House of Commons

Wednesday 16th May 2012 Commons Chamber

Wednesday 16 May 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 16th May 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 16th May 2012 Commons Chamber

The Secretary of State was asked—

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

1. What recent discussions he has had with Ministers in the Northern Ireland Executive on welfare reform.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

I regularly discuss the benefits of our reform agenda with Executive Ministers and the Secretary of State for Work and Pensions. I spoke yesterday to the Minister for Social Development, who will shortly introduce a welfare reform Bill to the Assembly. Lord Freud, the Minister responsible for welfare reform, will visit Northern Ireland again tomorrow and Friday to continue the discussions.

[Gordon Henderson]

As my right hon. Friend will know, many aspects of social welfare are already devolved to Northern Ireland. Does he agree that it is very important that parity with Great Britain is not broken on this issue?

[Mr Paterson]

My hon. Friend is absolutely right that it would be very damaging to Northern Ireland if parity were broken, because these reforms will bring tremendous benefit to many of the most disadvantaged people in Northern Ireland. At the same time, this very much has to be a Northern Ireland Bill. I am working very closely with the local Minister, to whom I spoke yesterday, to ensure that there is sufficient flexibility so that when the measure comes to the Assembly, it conforms to the needs of local communities.

[Ian Paisley (North Antrim) (DUP)]

I say to the Secretary of State, SUFTUM, and I am sure he will on Saturday.

Will the Secretary of State assure us that the welfare reform flexibilities that our Northern Ireland Minister is seeking will be accommodated at a policy level, but also at a practical level within the universal credit IT system? It will be vital to have those flexibilities in place next year.

[Mr Paterson]

For those who are not enlightened, “SUFTUM” is “Stand up for the Ulster men”. We all heartily congratulate the team on having got to where they will be on Saturday, and we wish them all the best.

The hon. Gentleman is absolutely right to stress that flexibility means that the detailed welfare reform measures must be adapted to the particular circumstances of Northern Ireland. The most obvious one is that there is no council tax in Northern Ireland. I am working closely with the local Minister, and Lord Freud, who has been a frequent visitor and will be in Northern Ireland for two days at the end of the week.

[Ms Margaret Ritchie (South Down) (SDLP)]

Is the Secretary of State aware that conservative estimates indicate that when welfare reform is implemented in Northern Ireland, it will remove about half a billion pounds from the pockets and purses of low-income households? Apart from the social consequences, will he give his assessment of the macro-economic effects of that significant cash withdrawal from the Northern Ireland economy?

[Mr Paterson]

I am grateful to the hon. Lady for the question, but I have to remind her that the hon. Member for East Antrim (Sammy Wilson), the Northern Ireland Finance Minister, does not agree with her. He has said:

“The claim that welfare spend will fall in Northern Ireland and will lose £500 million is clearly not true. All that will happen is that welfare spending will still be increasing but at a slower rate than if no reform agenda is pursued.”

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

2. What discussions he has had with the Secretary of State for the Home Department on the implications for Northern Ireland of the replacement of the Serious Organised Crime Agency by the National Crime Agency.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

I am in regular discussion with both my right hon. Friend the Secretary of State for the Home Department and the Minister of Justice in the Northern Ireland Assembly. I believe that the plans for a National Crime Agency should be welcomed in Northern Ireland as a significant step forward in tackling the threat from serious, organised and complex crime in a way that respects the accountability mechanisms in Northern Ireland.

[Cathy Jamieson]

I thank the Secretary of State, but does he agree that notwithstanding the views on the National Crime Agency, there are specific issues to consider in Northern Ireland about the direction and control of police officers? Will he say more about how he intends to address those issues?

[Mr Paterson]

I am grateful to the hon. Lady for giving me the chance to clarify that I have worked very closely with the Justice Minister David Ford and the Home Secretary here to ensure that the NCA’s systems and methods of direction are totally compatible with the arrangements in Northern Ireland, which provide strong local accountability. In effect, no direction will go forward without the compliance of the Chief Constable. I am sure the hon. Lady will agree that horrendous crimes such as trafficking need an overarching authority working in close liaison and co-operation with the Police Service of Northern Ireland and, through the PSNI, with the Garda in Dublin.

[Mr Laurence Robertson (Tewkesbury) (Con)]

In a recent report, the Northern Ireland Affairs Committee highlighted the importance of the work of the Organised Crime Task Force in the fight against fuel and tobacco smuggling, and laundering and counterfeiting. Will the Secretary of State assure the House that the National Crime Agency will play a similar role in the Organised Crime Task Force to that played by the Serious Organised Crime Agency?

[Mr Paterson]

I am grateful to my hon. Friend and his Committee for their interesting report, which showed significant progress in bearing down on fuel smuggling. I absolutely reassure him that the intention of the National Crime Agency is to work on the success of SOCA and beef it up, and to bear down on many such crimes, which have an international nature.

[Mark Durkan (Foyle) (SDLP)]

Does the Secretary of State accept that role definition and delineation between the Police Service of Northern Ireland and the National Crime Agency is important? Does he envisage a memorandum of understanding in that regard, and if so, would it be published?

[Mr Paterson]

I entirely agree that the arrangements between the new agency and the devolved police in Northern Ireland must be absolutely clear. There has been an exchange of letters between me, the Justice Minister in Northern Ireland and the Home Secretary here, with an absolutely clear statement that there can be no direction from the NCA, only co-operation with the approval of the Chief Constable.

[Mr Philip Hollobone (Kettering) (Con)]

Will the National Crime Agency have more resources than its predecessor to tackle cross-border criminal activity?

[Mr Paterson]

That question should be addressed to my right hon. Friend the Home Secretary.

[Dr William McCrea (South Antrim) (DUP)]

Will the Secretary of State assure the House that the proposed changes will have no detrimental effect on the fight against terrorism and organised crime?

[Mr Paterson]

I assure the hon. Gentleman that it is absolutely the reverse: the proposal is for a stronger agency, with a clear remit to co-operate in a vigorous manner with the PSNI. As I have said, the PSNI works closely with the Garda—I saw Martin Callinan, the Garda Commissioner, in Dublin on Monday. We should never forget the extraordinarily high level of co-operation we have with the Garda. On very serious crime such as terrorism, that co-operation is saving lives as we speak.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

3. What recent assessment he has made of the security situation in Northern Ireland; and if he will make a statement.

[Andrew Bridgen (North West Leicestershire) (Con)]

4. What recent assessment he has made of the security situation in Northern Ireland; and if he will make a statement.

[Julian Sturdy (York Outer) (Con)]

7. What recent assessment he has made of the security situation in Northern Ireland; and if he will make a statement.

[Nic Dakin (Scunthorpe) (Lab)]

10. What recent assessment he has made of the security situation in Northern Ireland; and if he will make a statement.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

The threat level in Northern Ireland remains at severe. Those who remain intent on committing violence are defying the will of the overwhelming majority of people, who want to go about their lives without fear and intimidation. This Government remain fully committed to countering terrorism in all its forms.

[Jack Lopresti]

Newry has unfortunately had three significant bomb threats in as many weeks. Will my right hon. Friend take this opportunity to encourage those who have information about those involved in dissident activities to come forward to the police and stop those who are intent on driving Northern Ireland backwards?

[Mr Paterson]

I entirely agree with my hon. Friend, who is absolutely right on how to defeat the small minority of people who are defying the overwhelming majority of people of Northern Ireland, who support the PSNI and co-operation with the Garda and who want to make Northern Ireland a peaceful, prosperous place. The former are completely unrepresentative, but we do not underestimate the fact that they are dangerous. My hon. Friend cited the Newry bomb. Had that not been disrupted by police activity, it could have caused very severe danger. We are not complacent, but the key is co-operation between the communities, the people and the police.

