not to be underestimated. It is now approaching 10 per cent of the economy. It depends on training, essential skills and the colleges providing skilled manpower.
As my noble friend Lord Layard emphasised, whatever the difficulties with regard to higher education, we should be extremely concerned that this continues to be a society that undertrains and undereducates a substantial section of the population. That is why the Government’s contribution with regard to the modest number of places in apprenticeships and training schemes is a minute dimension of the need that is required to ensure that we have a population sufficiently skilled to make a contribution to our society and earn their living in this world. Cutbacks in that sector—and colleges are suffering very substantial cutbacks—and the loss of the guarantee to which my noble friend Lord Layard made reference is a very serious blow.
Another dimension of this, our transport infrastructure, was introduced by my noble friend Lord Soley and the noble Lord, Lord Birt. I give due credit to the Government with regard to rail investment and the fact that crucial areas of it are being sustained. But my noble friend Lord Soley is absolutely right when he says that there does not appear to be a concept of an aviation policy when aviation is bound to play a very significant role in the economy. The noble Lord, Lord Birt, also, identified our difficulties with regard to road.
Another dimension on which I give the Government credit is the Green Deal. They are continuing policies which the previous Government adumbrated, but we are looking forward to the whole development of house insulation and improvement with regard to conservation of energy in the home. The Government deserve credit for their commitment in that area. But as my noble friend Lady Worthington indicated, it is not so certain that the commitment to the green bank and the whole environment development is so secure.
There are tough times ahead. We all recognise that the nation has got to identify areas of potential growth. But I emphasise this one other dimension, which my noble friend Lord Wood introduced into his all-too-brief speech, when he reflected on the concept of fairness. If we are all in this together, there must be some concept of fairness across society. It will not do that the Government rely upon the failed Project Merlin for their temporising with regard to the banks and their pathetic gestures towards seeing the banks make some reparation and take some responsibility for the disasters of the past, while pursuing policies with regard to social cutbacks which hit so adversely the least well-off in our society.
I am grateful that today we have moved from a position of significant division to one in which there have been some very constructive proposals on growth. I hope the Minister will be able to give us encouragement that he intends to pursue the majority of them.
The Commercial Secretary to the Treasury (Lord Sassoon)
My Lords, we have had a tremendously interesting and wide-ranging debate today. I thank all noble Lords who have contributed, particularly the noble Lord, Lord Hollick, for securing what is in effect, I suppose, part two of our growth/Budget debate. I recognise what the noble Lord, Lord Haskel, kindly said about the endurance of the Minister who has to sit here, but I note that many other noble Lords have sat here throughout. I am only grateful to at least have a week between the two debates rather than have it on two consecutive days.
I completely agree with the noble Lord, Lord Davies of Oldham. It has been an overwhelmingly constructive debate, in which many positive ideas have come from all round the House, and this presents me with an additional challenge today. Last week I attempted, maybe foolhardily, to make some mention of all noble Lords’ contributions to that debate. But I know my limitations. Today, with even more speakers and an even shorter time to respond, I apologise in advance but I am not going to be able to make mention of everyone who spoke. There were lots of good ideas, not all of them workable, but it is right that you should push the envelope in imaginative ways, whether in the use of faith buildings or encouraging science in schools. There are all sorts of great ideas coming from around the House, and I will make sure that those are considered by the Treasury or the other departments responsible.
In general, the message I take away is very welcome, because I know that the temptation is for us all, or for a lot of us, to be making political points. The message that I take away is that there are many good things in the Budget and in the growth document that went with it, but that we have to work harder—I understand that—and consider lots more of the ideas that are coming up. In the phrase of the noble Lord, Lord Hollick, it is a worthy and promising start. I appreciate that. I take to heart the big challenges for us—that we must be bold and not timid as a Government. I agree, and I will come back to that. We must always remember the big picture. I agree with that. We have to live up to the challenge of the Government’s part of the bargain of delivering and not just making promises. I will come back to each of those themes in a minute.
I start by acknowledging the five excellent maiden speeches that we have heard today—from the noble Lords, Lord Kestenbaum, Lord Wood of Anfield and Lord Collins of Highbury, my noble friend Lord Popat, and of course the noble Baroness, Lady Worthington, who has confused me by moving seat. I am glad to see that she is back in the Chamber. There was a common and very important theme in those speeches, some of it put very movingly, about what this country and this House have done to foster diversity, whether of ethnicity, faith, gender or sexual orientation. Of course, we must not forget that diversity in hair colour is also a feature of life. The maiden speakers also, by their diverse backgrounds in business, academia, the unions and the environment, and by the quality of the individual speeches, could make no better case for this making a genuinely value-adding House that we are all part of. That was a great addition to what was, in any case, a very important debate.
I remind noble Lords of the context of this year’s Budget and growth plan. The Budget is about reforming the nation’s economy so that we have sustainable growth and jobs in the future. “Sustainable” is a word that has been used by a number of noble Lords. It is worth very briefly reminding ourselves, as a number of speakers have done, that this will not be possible without sticking to our deficit reduction plan. My noble friend Lord Higgins was the first to point out the constraints within which we live. It is that plan that has secured the economic stability, the international credit rating and the low interest rates that are the platform from which we must go forward with sustainable growth.
Last week’s Budget was built on clear economic principles of sound public finances—and no wavering on that—but support for private sector growth, reward for work, help with the pressure of high fuel prices in the short term and a new vision for growth. That vision for growth has four key ambitions at its heart: that Britain should have the most competitive tax system in the G20; that Britain should be the best place in Europe to start, finance and grow a business; that Britain should be a more balanced economy by encouraging exports and investment; and that Britain should have a more educated workforce that is the most flexible in Europe. Those noble Lords who had the stamina to be here during last week’s debate as well will know that I went through each of these four areas thematically. But let me today take a slightly different cut through the issues, prompted very much by the challenge of the noble Lord, Lord Hollick, that we must be bold and that timidity is not enough. That is linked to the challenge from a number of noble Lords that we must attend to the big picture.
Let me suggest to your Lordships a number of areas in which I believe we are being bold and addressing the big-picture issues. Take corporation tax: the fact that we are heading, in three years from now, down to a corporation tax headline rate of 23 per cent, which will take us to the lowest rate in the G7 and one of the lowest in the G20. I suggest that that sends the clearest signal possible around the world that this country is again open and welcoming to all businesses to come and base significant global operations here.
Deregulation is a difficult, challenging topic which the previous Government worked hard on but we have to find new ways of tackling it credibly. Again, we will be bold so we are starting right now with a new initiative to put tens of thousands of individual regulations on to a public website. Two weeks at a time, chunks of regulation related to a specific part of the economy will be open to challenge. At the end of the period of public challenge, it will be up to the departments concerned to argue why any regulations which have been challenged by the public must stay in place. The presumption of the committee led by my right honourable friend the Business Secretary will be that if people identify a regulation that has to go, it has to go unless there is an overriding reason for it to stay. I suggest that is bold.
Planning is a critical issue for growth in this country, and we will bring out some draft new planning guidelines within the next few months. They will have in them a fundamental new approach which has, at its heart, a presumption in favour of sustainable development. In addition, the new planning rules must have a process in place where the entirety of planning, including appeals, has to be finished in no more than 12 months. For those of your Lordships who have businesses stuck in planning processes that go on for three or four years, I suggest that is a bold approach.
A number of speakers brought up the field of energy and the question of setting a carbon floor price was raised. I suggest that setting a carbon floor price is a bold, difficult but necessary part of underpinning the huge amount of new energy investment which this country needs, so we will not shy away from taking the difficult decisions.
We have heard a lot about education—
Lord Davies of Stamford
Will the Minister not acknowledge that although setting a carbon price might be very desirable if it was based on international agreement, if it is based on a purely unilateral or national move we shall be handicapping our industry and our growth, and contributing nothing at all to the reduction of global warming?
Lord Sassoon
My Lords, I do not wish to be discourteous to the noble Lord, Lord Davies of Stamford, but if I am to do justice to at least some of the points that have been raised in the debate so far, he will perhaps forgive me if I do not answer his question in intervention. I would rather do justice to some of the points made in the debate.
On education and bringing people into the workforce, I could mention a number of initiatives but let me just draw attention to the apprenticeships. Those are one key plank of what has to be a bold transformation of young people’s appreciation of the different and valuable routes into work. The total number of apprenticeships that will be available over the next four years is 1.1 million, so the Government are playing their part in making the apprenticeships available. I hope that, as my noble friend Lord Newby has said, business will rise to the challenge of taking up those places. Again, these are big-picture issues and this is, I suggest, a bold approach.
Lastly, there has been mention from a number of angles of the challenge to get finance into our corporate sector, whether SMEs or the whole of industry. We have set the banks the challenge now, through the deal that we have done with them, whereby they have agreed to make up to £190 billion of credit available for new loans, and more if it is necessary. That very significant amount of money should meet the reasonable demands of growing businesses in this country. When the banks are under considerable pressure to manage their balance sheets more prudently under new capital and liquidity rules, I suggest again that getting financing through to businesses is one of the big-picture challenges and that we as a Government are rising to that challenge in a suitably bold way.
Another big-picture theme that has come up a number of times and which deserves particular recognition is that of infrastructure because, again, the size of the challenge is enormous. A number of speakers raised this, the noble Lord, Lord Hollick, first, with the noble Lord, Lord Bilimoria, and others following after. We have identified £200 billion of infrastructure investment as being required over the next five years in economic infrastructure alone: in energy, water, broadband, transport and so on. The reason that this is so important is clear. We have an ageing infrastructure which needs considerable refreshment and rebuilding and because of that, at the very start of the Government’s work on our growth plans last autumn, we put out the first ever National Infrastructure Plan. That is starting to identify, sector by sector, the vision that we have for the infrastructure that is necessary for this country over the next 25 years and more.
We committed in the growth programme and the Budget to coming up with a rolling forward programme of infrastructure projects, so that we can start to give much greater certainty than there has been to the construction and financing industry in this country. If we expect businesses and financiers to take the strain, which they will do on 60 to 70 per cent of that £200 billion of infrastructure, we need to give them some clarity about where these programmes will be directed, so that is what we will do.
In answer to the specific challenge from the noble Lord, Lord Soley—although he knows this well—it is worth restating that, yes, aviation policy is very important. That is why my right honourable friend the Transport Secretary took time to work up a consultation paper that was published yesterday. I acknowledge that it may not meet the aspirations of all interests in the aviation sector but it is the start of a critical debate. I acknowledge that that debate must be had: that is why the consultation paper has gone out on aviation policy, which is one critical component. Alongside that, I acknowledge the references that were made to our commitment as a Government to high-speed rail. We must look at transport within a holistic and complete picture.
In this general area, there were also a number of references to the desirability of a green investment bank, a national investment bank or an infrastructure bank; your Lordships expressed it in a number of ways. I entirely understand the ambitions of the noble Lord, Lord Skidelsky—the noble Lord, Lord McFall of Alcluith, made this point as well—but without going into the technical details of PSBRs and how government accounting works, the first thing to say is that having a very large national investment or infrastructure bank is simply not possible given the constraints that we have on the Government’s balance sheet. However one looks at it, this would score against the national borrowing. Even if the case were made, and there are strong proponents on both sides of the argument about how big a green or a national investment bank is required, we have to be realistic about the constraints of the public balance sheet.
Within that, we announced last week in the Budget that we have brought forward by one year the starting date for the operation of the green investment bank to 2012-13. I do not want to make political points, but this Government for the first time have committed the money—£3 billion. That is a good start. We have committed money to this project in a way that there was previously a lot of talk about over the past few years. The bank will be able to leverage in private sector money so, even though in the first couple of years of its operation it will not be able to have its own borrowing, the leveraging effect of the green investment bank, by working with private sector investors, will be materially important to the more challenging investment schemes that must be introduced in the areas of new energy and new technology.
That is to address a few of the specific points made. I end by drawing attention to one or two of the reasons to be positive, which are very welcome. Yes, there are huge challenges, but the noble Lord, Lord Rees of Ludlow, reminded us about the latest Nobel prize-winning team, working with graphene, that has been based in this country and the need to exploit that; the noble Lord, Lord Mitchell, talked about Silicon Roundabout with great passion and the way that that will translate through the Olympic legacy and Tech City into something that is really lasting; my noble friend Lord Flight talked about the 428,000 jobs that were created in the private sector last year; the noble Lord, Lord Bhattacharyya, talked about our great strengths growing again in manufacturing and exports; and my noble friend Lady Wheatcroft gave us a specific example in the design and textile world of what we can do.
This has been a wide-ranging debate. I take from it a great challenge to Government, which I assure noble Lords the Government are committed to driving through. I also take away some great strengths that we have to work on. The Government are putting our economy back on the right path. We are supporting and will support enterprise, and we are driving innovation. We are doing our part as a Government to invest in skills, jobs and infrastructure. The Budget stands firm on our plan for the recovery; it is a plan that is good for business and good for growth and will help to create the prosperous economy that the people of Britain deserve.
Lord Hollick
My Lords, this has been an excellent debate. I thank every speaker for the informed and constructive way in which it was conducted. There were many excellent ideas and there have been five outstanding maiden speeches, which give us a glimpse of the formidable contribution that our new colleagues are going to bring to our debates.
The Minister has not had the opportunity or the time to go through each and every one of the suggestions that was made. Perhaps he will find an opportunity in future to do that, and perhaps he will take up the suggestion of the noble Lord, Lord Higgins, of having a meeting in the Moses Room to discuss some of these things. The contribution that has been made today is worthy of continuing discussion and serious consideration by the Government. With that, I beg leave to withdraw the Motion.
NHS: Standards of Care and Commissioning
(13 years, 7 months ago)
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Lord Turnberg
To call attention to standards of care and the commissioning of services in the National Health Service; and to move for papers.
Lord Turnberg
My Lords, I am delighted to have this opportunity of opening this debate. I am pleased that so many noble Lords are remaining in the Chamber and are going to contribute. I look forward to hearing what they have to say.
I shall focus my remarks on recent reports of failures in standards of care, particularly for the elderly, but this is also a good opportunity to examine whether the commissioning arrangements proposed in the new Bill will have a positive or a negative effect on standards of care. Perhaps, too, we should look at how the Bill might be used to make things better.
I am someone who has spent most of his life working in the NHS and I bow to no one in my support and admiration of what it achieves. I see enormous advances being made every year, and patients who would no doubt have died are now cured and surviving into old age. Medicine has been transformed out of all recognition during my working life.