[Andrew Bridgen]

Given the danger that former prisoners will re-engage in paramilitary activities, will my right hon. Friend inform the House what steps are being taken to monitor prisoners released on licence, and under what circumstances those licences may be revoked?

[Mr Paterson]

If you do not mind, Mr Speaker, I should like to take a few moments to answer this question, which is a matter of huge consequence and debate in Northern Ireland.

The parole commissioners are an independent body appointed by the Justice Minister in Northern Ireland. The commissioners’ role is to make decisions on the release and recall of life-sentence prisoners in Northern Ireland. If information is brought to my attention, I share it with the commissioners and seek a recommendation from them regarding whether to revoke a licence. If they recommend that I do so, I will revoke, because I have a duty to protect the public. The commissioners then arrange a full hearing at which the prisoner can present his or her case and challenge the evidence against them. The commissioners make their decision on whether to release the prisoner because they are no longer a risk to the public, or whether the prisoner should stay in custody. The commissioners’ decision is binding. For those who remain in custody, cases are reviewed every one to two years.

[Julian Sturdy]

Does my right hon. Friend agree that the term “alternative policing” is not only a disgrace but a worrying development that needs to be stopped?

[Mr Paterson]

My hon. Friend is absolutely right. I discussed recent events involving Republican Action Against Drugs with the Chief Constable this morning, and he described some of those activities as an obscenity in a modern democracy. There is absolutely no place in Northern Ireland for any alternative authority. The duly constituted authority, responsible to the democratically elected Assembly and Policing Board, is the PSNI, which needs to work with the full co-operation of the public. The situation is frustrating. As the Chief Superintendent said on television yesterday, the PSNI needs information from the public, so I appeal publicly to all those with any details. Some of these events are horrific and the police need the public’s help to bring the perpetrators to justice. [Interruption.]

[Mr Speaker]

Order. There are a lot of private conversations taking place in the Chamber. I remind the House that we are discussing the extremely serious matter of the security situation in Northern Ireland.

[Nic Dakin]

Given that the bomb in Newry was twice the size of the one responsible for the atrocity in Omagh, can the Secretary of State assure the House that the police and other services have all the resources necessary to maintain safety and security in Northern Ireland?

[Mr Paterson]

I would like to reassure the hon. Gentleman. Shortly after we came to power, we reviewed the security position in Northern Ireland and recognised that, sadly, a small number of people were flouting the democratic will of the people of Northern Ireland and trying to pursue their aims through violence. Working closely with the Justice Minister and the Chief Constable, we have worked out a programme, costing £200 million over the next four years, and I am pleased to say that the Chief Constable himself says we have the resources, the resilience and the commitment to meet the threat.

[Mr Nigel Dodds (Belfast North) (DUP)]

In dealing with security, the Secretary of State will be aware that yesterday evening the PSNI revealed that, alongside other police forces in England, it had retained body parts and human tissue in 67 cases of suspicious and unexplained deaths without notifying the families of those possibly murdered. He will no doubt share my shock and will have sympathy with the relatives being told this terrible news today and in the coming days. What action does he now advocate taking, in co-operation with those in Northern Ireland, to deal with this serious issue?

[Mr Paterson]

I am grateful to the right hon. Gentleman for raising this matter. I entirely endorse his views and sympathise with those families who have heard this news. These are matters of the greatest sensitivity, and they must be very difficult for families to handle. I think we were all unaware that this material existed. It is most unfortunate that the news came out as it did. The Human Tissue Authority issued a direction to all state agencies, and the Association of Chief Police Officers advised chief constables. I talked to the Chief Constable about the matter this morning. As I understand it, the report was due to be published in good order on Monday, and he had prepared a careful plan to address the matter with each individual family in a most sensitive manner. We await the details of the report on Monday, but in the meantime the Chief Constable has assured me that he will have to accelerate his proposals to talk to the families.[Official Report, 16 May 2012, Vol. 545, c. 12MC.]

[Mr Dodds]

I am grateful for the Secretary of State’s response. Given that this practice apparently occurred between 1960 and as late as 2005—it is now illegal, of course, under new legislation—will he and direct-rule Administrations of the past give full co-operation to any independent review or inquiry that might be set up?

[Mr Paterson]

The right hon. Gentleman raises an important point. We had all better wait to see what the report says, and then I will obviously discuss its implications with the Justice Minister David Ford and the Chief Constable. I suspect that most of the detail might be devolved, but I take onboard what the right hon. Gentleman says. This is a most difficult revelation, and we have to handle it with great sensitivity.

[Vernon Coaker (Gedling) (Lab)]

We know how much the security situation in Northern Ireland has improved—we are all thankful for that—but, as we have seen with the recent escalation in the number of attempted bombings and hoaxes, there remains a severe threat from those who wish to take us back to the past. Does the Secretary of State agree that the Army bomb disposal teams do tremendously courageous and vital work, and will he assure the House and the people of Northern Ireland that they will receive whatever resources they need to do their important job?

[Mr Paterson]

I am grateful to the hon. Gentleman for his question and I also thank him, on the record, for his great support in our teamwork with the devolved Ministers in bearing down on criminals in Northern Ireland. Let me reassure him that support for the ATOs—ammunition technical officers—is very much a feature of the £200 million programme that we put together two years ago.

[Vernon Coaker]

I thank the Secretary of State for his remarks. He will be aware that this week is community relations week and I am sure that he will join me in paying tribute to all those involved in trying to create a shared future in Northern Ireland. Does he agree that legitimate grass-roots community organisations across Northern Ireland do hugely effective work in maintaining security and combating paramilitary activity? For those who rely on financial support from the European Union, will he tell the House what support we can expect from the new Peace IV funding initiative?

[Mr Paterson]

I entirely agree with the hon. Gentleman that we will not bear down on the number of delinquents purely by a security effort. We must give credit to the efforts of the PSNI to penetrate communities and to work on the ground in places where the police have not been seen for many years. This week, we have seen an announcement showing the lowest level of crime for 14 years and the highest level of confidence in policing for a very long time. At the same time, in parallel, there has been success against the terrorists in terms of arrests. However, he is absolutely right that we need to promote the programmes he mentioned, and I have discussed this issue with the Tanaiste, the First Minister and the Deputy First Minister, and together we will come up with a new programme.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The dissident terror threat increases in Northern Ireland, but is the Secretary of State aware that supporters of dissident terror are using illegal fundraising activities here in mainland GB, such as fuel smuggling and so on, to fund the campaign in Northern Ireland?

[Mr Paterson]

I thank the hon. Gentleman for his question. We are aware that such individuals fund their activities by a number of illegal means, and there has to be a question mark over them, whether they are used by criminal organisations or by paramilitary organisations. All such activities are totally and absolutely unsupportable. We have the full backing of the communities. We are talking about a tiny number of people who are not widely supported, and the way to beat them is for the people in the communities on the ground to work with the police.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

5. What assessment he has made of future opportunities for creative industries in Northern Ireland.

[Christopher Pincher (Tamworth) (Con)]

9. What assessment he has made of future opportunities for creative industries in Northern Ireland.

[Alok Sharma (Reading West) (Con)]

11. What assessment he has made of future opportunities for creative industries in Northern Ireland.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

The creative industries in Northern Ireland are worth £500 million a year and employ more than the agriculture sector. The new relief announced in the Budget will assist the industry directly and help to attract further blockbuster productions such as “Game of Thrones”, which was—indeed, is—filmed in Northern Ireland, creating 800 jobs.

[Dr Coffey]

After the Oscar win for the excellent Northern Irish film “The Shore” and the financial boost given to the film industry by the Chancellor, does my right hon. Friend agree that Northern Ireland has a creative industry to be proud of, bringing in investment in skills and jobs?