It is because I have this pride and huge admiration of the NHS and the people who work in it that I now feel a deep sense of shame. Despite these wonderful advances, in too many places we have been ignoring the common decency needed to care for the vulnerable, the sick and the elderly—and it is the elderly who are often the most vulnerable. As Ann Abraham, the Health Service Ombudsman, said in her report, there is a,
“gulf between the principles and values of the NHS Constitution and the felt reality of being an older person in the care of the NHS in England”.
That is why I am going to focus on the elderly, but they are not the only group where standards have slipped. I suspect that other noble Lords may speak about the mentally ill, and only the other day we had a report about failures in maternity services.
Of course, the media are quick to pick up the seemingly occasional horror stories of neglect in a hospital. You might want to hide behind the idea that these are rare incidents against a background in which 1 million people are looked after perfectly well in our hospitals and nursing homes every 36 hours, and that is absolutely true. But it turns out that it is not a rare or unusual event. It seems to be happening far too often, and stories of neglect are just too common for comfort: patients, usually in a geriatric ward, unable to eat the food left out of reach at the end of the bed and collected by staff seemingly unaware that it has not been touched, and too busy to notice that a thirsty patient is unable to even drink without help—or, worse, too busy to notice that a helpless patient, unable to get out of bed and incontinent, is sitting in damp sheets for hours or, the final degradation, soiled by faeces and unwashed for days.
Noble Lords might ask whether I exaggerate. Where is the evidence that this picture is not just a rare, occasional lapse in an otherwise acceptable system of care? Well, quite apart from the rather common anecdotes of many with elderly relatives, there is now the report of the ombudsman in which she describes 10 examples of the complaints she receives that emphasise just how bad it can get.
We cannot say that we have not been warned. In 1997 we had the report from Age Concern in its “Dignity on the Ward” campaign, describing failing standards of care. When it followed that up 10 years later, in 2007, it found that little or nothing had changed. The Commission for Health Improvement in 2003, the Healthcare Commission in 2007 and the Care Quality Commission in 2010, despite regularly changing their names, came up with the same message. Now there is the book that has just been published, Michael Mandelstam’s How We Treat the Sick, which brings all this together in a devastating way.
The scandal at the Mid Staffordshire hospital of a year or so ago turns out not to be an isolated example. Every time we have a disastrous fall in standards we have another report or inquiry. I will not list all the hospitals or nursing homes that have been the subject of criticism but they range from Cornwall to Rotherham, from Tameside to Southampton and from Oxford to Bolton. There are just too many, and it is clearly not a new phenomenon. It went on under the past Government and the one before that, so I do not want to make any political points here. But how can we have tolerated this neglect of our most vulnerable citizens for so long? No one can afford to be sanguine—not the doctors, not the nurses, not the managers and not the Government. I want to say a few words about why and how this is happening and suggest what we might do about it, because we certainly cannot allow it to go on.
Let me apologise for starting with the nurses, for whom I have the greatest admiration and to whom I owe a great deal of personal gratitude. However, at the end of the day, it is the nurses who patients look to first for their personal care and empathy. It is always tempting to look back to a golden age that never was, but one thing that is clearly fixed in my mind is how high the standards of nursing care were on the medical wards where I worked in the 1950s and 1960s. Those were the days when the sister in charge of her ward really was in charge. She was usually a mature woman in a career job who made absolutely certain that everything ran efficiently and well. I admit to running scared of her; as, indeed, did the patients.
However, those were the days before the revolutions in nurse management and nursing education. One of the unintended consequences of the upward drive to better educated nurses with university degrees has been the development of a generation whose aspirations are set high. They quite reasonably expect to have a career in which they can practise their skills to a high standard. Who can blame them? They do a great job with all the caring attitudes you can wish for. However, that has left a gap at the more basic and, to many, less attractive level of the general and geriatric ward where there is greater emphasis on the basic needs of patients: feeding, washing, help with movement, going to the toilet and so on.
Those are the wards where staffing levels are often lower per patient in the belief that they do not need the more intensive, one-to-one care of the specialist units. So they are often understaffed and sometimes come to rely on temporary, or “bank”, staff, who constantly change. Continuity of care is damaged as patients, already a little disorientated by being removed from their familiar environment, are faced with a bewildering series of new faces.
It is not only the nurses who are constantly changing. Confusion is compounded by the way the rotas for the ward doctors are arranged to fit in with the European working time directive or as they rotate through yet another experience to chalk up on their training programme. So there are new faces at every turn. These wards do not have the champions that the specialised departments have, who can put pressure on management to protect them from cuts. Not much wonder that nurses in training pass through those experiences quickly on their way to higher things. Nursing sisters in charge may not stay long enough to be able to stamp their authority and, in any case, are distracted by paperwork or, nowadays, putting stuff into their computers—care plans and the like.
I fear that these changes have created a situation in which we have two starkly different standards of care. On the one hand we have highly trained, highly professional and caring nurses in well staffed specialised units—intensive care, coronary care, chemotherapy units and the like—and, on the other hand, poorly staffed wards, rushed nurses, falling morale, falling standards and poor supervision. These are the staff who are struggling to cope with patients whose vulnerability makes enormous demands for the care and attention that the nurses have neither the time nor the patience for.
Of course, this picture is not true everywhere and many, probably most, wards and hospitals are very good indeed. It is just that this picture is too common for us to take any comfort from it.
So what is to be done? Here it is clear that there is a need for a multifocused set of actions which no one profession or body can shirk. First, we must have someone at ward level who takes full responsibility for ensuring that patients are properly looked after with the respect and dignity that they deserve. That is absolutely key. I hope that my nursing friends will forgive me for saying that we should be making this job, the ward sister or charge nurse, a career post and rewarding those who do it accordingly.
Lord Turnberg
My Lords, there has to be some continuity in that post to make it an attractive alternative to the lofty pastures of the specialised departments.
Then there is the issue of too few carers on the wards. What happened to all those state-enrolled nurses—SENs—whose roles were predominantly in the caring world and who did not aspire to higher degrees? They disappeared in project 2000. Is it possible for us to resurrect the SEN grade and make it attractive again? I hope that some thought can be given to that.
That leads me to the medical profession, who cannot absolve themselves—ourselves—from responsibility for the neglect we are now discussing. They, after all, must see the way their patients are being cared for and, I am afraid, have not raised their voices loud enough. They should be leading the charge for proper staffing levels on their wards. They should be pressing hard on the managers of their hospitals. Of course, they really must do something about these disruptive rotas that are destroying the continuity of care that patients need and deserve.
The managers must make themselves much more aware of their responsibility to ensure that there are sufficient staff on these wards to cope with what is one of the most demanding areas of a hospital. They should know that these wards cannot be among the first, for example, to take cuts. Then there are the responsibilities of the trust boards. Board members have to be rather more hands-on and need to know what is going on in their wards. Many obviously do, but it seems that there are too many who do not.
Finally, I come to those bodies who will be commissioning services in the bright new tomorrow, the GP consortia, and the responsibilities that we should be placing on them for standards of care in the NHS, under the Health and Social Care Bill coming through the House—in whatever form that Bill survives. To paraphrase Aneurin Bevan, there are bed pans clanging on the floor all over the country and, in the rush to devolution to the local level, important though that is, devolved responsibility must also mean some central accountability.
As these services are commissioned, we must make sure that the Bill places a duty on the GP consortia to make sure that high standards of care for the elderly, at least, are a contractual obligation on the providers. Furthermore, we must have a robust system of monitoring so that we can have some confidence that this care is actually being provided. Perhaps the proposed commissioning board can take this on, but only if it has the capacity to monitor what is going on in hospitals and nursing homes, and has a mechanism for action when standards slip.
We have been through too many years in which we have seen indifference punctuated by intermittent reports and wringing of hands. It has to stop. The time for action is now.
Viscount Bridgeman
My Lords, I congratulate the noble Lord, Lord Turnberg, on his timely and most important contribution. We have benefited from his immense and distinguished experience.
The Health and Social Care Bill represents a once in a lifetime opportunity. However, we must not forget that it is built on, and expands in much greater depth, the fundholder initiatives that existed in the National Health Service between 1991 and 1997, when they were stopped in their tracks by the then Secretary of State. I assure the noble Lord, Lord Turnberg, that that is the last political point I shall make. There were, however, some welcome initiatives introduced by the previous Government, of which two were the creation of foundation hospitals and the introduction of practice-based commissioning groups.
The current reforms under the leadership of my right honourable friend Andrew Lansley seek to build on the reforms of the 1990s and the more recent ones of the previous Government and to capture the advantages and discard the disadvantages of both. At the heart of the Health and Social Care Bill lies the increased emphasis on bringing the patient into the decision-making process, and many of the reforms flow from that. Like, I am sure, many speakers today, certainly the lay speakers, I have canvassed the views of a number of general practitioners and consultants. We can of course differ on the overall measure of enthusiasm for the reforms. However, I think it is fair to say that a substantial proportion of general practitioners welcome the proposed changes, while opinion among consultants is more evenly balanced, though here, among the younger age group, the reforms appear to be generally welcomed.
Among the general practitioners there is the age-old agony for the conscientious GP as to how much time he or she will be required to give up for the management of the consortium, at the expense of treating patients. The evidence from the early experiences of the pathfinder consortia shows that many able practitioners have come to terms with this issue and are able to adjust their professional lives around it—and the consortia are at the heart of these reforms. They will take the place of the primary care trusts. What, then, is the difference? The main difference, as I see it, is that the PCTs have seriously little clinical input. This, by contrast, will, I hope, be the strength of the consortia, which will be clinically led. These consortia, to which every general practice will have to belong, will have the resources to back up their constituent practices and will commission secondary care.
The document Liberating the NHS: Legislative Framework and Next Steps is, I suggest, a model of its kind. It is readable, positive and forward-looking. I wish to speak about one of the specific matters mentioned in it—the provision of specialist services. It is known that some disabled charities are concerned that some specialist low-volume and often expensive services which they use will be lost. The paper specifically provides for this by encouraging consortia to work together to share such services, and for these to be commissioned by the NHS Commissioning Board. This is but one example of the many relatively minor issues which have been addressed in the paper and demonstrates the flexibility of the proposed consortia structure.
Much has been made of pathways in the paper, and these are at the heart of the proposals in the relationship, initially, between the patient and his or her GP. If the patient cannot be treated within the practice, the GP will negotiate with medical colleagues in the consortium, who will in turn negotiate with the provider. Note the clinical input at every stage.
Time does not permit me to make anything but passing reference to the very welcome initiative proposed to combine many of the functions of healthcare and social services under the health and well-being boards. The point that the noble Lord, Lord Turnberg, made about the care of the elderly is crucial to this combination. This is a very important and long overdue development.
I asked a GP who had given me considerable help in preparing for this debate whether there was any point that he would like me to make. He said without hesitation, “The NHS has for far too long tolerated poor performance by general practitioners”. I suggest that this is at the heart of these reforms.
Lord Alderdice
My Lords, we are all indebted to the noble Lord, Lord Turnberg, for obtaining this debate. The only unfortunate thing is that he did not obtain more than two hours as that leaves us with relatively little time to discuss an issue about which many of us are extremely passionate. However, as an additional service to your Lordships' House, he introduced the debate with understanding, passion and compassion and identified some very real and long-standing problems in the NHS. I wish to pick up on those as they are of enormous importance.
As the noble Lord pointed out, over a considerable time there has been a deterioration in what I might describe as the culture of care. I say “care” rather than “treatment” because, as he rightly pointed out, specialist, high-quality, acute treatment is often of a very high standard indeed; but in areas such as the one closest to my heart—care of the mentally ill, whether in the community or in in-patient care of various kinds—or care of the elderly, as he rightly pointed out, that long-term care has often deteriorated because of cultural changes in the NHS itself. I shall explain what I mean by that.
As the service expanded and became more complex, there was an increasing and necessary focus on management. It became increasingly the case that those who progressed would move into management. The noble Lord referred to this. In most professions, such as social work, psychology and particularly nursing, if someone wanted to make progress, inevitably they moved out of direct clinical care. For the ambitious and capable young nurse, for example—although this state of affairs was not confined to nursing—to make progress in the profession meant focusing on training and development, to move out of direct clinical care and into management, rather than making clinical care a long-term career commitment.
For obvious reasons, this disadvantaged the concern and commitment of the ambitious and capable young nurse for clinical care; the culture was to move into management. Doctors moved in the other direction. They continued to focus on clinical care—even when they got into management, they rarely gave up care completely—but that meant that they were disadvantaged when they were good managers. They tended to let go not of the care side but of the management side, which increasingly became detached from medicine, so doctors became disenchanted with the whole process of management.
In their different ways, our different professions found that the domination of management in the service took us away to a management culture rather than to a professional culture of devotion and care, which is what our NHS ought to be about. It is that change that we need to find a way to reverse. This is the idea of the reforms that are proposed. They are not necessarily the same as the proposals that will come forward, and it will be your Lordships' responsibility to try to change things in such a way that the principles are best expounded in the legislation and ultimately in its implementation. The challenge is how we move to less management focus in care and to more clinical focus, and focus on the patient.
We must move to greater local accountability; greater clarity of governance; competition in quality of care and not in the price of care, because that will be set down in tariffs; and to ensuring that there is a greater integration and collaboration of the various groups involved—public, private, and charitable and non-governmental, which often produce good-quality niche care in various ways. If we can ensure that progress and do it together—I hope that the exercise will be collaborative rather than partisan in your Lordships' House—we will have something to look forward to despite the difficulties that the noble Lord pointed out.
Baroness Emerton
I thank the noble Lord, Lord Turnberg, for raising this timely debate. Without doubt, corrective action is required to deal with these issues. They will not go away unless that happens. This fact is reflected in the 57 per cent increase on last year in referrals from the general public to the Nursing and Midwifery Council fitness to practice committee in the months of January and February this year. The total was 833—a dramatic increase.
On 3 March, I asked when the Government were going to respond to the report of the Prime Minister’s commission on nursing and midwifery, published in March 2010. I declare an interest: I am proud to say that I am a nurse and that I was on the commission. The Minister replied that he would check where the Government were on the formal reply. I raise this again as no response has been received and because a year was spent by 20 senior and distinguished nurses, midwives and health visitors looking at the problems that faced us.
Evidence was collected following meetings with the public, stakeholders and students, and left the commissioners in no doubt that a “care quake” was approaching—driven by healthcare trends, social changes, demographic changes, families outsourcing care, growing numbers of people with long-term conditions and the additional complex conditions resulting from the ageing process. The nursing professions are centre-stage to handle the care quake, but must be properly equipped and supplied to deliver truly compassionate care that is skilled, competent, values-based and that respects patients' dignity with clear, respectful communication to patients and relatives.