[Mr Swire]

I certainly do agree, and we should not forget that for every £1 spent on the arts, the economy benefits to the tune of £3. There is absolutely no reason why the Cathedral quarter in Belfast cannot rival Temple Bar in Dublin or Covent Garden in London in terms of new creative industries and technologies, and we are very excited by that prospect.

[Christopher Pincher]

Following the sell-out success of Belfast fashion week, what support can the Minister give to high-quality local designers and niche manufacturers to ensure that local retailers buy quality local goods and do not buy from abroad?

[Mr Swire]

My hon. Friend is right, and of course it is not just about those designers and textile manufacturers in Northern Ireland; it is about those around the world. I refer him to Patrick Grant, the Savile Row tailor of E. Tautz—judging by the look of my hon. Friend, he has been to visit him on a number of occasions—as well as Jonathan Anderson and others. There are a huge number of people, both in Northern Ireland and outside, in the industry, and we are—to repeat myself—very excited by the prospects for the industry. [Interruption.]

[Mr Speaker]

Order. There are some very noisy private conversations taking place. Let us have a bit of order for Mr Alok Sharma.

[Alok Sharma]

Does the Minister agree that the announcement in this year’s Budget to introduce corporation tax reliefs for film and television production will bring even more value to Northern Ireland’s proposition as a world-class production location?

[Mr Swire]

For my hon. Friend I repeat above the hullabaloo that Northern Ireland is a world-class destination for film and TV production. I welcome the moves taken in the Budget to encourage further investment there. The Paint Hall studio in the Titanic Quarter has recently been used for “City of Ember”, the mediaeval comedy “Your Highness”, and, of course, the first two series of the European “Game of Thrones”, which has so far brought about £43 million to the Northern Ireland economy. Yes, we are open for business, and if anyone out there is watching—I am sure there are many—come to see us in Northern Ireland and we will assure you of an excellent service.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

Will the Minister encourage the British film industry to make more use of the facilities available to it in Northern Ireland?

[Mr Swire]

I rather hoped that was what I had just done, but I welcome the right hon. Gentleman’s question so that I can repeat again that Northern Ireland is a great location, providing a great landscape, very willing people, a hard-working work force, financial incentives and great studio production facilities. More than that I cannot say.

[David Simpson (Upper Bann) (DUP)]

Although it is well and good to encourage the creative industries in Northern Ireland to create short-term employment on some occasions, what can the Minister do to encourage the small to medium-sized companies in Northern Ireland that are currently on their knees? [Interruption.]

[Mr Speaker]

Order. The House must calm down. It is difficult even for the Minister to hear the question. Let us hear the reply.

[Mr Swire]

The Budget provided a number of measures and most of them apply, of course, to Northern Ireland as an integral part of the United Kingdom. I am looking forward to visiting a number of these companies with the hon. Gentleman in the forthcoming days or weeks. The Budget was designed for the United Kingdom as a whole to retain the fiscal responsibility that is the signature of this Government. Everyone benefits from low interest rates and from taking lower-paid people out of taxation altogether. This is not just for small companies in Northern Ireland; it is for small companies the length and breadth of the kingdom. It was a good Budget to help this country on the road to economic recovery, which it deserves.

[Jim Shannon (Strangford) (DUP)]

6. If he will take steps to secure a reduction of air passenger duty in Northern Ireland.

[The Minister of State, Northern Ireland Office (Mr Hugo Swire)]

The Government have worked closely with the Northern Ireland Executive on this matter and have reduced air passenger duty on all direct long-haul flights from Northern Ireland from 1 November 2011. Provisions to devolve APD are set out in part 3 of schedule 23 to the Finance Bill, which is awaiting its Committee stage.

[Jim Shannon]

I thank the Minister for his response. The Secretary of State recently had a meeting with Willie Walsh of BAA and was assured that the Belfast city airport flight routes were safe. The staff at bmibaby are on a 90-day protective notice, as flight routes are due to finish. At that meeting, air passenger duty was also discussed. If there is one initiative that can retain flights, it is the reduction of APD for Northern Ireland. What steps is the Minister taking to reduce APD and to secure jobs?

[Mr Swire]

It is very important to make this situation clear. Northern Ireland Ministers asked for APD to be devolved only for bands B, C and D, and we were able to meet that request, thanks to our all-listening Chancellor. We have not been asked to devolve band A flights, which would reduce the block grant by a substantial amount. The hon. Gentleman’s question allows me the opportunity to tell the House that my right hon. Friend the Secretary of State and I have been very proactive on this matter, working with the local Minister of Enterprise, Trade, and Investment, Arlene Foster. As the hon. Gentleman says, my right hon. Friend has spoken to Willie Walsh a number of times. Keeping those routes open from Belfast to Heathrow is very good news.

[Mr Speaker]

Order. I ask the Minister to shorten his answers, as other Members wish to participate in the debate.

[Mr Robert Syms (Poole) (Con)]

13. Further to the question on air passenger duty, should the Government not be doing much more to expand Belfast airport, particularly the air links, especially if we are to promote more public sector jobs in Northern Ireland?

[Mr Swire]

I hope my hon. Friend meant more private sector jobs in Northern Ireland, but more jobs there is great news. The employment figures for Northern Ireland are better today—better than in other parts of the United Kingdom. We are not on the back foot on this one: we want more traffic and more flights to and from Northern Ireland; that is what we are working towards.

[Dr Alasdair McDonnell (Belfast South) (SDLP)]

Does the Secretary of State agree with me, and with many members of the business community in Northern Ireland, that air passenger duty charges are inhibiting business access and activity, and making it even more difficult to achieve growth and business development?

[Mr Swire]

I think that this is an opportunity for the Chancellor to be given some credit for responding to what the Executive wanted and having air passenger duty devolved, which is good news for Northern Ireland. We want more flights into and out of Belfast, and we are on the right road towards achieving that. We have also saved the flights to Heathrow, which is good news for the businesses in the hon. Gentleman’s constituency.

[Philip Davies (Shipley) (Con)]

8. Whether he has made an assessment of the potential effect on the Northern Ireland economy of changing the corporation tax rate in Northern Ireland to that obtaining in the Republic of Ireland.

[The Secretary of State for Northern Ireland (Mr Owen Paterson)]

The low corporation tax rate in Ireland has been a key factor in attracting investment. The ministerial working group chaired by my hon. Friend the Exchequer Secretary is considering the potential impact of devolving the power to vary the corporation tax rate to the Northern Ireland Assembly.

[Philip Davies (Shipley) (Con)]

I know that the Secretary of State is, like me, a great believer in low taxes to stimulate the economy. What discussions has he had with the devolved Administration in Northern Ireland, and with the Treasury, to try to lower the corporation tax rate in Northern Ireland?

[Mr Paterson]

My hon. Friend will be pleased to hear—and the Leader of the Opposition will be delighted to hear—that, thanks to the reductions in corporation tax introduced by my right hon. Friend the Chancellor, 57,000 more people are in jobs in Northern Ireland than were in jobs before the election. The ministerial group is working closely with Ministers in the devolved Administration, the Northern Ireland Office and the Treasury to establish whether further steps could be taken to reduce corporation tax and devolve it to Northern Ireland, and we will report later in the summer.[Official Report, 21 May 2012, Vol. 545, c. 13MC.]

The Prime Minister was asked—

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Q1. If he will list his official engagements for Wednesday 16 May.

[The Prime Minister (Mr David Cameron)]

I am sure that the whole House will wish to join me in paying tribute to the two servicemen who were killed in Afghanistan on Saturday, Corporal Brent McCarthy of the Royal Air Force and Lance Corporal Lee Davies of the 1st Battalion Welsh Guards. Our deepest condolences are with their families and their loved ones. They were both courageous and highly respected men who were engaged in the vitally important work of training and mentoring the Afghan police, and their service to our nation must never be forgotten.