We gathered from extensive engagements with the public that they felt strongly that the public image of the nursing, midwifery and health-visiting professions is out of date and that a new story of nursing is needed. The clearest message was that the traditional image of the front-line sister or leader of a community nursing service should be restored to the former point of visible authority and clear leadership role, answering the cry, “Who is in charge?”, at front-line level.
The commissioners set to work to make recommendations for the largest single workforce in Europe. There are currently in excess of 625,000 nurses on the register. The NHS nursing and midwifery pay bill is £12 billion, with more than £l billion spent on pre-registration nursing and midwifery education. There is little research on the cost-effectiveness and cost-benefit of nursing-led services, and existing research is often ignored. A recent scoping review commissioned by the Nursing and Midwifery Council found that there were 300,000 healthcare support workers in the NHS that were unregistered, posing a potential risk to patient safety. Recently the Mid Staffordshire complaints officer stated in evidence to a public inquiry that the ratio of trained nurses to support workers had swung to 40 per cent trained and 60 per cent healthcare assistants over the period 2002 to 2009. That was a change to address the £10 million overspend in the trust.
The move to make nursing a degree-level profession by 2013 is an integral step in ensuring that registered nurses and midwives have an academic base to translate into high-level, quality compassionate care.
Of the nursing commission’s 20 recommendations, I wish briefly to highlight four. The commission said that the nursing, midwifery and health-visiting professions should deliver high-quality care and that leaders should accept full managerial and professional accountability for ensuring that the organisation provides high-quality, compassionate care. The boards should ensure that care champions strengthen the front-line managers—for example, sisters and charge nurses. There was a call for advanced practitioners and healthcare support workers to be regulated, protecting the title “nurse” and limiting its use to those on the NMC register. This would be equivalent to “enrolled nurse”, as has already been mentioned. Another recommendation was that nurses and midwives should contribute to health and well-being, reducing health inequalities.
I hope that Her Majesty’s Government will respond quickly and positively to the commission’s recommendations, which all go towards achieving an improved nursing profession that will meet the needs of the community with compassion and with respect for the elderly.
Baroness Northover
My Lords, perhaps I may remind noble Lords, as I did in the previous debate, that we have a very tight time limit in this debate. Therefore, when the Clock reaches “4”, noble Lords will have completed their allotted four minutes.
Baroness Sherlock
My Lords, I thank my noble friend Lord Turnberg for securing this debate and I declare a non-pecuniary interest as the next chair of Chapel St, a charitable enterprise which delivers services in partnership with primary healthcare.
I should like to wave another report at the House. This one came out last week. It is from the King’s Fund and is called Improving the Quality of Care in General Practice. In fact, it begins where the noble Viscount, Lord Bridgeman, left off, looking at variations in care. The report was the result of a major inquiry conducted over two years by an independent panel. The panel looked at general practice and found that most care is good, which is a relief, but it also found that there is a widespread variation in performance, as well as gaps in the quality of care delivered by general practice. The report is full of examples, which I commend to the House. It showed variations in the quality of prescribing, in the quality of diagnosis—for example, one-third of patients with stomach or oesophageal cancer who required urgent referral to hospital were given non-urgent referrals—and in the rate of referrals. The report also highlighted variations in the continuity and co-ordination of care. It showed some significant differences.
Almost as telling was the fact that it found a significant problem in accessing public information, particularly comparative data, on performance in general practice. When we consider the avalanche of data available for almost every other part of the health service, that is quite striking, and I should be interested in hearing the Government’s reaction.
I see that the noble Earl, Lord Howe, told the Health Service Journal last week that, in response to the report, the Government’s plans to move 80 per cent of the NHS commissioning budget to GP-led consortia will improve this situation. I am very keen to learn how, and perhaps the Minister will take the opportunity to explain it to the House. He may not want to go into detail today but I wonder whether I can encourage him to assure the House that he will engage with the King’s Fund, as well as with the Royal College of General Practitioners and the BMA. I was delighted to hear that they both welcome the report, so there is a fair wind behind it, but perhaps the Minister will engage with them in looking at how these problems can be tackled. Perhaps, in particular, I could encourage him to do so before this House starts to look in detail at the Health and Social Care Bill that will be coming before us.
For me, this report could be a metaphor for the state of the health service: most general practice is good; the NHS is good; popular satisfaction has never been higher; its efficiency is admired; but there are pockets of significant problems, as described by my noble friend Lord Turnberg. It is clear that performance and outcomes vary too much. We all want to see continuous improvement and we all are open to the idea of changing how healthcare is delivered. However, it is not at all obvious to me how the revolution in the health service, on which the Government are embarking, will necessarily solve these problems. Risks will inevitably be taken by such large-scale reform, so not just this House but the country needs to be persuaded that the changes will produce results that will solve the kind of problems that have been identified. I strongly encourage the Minister to look not just at the specific problems raised but to say why the Government think that their prescription will cure the ills. That is the challenge for all of us.
When I thought about what I would talk about today in my four marvellous minutes, I went back to a list of notes that I had made at the wonderful all-party seminars that many of us have attended with experts in the field, and I found a list of 20 questions to which I did not know the answer. It is not simply a list of questions that I cannot answer, as that would be a rather greater list, but a list of questions to which the experts at these seminars had been unable to find the answers after carefully reading the Bill and all the associated documentation. If that is the case, we have to question the wisdom of proceeding at the current pace. This House has enormous respect for the integrity and experience of the Minister. I wonder whether he could speak to his colleague the Secretary of State and encourage him to reflect on the fact that a wise man does not demolish his house while the architects are still sketching the new one.
Baroness Hollins
My Lords, I, too, am somewhat daunted about speaking about my interests in this debate in such a short time, but I am grateful for the opportunity. I note that the Care Quality Commission has just published its second annual report. Encouragingly, it talked about safer services and an upward trend in the standards of healthcare.
Noble Lords would expect me, as a former president of the Royal College of Psychiatrists, to speak about people with mental illness and learning disabilities. I shall do that but I will focus on the physical health of people in that group and their access to acute hospital services. That relates to commissioning. Although I do not think that commissioning is the key to all the problems in the NHS, strong commissioning is important. At the moment, commissioning largely does not understand the needs of people with learning disabilities and mental illness, particularly when their needs are complex and they are seeking care in an acute hospital setting. I shall try to explain what I mean and will give two examples.
If we stop to think about maternity services—my noble friend Lord Patel may have a different view—we find that the most complex kind of maternity case is a mother with a severe mental illness. However, the current tariff does not cover the mental illness that that mother has and the obstetric department does not have to purchase mental health services to look after that mother. That is a real shame, as this is a good moment in a woman’s life to attend to her mental health needs and the mental health needs of her child. That is just one example.
The Bill sets out clearly the kind of duties that commissioners will have in the future and suggests that commissioners will need to seek advice, but what kind of advice is not clear. GPs will need to work closely with their clinical colleagues in different specialisms, particularly specialists in mental health, to ensure that their patients with mental illness get their ordinary, everyday healthcare needs supported and adequately met, and not just their specialist needs.
People who do not work in psychiatry often think that commissioning for mental illness or learning disabilities is about buying specialist services somewhere else and that it has nothing to do with the rest of the health system. That is just not true. There is no health without mental health and I am pleased that the Government’s policy on public health acknowledges that.
Because I have less than a minute, I shall turn only briefly to learning disability. Tom Clarke MP spoke in the other place yesterday about the NHS and public satisfaction. He spoke extremely eloquently and, since I do not have time to repeat all that he said, I encourage noble Lords to read Hansard. He talked about the long history of concern of Mencap and other bodies about the institutional discrimination that has been found in the NHS—not a culture of care but a culture of discrimination. The previous Secretary of State established an independent inquiry into healthcare for people with learning disabilities. It came up with some important recommendations, including recommendations for training all healthcare professionals. I would appreciate support from the Minister for such recommendations to be fully implemented when the new Bill comes in.
Lord Winston
My Lords, the points that I shall make are no criticism of the Government; indeed, they are not faults induced by them. If there have been faults, they have been those of healthcare professionals and the management of the health service. I hope that the noble Earl will be able to respond by saying how we can build in these suggestions. This is a strong echo of what the noble Lord, Lord Turnberg, said. He spoke with nobility, dignity and humanity and his points were very well made.
Some weeks ago, I brought to the attention of the House my experience at a leading hospital, where I was faced with a woman in her postnatal period, four days after delivery, with a dangerously high, life-threatening blood pressure, which no one was dealing with—she had not seen a doctor in four days. There was no continuity of care on the ward. When I tried to speak to the nurses, they were busy at their computers and with their paperwork.
I want to talk about the loss of continuity of patient care in the hospital service. The noble Lord, Lord Turnberg, talked about halcyon days. Although we may not want to return to those days, the old-fashioned firm system in medical practice was very good: the idea of consultants working in tandem, usually two at a time with the same secretarial support, followed by a senior registrar, a registrar, house physicians and house surgeons, was a good way to ensure continuity. Nowadays, we do not even have the privilege of interviewing the staff who come on to the team. Because of political correctness, they are often appointed. That means that we lose a valuable kernel within the health service.
There used to be flexibility about time off. We did not go off when a patient was really sick. We had a detailed handover when we went off, if we had to. We would make sure that the person to whom we were handing over understood what was going on. We were still responsible, as junior doctors, when we were off, and would expect to be informed if critical decisions were being made about those whom we regarded as our patients. That ethos and that culture have been lost, partly because of the European working time directive, although that is not the only reason. The restrictions on working time, which we have previously encouraged the Government to think about, have had a massive negative effect not only on training and experience but on morale and continuity. A “watch the clock” attitude has been engendered.
There used to be general ward rounds for the whole team, at which the ward sister would be an important person, together with the general practitioners. Often, general practitioners came to the wards, which meant continuity in society afterwards. Nowadays, we do not have the same attitude towards the hospital in which we work. We have no hospital nurse, no medical porters and no dedicated bedrooms. There is no staff dining room. That may seem a ridiculous point, but the disadvantage is that, in terms of morale, we cannot replace the staff dining room, where we used to discuss individual patients with other consultants in order to learn. In science units, restaurants and coffee facilities are in every research lab, but they are no longer in hospitals. We should think about that. I have to say that I learnt my haute cuisine of Indian cooking in such messes. We felt valued members of an institution in a way that we do not now.
As the noble Lord, Lord Turnberg, said, there is no leadership on the ward. Without ward sisters, individual nurses do not feel responsible for all the patients in their care on the ward. Doctors now normally do ward rounds without the sister present; indeed, it is difficult to find a nurse who is free.
I make one final point. Basic nursing has been lost: cleaning patients, caring for them, listening to them, trying to feed them occasionally. Yesterday, I met a paediatric nurse at one of the best nursing schools in the country. She said: “I got an A in hospital management and NHS management in my essays, but I cannot change a paediatric colostomy bag, and that really worries me”.
Baroness Benjamin
My Lords, I thank the noble Lord for securing this debate. Sadly, his opening remarks reflect the treatment that my late 80 year-old father received during his last months, which were spent in hospital.
This debate gives me an opportunity to highlight the concerns of those with sickle cell disorder as well as of those working with and for patients with the disorder. I am a patron of the Sickle Cell Society, so I declare an interest. The Sickle Cell Society has a panel of expert medical advisers as well as a board that includes those who suffer from sickle cell disorder. Over the past 30 years, the charity has worked with the NHS and primary care trusts to produce best practice guidance on treatment and care based on clinical research and the experience of those with sickle cell disorder.
Sickle cell is the most common genetic blood disorder in the UK and some 300 babies are born with sickle cell each year. Yet children and adults are needlessly dying from this illness. The two most recent deaths were in the past four months—one as young as four years old. The deaths are due to poor access to services, poor care, poor treatment and generally poor awareness of the disorder. The National Confidential Inquiry into Patient Outcome and Death shows that of the 19 patients it studied who complained of pain on admission to hospital and who died in hospital, nine had been given excessive doses of medication, leading to death from the complications that resulted.
I believe that with the right policies in place and an understanding of best practice standards, treatment and medication, the quality of life for sickle cell patients can be dramatically improved. Will the Minister consider a medical and social awareness campaign, backed up by syllabus changes to medic training at royal colleges? Will he also consider commissioning services to improve the detection and chronic disease management of patients with sickle cell? I am convinced that if these measures were in place, it would save the NHS millions of pounds, prevent many deaths as a result of hospital overmedication and reduce children being absent from school, which produces poor educational performance that in the long term leads to economic disadvantage and benefits claims.
I believe that the doctor-patient relationship is a two-way dynamic. Some changes to the current system are required in terms of GP education, follow-up, and long-term involvement with the management of sickle cell disorder. Patients and healthcare providers should work together in the proactive management of sickle cell disorder, rather than dealing with crises on an unplanned basis as and when they arise.
The current financial state of the NHS and the recent spending review have increased the nervousness of sufferers. Therefore, there need to be reassurances about the funding of provision for sickle cell. Some believe that the abolition of health targets will have a negative impact and that services will not provide fairness and equality of access to healthcare services for all. Therefore, there needs to be NHS specialised services commissioning for those with sickle cell disorder, with provision for practical home-care support, especially home-from-hospital convalescent support to avoid readmission, the training and deployment of a pool of community support care workers, information and counselling to every patient and carrier in every locality, and the monitoring of performance against agreed outcome measures. I believe that the Sickle Cell Society is well placed to assist the Government in achieving these measures.
Sickle cell disorder should be of great concern to society. It needs our full attention because as more and more children are born to parents from different ethnic groups and we become more and more integrated, so the more common sickle cell disorder will become. Sickle cell disorder is now the fourth global public health priority, as declared by UNESCO and the World Health Organisation in Geneva in May 2006. Please let us accord it the priority and respect it deserves.
Baroness Murphy
My Lords, I shall hark back to much of what the noble Lord, Lord Turnberg, said in his admirable introduction to this topic. The stories in the ombudsman’s report are so shockingly familiar to us, yet we still find it very difficult to take in that they reflect the norm. The National Confidential Inquiry into Patient Outcome and Death in surgery for elderly patients found that only 38 per cent got good care. It is not just that care is neglectful to the point of cruelty, but that families that try to intervene are actively discouraged and largely ignored and the denial by managers is a cultural norm. I found that I could not save my own mother-in-law from truly appalling care in a suburban London hospital, and my own mother’s recent care in a Midlands teaching hospital was pretty variable, too, depending on the team that was on duty.
I have heard people minimise the significance. Apparently the NHS has improved over the past few years and patients say that they are very satisfied with the care that they get. It may well have improved, but the very aged do not respond to these patient surveys, and in any case it is their distressed kith and kin we should be surveying to get an accurate picture. My mother would not let me complain because they fixed her hip, did they not? The Patients Association has been flagging up the truth for years and the majority of senior managers know that Mid Staffordshire Hospital was not an outlier on the graph by any means.
The usual response to a scandal is to launch an inquiry, and I have sat on many myself. Typically they make vast numbers of recommendations that are then translated into points for action with a monitoring schedule for ticking off the boxes. Schedules will be cascaded and all will get a bit better. There are marginal improvements locally, but nothing really changes. What is the answer? More inspection? I do not think so. The CQC knows that the self-monitored standards of dignity that hospitals claim to have reached are often a fiction. Inspection never picks up more than a snapshot. Unannounced visits are helpful, but they are too infrequent and superficial to be realistically helpful. Regulators simply cannot substitute for caring staff. More training that treating old people appallingly is wrong? I do not think so. We all know it is wrong, but we learn by example from our seniors. If that counts as training, then perhaps training is needed. More geriatricians and psychogeriatricians like me? We need champions in medicine and nursing—but no, this is every clinician's business, not a specialty.
I agree with many colleagues who have spoken before that getting the teamwork and ward processes right might help a bit. It is noteworthy that these episodes of poor care do not occur on specialist wards where unified teams work together under good leadership. We have tended to undermine teams on general wards in the misguided and counterproductive chase for efficient turnover. I harp back to Professor John Yates’s earlier studies, which show that it is vulnerable patient groups, local ward staff left to their own devices and staff not included in team support who fail.
My recipe comes back in part to unannounced regular inspections by HealthWatch and the regulator and to surveys of family carers. However, hospitals reflect the wider attitudes of society. We should look properly at the price of care, and we should stop commissioning specialties such as cardiac, cancer and renal at a higher tariff on the care price compared with medicine for the elderly and general surgery. The funding imbalance is profound and reflects the poor value which society puts on the everyday care of the most vulnerable. Therefore, the commissioning sensitivities that GP consortia will have will be crucial. We know from studies in the States that commissioning cannot be the whole answer; it is the providers who are important. However, we should not necessarily ignore commissioning. It is vital, but ultimately it is the care design in hospitals and structures that really count.
Lord Owen
The NHS is dear to us all, and the care and health professions have made a difference to pretty well every family in this country. However, the 353 pages of the Health and Social Care Bill are a massive reform, and we should not underrate the basic fatal flaws in this legislation, although of course there is much that we can all recommend and be pleased to see.
The health service is a rationed service. A lot of the acceptance of and satisfaction with that rationing has come from its democratic basis and the feeling that it is done in a democratic and acceptable way. That is challenged by the Bill and by a massive change in the responsibilities of the Secretary of State. The fatal flaw is to move on from the internal market—a reform introduced by successive political parties that was initially quite controversial but, I believe, has done a lot to encourage cost-effectiveness and efficiency in the health service—and to cross that threshold to an external market.
This Bill needs to be substantially amended, not just at Report stage in the other place—it has not yet been amended in Committee—but when it comes to this House. In my view, it is not in the interests of anyone to include “any willing provider”, which would inevitably involve EU competition law and legal cases about commissioning decisions. Nor is it in anyone’s interest that we should make costs and pricing the basic decision on where a patient is allocated. That would have profound effects on the relationships between patients and the general practitioners, consultants and managers who have to make these rationing choices.
Deep and fundamental problems underlie this Bill. I hope that when it comes to this House we will use the unusual but nevertheless precedented position of giving it a Second Reading but only on condition that it is referred to a Select Committee of this House in order to give it far deeper and more fundamental attention. This Bill should have had a full pre-legislative committee. It has not got it. Listening to this debate, it seems to me that we are not reflecting the anger, disillusionment and despair of many people outside this House about this legislation. Were the Bill to pass in its present form, it would do horrendous damage to the health service—not immediately, but slowly and imperceptibly. It would also damage the professionalism, care and intimacy of the one-on-one patient-nurse and doctor-patient relationships, which I believe are so essential.
Health is not just a commodity to be bought and sold in the market. It is not a utility in which everyone should be treated as if they are commodity managers. We must understand that and the fundamental issues which are being challenged by this Bill. Perhaps they are being challenged inadvertently but, nevertheless, that is happening. Extensive amendments have already been talked about. Why was the Bill in that condition? I urge this House at Second Reading to refer it to a Select Committee—perhaps for six months until after the Summer Recess. Then we could come back to the normal amendments and, if necessary, the ping-pong between both Houses. Ultimately, I would not hesitate to delay this Bill for the statutory period if the House of Commons does not accept amendment procedure in this House. Fundamental amendments are needed. This is not a minor piece of legislation or a part of the evolutionary change we have had since 1948; it is a revolutionary change and, in some parts, a very bad change.
Baroness Pitkeathley
My Lords, I thank my noble friend Lord Turnberg and declare two interests as chair of the Specialised Healthcare Alliance and as chair of the Council for Healthcare Regulatory Excellence.
However devoted we are to the NHS—I speak as one who owes her life to it—we must acknowledge that there are still far too many instances where it falls short. No one could fail to be shocked by the ombudsman’s report to which many noble Lords have referred. The universal standards which we all wish to see, of a compassionate and skilled service, are by no means universal as yet. The dismissive attitudes and indifference to deplorable standards encountered in all too many instances must be addressed and, as far as possible, eliminated. I say “as far as possible” because, as a regulator of healthcare, I know only too well that it is not possible for any form of regulation to bear on every safety or quality concern. We are dependent on the quality of the professionals delivering the service and we must judge this always from the experience of the patient and his or her family.
When we think about commissioning as being about improving health outcomes and reducing health inequalities, let us never forget what that means from the patient’s point of view. Most will have absolutely no idea what “improving health outcomes” means. They only know that they want to be treated safely, with dignity and compassion, and have timely and effective treatment. In all the discussions we are currently having about the reform of commissioning, I am often struck by how remote those discussions seem from the actual experience of patients. The test that we must apply is whether it is better for them, not whether it is better for the Secretary of State, the commissioning board and GP consortia.
It is also striking how removed our discussions are from the facts around patients’ experience, which are not linear but confused and complicated—a mixture of services from health, social care, housing, the voluntary sector and their own families. This complication of experience is little recognised, even now when some of us have been trying for 30 years to get it recognised. The question we have to ask is: will the new commissioning arrangements deliver that recognition? We do not know.
What we do know is that every bit of research ever done about changing institutional structures shows that only a part, and usually a small part, of the objectives are achieved, and the bigger the upheaval, the fewer of those objectives are achieved. Since we are largely dependent for quality outcomes on the skill, commitment and—let us not be afraid to use the word—dedication of our staff, how are we to maximise those and provide them with the support they so urgently need when, for the next two years at the very least, their energy will be directed towards the change itself in the form of applying for their own jobs, learning to work with a new set of partners and so on? Also, the history of co-operation between GPs and social services does not fill me with hope, while the lack of co-terminosity between consortia and local authorities is certainly not going to be helpful.
We know that the commissioning board will issue guidance on commissioning to the consortia, but when is this to happen? Do we not risk a mismatch in timing? Some of the consortia are already willing to go ahead and are following their own rules in the absence of any from the commissioning board. I hope that the Minister will be able to comment on this. Also, from the patient’s point of view, we need a great deal more clarity about what will happen when GP consortia refuse to commission a service that a patient requires. Where is the accountability?
As to the voluntary sector, for so long the provider of good preventive care and services, we hear a great deal about organisations being encouraged to take on a greater share in providing public services and for the commissioners to recognise this. If we are serious about pushing power as close to individuals as possible and for citizens and communities to define the priorities and expectations of public services like the NHS, as the big society concept suggests we should, it is certainly important for the voluntary sector to be involved. However, many organisations are having their funding savagely cut, and more than half of them say they are going to have to cut staff in the next three months. Given that, I doubt their capacity.
Lord Rooker
My Lords, there is widespread concern among nurses, patients and relatives about the many incidents of poor nursing highlighted in recent years. There are of course many fine examples of high-quality nursing practice, and I can testify to that from my own family experiences. But action now needs to be taken to improve the state of nurse training and management. Over the past five years, a nurse friend of mine, Sheila Try, has been contacting successive Health Ministers, Select Committees and others with these concerns, as well as the Chief Nursing Officer, all to no avail. They have all failed to see that there is a fundamental flaw in the training and management of nurses and that the image of nursing has been damaged. The Chief Nursing Officer commented to Sheila that these,
“concerns resonate very well with nurse leaders who I have met around the country and with the wide range of people who explain their experiences to the Prime Minister’s Commission, ‘Frontline Care’”.
That is a clear admission of the points that Sheila and other experienced nurses are making.
Sheila Try is a qualified nurse and a health visitor to BSc standard, and a former senior manager and a reviewer for the Commission for Health Improvement. She is not someone who wants to turn the clock back, but she is concerned with the basic essentials of nursing. Last week, she met over 70 third-year degree nursing students at a local university who are due to qualify in August. They stated that they,
“do not feel confident or competent to work as staff nurses as the training has failed to give them the knowledge and skills they need, with clinical placements being too short. There are inconsistencies in clinical practice and Health Care Assistants are doing nursing tasks, including wound dressings, while they as students are doing Health Care Assistant roles (handing out drinks) when they should be being trained in nursing tasks”.
The students are concerned that their competencies are usually decided on just one observation of the skill required, such as catheterisation or wound care. They would prefer a more rigorous check in order for them to feel competent and confident. On learning to drive with an instructor, you do not do a three-point turn only once.
One of the issues lies in the ratio of academic to clinical practice. The time spent in contact with patients is only 15 weeks in each of the first two years over two placements and 21 weeks over two placements in the final year. That is not enough. This is not resulting in well trained nurses capable of giving good, consistent quality care at the point of qualification.
Image and esteem are important. These have been damaged by the practice of not using the title of “nurse” and the poor national uniform that was introduced some years ago. After working for three years to become a nurse, people are told not to use the title, but to tell patients their first name, which is unprofessional. The sign above the bed says, “Your nurse is Susan” or “Mark”, but not “Nurse Jones” or even “Nurse Susan”. That is ridiculous because it is unprofessional and breeds a familiarity that can cause problems.
The uniforms that nurses wear in most hospitals are not very professional, with qualified nurses wearing the same uniform with no difference in design to identify their status. The uniforms are often of poor quality. Nurses have said that they are more like a cleaner’s overalls—that is not to degrade cleaners. This affects not only the image that the uniforms portray to patients and relatives but also how nurses feel about themselves.
One major hospital in the Midlands has recently changed its uniform policy, bringing in colours to identify a nurse’s grade and with the grade embroidered on the uniform. Patients and relatives can now distinguish between a staff nurse and the sister in charge. It has massively lifted morale, because the nurses feel valued. The ward management points that Sheila has asked me to make are exactly the same, word for word, as those made by the noble Lord, Lord Turnberg. The solution, she thinks, is simple: tackle the way in which nurses are trained, with more time spent with patients and less in the classroom.
Nursing needs to be up to date with technology and the changing face of disease and management, but essential care is vital to ensure patients’ safety. A better balance between academia and professional placements, needs to be found. And, yes, Nurse Try would welcome an opportunity to put the case to the Minister direct.
Baroness Tyler of Enfield
My Lords, that is a hard act to follow. I congratulate the noble Lord, Lord Turnberg, on securing such an important debate at a time of far reaching reforms to our National Health Service. These reforms should be judged by the extent to which they lead, first, to better health outcomes for adults and children; secondly, to consistently higher standards of care for all; and, thirdly, to a more responsive and personalised service. Given the scale and pace of reforms, the most radical in a generation and beyond, it will be crucial to give close attention to the quality of care during this period of immense change.
I would like to illustrate this by talking about the standards of care and commissioning practices within mental health services, still seen in some quarters as a Cinderella service. I am indebted to the briefing and support that I have received from the charity Mind.
One in four people is likely to experience a mental health problem every year and the cost of poor mental health to the economy is estimated to stand at £105 billion. As will be well known in your Lordships' House, mental health problems are inextricably linked to social factors such as debt, unemployment, poverty and poor housing.
The Government’s recent No Health without Mental Health strategy sets out a clear vision for the future of our mental health services. This is to be welcomed. The strategy also makes it clear that the provision of high-quality services is dependent on high-quality commissioning.
To make a reality of that strategy, it will be important to ensure four things: first, that commissioning bodies have a proper understanding of mental health services and service users; secondly, that mental health services are fully integrated both within the health service and across social care, public health and areas such as housing and policing; thirdly, that every opportunity is taken to increase patient and public involvement and that those who need extra support to get involved in decision-making are given it; and, finally, that there is parity of esteem between mental and physical health services.
In response to a recent survey by the charity Rethink, 42 per cent of GPs said that they lacked knowledge about services for people with mental illness and lacked confidence in commissioning those services. The abolition of the National Mental Health Development Unit this very day will create a real gap in mental health advice for commissioners and providers. What plans do the Government have to fill that gap in expertise?
The Government have recently announced plans to invest around £400 million over four years to ensure that adults with depression and anxiety across England have access to a wider range of effective psychological therapies. This investment will also enable the expansion of much needed psychological therapies for young people, older people, people with severe mental health problems and people with long-term physical health conditions. All this is greatly to be welcomed but it is vital that this funding is not seen in these tough financial times as an opportunity to cut existing mental health services.
As already referred to, only this week the Care Quality Commission released its latest report on the state of health and adult social care. I was concerned to see that, despite the welcome advances across the board, care standards for people experiencing mental health problems are being left behind, particularly in acute and crisis mental health care.
I would have liked to have finished by saying a few more words about the commissioning of children's mental health services—an area that I know something about. I am chief executive of the charity Relate, a declared interest of mine, which has experience of providing what is called early intervention counselling services. Time will elude me, but the one thing that I will say is that far too often the voluntary sector finds itself left to pick up the pieces because statutory services such as children and adolescent mental health services, which try to do a good job in very difficult circumstances, are vastly oversubscribed with very long waiting lists. More needs to be done to give this area higher priority.
Lord Touhig
My Lords, I join others in the House in thanking my noble friend Lord Turnberg for securing this debate. In the short time that I have at my disposal, I would like to focus my remarks on one area in particular: healthcare and autism. The noble Baroness, Lady Browning, and I, together with representatives of the National Autistic Society, recently met the Minister and we were given a very sympathetic hearing on matters that concerned us. We thank him for that.