This morning I had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further such meetings later today.

[Paul Maynard]

May I associate myself with the Prime Minister’s correct tribute to our fallen servicemen? It is the right thing to do.

I welcome the fall in unemployment of which we have learnt today, and, perhaps more important, the rise in employment. Can the Prime Minister assure me that he will continue to invest in the apprenticeships, the Work programme, and the other schemes that get my constituents, and all our constituents, back to work?

[The Prime Minister]

I thank my hon. Friend for what he has said about the schemes that we are introducing. It is welcome that we have seen the largest rise in employment for over a year, that the number of people in work has risen by 370,000 since the last election, and that the number of private sector jobs has increased by more than 600,000. However, we are not remotely complacent. Although there is good news about youth unemployment and the fall in the claimant count, there are still too many people in part-time work who want full-time work, and we still face the challenge of tackling long-term unemployment. We are not complacent, but whereas the flexible new deal took four years to put in place, the Work programme has been put in place within 12 months, and is targeted at helping the difficult to help and the long-term unemployed whom we want to help back to work.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Corporal Brent McCarthy of the Royal Air Force and Lance Corporal Lee Davies of the 1st Battalion Welsh Guards. They both showed the utmost bravery and courage, and our thoughts are with their families and friends.

We need to ensure that the welcome reduction in unemployment that has been announced today is sustained by economic growth. Can the Prime Minister tell us what discussions he has had with the new President of France about a growth plan for Europe?

[The Prime Minister]

First, let me welcome the fact that, on this occasion, the right hon. Gentleman has welcomed the fall in unemployment. Unemployment has come down and the claimant count has come down, and I think it is worth making the point that the number of people on out-of-work benefits has fallen by 70,000 since the election. However, there are still challenges, and we must go on investing in apprenticeships and in the Work programme.

I had a brief discussion with the President of France after his victory, and I look forward to having a longer bilateral with him before the G8 starts this weekend. I look forward specifically to discussing what more we can do to help in terms of European growth. As the right hon. Gentleman will know, together with the Italian Prime Minister and many other Prime Ministers, we have put forward a whole series of steps that can help the European economy to move. Let us complete the energy single market; let us complete the digital single market; let us complete the services single market. These things could seriously add to growth in Europe. That is what we should be focused on in Europe, and I look forward to discussing that, and more, with the French President.

[Edward Miliband]

If I may say so, it is a shame the right hon. Gentleman did not see the French President three months ago, when he was in the United Kingdom. But I am sure that a text message and “LOL” will go down very well.

Europe needs a proper growth plan, which this Prime Minister has failed to argue for, and Britain needs a proper growth plan, which he has failed to come up with. Business is pleading with the Government for a growth plan. Does he really agree with the Foreign Secretary that the problem with our economy is that British business is not working hard enough?

[The Prime Minister]

I have to admit that perhaps I have been overusing my mobile phone—but at least, as Prime Minister, I know how to use a mobile phone, rather than just throw it at the people who work for me. You can probably still see the dents!

I do think there will be common ground between the British view of what needs to happen in Europe and the French view. I note that the French President, when asked how he would stimulate growth, said:

“The means cannot be extra public spending, since we want to rein it in”.

It is interesting that the French President does not back the Labour view that the way out of a debt crisis is to borrow more, spend more and add to the debt. But I do think that what we need in Britain—absolutely vital—are the low interest rates that we have, because when this Government came to power, we had the same interest rates as Spain. Today, ours are below 2%, whereas Spanish rates are over 6%. The shadow Chancellor was saying from a sedentary position that somehow this was delusional. Let me remind him that he said:

“the simplest measure of monetary and fiscal policy credibility”

is long-term low interest rates. Those were his words. That is what Britain has got, and that is what we must not lose.

[Edward Miliband]

The right hon. Gentleman totally failed to answer the question about the Foreign Secretary, who is saying that the problem in our economy is that British business is somehow not working hard enough. I notice that the right hon. Gentleman is now trying to claim the President of France as an ally—what is he on? But there is one group of people whom we know are losing their jobs, and that is the police, 30,000 of whom marched on the streets last week. Can the Prime Minister tell us how many front-line police officers have been lost since he came to power?

[The Prime Minister]

I am not surprised that the right hon. Gentleman wants to rush off the economy after his first few questions. Let me just remind him what this Government are doing to boost our economy. We have cut corporation tax; we have boosted enterprise zones; we are investing in apprenticeships; we are investing in housing; we are making sure we put money into infrastructure. But above all, because we have a plan to deal with our deficit, we have the lowest interest rates, whereas he would give us the highest interest rates.

On policing, Her Majesty’s inspectorate of constabulary has actually found that police forces are planning to increase the proportion of police officers and staff working on the front line, so they are taking people out of the back office and putting them on the front line. But let me say this to the right hon. Gentleman: both parties are committed to making cuts to the police budget. He is committed to £1 billion of cuts, but the point is this: we are reforming allowances, we are cutting paperwork, we are freezing pay, we are reforming pensions. He would not do any of those things, so his cuts would be deeper, because he does not have the courage to do the right thing.

[Edward Miliband]

First, on the economy, we are in a double-dip recession—a recession made in Downing street by the two of them—him and the Chancellor. That is the reality. On policing, everybody will have noticed the Prime Minister’s answer. It was about the proportion of front-line officers—that is because he is sacking so many police officers from the back office. But what is actually happening to the number of front-line police officers? We have 5,000 fewer front-line officers. We have fewer 999 responders, fewer neighbourhood police and fewer traffic police. What was his sales pitch—[Interruption.] They were elected on a promise of more police officers—no wonder they are losing the elections.

What was the right hon. Gentleman’s sales pitch just before the election? This is what he said—[Interruption.] They do not want to hear about what he said before the election. He said:

“any Cabinet Minister…who comes to me and says, ‘Here are my plans’ and they involve front-line reductions, they’ll be sent straight back to their Department to go away and think again.”

Is it any wonder that the police are absolutely furious about his broken promise?

[The Prime Minister]

Oh dear, he is having a bad day. Let me try to explain. Whoever was standing here right now would have to cut police budgets—they accept that, we accept that. But if you did not have the courage to deal with allowances, to deal with paperwork and to deal with pay, you would have to make deeper cuts. This is what—

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

Calm down, calm down.

[The Prime Minister]

I am extremely calm. This is what the Leader of the Opposition’s own police spokesman said. He was asked, “Aren’t you accepting the need for a freeze on police pay? That is what Yvette Cooper has said recently.” “No”, he replied. So that is it: they do not accept the freeze on pay, they do not accept the pension reform, they would not do the paperwork cuts; they would be cutting the police more deeply. That is their position—they have absolutely no policy ideas at all.

[Edward Miliband]

I know that the right hon. Gentleman is going to have extensive training before he goes before Leveson, and I have a suggestion: I think it should include anger management. I think it would be very good for him.

It is not just on policing that the right hon. Gentleman has broken his promises. We all remember his promises three years ago to the nurses. He told their conference:

“there will be no top-down reorganisation”.

I notice that he did not go back to the Royal College of Nursing conference this year. Can the Prime Minister tell us how many fewer nurses there are since he came to power?

[The Prime Minister]

The number of clinical staff in the NHS has gone up, and the reason it has gone up is that this Government have put more money into the NHS every year. What is the right hon. Gentleman’s commitment? His commitment is that spending on the NHS is irresponsible. That is his commitment—to cut spending on the NHS. What is actually happening is that we have the lowest number of people waiting for 18 weeks in our NHS, and that is because we have got more doctors, more clinical staff and fewer bureaucrats working in the NHS.