The National Audit Office’s investigation into public spending on autism found that one of the best ways of overcoming the alarming gaps in training, planning and provision across a range of services was to develop specialist autism teams that could diagnose and support people with autism. It went on to say that, if such teams are established, there is the potential to save money. It stated that, if local services identified and supported just 4 per cent of adults with high-functioning autism and Asperger’s syndrome, the outlay would become cost neutral over time. In addition, it found that, if these local services did the same for just 8 per cent, the Government could save £67 million per year. The Liverpool Asperger Team, which is the longest-standing specialist Asperger’s service, reports an identification rate of 14 per cent, so 4 per cent is certainly achievable.
Will the Minister tell the House how teams such as the one in Liverpool will be funded if the Health and Social Care Bill is passed into law? In the Bill, health and social well-being boards have a duty to promote integrated working and, as such, would lead on commissioning specialist services. However, the White Paper published in July states that the NHS Commissioning Board will take responsibility for commissioning specialised services at both national and regional level, as informed by the specialised services national definitions set. These sets contain definitions of 34 services. Definition 22 covers specialist mental health services and includes specialised services for Asperger’s syndrome and autism spectrum disorder. There is clearly a difference between the White Paper and the legislation on how specialist autism teams will be commissioned to carry out their work. Will the Minister say whether the NHS Commissioning Board or, at local level, the health and well-being board will be responsible for this commissioning work?
Each of the commissioning scenarios is not without problems. First, specialist teams are often commissioned through pooled budgets. There is concern that, if 80 per cent of the commissioning budget sits with the GP consortia but the health and well-being boards are responsible for commissioning the joint services, the major budget holders—the GPs—may not commission services whose primary benefit in the short or medium term will be the local authorities. The commissioning problems could potentially become more complicated when health and well-being boards have a number of consortia in their areas. It is possible that the GP consortia might take a free ride and not contribute. Secondly, if these services are commissioned through the specialised services national definitions set at regional level, that could make it more difficult for the teams to respond to local needs and integrate themselves into each local authority that they serve.
The draft NICE guidelines on diagnosis, recognition and referral of autism in children and young people call for local teams to be created in each area. Teams such as the ones in Liverpool and Bristol are doing first-class work. A key way of getting over this problem of commissioning specialist teams is to strengthen the role of the health and well-being boards in creating pooled budgets and to ensure that the NHS Commissioning Board can intervene in any disputes over these budgets. I appreciate that this is a major problem still to be solved and I hope that the Minister will respond to that and to my other questions.
Lord Patel
My Lords, good healthcare systems deliver good standards of care and good commissioning should reflect that. I would like to focus on cancer, the insights that it offers into the performance of our healthcare system and the challenges that it poses in the new healthcare structure. The proportion of deaths attributable to cancer has risen from 17 per cent in 1948 to 27 per cent in 2008. It is predominantly a disease of the elderly. Alongside its human impact, cancer is also costly. The National Audit Office estimates the cost as £6.3 billion and the total cost to society as £18.3 billion. These costs will rise as the population ages and new treatments are developed.
Cancer survival is a key metric of the performance and quality of healthcare systems. It is a function of the population awareness of cancer symptoms, primary and secondary care assessment and referral, treatment quality and effective screening programmes. Each year around one in three people is diagnosed with cancer and one in four will die of cancer.
The Lancet in January 2011 compares the survival of patients diagnosed in England, Wales, Northern Ireland, Denmark, Norway, Sweden, Australia and Canada. All these countries have comprehensive cancer registration and broadly similar healthcare spending and systems. The study examined relative survival—the excess deaths due to cancer after allowing for competing causes of death—from 1995 to 2007. Despite the improvement in cancer survival in the UK, the survival gap—the difference between the UK and the best-performing nations—appeared to have showed only some narrowing in breast cancer but was static in colorectal and ovarian cancer and worse in lung cancer. The difference in survival in lung cancer is equivalent to at least 1,300 avoidable deaths each year if we matched the best in Europe. It has been estimated that this survival gap from England to the best-performing countries in Europe for all cancers accounts for 10,000 avoidable cancer deaths each year.
The healthcare system in the UK is not improving at a fast enough rate to narrow the survival gap. This accounts for thousands of avoidable deaths each year. A far greater proportion of people die within one year of cancer diagnosis in the UK than in better-performing countries such as Sweden. This is due to later diagnoses in the UK; when patients in the UK are diagnosed with cancer, it is more often at an advanced stage where survival is shorter.
The coalition Government published in January Improving Outcomes: A Strategy for Cancer. This strategy aims to deliver health outcomes that are among the best in the world. It aims to do this alongside the seismic reforms that are taking place in healthcare in England. These new reforms as they stand rely on high-quality information and organisation of cancer services. The strategy does not ensure the continued existence of cancer networks, but says that,
“it is likely that GP consortia will purchase services from a new style of cancer network”.
That does not go far enough. Cancer networks are essential organisations to ensure the delivery of improved cancer outcomes and, in particular, the geographical areas that allow robust outcome data to be derived. The centralisation of cancer services since the NHS cancer plan has helped to deliver improvements in cancer outcomes. The National Cancer Intelligence Network is now providing detailed cancer outcome data according to network, PCT and age. These powerful data can be used to improve outcomes.
Much of the variation in outcomes in cancer is due to late diagnosis or referral by general practitioners. There is no process in place for assessing the quality of GPs in the assessment of patients with potential cancer symptoms. The Teenage Cancer Trust survey reveals that one in four teenage cancer patients visited their GP four or more times before referral to hospital. Without cancer networks, there is a danger that the cheapest services will be purchased that meet basic but not world-class quality standards. Healthcare is a complex process and we will never be able to define and record every metric that will contribute to high-quality outcomes. I hope that the Minister will confirm today that there are no plans to abolish the cancer networks.
Lord Warner
My Lords, I am grateful to my noble friend for securing this warm-up debate before the Government’s legislative juggernaut reaches this House. In the time available, I want to confine myself to talking about commissioning because good commissioning has a significant impact on achieving good service standards. For 20 years, we have been trying to establish an effective NHS commissioning system. Ken Clarke’s GP fundholding and partial purchaser/provider split was followed by Labour’s PCT commissioner model, again without a full purchaser/provider split. Just for good measure, I added on a practice-based commissioning dimension in 2006 which many PCTs were pretty effective at thwarting. Now we are to have another legislative go. That is a summary of the history of commissioning.
All too often, PCT commissioners have lacked the know-how, competence and muscle to commission effectively. Too often, they have been unable to manage demand, keep in check acute hospital expenditure and hold hospitals to account. We know from the Care Quality Commission data that there are too many PCTs with poor track records on quality and financial management. The House of Commons Health Select Committee’s excellent reports on PCT commissioning make for depressing reading. It is not, in my view, unreasonable to decide that PCTs have had their chance and failed overall, so we should try a more clinically driven model of commissioning, as the Government wish to do. In many ways, this is a logical development from practice-based commissioning. However, the Government must learn the lessons of past mistakes in designing a new commissioning model if they are not simply to repeat those mistakes.
The population size of many commissioning bodies has been too small for effective health-risk pooling. When I hear the BMA say that there is a new commissioning consortium with a population of 18,000 people, I despair. I managed to reduce the number of PCTs from 302 to 150, but could not secure agreement politically to go down to 50. That would have given us commissioning bodies with populations of about half a million to 1.5 million people. I believe that is the kind of population we should be looking for in commissioning the full range of services that the Government wish to give to those kinds of consortia. The amount of high-quality commissioning capability in the NHS that we had in 2005 was insufficient to service the number of bodies involved. That remains the case today and the added trouble is that the amount of money available to pay for them has become even smaller in size.
When the Bill comes to this House, we are going to have to probe the area of commissioning forensically. We will need to ensure that there is a proper system of licensing or accrediting commissioners, however the function is organised. We need to ensure that commissioning bodies have the data collection and the analytical, financial, contracting and clinical expertise to commission safely and cost-effectively the range of services that they will be legally required to commission with about £60 billion of public money a year, on present estimates. The National Commissioning Board must have the authority and capacity to prevent people without the competence to commission getting their hands on big slugs of public money. The board has to be able to remove and replace inefficient, incompetent or overspending commissioners in a timely way. Those are the kind of issues we should be considering when we come to that Bill.
In conclusion, as a former commissioner of social care I found it jolly useful to have a diversity of service providers so, unlike a number of people, I congratulate the Government on going for a bit more competition and extending the market for providers—not just from the private sector but with good providers from within the NHS and good mutuals, of which I suspect we will see a lot more in future. We will have a lot of time to discover what the Government’s thinking is on some of these issues as we take the Bill forward in this House.
Baroness Thornton
My Lords, I start by thanking my noble friend for initiating this debate and for emphasising the importance of standards of care and of the effect on patients of the proposed changes to the commissioning regime. Indeed, I congratulate all speakers in this debate. On this occasion, the point of my noble friend’s remarks was possibly, “We’re all in this together”, in dealing with the standards of care. However, he also said that we face some major challenges here, which are the challenges that he posed, as did several other noble Lords, including the noble Baronesses, Lady Emerton and Lady Hollins, and my noble friend Lady Sherlock. The question is: will the Bill help or not?
I welcome the noble Lord, Lord Owen, to both this debate and our wider discussions. I look forward to reading his pamphlet, Fatally Flawed, this weekend, and I suggest that the Minister might choose to do the same. However, I will resist the temptation to join the noble Lord in what would be a Second Reading speech.
I start by quoting a young woman who works in healthcare and who spoke last Saturday to between 200,000 and 500,000 people—personally, I think it was nearer the latter. In many ways, her simple eloquence says it all about how thousands of dedicated health workers feel. She said: “I am an NHS physiotherapist and have been for 13 years. My patients are people living with complex disability from conditions such as MS, brain injury, spinal cord injury and stroke. I work with a wonderful team of NHS workers such as occupational therapists, speech therapists, psychologists and rehab assistants, as well as social workers, to support our patients to overcome barriers to their independence, often supporting them back to work and working with their carers to support them to stay in their homes for as long as possible … David Cameron told you all in his election campaign that he would ‘cut the deficit, not the NHS’. Well, if 50,000 frontline NHS posts at risk doesn’t count as a cut, I shudder to think what does … For the sake of my patients, I fear the introduction of ‘any willing provider’. I fear that it will fragment services, will make the postcode lottery of care worse, and the most vulnerable patients, those least able to stick up for themselves—the kind of patients I treat every day—will be hit the hardest. Good quality patient care relies on good communication. How can we guarantee this, when services that currently work together are pitched into direct competition against each other? … In parts of the country, physios are already starting to see the rationing of care to just one or two treatment sessions, regardless of need … This is not the NHS I signed up to work for. I don't believe it is the kind of NHS that people in this country want”.
In this short response to the debate I am going to argue that we would not start here with reform and I will ask some questions about the risks to standards of the proposed commissioning system. I put a plea to the Minister: could we perhaps have some new words in his answers to these debates? I have looked back at the debates and discussions in the House since the White Paper was published last July, and time after time the Minister has stuck admirably to the Andrew Lansley brief, with what is becoming the famous NHS techno-jargon that weaves a web of words but really does not serve to comfort, or even leave one any the wiser. It is very noticeable that when the Minister comes off script and is back to his old, clever self, we prefer it and I, for one, understand things better.
We are nearing the point, after many questions and sustained criticism from professionals, patients and even the Minister’s partners in the coalition, when we need some real answers to real concerns, not least on the commissioning that is the subject of this debate. Notwithstanding the progress of the Health and Social Care Bill, I invite the Minister to agree that there is no doubt that the period 2011-14 is likely to be the most challenging ever faced by the NHS. The NHS is faced with the challenge of producing £20 billion in efficiency savings, putting considerable pressure on the system to maintain current standards of care. Given those constraints, we on this side of the House are still of the view, perhaps even more so now, that this is not the right time to embark on the largest structural reorganisation in NHS history, which includes scrapping those layers of the NHS structure with real experience of commissioning—family care trusts and strategic health authorities—and putting the power in the hands of untested and inexperienced consortia.
I am not saying that PCTs and SHAs have been unfailingly brilliant; in some cases, they have not even been good or average. There was and is significant room for improvement, and I think we would all agree on that. Most notably, clinical leadership and engagement in PCTs has often been weak, local accountability has been lacking and imbalances in status and power that exist between commissioners and providers appear to have limited substantially the former’s ability to influence service provision, to say nothing of the lack of clinical presence in the whole process. However, we believe that it would have been better to tackle this problem rather than to turn the whole NHS upside down.
What of the transition? Responsibility for maintaining and improving the quality of services will fall initially to the new PCT clusters. At a time of major reorganisational transition it will be especially important to have in place adequate performance measures supported by transparent and robust mechanisms, through which the GP consortia and PCT clusters can account to local people for the quality and performance of local health services. I do not see how this can be achieved when PCTs are being decimated either by the efficiency cuts or people jumping ship to work elsewhere. Perhaps the Minister can say how he thinks this will be achieved.
We know that PCTs are responsible for commissioning a range of primary, community, secondary and tertiary health services, often in partnership with local authorities—for instance, in mental health—and, indeed, other PCTs, through networks or consortia for specialised services, and primary care clinicians through practice-based commissioning. That has already been mentioned by the noble Lord, Lord Patel—cancer networks being one of these. This is a complex landscape and it is about to become even more so. It will grow a whole new bureaucracy of its own if the competition which the Government intend to put at the heart of the Bill, whatever one believes about that, is as envisaged.
The majority of concerns with the health Bill in relation to commissioning of services fall into five broad areas: multidisciplinary commissioning; commissioning of long-term conditions; specialist commissioning; a lack of national guidance leading to fragmentation; and communication and co-ordination between providers and commissioners. A theme that runs throughout these areas is concern about the involvement of GPs and the ability of relevant commissioners to secure appropriate clinical input when commissioning services.
The King’s Fund report of the beginning of March highlights the need for strong, strategic commissioning to reconfigure some services such as cancer, cardiac and stroke care across large geographical areas. It argues that this will not be delivered by the Government's health reforms, which will abolish the strategic health authorities currently responsible for leading this work and leave GP consortia to fill the gap, which they are unlikely to be able to fill—to which I add that that will probably be the case for at least 10 years or so.
Briefly, on long-term and specialist conditions, throughout the debates since last July various advocates and campaigning organisations on almost every long-term condition have commented on the proposed reform. The Minster must accept that the Alzheimer’s Society, the cancer campaigns, diabetes organisations and many others are very worried about the commissioning for their conditions becoming fragmented and incoherent, to say nothing of end-of-life care and, for example, treatment for children with very serious conditions.