[Edward Miliband]

I am afraid it is back to the bunker with that answer. There are 3,500 fewer nurses since the right hon. Gentleman became Prime Minister. The Health Ministers could not even get the figure right on the radio; they could not even tell us how many nurses in training cannot find jobs. This is all because he has diverted billions of pounds from patient care to a top-down reorganisation that nobody voted for and nobody wanted. I know that he does not like being reminded of his words, but that is because he broke his promise. That is the problem with this Government: they cut taxes for millionaires and cut services for the rest of us. [Interruption.] I know they do not like hearing about it. What did the hon. Member for Cleethorpes (Martin Vickers) say? He said:

“We can’t convince voters that we are ‘on their side’ when we give top-earners a tax cut leaving Mr & Mrs Average reeling”.

That is the truth of this Government. They are unfair and out of touch, and they stand up for the wrong people.

[The Prime Minister]

What this Government have done is delivered a tax cut for every single working person in the country. We froze the council tax for every household in the country. We have taken 2 million people out of tax in our country.

But what is the big decision that the Leader of the Opposition has taken this week? He took the person in charge of his policy review, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne)—the person who said that they had to be serious about the deficit, who said that they had to be serious about welfare reform, the person who told us that they had run out of money—and replaced him with a policy chief who thinks that Labour’s problem is that it is not close enough to the trade unions. That is the Leader of the Opposition’s big decision. I often wonder whether his problem is that he is weak or that he is left-wing—his problem is that he is both.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Perhaps we can now make progress with short questions and short answers.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

Does my right hon. Friend suppose that Chancellor Merkel now regrets that she did not take the advice he gave her last October about the big bazooka? If she had fired it then, that would have spared the European Union from its present crisis.

[The Prime Minister]

I cannot give a direct answer to that, but I can say that the eurozone has to make a choice. If it wants to continue as it is then it has to build a proper firewall and take steps to secure the weakest members of the eurozone, or it will have to work out that it has to go in a different direction. It either has to make up or it is looking at a potential break-up. That is the choice that has to be made, and it cannot long be put off.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

Q2. If Andy Coulson was not vetted, why did he attend secret briefings, and what documents did he see? Is not this a mess?

[The Prime Minister]

I know the hon. Lady is desperate to find a smoking gun but I tell her that this is absolutely not it. We took a view, on coming to office, that in the past there were too—[Interruption.]

[Mr Speaker]

Order. The question has been put and the answer must be heard.

[The Prime Minister]

We took a view that too many people had been cleared at the highest level and that that had led to some of the problems in terms of Alastair Campbell. Actually, when it came to it, Andy Coulson was in the process of being development-vetted, so there is absolutely no mystery about this at all. The hon. Lady should go and look somewhere else.

[Joseph Johnson (Orpington) (Con)]

Q3. Britain has just posted its first quarterly trade surplus in cars since the 1975 nationalisation of British Leyland by one of the previous Labour Governments. Will the Prime Minister welcome the news that Britain has not only cut its deficit by 25% over the last two years but is once again a net car exporter?

[The Prime Minister]

My hon. Friend makes an extremely good point; the Labour party does not want to hear good news. He is absolutely right that although we have had to take difficult decisions, the deficit has now been reduced by one quarter, so we are on our way to balancing our budget and dealing with our problems. It is encouraging that for the first time since 1976 we have a surplus in motor car manufacturing. That is because of the hard work that people have put in at Nissan, at Honda, at Jaguar Land Rover. It is extremely good news that, although it has taken this long to get back to a trade surplus in cars, Britain is once again a real home for manufacturing.

[Hugh Bayley (York Central) (Lab)]

Q4. Two years ago, during the general election, The Press in York reported the Prime Minister as promising, “We won’t bring in VAT increase”. Has he considered that if he were to honour that pledge and reverse the VAT increase, that would put money in people’s pockets, stimulate the economy and get Britain out of a double-dip recession made in Downing street?

[The Prime Minister]

The reason we had to put up VAT is that we were left the biggest budget deficit anywhere in Europe. It was bigger than Greece’s, bigger than Spain’s, bigger than Portugal’s—the complete mess left by Labour. We now know from reading the former Chancellor’s memoirs that he was going to put up VAT too.

[Caroline Dinenage (Gosport) (Con)]

Q5. You may be aware that this is adult learners week, Mr Speaker, and Gosport’s inspirational Read and Grow charity has just received lottery funds to support the innovative work it is doing with adult literacy. May I invite the Prime Minister and the education team to visit Gosport and see for themselves how this work could be rolled out across the country to benefit people?

[The Prime Minister]

My hon. Friend is absolutely right to raise the issue. It is a tragedy that too many adults in our country do not have proper literacy and reading skills, because of not being taught properly at school. It is vital that we put that right through initiatives such as adult learners week, as she recommends, but we have to do better in our schools in the first place, to make sure that no child is left behind. We know that through the phonics scheme that my right hon. Friend the Secretary of State for Education is leading on that we can teach reading so that no child is left behind, and we must make sure it is available for every child in every school.

[Mr Nigel Dodds (Belfast North) (DUP)]

The Police Service of Northern Ireland has revealed that between 1960 and 2005 it kept body parts and tissue samples in 64 cases of suspicious death, without notifying the families and loved ones of those concerned, many of them in my constituency. Police forces in England have done the same. The Prime Minister and the whole House will sympathise with the families; obviously, shock has been felt throughout Northern Ireland as the families have been visited. Will the Prime Minister join me in demanding the fullest and speediest answers about what happened in those cases so that families can know as soon as possible? Does he have sympathy with the idea of holding an independent review in order to explain how that practice could go on for so long right across the United Kingdom?

[The Prime Minister]

I thank the right hon. Gentleman for his question. I am sure I speak for everyone in the House in expressing sympathy for the families who found out that terrible news about their loved ones; it must be a time of huge anguish for them. I am extremely sorry that the report was leaked, because it was going to be announced properly on Monday, when there could be a proper statement and explanation of what has gone on. I am sure my right hon. Friend the Secretary of State for Northern Ireland will have listened carefully to what the right hon. Gentleman said about the form of inquiry that needs to be held, but let us first publish the information on Monday, so that everyone can see what went wrong and why it happened.

[Stuart Andrew (Pudsey) (Con)]

Q6. From growing up in a council house, I remember well how proud people in my community were to be the first in their family to own their home. Will my right hon. Friend do all he can to give the same opportunity to a new generation of families?

[The Prime Minister]

My hon. Friend makes a really important point. The right to buy their council house was a hugely important social and economic change that gave people a stake in their society, a stake in their community and led to a huge improvement in many housing estates up and down the country. It is sad that under the last Government discounts were allowed to go—[Hon. Members: “What are you going to do?”] We are going to increase the discount right away to £75,000, which in some cases will mean a quadrupling of the available discount. There were years of Labour neglect, but two years of a coalition Government and we can get council house tenants buying their homes again.

[Ian Austin (Dudley North) (Lab)]

Q7. In recent weeks, Britain has gone back into recession, we have had a botched Budget and crazy advice from the Cabinet Office to stockpile petrol at home. Which of those does the Prime Minister think has caused the calamitous collapse in his reputation for competence?

[The Prime Minister]

What the hon. Gentleman should be recognising is that today unemployment has fallen, the claimant count has come down and more people are in work. Yes, we have a difficult economic situation, but if he listened to the Governor of the Bank of England this morning, he will have heard him say that we are coming up with a textbook response to what needs to be done to clear up the mess made by people like the hon. Gentleman.

[Pauline Latham (Mid Derbyshire) (Con)]

Q8. Businesses and home owners in my constituency are having a tough time at the moment, but it would be worse if it were not for consistently low interest rates. Under Labour, our long-term interest rates were the same as Spain’s; this week our rates are under 2%—a record low—while Spain’s are 6%. Will the Prime Minister assure the people of Mid Derbyshire that he will do nothing to put that situation into jeopardy?

[The Prime Minister]

My hon. Friend makes an important point: every increase in interest rates of 1% will add £1,000 to the typical family mortgage. The fact is that today British interest rates are below 2% because the world has confidence that in spite of our economic difficulties we have a plan to deal with our debt and our deficit. We can see from looking around Europe what happens when there is no plan. Interest rates go up, which is bad for business, bad for home owners and bad for the economy. That is what we would get if we listened to the Opposition.

[Tony Lloyd (Manchester Central) (Lab)]

Q9. Many agencies let down the children involved in the Rochdale sex abuse cases, and the whole House must agree that offering our looked-after children a safe and secure place to live is paramount. In that context, given that there are wide concerns about the operation of private children’s homes in the area, will the Prime Minister do two things? Will he look at holding an inquiry into whether they are properly funded and have properly trained staff, and will he make sure that monitoring now works effectively? Clearly it has not done so.

[The Prime Minister]

I am glad the hon. Gentleman raises this issue. It is a truly shocking case and we need to look very carefully at what went wrong. I have asked my right hon. Friend the Secretary of State for Education to do this. He, in turn, has asked the Children’s Commissioner to do a piece of work on it. We need to look at why information was not passed more rapidly from children’s homes to police, and why action was not taken more rapidly. There are obviously issues about inspection, which the hon. Gentleman mentions, but there are also issues about why action was not taken. It is very important that we get to the bottom of a truly, truly dreadful case.

[Jason McCartney (Colne Valley) (Con)]

Q15. Huddersfield Town fans are celebrating today, having won a place in the league 1 play-off final at Wembley. Also winning in my constituency are local manufacturing businesses, which are winning new orders, creating new jobs and creating apprenticeships. Does the Prime Minister agree that the record number of apprenticeships in the UK is a clear sign that this Government are committed to getting Britain working?

[The Prime Minister]

I am grateful to my hon. Friend. Through him, I wish Huddersfield Town all the best, although that might be a prime ministerial curse.

We achieved 457,000 apprenticeship starts last year. We are hoping to achieve over 400,000 more this year. The budget has been increased by more than £1.5 billion. This should deliver 250,000 more apprenticeships across this Parliament than were planned by the Opposition. There is a lot more to do also to make sure that these are high-quality apprenticeships, and we are targeting them on the young people who need help most.

[Simon Danczuk (Rochdale) (Lab)]

Q10. My hon. Friend the Member for Manchester Central (Tony Lloyd) referred to the case and the situation in Rochdale. I want to speak about the girls in that case—the vulnerable girls who went to hell and back through what they experienced. I pay tribute to their bravery in coming forward and standing up to their abusers. They did it to get justice and to stop it happening to others. Vulnerable girls like that do not usually get heard by politicians. They do not get easy access to power or influence. How will the Government respond to these terrible crimes, and will the Prime Minister support a serious case review?

[The Prime Minister]

First, I pay tribute to the hon. Gentleman. He is absolutely right to say that these girls have been brave to come forward and tell their stories, with all the difficulties that that involved. He has talked about people who have come to his constituency surgeries. Of course this is a problem across communities, but there are particular problems in particular communities and he has been brave to say that, because we need to face up to these problems if we are to deal with them. He asks about a review. I will have a look at that. As I said, the Office of the Children’s Commissioner will—hopefully—come up with recommendations within a month, and I understand that Rochdale borough safeguarding children board has conducted a review of child sex exploitation which will be published, but I am prepared to look at the issue of a serious case review as well.

[George Eustice (Camborne and Redruth) (Con)]

Q11. Next year Camborne Science and International academy will become the first ever British school to host the international student science fair, welcoming schools from around the world. Does the Prime Minister agree that if Britain is to prosper in the future we need to lead the world in science and technology, and that we should support the efforts of schools such as Camborne, which are leading the way?

[The Prime Minister]

My hon. Friend is absolutely right to highlight the issue and to highlight the school in his constituency that is clearly doing a good job. If we want to compete in a very competitive global market, we need more science teaching, we need more science graduates, and we need also to encourage those science graduates back into the classroom to train up the next generation of scientists and engineers. The good news is that there has been an 80% increase in the number of students taking science GCSEs since 2010, and my right hon. Friend the Secretary of State for Education has put in place some generous bursary schemes to encourage some of our top maths and science graduates back into the classroom, to make sure that they are teaching the next generation.

[Dan Jarvis (Barnsley Central) (Lab)]

Q12. It is now clear that the Government do not have a comprehensive long-term strategy for care, so does the Prime Minister agree that the sharp increase in home care charges revealed by figures released today is the result of his cut of £1 billion from local council budgets for older people?

[The Prime Minister]

I am afraid I do not think the hon. Gentleman’s figures are right. In the spending review we put £2 billion extra into adult social care, but we have inherited a situation where there is not a clear strategy or pathway for social care. We need to deliver one. That is why there will be a White Paper this year which has to look at all—

[Ian Lucas (Wrexham) (Lab)]

When?

[The Prime Minister]

The hon. Gentleman asks when. The Opposition had 13 years. They just ducked decision after decision. Royal commissions were held. Absolutely nothing was done. Within two years we have done far more than they did in 13.

[Tessa Munt (Wells) (LD)]

Q13. Some 2,000 highly paid public servants have been exposed for avoiding paying their fair share of tax. Does the Prime Minister agree that whenever someone is paid a salary using taxpayers’ money, the Government should insist that they are on the payroll and pay full pay-as-you-earn income tax and national insurance contributions?

[The Prime Minister]

The hon. Lady is right to raise that and I agree with what she says. We have been shocked by the level of this problem and the Treasury is looking at it closely, but the principle she announces—those paid by the public should pay tax properly—is absolutely spot on.

[Mr Peter Hain (Neath) (Lab)]

Will the Prime Minister meet to take forward the Severn barrage project, which is entirely privately financed and could be the biggest source of renewable generation in Europe, generating 5% of Britain’s electricity needs? Does he accept that, with a flat economy in Britain and Europe, this £30 billion of private investment in growth and jobs is a no-brainer?

[The Prime Minister]

I heard the right hon. Gentleman on “Farming Today” waxing eloquent on this project. I think that it has many advantages. A huge amount of renewable energy could be delivered through a barrage of this kind. He knows that there are lots of problems and that the environmental groups have been divided over it, but I am very happy to listen to his views as he takes forward this important piece of work. I think that there are many opportunities in a challenging European economy, as he says, to look at energy connectors and energy co-operation, particularly between England, France and other northern European countries.

[Christopher Pincher (Tamworth) (Con)]

Q14. Both the National Audit Office and the Public Accounts Committee have praised the Work programme for getting off the ground in under a year, which is in stark contrast to the four wasted years it took to get Labour’s programme off the ground. What further help can the Prime Minister give my striving jobseekers in Tamworth, where unemployment figures monthly are falling, to find the work they want?

[The Prime Minister]

My hon. Friend makes an important point, because not only did the Work programme get up and running quickly, but it is already helping 519,000 people. It will help over 3 million in total. The key difference between it and previous programmes is payment by results, so we are paying providers more money for the more difficult people who have been out of work for a long time and have serious challenges in getting back into the workplace. I think that we can use this programme to help not only people who have fallen out of work recently, but people who have totally lost connection with the labour market. Those are the people we want to help most, and the Work programme is a very innovative way of doing that.

[Alan Johnson (Kingston upon Hull West and Hessle) (Lab)]

In April last year the Government announced the successful bids in round 1 of the regional growth fund. Hull was very pleased to be included, because it means 500 jobs and rescuing people from some of the poorest housing conditions in the country. However, 13 months later, not a penny of that regional growth fund money has materialised. Will the Prime Minister tell me why and, if he cannot, will he undertake to find out and ensure that that money flows before the summer recess?