The Government are asking those who have fought long and hard for recognition of and improvement in the treatment and care of people to take on trust that everything will be okay. The Minister needs to accept that this clamour about commissioning, although we are joining it, is not motivated by Her Majesty’s Opposition being oppositionist; it is about a long list of concerns, questions and anxieties that we have to address without the proposed revolution. I look forward to the Minister’s reply.
The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)
My Lords, I begin by thanking the noble Lord, Lord Turnberg, for tabling a Motion which has occasioned such a fascinating and often moving debate. As has happened previously, the breadth and depth of the contributions create their own problem in that, when there is such a short time available for me to reply, I am up against the clock. To the extent that I am unable to answer specific questions today, I apologise but I will of course happily follow them up in writing.
There are many reasons why we believe it is necessary to modernise the National Health Service. With rising costs of new treatments, an ageing population and rising public expectations, the system is simply not sustainable in its present form. Most importantly, however, the NHS must modernise in order to focus relentlessly on what matters most to patients: improving health outcomes. In so many ways it is a wonderful service, but we know that it can do better and we believe that it must do better. For our ambition is not limited to maintaining the current quality of services, it is far greater—to have health outcomes that are consistently among the very best in the world. I suggest to the noble Baroness, Lady Thornton, who said that now was not the time to do any of this, that the financial situation that we face provides even more of a reason to modernise swiftly. I hope that she and other noble Lords will agree with me that this debate is really about quality.
The noble Lord, Lord Turnberg, began by raising the Parliamentary and Health Service Ombudsman’s report, Care and Compassion? I am sure that all of us can identify with the concerns that he raised about nurse training and accountability for what happens on the hospital ward. I am sure I was not alone in being very moved by the noble Lord’s speech. I fully intend that we should learn from the ombudsman’s report, which is why its findings have been highlighted to NHS boards and why the Care Quality Commission will be commencing unannounced inspection visits shortly. However, I also submit that the changes that we are making to the NHS—placing the patient at the heart of everything we do—will help to guard against this happening in the future.
As the noble Lord, Lord Warner, rightly reminded us, effective commissioning is a key piece of the jigsaw. Currently, commissioning decisions are taken by primary care trusts—remote organisations that frankly few people have heard of and fewer still understand. We propose to hand responsibility for commissioning to GP-led consortia. Why are we doing so? It is because GPs and their clinical colleagues are the people who best understand the health needs of their local populations, and, in partnership with healthcare professionals from across primary, community and secondary care, they are ideally placed to design clinical services that provide more effective, integrated and preventive care.
Lord Davies of Stamford
I am very grateful to the Minister for giving way. Will the present system of “choose and book”, which seems to me to be working extremely well, be perpetuated under the new commissioning consortia regime?
Earl Howe
Yes, my Lords. However, if the noble Lord will forgive me, I do not propose to take many interventions as the time is limited. As I say, the answer to his question is yes.
Those who question the effectiveness of these arrangements should focus on the new framework of accountability that we are proposing as it is central. The new NHS will be more directly accountable than it is now. Because of that our reforms introduce a stronger national framework for driving quality improvement than ever before. How will this accountability work? The Secretary of State will hold the NHS Commissioning Board to account for delivery against the NHS outcomes framework, published in December. The NHS Commissioning Board will then hold individual consortia to account for their performance against the indicators set out in the more locally focused commissioning outcomes framework. There was widespread and strong support for such a framework during our consultation.
The NHS Commissioning Board will decide on the shape and content of the commissioning outcomes framework over the next two years, working closely with emerging consortia and with professional and patient groups. To help maintain momentum, the department will shortly publish a discussion document, seeking more detailed views on possible features of the framework. The Health and Social Care Bill contains a new duty of quality. The NHS Commissioning Board and GP consortia will be required continually to improve the quality of NHS services. Underpinning that, the Care Quality Commission will regulate providers on safety and quality, with wide-ranging enforcement powers to protect patients should providers fail to meet requirements. Accountability works in its fullest sense only if there is transparency. We will publish clear, easy to understand information on the quality of healthcare services and the progress being made to reduce health inequalities. We also propose, subject to the passage of the Bill, that the NHS Commissioning Board be able to make payments to consortia in recognition of the outcomes they achieve collaboratively through commissioning and the effectiveness with which they manage their financial resources.
How will quality be driven through the commissioning system? Quality standards, prepared by NICE, will be at the centre of it. Quality standards bring clarity to quality, providing definitive and authoritative statements of high-quality care, based on evidence of what works best. Quality of care does not cover just the effectiveness of that care but also includes patient safety and patient experience. The three domains of quality are interconnected: they cannot exist in isolation. The Royal College of Physicians reflected on this point in its response to the consultation on the NHS outcomes framework and acknowledged that healthcare that is not safe could not be described as efficient, effective or sustainable.
Our reforms will allow a re-established NICE to produce a broad library of quality standards that will cover the majority of NHS services. NICE will also develop quality standards for social care and public health. The Secretary of State and the NHS Commissioning Board will be able to commission quality standards jointly, which will open up the opportunity for standards to cover the whole care pathway, from public health interventions in primary care through to rehabilitation and long-term support in social care, and will support the integration of health and social care services. It is important to understand that quality standards will do more than just bring clarity to quality: they will have real traction within the system, underpinning the duty of quality and linking with the new best practice tariffs that will see providers paid more for better care.
GP consortia will have a duty to support the NHS Commissioning Board in continuously improving the quality of primary medical care services. That does not alter the board's overarching responsibility for commissioning GP services and holding GP contracts. But it does mean that consortia will play a systematic role in helping to monitor, benchmark and improve the quality of GP services, including through clinical governance and clinical audit. It means also that consortia will have a core role in improving patient care across the system. That will include both the quality and accessibility of the care that GP practices provide and the wider services that consortia commission on behalf of patients.
Where does the Secretary of State sit in all this? The Health and Social Care Bill strengthens the accountability of the Secretary of State to Parliament for the provision of the comprehensive health service. For the first time, the Secretary of State will have to report each year on the performance of the health service, consult on the annual objectives set for the NHS through a mandate, and lay both documents before Parliament. The NHS Commissioning Board will be accountable to the Secretary of State for delivering against that mandate.
Nursing has been a strong theme in the debate. The noble Baroness, Lady Emerton, asked when the Government's response to the report of the commission on nursing will be published. I can assure her that the Government will respond soon to the commission's report and I apologise for not having given her an undertaking to that effect sooner. The noble Lord, Lord Turnberg, and the noble Lord, Lord Winston, raised concerns about nursing standards in hospitals. As they know, we now have matrons in post. They have a specific remit for quality of patient experience and should be accessible to patients and carers. Matrons are directly accountable to directors of nursing, who should present ward-to-board reports. We launched the Principles of Nursing Practice in November last year. This sets out an agreed set of standards and behaviours that were developed by the Royal College of Nursing in association with patient groups. These principles reinforce the NHS constitution.
The noble Lord, Lord Turnberg, asked about the duty of consortia to improve the quality of care for older people. There is no specific duty in the Bill relating to consortia and older people. However, we propose a new duty for consortia to seek continuous improvements in the quality of services for patients and in outcomes, with particular regard to clinical effectiveness, safety and patient experience. That extends to all aspects of care.
The noble Baroness, Lady Sherlock, spoke about the recent King's Fund report. The report highlights particular variation in relation to patient involvement in decision-making, and in co-ordination and continuity of care. It also highlights the need for changes in leadership and culture. We have a strong system of general practice in this country, but we agree absolutely with the report that there is too much variation in quality. This reinforces the case for GP decommissioning, because one of the key aims behind the development of GP commissioning is for consortia to play a central role in helping to reduce variation and drive up the quality of general practice. There will be strong incentives for GP consortia to want to tackle these variations, because with lower-quality primary care one achieves poorer outcomes for patients and one has greater pressure on more expensive secondary care services.
The noble Baroness, Lady Sherlock, questioned whether the Government were allowing enough time to see whether the changes would work. With the introduction of shadow bodies and early implementers, we are allowing almost three years to consult, to dry-run and to put our reforms into practice on the ground, so that by 2013 the new organisations will have had time to secure capability collectively. Therefore, it is wrong to say that the house is being demolished; in many senses, we are refashioning some parts of the existing edifice.
On that theme, the noble Baroness, Lady Pitkeathley, asked how consortia will be authorised, given their different states of readiness. The pathfinder programme is, I think, central to sharing learning across emerging consortia, and it is a crucial part of their development to take on full commissioning responsibilities. Consortia will not have statutory responsibility for commissioning until April 2013, so the intervening period will allow all consortia to be ready by that time.
We listened to an impassioned speech from the noble Lord, Lord Owen, who criticised the Health and Social Care Bill on a number of fronts. Time prevents me setting out a detailed set of counterarguments but perhaps I may just say to him that we have tabled amendments to the Bill that will put beyond doubt that competition will be on the basis of quality and not price. Far from challenging the principles of the NHS, we have consistently made it clear that we are absolutely committed to a comprehensive National Health Service which is free at the point of use and is based on need rather than ability to pay. Nothing in our plans changes that.
The noble Lord criticised the policy of “any willing provider”, or “any qualified provider” as we are now calling it, because we think that that is a better description of the policy. The noble Baroness, Lady Thornton, did the same. “Any qualified provider” is about empowering patients and carers, improving their outcomes and experience, enabling innovation, and freeing up clinicians to drive change and improve practice. Introducing a choice of any qualified provider will give patients more control. That is what all the research evidence tells us they want and increasingly expect from the NHS. Why should not someone with MS be able to choose the physiotherapist they want and be treated at the time and in the setting that best suits their need? Why should not a patient, at the end of their life, choose their hospice provider? Patients are already able to choose from any provider that meets NHS standards and prices when they are referred for a first out-patient appointment to a consultant-led team. That was an innovation brought in by the previous Government. “Any qualified provider” will extend that principle to more providers and more services, including social enterprises and charities, particularly in community care. For the life of me, I cannot see what is wrong with that. Money will follow the patient and the choices they make about where and by whom they are treated.
The noble Lord, Lord Owen, indicated his belief that the policies that the Government are advancing will damage clinical professionalism and remove the intimacy inherent in the doctor/patient relationship. I say to the noble Lord gently and with huge respect that I do not believe he has any basis whatever for suggesting that. I would argue, on the contrary, that clinically-led commissioning brings the design of services closer to patients.
Earl Howe
The department has sought legal advice on that point and the strong consensus is that the NHS, as we envisage it initially, will not be subject to EU competition law. It is not at the moment, as the noble Lord will know, although of course the situation can change over time. This is an interesting, and rather esoteric, area of debate but I do not think that it impacts—
Earl Howe
I mean that it becomes rather technical. However, I do not think that it impacts on the central point that I was seeking to make, which was to argue that the noble Lord’s contention that the doctor/patient relationship would be damaged does not stand up. To me, the principle of shared decision-making—“no decision about me without me”—will bring about an even closer partnership between clinicians and patients.
The noble Lord, Lord Patel, spoke about cancer services. GP consortia will be well placed to commission the majority of cancer services and GPs have a crucial role to play to achieve earlier diagnosis of cancer. As a first step in relation to cancer services, we will work with GP consortia and pathfinders to identify and provide the sort of data that they will find useful to commission cancer services effectively. We will provide GP consortia profiles of services and outcomes for their local populations—for example, cancer survival rates, the use of the two-week urgent referral pathway, uptake of screening and use of inpatient beds. We will be benchmarking the data against similar consortia so that they will know what needs tackling to improve outcomes in their areas. However, as the noble Lord will know, we have also earmarked a great deal of money to ensure that our plans for earlier diagnosis—giving GPs direct access to key diagnostic tests, for example—will assist in the process. He asked about cancer networks. They have had a crucial role in improving the quality of cancer treatment. I quite agree with him. They have helped commissioners, providers and patients to work together to plan and deliver high-quality cancer services. GP consortia will need commissioning support and cancer networks will be well placed to provide that. The department has said that next year there will be funding for cancer networks to support commissioning.
The noble Lord, Lord Touhig, asked about the commissioning of autism services. The health and well-being board will be the key vehicle by which commissioners and local authorities can work together, ensuring that services that cross health and social care can be effectively commissioned. The noble Lord raised a number of valid points about how these arrangements for autism services will work in practice. I suggest that I cover those in a detailed letter.
The noble Baroness, Lady Hollins, and my noble friend Lady Tyler questioned the ability of consortia to commission mental health. We recognise the need for GP commissioners to collaborate with their clinical colleagues and one of the key initiatives in mental health derives from the new joint commissioning panels set up in partnership between the Royal College of Psychiatrists, the Royal College of General Practitioners, the Association of Directors of Adult Social Services, and others. That collaboration works to promote integrated working across secondary and social care. The outcomes and lessons from this work will be made available to inform the implementation of the new commissioning arrangements.
My noble friend Lady Benjamin asked a number of questions about sickle cell. Again, I should like, if I may, to take full advice from my department about the points she raised and write to her.
Our reforms are ambitious and challenging but we have been heartened by the enthusiasm that we have found among clinicians, especially among those already taking increasing levels of responsibility through the new consortia. There are now 177 GP pathfinders involving more than 5,000 GP practices, covering more than 35 million people across England. I am confident that by empowering clinicians to innovate and deliver health services we can continue to address the healthcare needs of this country and move towards delivering outcomes that are indeed consistently among the best in the world.
Lord Turnberg
My Lords, this has been a fascinating debate and I am enormously grateful to noble Lords for many outstanding speeches. I have learnt a lot. I am only sorry that we had such a short time—each speaker had only four minutes—but I am constantly amazed at how noble Lords are able to pack in so much useful information in such a short time. The noble Earl, as one might expect, was eloquent and convincing, but it remains to be seen how many he has convinced around the House. I am sure that he is as aware as I am that these are not the last words we will hear on these matters. With those few comments, I beg leave to withdraw the Motion.
Inter-parliamentary Scrutiny: EUC Report
(13 years, 7 months ago)
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Lord Roper
That this House endorses the proposal of the European Union Committee for Future inter-parliamentary scrutiny of EU foreign, defence and security policy, and requests the Lord Speaker or her representative to present it to the EU Speakers’ Conference in April 2011. (7th Report, HL Paper 85)
Lord Roper
My Lords, this Motion endorses the seventh report of your Lordships’ European Union Committee, which I chair. The proposal sets out the arrangements which we would like to put in place for the inter-parliamentary scrutiny of the common foreign, security and defence policy of the European Union, following the winding up of the Western European Union, and therefore its Assembly.