[The Prime Minister]

I will certainly look at the case the right hon. Gentleman raises. With the regional growth fund as a whole, around half of the projects are now under way and serious amounts of money are being disbursed. By way of comparison with the regional development agencies, the overhead costs are £3 million, compared with £240 million, so we are able to put a lot more money into these projects, but I will certainly look at his specific project and write to him shortly.

Debate on the Address

Wednesday 16th May 2012 Commons Chamber

[5th Day]

Debate resumed (Order, 15 May).

Question again proposed,

That an humble Address be presented to Her Majesty, as follows:

Most Gracious Sovereign,

We, Your Majesty’s most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Cost of Living

Wednesday 16th May 2012 Commons Chamber

[Mr Speaker]

I inform the House that I have selected the amendment in the name of Mr Edward Miliband.

12:33

[Caroline Flint (Don Valley) (Lab)]

I beg to move an amendment, at the end of the Question to add:

“but believe that the Gracious Speech fails to help families, squeezed households and pensioners to deal with the cost of living crisis and the double-dip recession; regret that cuts to feed-in tariffs and the Warm Front scheme mean that families and pensioners who are paying higher electricity and gas bills have been abandoned by the Government; call on your Government to ensure that energy companies meet their obligations and provide the cheapest tariffs for over 75s, to protect small business owners, to ensure the Green Deal is offered fairly to all consumers and cuts bills to increase competition in the energy market to drive down energy bills for all; urge your Government to reverse their out of touch decision to increase rail fares by three per cent above inflation in 2013 and 2014, and to allow train companies to increase train fare prices by a further five per cent; call on your Government to ensure that train operators cap all regulated fares fairly across all journeys so that no regulated train fare increase is more than one per cent above inflation, to reform the bus market by extending to the rest of England London-style powers to regulate fares, protect services and to require operators to provide a concessionary scheme for young people; and further call on your Government to help hard pressed motorists by temporarily reducing VAT to cut fuel prices and boost the economy.”.

This Government promised recovery, but they have delivered recession—a recession made in Downing street: the worst unemployment in 16 years; 1 million young people out of work; the first double-dip recession since the 1970s; a lost decade for Britain’s families and pensioners, who are being subjected to the most sustained assault on their living standards in living memory; and a Government who are hurting, not helping.

Unfolding day by day in kitchens and living rooms in every town, village and city up and down this country is a cost-of-living crisis. Two of the biggest pressures on family budgets are rising energy bills and soaring transport costs, so my hon. Friend the Member for Garston and Halewood (Maria Eagle), who will close the debate for the Opposition, and I could not let the Queen’s Speech pass without addressing those vital concerns.

The VAT hike will cost a family with children an extra £450 this year and push the price of petrol at the pumps even higher. Just when the costs of child care are rising twice as fast as wages, this Government have cut the child care element of working tax credit. While bankers have seen their taxes slashed, cuts to front-line services will mean fewer police on the beat, longer NHS waiting times and more families pushed to the brink because of the costs of social care and the closure of Sure Start children’s centres and other vital support for families.

We have a Government who stand up for the wrong people, with a Budget in which millions are asked to pay more so that millionaires can pay less; a Government who do more for the rail companies than for hard-pressed commuters; and a Government who put the energy companies before families struggling to make ends meet.

[Dr Julian Huppert (Cambridge) (LD)]

I am sorry to interrupt the rhetoric with some facts, but will the right hon. Lady remind the House what happened to rail and bus fares during 13 years of Labour Government, and can she confirm that Labour’s policy is that rail fares should continue to increase above inflation?

[Caroline Flint]

We saw what was happening and put a cap on those fares. This Government have decided to remove the cap and to let fares rise way above inflation, but we have said that when they do rise above inflation they should do so by no more than 1%, so we are not going to take any lectures about supporting families from the Tories and Liberal Democrats in this Government.

The truth is that in every corner of the country families have huge worries when they look at depressed and frozen wages, more part-time work and more people who are long-term unemployed; and every week families worry about energy bills.

Energy bills have now risen up the agenda for families and are one of the biggest worries that they face. The latest figures from Ofgem put the typical annual energy bill at £1,310, so what is the Government’s answer? At their energy summit last year, they told people:

“Check, switch and insulate to save.”

But, in an answer on 18 April to one of my parliamentary questions, we found out that fewer people switched energy supplier in the final month of 2011 than ever before. I do not remember seeing that in one of the departmental press releases.

The Government said that energy efficiency was a no-brainer, but the Warm Front scheme has collapsed, the energy companies are not delivering the measures that they were meant to and the green deal is in chaos. In last week’s Queen’s Speech the Government promised

“reform of the electricity market to deliver secure, clean and affordable electricity and ensure prices are fair,”

but the irony of the Government’s electricity market reforms is that one thing they do not do is reform the electricity market. There is no change to the way in which energy is bought and sold, nothing to open the books of the energy giants and nothing even to improve competition in the energy market and break the stranglehold of the big six: no change, no hope and, I am afraid, not a clue how to help families affected by those pressures on the cost of living.

Our energy market is not working in the public interest. Confidence in the energy companies is at a near-record low, complaints have soared and today five of the big six energy companies are under investigation by Ofgem. Yet they see fit to award themselves huge bonuses totalling millions of pounds and even discounts on their own energy bills, while leaving their customers to struggle.

Last winter, more than 6.6 million families and pensioners across the UK could not afford to heat their homes properly. The number of pensioners dying from hypothermia has doubled in the past five years. Yet four out of five people are paying more for their energy than they need to. Energy prices are already at near record levels, and last year, when wholesale prices rose, every energy company put up its gas and electricity prices, in some cases by as much as nearly 20%. Yet when wholesale prices fell this year, none of the companies cut both their gas and electricity prices. British Gas, for example, cut only its electricity prices, even though it has twice as many gas customers. On the other hand, EDF, which has significantly more electricity customers, cut only its gas prices. Now, with increases in wholesale prices on the horizon again, British Gas, Britain’s biggest energy supplier, is threatening yet another round of price hikes.

These are not the signs of a healthy, functioning competitive market; they are the symptoms of a market that works in the interests of the energy companies, not of the public. There is a reason the market works like that. We have companies that both produce and retail power. They generate the power and sell it to themselves, and then on to the public. When wholesale prices are high, the generation side of the business makes big profits; when wholesale prices are low, the retail side of the business makes big profits. Either way, the energy companies always make big profits and customers always foot the bill.

That was exactly what the respected Institute for Public Policy Research think-tank found a few weeks ago. Its research shows that if the market were truly competitive, efficiency savings alone would knock £70 a year off the average bill. It reckons that over 5 million households in the UK are currently being overcharged and that if something were done about it they could see savings of at least £300 a year. That is why we have said that all energy suppliers should have to sell the power that they generate into an open pool from which anyone could bid to retail to the public. That would allow new firms to enter the market, increase competition and help to drive down bills. Of course it would not be popular with the big energy companies, but unlike the Government, Labour Members are putting the interests of the public ahead of those in the energy industry.

[Angie Bray (Ealing Central and Acton) (Con)]

It is all very well for the right hon. Lady to recite a catalogue of problems, but I am scratching my head about the record of her party in government, when prices were going up and we all had problems. I was not aware that the Government of the time were stepping in to look after consumers as prices rose. It is worth pointing out, of course, that Labour’s own leader was Energy Secretary at the time.

[Caroline Flint]

This Government have now been in office for nearly two years. The truth is that—

[Laura Sandys (South Thanet) (Con)]

rose—

[Caroline Flint]

Could I first answer the question from the hon. Member for Ealing Central and Acton (Angie Bray)?