The proposal is in the same terms as one approved by the other place, on the basis of a report from its Foreign Affairs Select Committee, on 10 March. I am grateful to that committee and its chairman, and to the House of Commons European Scrutiny and Defence Committees for their informal co-operation, which has allowed the committees of both Houses to come to a common position on the matter.
It might be of assistance to the House if I briefly set out the context for the Motion before the House today. As many noble Lords will know, the member states of the Western European Union decided this time last year that the organisation should be dissolved with effect from the middle of 2011. I need not tell this House that the Western European Union and its Assembly has played a valuable and unique role giving international parliamentary oversight of European security and defence matters. About 30 years ago, in the 1970s, I myself served in the Assembly and was a chairman of its defence committee, so I know its work in that period very well.
More recently, as the first head of the Western European Union Institute for Security Studies, which was co-located in the Assembly building, I have seen how many noble Lords have contributed actively to the work of the Assembly over the years, and I pay full tribute to the important work which they have done.
The question now before us is: what should be done to replace it? The inter-governmental nature of decision-making in the common foreign and security policy and the common security and defence policy of the European Union means that parliamentary scrutiny of those policies should not be left to the European Parliament. The significance of the CFSP and the CSDP activities is that those are decisions made by the European Council, which is of course made up of Foreign Ministers from the member states, who are held to account by their national Parliaments. It is therefore important that national Parliaments should be aware of and share in considering those matters at a European level.
As we state in our report, the European Union Committee is of the view that it is vital that some forum for inter-parliamentary debate on these matters is maintained in the post-WEU period, with national Parliaments taking the lead. The issue of how the forum should be structured is the principal subject for discussion at next week's conference of European Union Speakers’ in Brussels. As is indicated in the Motion, we ask for the House’s endorsement of the committee’s approach today, so that when, next Monday, I will be representing the Lord Speaker, I will have a mandate to agree to new arrangements.
The proposals are set out in full in our report, but I shall refer only to the principal points. We propose that the successor body should be a European Union inter-parliamentary conference on foreign affairs, defence and security, with the acronym of COFADS. It should,
“secure continued inter-parliamentary scrutiny of this area of EU activity”,
and,
“would not be an additional or autonomous institution”.
In fact, it would replace the current biennial meetings of the chairs of the foreign affairs and defence committees of national Parliaments. Therefore, it,
“would minimise costs, while adding value to the work that each national parliament does on its own in this field”.
Under our proposal, all the European Union national Parliaments and the European Parliament, but only those Parliaments, would have full membership of the COFADS body. Parliaments of official European Union candidate members would be automatically invited as observers—that is, Croatia, Macedonia, Iceland and, importantly, Turkey. We make it clear in our proposal that it would be possible for other countries to be invited on the decision of the presidency. In speaking to the matter next week, I shall of course refer particularly to the case of the other European members of NATO, especially Norway, which has made strong representations to us on this subject. Delegations from each country would consist of a maximum of six delegates per Parliament, including the European Parliament. That would be three per Chamber in the case of a bicameral Parliament such as our own.
The proposal is that the new body, COFADS, would meet once in every presidency; that is, twice a year. We propose that the meetings should as a general rule be held in Brussels or in the presidency country; but we feel that there would be some advantage in it not necessarily meeting in the European Parliament, to make quite clear that it is a distinct body of national Parliaments rather than something else. Organisational responsibility would be borne by the Parliaments of the troika countries—the country holding the presidency, the country about to hold the presidency and the country that had just held the presidency. They would be responsible for providing the secretariat function with support from the secretariat that already exists in Brussels and services COSAC, the conference of the national European committees of the Parliaments of the European Union.
This is the position of the European Union Committee and it has already been endorsed by the other place; and, as I said, next week I will go to Brussels for the Speakers’ conference, and if the House agrees to the Motion on the Order Paper, it will be the position of both Houses of the UK Parliament. The Speakers’ conference makes its decisions on the basis of consensus. Finding a consensus in advance of the conference has so far not been totally straightforward. However, I am pleased that a significant majority of other European Union national Parliaments broadly support the position outlined in your Lordships’ committee’s report.
On 24 February, the Belgian Parliament, as host of the forthcoming Speakers’ conference, circulated a draft proposal for the future of the CFSP and the CSDP scrutiny—noble Lords may have seen it in the very useful debate pack which the Library prepared for today’s debate. The proposal was a significant way away from the position that I have outlined today. It envisaged, in particular, a significantly greater role for the European Parliament than we would be prepared to accept, notably with the European Parliament holding a permanent co-presidency of the conference and providing up to a third of the delegates but not providing the secretariat.
In response to the proposal, I wrote jointly with Richard Ottaway, the chair of the House of Commons Foreign Affairs Committee, to the Speakers of the two Belgian Houses. We set out in our letter the positions of the two committees, and I am very pleased to say that many other national Parliaments have made similar representations. The Belgian presidency reflected on those responses and issued a revised proposal last Friday, which is also in the Library’s debate pack. It has obviously taken serious account of the representations made by the national parliaments and the revised proposal is heading in the right direction. We should be grateful for that. Thanks to its efforts, an agreement on a proposal next week, which will only be possible on the basis of consensus, now looks a more likely prospect.
However, there remain in the Belgian proposal some areas of concern. Most seriously, the Belgians suggest that the national parliamentary delegations should be limited to four members. In order to allow proper party political balance and Select Committee representation, we remain firmly of the view that delegations should be allowed up to six members per Parliament. Secondly, in our view, the European Parliament is still given too great a proportion of the delegates. In the revised proposal, the proportion has been reduced from a third of the total membership to a quarter of the total size of the national parliamentary delegations. Although there are other matters in the Belgian revised compromise proposal—such as the location of meetings—which also diverge somewhat from the intended UK position, it is these two issues on which we have the strongest views and on which we have been supported most strongly by most other national Parliaments. If the House agrees to our report today, I will argue strongly for the position in the report, and I will feel unable to agree to a proposal that does not come significantly closer to the UK Parliament's position than the revised Belgian proposal on these two points of substance.
As is clear from the report before the House, the European Union Committee's clear view is that the continuation of an inter-parliamentary forum is necessary to ensure that the demise of the WEU does not leave a serious gap in scrutiny. Should we have needed reminding, recent events in north Africa and the Middle East have demonstrated the fundamental importance of discussing and perhaps sometimes reaching agreement on common foreign, security and defence policies. The WEU Assembly will meet for the last time in June. It is therefore wholly desirable that the European Union Speakers’ Conference next week can reach a decision so that the new forum can become operational later this year. I am optimistic that, with further compromise, such a decision can be reached, and I will do everything I can to secure it.
The committee's position is clearly set out in the report. I believe that it is a sensible and appropriate response to the winding up of the WEU Assembly and, if agreed to, will make a good framework for inter-parliamentary scrutiny for years to come. I therefore commend it to the House. I beg to move.
Lord Davies of Stamford
My Lords, I am very happy with this proposal and delighted to hear of the progress which the noble Lord, Lord Roper, has made in negotiating it. I congratulate him first on having seen off Mr Lidington’s completely inappropriate and ill thought through proposal that countries other than members of the European Union, or even candidate members, should be members of this body. Part of this body’s function is to hold the Council of Ministers, the European Council and the high representative to account, so the idea of a body that is composed of states that are not even members of the European Union holding the European Council to account or sending instructions to the high representative is utterly absurd. It would be rather like us trying to intervene in the activities of the African Union or sending instructions to its director-general, if that is what he is called. I am therefore very glad indeed that the noble Lord’s judgment and that of his colleagues has prevailed over the Government’s initial proposal.
As the noble Lord said, one or two matters have been left open, but they are obviously secondary or tertiary matters and I hope that he will feel able to display whatever flexibility is required. Those on all sides of the House who know him—I have known him for many years: indeed, long before I got into this place—will have the highest respect for his judgment, and it is important that he feels that he can go back to the meeting with a degree of negotiating flexibility. Some of the outstanding issues, such as whether meetings can be held in the premises of the European Parliament, seem a little theological and indeed rather petty, so giving way on such a matter in order to get an agreement sooner and to establish quite clearly what the regime will be would be very much in the interests of this House and indeed of the country and the future functioning of this committee.
I conclude with one thought. Perhaps noble Lords will think I am slightly self-interested in saying this, and perhaps I am, but I do not necessarily apologise for that. The proposed arrangement is very good, but the noble Lord will appreciate that it leaves entirely in the hands of three Members of this House and three Members of the House of the Commons the important role of co-ordinating with parliaments of other member states on the vital issue of the future of the common and foreign security policy and possibly defence policy of the European Union. Is there some scope for having from time to time—certainly not as frequently as the meetings of the proposed new committee but at most once a year or maybe less—a slightly wider conference enabling those of us in both Houses who take a close interest in these matters to meet colleagues in the other European Union member states to discuss those matters and to see what the views are and how they are evolving, and where consensus might be possible and where it might not be possible? In other words, is there some scope for getting a flavour of the debate directly, as one could in the old days when there was the WEU Assembly? In much older days, long before I became involved in public life and before direct elections to the European Parliament, Members of both Houses attended meetings at which they could discuss matters of common interest with other members of national parliaments and the European Community.
Of course, as the noble Lord, Lord Roper, knows, I do not suggest for one moment going back on the decision to have direct elections to the European Parliament—far from it. That is an obvious and a great improvement. But I should be grateful if he could give some thought, and possibly discuss it with his British and other EU colleagues, as to whether there might be some opportunity from time to time to widen the circle a little bit in order that these important matters, which are sometimes extremely complex, are not left exclusively in the arcane hands of a small number of experts—great as the expertise will certainly be, at least from the, I think, six representatives which the British side will send to the committee.
Lord Dykes
My Lords, I too welcome very much the fact that the noble Lord, Lord Roper, has tabled this Motion. I also welcome the fact that he has explained the background to it as well as the background to the Select Committee report and the recommendations. We on these Benches, and I as a member of the EU Select Committee, very much endorse Appendix 1 and the details of the proposal. We thank the noble Lord for having had oversight of this matter. He followed it through in painstaking detail. Without wishing to embarrass him by heaping too much praise on him, which is deserved none the less, I can think of no one more suitable or with a longer pedigree of knowledge on this subject and this particular theme than the noble Lord, Lord Roper. He mentioned his work in the Assembly in the early 1970s. I remember vividly having a long meeting with him in Paris to discuss these matters in the early days of the development of the WEU and the rest of the apparatus.
It is a very good way of viewing the gradual development of this new architecture, bringing in the European Union, as a result of the two recent treaties, into the oversight of defence and security policy for European Union member states. Originally, there was resistance from certain senior members of NATO and various member states about the idea of the EU being involved in some aspects of the other subordinate bodies that the EU proposed to be established to deal with these subjects in detail, including the defence agency. I think now that there is a much more contented atmosphere between the two. There is a feeling now of reciprocal aid and support in psychological terms between NATO and the EU on these subjects, which I hope will continue without me being too complacent about the difficulties therein, because old habits can die hard.
This is a moment too to pay tribute to the WEU and what was achieved over the years with it and the great experts among parliamentarians of all countries who developed a profound knowledge. I recall, over many years, quite a few laudatory comments from the RUSI, the Royal College of Defence Studies personnel and so on about the quality of the investigations and reports of WEU committees and the work that they did. It was inevitable that it would end. That is quite right and people accept that now. We move on to the new ESDA structure and we wish Robert Walter, the new chairman, and his colleagues well with those functions.
Now that NATO is in areas other than just western Europe, there will be more and more areas where the EU will wish to follow what is going on as a united body. Equally, it is right that it should remain primarily in the intergovernmental cockpit because that is the nature of the subject. Gradually, the European Parliament will also extend its activity and architecture in the whole area of defence and security. That is a decision which will, I am sure, in friendly consultation with national parliaments, reflect the worthy sentiments of the Lisbon treaty. It specifically built into the development of the European Union—and the integration that we are now seeing being accelerated, I am glad to say, in various fields—the idea of a much bigger involvement of the national parliaments in all sorts of European policy forming areas. The involvement was not just in this particular area. The way in which the European Parliament responds to that now will be much more encouraging than we might have feared in the past. For all those reasons and for the reasons explained by the noble Lord, Lord Roper, in his initial remarks, we very much hope that this Motion will be supported today.
Lord Jopling
My Lords, I am glad to be able to give broad support to the speech made by the noble Lord, Lord Roper, in opening the debate. There are some people who look back with great nostalgia on the work of the WEU over the years, and there is no doubt that it has done some extremely useful work. But over the last few years I have heard the WEU described in a rather rude way as being similar to an old dog who is much loved but for whom sentimental affection prevents it being gently put to sleep. It has been right to put it to sleep over the course of the last year or so.
Little objection has been made to the view that there really must be some form of parliamentary oversight over both the CFSP and the CSDP. The question is what form that should take. The Select Committee report—the House may recall that I happen to be a member of that committee—is absolutely on the right lines. The first point is that national parliaments must take the leading role in this. I notice that the latest Belgian proposal suggests that there should be not six but four Members from each parliament. Personally, I do not mind that very much. Bearing in mind that someone spoke earlier of the quality of the likely representations from the UK Parliament, I am sure that we shall be extremely well represented whether it is four or six, but my preference would be for four representatives. I imagine that if there were only four representatives, the two from your Lordships’ House would be the noble Lord, Lord Roper, and the chairman of Sub-Committee C, the noble Lord, Lord Teverson. They would represent us extremely well and bring a great deal of expertise to the conference.
One of the contentious issues, referred to by the noble Lord, Lord Roper, was what the role of the European Parliament should be. Of course it should have a presence, I am entirely in favour of that, but most emphatically not of the first proposal made by the Belgian Parliament. It suggested that one-third of the membership—54 members—should come from the European Parliament. It modified that figure in the second proposal to bring it down to 27. My suggestion to the noble Lord, Lord Roper, is that when he goes to the meeting in Brussels next week he would do well to insist on 12 representatives from the European Parliament. I think that that would be ample. It would mean that the European Parliament had 10 per cent of the membership and that the total membership of the conference, with 108 representatives from the various member parliaments, would be 120. Thus, if the conference meets for one and a half days twice a year, at 120 members, those representatives would have an adequate opportunity to make a contribution. I should have thought that that number was entirely adequate with no need for any more.
My own view, which I know some people do not agree with, is that a small representation as observers—I insist on that—from candidate states to the EU should be included, and from European states that are members of NATO, which is in the amended Belgian proposal. I would have thought that that was reasonable. If the proposal is pressed on the noble Lord, Lord Roper, I hope that it will be written into the rules that they can speak but that they do not have a vote and cannot put down amendments to motions. They should be there entirely as observers with the opportunity, if they wish, to speak.
There is no need to set up a new institution with a galaxy of officials if it is only to meet twice a year. The suggestion that it be organised through COSAC is reasonable. I am bound to say that I have never been a huge enthusiast for COSAC. Over the years, I have attended various meetings. I remember going to some of them as chairman of Sub-Committee C, the foreign affairs and defence committee, years ago. My experience is that that body is not as well directed and effective as it should be. I hope that its new responsibility for organising COFAD meetings twice a year will give it a new objectivity and we are right to give it a try.
I am not very happy with the latest Belgian proposal that the COSAC secretariat organise meetings in conjunction with the troika and the European Parliament. I do not really see why the European Parliament needs to be involved in the organisation of the meetings. It should not be left like that, with just the COSAC secretariat in Brussels and the troika. The troika does not give a feeling of continuity; it is a transient thing, as we all know—although it takes 18 months to get through it. If these meetings are to discuss defence and security matters, it is very important that military/defence expertise is somehow attached to the organisation. Unless it is, we could have trouble ahead and the work of the conference in future would not be sufficiently oriented to defence and security matters. Perhaps it would be possible temporarily to attach specialist defence consultants to the secretariat to add that expertise. I hope that the noble Lord, Lord Roper, will be able to insist on that when he is in Brussels next week. I am perfectly confident that he will look after the United Kingdom’s interests in those meetings and the interests of this House. I certainly wish him well. However, I must stress to him the need firmly to set the new body up so that it is tied into various conditions and rules which prevent the sort of mission creep which has befallen some international bodies in the past.
I am concerned that some of these international bodies do too much travelling, and to places which are unnecessarily distant. Perhaps I may give your Lordships an example which irritates me to death. I have to leave home at six o’clock tomorrow morning to fly to the Azores for a meeting of the standing committee of the NATO Parliamentary Assembly. It is meeting on Saturday and we come home on Sunday. That seems an enormous waste of time and money, when the meeting could perfectly well have taken place in Brussels or even in Lisbon. To have to go through Lisbon to go to the Azores to be there for 48 hours seems to me an absurdity and a waste of money. It is the sort of thing that we have to try to correct. Certainly, that will be one of the things that I say to the standing committee at our meeting on Saturday.
Lord Liddle
My Lords, on behalf of the Opposition, I welcome this Motion from the noble Lord, Lord Roper. We support the recommendations for the establishment of an EU Inter-parliamentary Conference on Foreign Affairs and Defence and Security. We have had interesting contributions from my noble friend Lord Davies of Stamford and the noble Lords, Lord Dykes and Lord Jopling.
I could hardly do otherwise than support the committee recommendation, given that I was on the committee when the recommendation was formulated, but it seems to be a wise set of recommendations. As an historian I share in the nostalgia of the noble Lord, Lord Jopling, for the Western European Union, but the WEU was rather a long time dying, if I may put it like that. I first remember this coming up when the noble Lord, Lord Robertson of Port Ellen, was Secretary of State for Defence in 1998. We had a discussion between the Ministry of Defence and No. 10 and the Foreign Office when I was an adviser in No. 10 about folding the WEU into the existing NATO and EU structures. It has been a long time since Britain first put forward that proposal.
The recommendations that we now have are right. We need a body made up of national parliamentarians to maintain some form of parliamentary accountability in the area of EU defence and foreign policy. The EU is a complex hybrid of supranationalism and intergovernmentalism. It has become an even more complex one with the passage of the Lisbon treaty and the setting up of the double-hatted high representative who has both a responsibility in the Commission and is accountable to the Foreign Ministers’ Council. It is very important that, because the intergovernmental nature of these things remains crucial, there is a body made up of national parliaments which can question the high representative. It also seems to me that there is a very strong political case for this type of body. I am sure that the European role in these questions is going to grow greatly in the years ahead in response to the pressures of globalisation and the insistence of the US, as we see in the events in north Africa, that we live up to our responsibilities as Europeans. It is inevitable that Europe’s role will grow, but it is also inevitable that these matters, at least in the first instance, will be handled intergovernmentally, I suspect for quite a period. Therefore, it is very important that such a mechanism as proposed exists.
We support the committee’s recommendations on structure. They seem to provide for an efficient and cost-effective body. We welcome the efforts of the noble Lord, Lord Roper, to achieve consensus on these matters. I would say that the essence of the position should be that, first, this should be an EU-led body. That does not preclude having observers, but the primary focus should be the European Union, and I agree with the noble Lord, Lord Davies of Stamford, on that point. Secondly, the primacy within the body of national parliamentarians should be absolutely clear-cut. Thirdly—and here I agree with the noble Lord, Lord Jopling—the meetings should be in Brussels, because that is where we are most likely to get engagement with the key people. There should not be some fancy gallivanting off to the Azores, or elsewhere. Fourthly, because the meetings should be in Brussels, I think one has to be careful about how many Members of the European Parliament one tolerates within this new institution. I spent a lot of time rather enjoyably in the convention that was set up to discuss the EU constitutional treaty. It was a great innovation in that convention that there were representatives of national parliaments there, but they got rather quickly overwhelmed by the Brussels bubble. You have to watch that something that meets in Brussels does not become dominated by those who are based in Brussels.
Those are the principles on which I hope that the noble Lord, Lord Roper, will represent us in the meetings next week. We support this recommendation. This new body should be more than mere tokenism; we want it to be effective and serious. We hope that he will be able to come up with a consensus that meets our concerns.
The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)
My Lords, I join in the congratulations to the noble Lord, Lord Roper, on both bringing forward this Motion and for presiding over this excellent report and, indeed, if I may say so more widely, for the way that he administers his very influential and effective duties in the EU Committee structure, which are of enormous benefit not only to this House but to general debate on the pattern and development of all European Union affairs.
I also find myself ready to endorse almost everything that the noble Lord, Lord Liddle, said. He rightly emphasised the intergovernmental nature and how crucial it was that it should be preserved in this vital area. The only point where things slightly jarred was when he mentioned his work on the constitutional treaty. A shadow passed through my memory as I recalled that unhappy episode that, alas, did not lead to fruitful results. For the rest, the noble Lord has rightly endorsed some sensible proposals.
The Government attach significant importance to the issue of parliamentary scrutiny of the EU’s common security and defence policy and want to ensure that the cross-European parliamentary debate on European defence issues, performed currently—and for the next few months—by the WEU Assembly, continues. Inter-parliamentary discussion serves to enhance and enlighten the national scrutiny work of Parliaments and complements the breadth of knowledge that already exists in this House. This can only be a good thing; I am unambiguous about that.
Let me be clear to your Lordships about the Government’s role in this process. In March last year, Governments decided to close up the Western European Union, the bulk of its functions having already transferred to the European Union. I share my noble friend Lord Jopling’s tinge of nostalgia, since it seems to me that the WEU was part of our lives in at least the last three or four decades of the previous century. Many of us regard it as a familiar part of the European Union landscape, but times pass and the decision to close it up has been taken.
In doing so, we recognised the value of the continuing inter-parliamentary debate on European defence and security so, to ensure that a future forum could be established to facilitate that, we have worked to help discussion with interested parliamentarians on how this might be taken forward. During those discussions, we set out the Government's preferences for such a body, but it is obviously for national European parliamentarians to decide the form that future scrutiny arrangements should take. It is certainly not for the Government to dictate the terms; that would be quite wrong.
The Government's priorities in this process are clear. First, we believe in the primacy of national parliamentary scrutiny of the EU’s common foreign security policy. That reflects the policy’s intergovernmental nature, which we have all emphasised, and within it, the common security and defence policy. These are intergovernmental matters and, given the role played by national parliaments, there is no need for any new arrangements to involve expanding the European Parliament’s competence to scrutinise CFSP. While the European Parliament has a role, as is recognised in the report, we believe that an inter-parliamentary body better reflects the intergovernmental nature of CFSP.
Secondly, we believe that any new arrangements should be better suited to supporting and informing the national security process. They should capitalise on the expertise of relevant parliamentarians in this policy area and allow for a free and open exchange of information among European states.
Thirdly, new arrangements need to demonstrate value for money to the taxpayer, as many of your Lordships have emphasised. Given the current financial pressures facing Europe and all its member states, we support the proposal in the EU Committee report that any future mechanism for inter-parliamentary dialogue on CSDP should operate with the minimum possible cost and bureaucracy. The UK’s current annual subscription to the WEU is €2.3 million. While the WEU Assembly played a useful role in engaging views from across Europe, we and other WEU council members believe that this inter-parliamentary debating function can be delivered much more efficiently outside the WEU structures. The new body, as envisaged in the EU Committee report, will operate at a fraction of the current cost and, more appropriately, will be paid for by national parliaments, not Governments.
The Government believe that the new arrangements should include third states outside the 27 members of the European Union, as the noble Lord, Lord Jopling, and others have referred to. One of the major strengths of the CSDP is its ability to draw support from outside the EU. The report acknowledges that. We welcome that it extends a standing invitation to EU candidate countries, of which there are five at the moment—including, as the noble Lord, Lord Roper, says, the important candidate country of Turkey—but we remain convinced that non-EU European NATO members such as Norway should also receive a standing invitation. European defence policy and NATO share common political and security interests. Norway in particular has provided valuable contributions to EU operations and is currently an associate member of the WEU. We can see no reason why its inclusion in future arrangements should be anything other than permanent, and we hope that the decision that the noble Lord mentioned will go forward. We ask: why slam down the door so dismissively on good friends and a valuable contributor to European defence?
In this policy area we see a real value in inter-parliamentary collective debate that informs the national security process of EU member states. The European Union Committee report is an important and valuable step towards developing practical, low-cost and inclusive arrangements that will benefit parliamentarians across Europe, and I urge your Lordships’ House to back it fully.
Lord Roper
My Lords, I am grateful to the noble Lords who have taken part in this short debate and have made helpful contributions to our consideration of this topic. As the Minister said in his closing remarks, Norway has already played a very active part in a number of the missions of the CSDP so, whether this should be automatic or whether it should be the norm, by convention it would always be invited. We have kept the model as it is in the report because that is the practice in COSAC; that body has a framework in the protocol to the treaty. To make that a right could lead to problems. However, we believe that Norway should be invited on every occasion, and I will certainly make that point clear when we have the discussions next week.
It was quite interesting that the noble Lords, Lord Davies and Lord Jopling, had different ideas as to whether the body should be larger or smaller. At the moment, given the pressures on budgets, it is going to be a case of keeping the size down. If we eventually move into a situation where more resources are available for inter-parliamentary co-operation, the possibility of having larger meetings from time to time of the kind that the noble Lord, Lord Davies, referred to should be considered.
Lord Davies of Stamford
The figure of six is probably right but I would be perfectly happy with four; I do not feel strongly about that. My suggestion was that in addition to that there could be a rather more informal occasion where a rather larger number of people could take part for the sake of informing a wider range of people in all national parliaments, including our own, about the current agenda of these important discussions.
Lord Roper
I noticed that. However, I think that the issue at the moment is the impact of the present period of austerity on the budgets of national parliaments, as we discussed at the Speakers’ conference last year. The impact is such that one has some difficulty in making proposals for too much of that at the moment. Nevertheless, the idea should be retained and brought forward when there are more possibilities.
I am grateful for the support of the noble Lord, Lord Dykes. I also very much appreciate the helpful advice—based on his great experience of inter-parliamentary co-operation in very many of these bodies—of the noble Lord, Lord Jopling. As for the issue of four rather than six, we say “a maximum of six”. Some of the unicameral parliaments—Malta, for example—never send more than two or three members to COSAC even though they are entitled to send six. One will not have six from everywhere. We have had informal discussions with our colleagues from the House of Commons, where there is a wish to send someone from the Foreign Affairs Committee, the Defence Committee and the European Scrutiny Committee. It would not necessarily be the case, as the noble Lord said, that this House would need to have three. However, if we were to restrict the number to four, there would be a feeling not only in the House of Commons but in some of the other parliaments that it was too restrained. We will obviously have to consider this matter with care next week.
I hope that we will be able to achieve the suggestion from the noble Lord, Lord Jopling, for 12 members from the European Parliament. It is certainly a matter to be considered. As for his point on the secretariat, the COSAC secretariat has always had someone from the European Parliament as one of the members. It would only happen in that way and as part of the general secretariat, rather than as the European Parliament coming in and providing it, as was at one time suggested.
As the noble Lord, Lord Jopling, will see, we have in the report a “no committees” point, at point 15 on page 9. At point 18, on page 10, we take up the point that he made about the need for technical and military advice from time to time. We will certainly examine how that can be done.
I was grateful for the support from the two Front Benches. The noble Lord, Lord Liddle, was—alas—only too briefly a member of the committee. Interestingly enough, however, in that short time, he was with us when we agreed this report.
Part of the problem with the European Parliament is that although we talk about the Lisbon treaty, there are in fact two treaties. Most of the stuff concerning the CFSP, the CSDP and the treaty which is purely inter-governmental is in the Treaty on European Union. That is of course what this is dealing with. On the other hand, if you turn to Part 5 of the Treaty on the Functioning of the European Union, you will see a great wodge of other external activities of the European Union for which the European Parliament has responsibility and on which its external affairs committee legitimately takes the lead. That is appropriate as those activities are dealt with on a Community basis. However, the European Parliament would like to try to blur the distinctions, as it were, between the two treaties. The point we will be making next week is that that distinction must be maintained as it is made clear in one of the declarations that the relevant treaty will give the European Parliament no more power in the field of common foreign and security policy.
I agree with the noble Lords, Lord Liddle and Lord Howell, that it is highly desirable to have the meeting in Brussels. We have left a certain amount of discretion in this regard as a presidency should have some power but we trust that Brussels will be seen as the norm for all the reasons that were given. I was very grateful to the noble Lord, Lord Howell, for his remarks. I have nothing further to say in that regard except that we were extremely grateful for the help we received from his right honourable friend the Minister for Europe, Mr Lidington, in the informal conversations which went on between committees of this House and of the other place in preparing the two parallel reports on this subject. We are very conscious of the point he made about the need to obtain value for money. That very much goes back to the point made by the noble Lord, Lord Jopling.
As I say, I am very grateful for the comments that have been made and I shall certainly take them with me when I go to Brussels next week.