The truth is that the leader of the Labour party, when he was Secretary of State for Energy and Climate Change, did start to tackle the discussion about the energy market. He said that we should have a pool, and that was in our manifesto. He also undertook to look at better ways in which we could provide for energy efficiency, and I will come to those shortly. In government, we had a good record of helping people with their bills. Millions of people were helped by Warm Front and millions of pensioners were helped by the winter fuel payments. What are this Government doing to help people with that? [Interruption.]

[Mr Speaker]

Order. There is an excessive amount of noise in the Chamber. It would be good if the issues could be aired in an orderly manner. I am grateful for the assent to that proposition from so experienced and senior a denizen of the House as the hon. Member for Gainsborough (Mr Leigh), who is himself setting an excellent example that others could follow.

[Caroline Flint]

I am always pleased to talk about Labour’s record in government, but let us now talk about the other side of the debate about energy prices—that is, saving energy. As Ministers are fond of telling us, the cheapest energy is the energy that we do not use. I am very proud that over 2 million households were helped with energy efficiency and insulation under the previous Labour Government. Through Warm Front, we helped over 200,000 households each and every year. This year, only 40,000 people are getting help.

The last time we debated this matter, the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle (Gregory Barker), said:

“Warm Front does not deliver insulation”.—[Official Report, 11 January 2012; Vol. 538, c. 256.]

He obviously had not browsed his Department’s website, which states clearly:

“The Warm Front scheme offers a package of heating and insulation measures”.

With such insight into his Department’s policies, we can only hope that the job of deciding who was eligible for a Warm Front grant did not fall to him. However, that might help to explain why nearly 30,000 people who applied for help last year were turned down.

Let us reflect on the figures. Under Labour, in each and every year more than 200,000 households were helped by Warm Front. This year, under this Government, only 40,000 households received help and 30,000 were turned down. They were turned down even though there was an underspend in the Warm Front budget of more than £50 million. That is right: hundreds of thousands of families face higher bills next winter and every winter because of cuts to Warm Front, and tens of thousands of families and pensioners who applied for help last year were left in the cold because of the incompetence of the Secretary of State and his Department, while £50 million that is in the Government’s coffers is going back to the Treasury. We asked whether the underspend could be used to provide further help through the programme. The answer, which I received very recently, was that it is going back to the Treasury.

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I will try to help the right hon. Lady, because her own Front Benchers are laughing at her. May I take her back to the comments that she made about the Leader of the Opposition? When he was doing my job, he was pressed on what the Labour Government were going to do about energy prices. In 2009, Andrew Marr asked him:

“When it comes to the price of energy…are we or are we not going to have to pay more?”

He responded:

“There are upward pressures on prices, yes”.

I am afraid that the right hon. Gentleman did very little on consumer prices. Labour had a record of failure.

[Caroline Flint]

We have not seen much of the Secretary of State since he took up his post. If that is the best he can offer after a number of absences from the Chamber, I worry about this Government and their handling of one of the most important areas for consumers and for jobs.

It is absolutely true that in reshaping the energy market to provide a low-carbon future, there are pressures. We have never denied that. However, today we are talking about the efforts to make the energy market more competitive; how we can ensure that a trail of energy companies is not investigated for mis-selling and dodgy dealing; and the increasing number of families who, under this Government, are paying more than they need to. The Government are stepping away from any responsibility to help the most vulnerable people in this country to tackle their fuel bills and keep their energy consumption down. It is possible to have policies on that, while recognising that there are pressures in the bigger scheme of things. It is a given that there are pressures—it is what a Government do about them that counts. This Government are doing nothing at all.

In government, we put tough obligations on all the big energy companies to use some of their profits to help poorer customers in deprived areas make their homes more energy-efficient. The community energy saving programme was meant to help 90,000 households. Two and a half years into the scheme—most of it under this Government—and with only a matter of months left, just 30,000 households have been helped. What are the Government doing about that? As far as we know, they are doing absolutely nothing.

We do know that the Minister of State, Department of Energy and Climate Change, the hon. Member for Bexhill and Battle, had a meeting with all the big energy companies on 1 February this year. We also know that the energy companies are lobbying the Government to relax the obligations on them or to push back the deadline. The Minister refuses to tell us what exactly was discussed at the meeting, what was agreed and whether he has caved in to the companies’ demands. Why will he not tell us that? He will not share with us—

[The Minister of State, Department of Energy and Climate Change (Gregory Barker)]

Will the right hon. Lady give way?

[Caroline Flint]

I will just finish the point that I am making.

[Gregory Barker]

Will the right hon. Lady give way?

[Caroline Flint]

No, I will not give way before I inform the House of the reason that the Minister has given me. He will have to wait a second. Tell me if this is wrong—

[Gregory Barker]

rose—

[Mr Speaker]

Order. The Minister of State is a rather excitable fellow. I am not interested in whether he thinks he can answer now. He will answer at the point at which the intervention is allowed. The hon. Gentleman is a senior member of the Government. He needs to cultivate a reputation for being a cerebral figure, not an over-excitable one.

[Caroline Flint]

Thank you, Mr Speaker. We have tabled parliamentary questions and used parliamentary procedures to get information, because Ministers at the Department of Energy and Climate Change are not especially forthcoming off their own bat. In response to my question, what did the Minister say? He said that he would not tell us, and I quote—[Interruption.]

[Mr Speaker]

Order. Let me make the point for the last time. We conduct debate in an orderly way. We do not have Members, be they Back Benchers, Ministers or Opposition Front Benchers, yelling out from a sedentary position, encouraged by cheerleaders behind them. It is an unseemly way to operate. The Minister has registered his interest in offering his view, and no doubt he will have the opportunity to do so in due course. In the meantime, he should sit in statesmanlike quietude and the House will benefit.

[Caroline Flint]

Thank you, Mr. Speaker. When I asked the Minister precisely why he could not tell us what was discussed at the meeting and what had been decided, he replied that he could not because it would “prejudice the commercial interests”—presumably of the big energy companies. That is a direct quote. I find it hard to believe that the big six energy companies are revealing, in front of each other—apparently, they are competitors—information, so sensitive that it would prejudice their commercial interests, about why they are not on target to meet their obligations to help people with their fuel bills and energy efficiency.

[Gregory Barker]

What we said is that we could not give the minutes of the meeting, but I can tell the right hon. Lady extremely clearly that I made it absolutely, perfectly clear that we expect the companies to fulfil all their obligations, we are not backing down and we will continue to hold them to account—unlike the previous Government.

[Caroline Flint]

I listened very carefully to that intervention, but I still do not understand why the hon. Gentleman said to me that he could not share the minutes because it would “prejudice the commercial interests”. I am interested to know what commercial interests were in the minutes of that meeting. I find it hard to believe that any of the six companies would discuss such sensitive information in front of each other.

[Gregory Barker]

The right hon. Lady will know that no minutes of any meeting were ever shared under the previous Government. We do not release minutes. However, I tell her again, very clearly, that we are holding the energy companies to account, we fully expect them to deliver their obligations and we will make sure that they do.

[Caroline Flint]

All fine words, but obviously the excuse for not sharing is changing as the debate continues. What is very clear from that answer is that it is all flannel, all rhetoric. There is no sense of what demands the Government have put on the energy companies, or of whether the companies will have to meet those demands by the set deadline, a few months hence, or of whether the number of families helped will increase from 30,000 to the 90,000 the companies are supposed to be helping. There is no sense of clarity, and no practical suggestions or effort by this Government to get a grip. On delivery, the Minister of State, the hon. Member for Bexhill and Battle, has previous in so many other areas that it is becoming rather a pattern.

The truth is that the Government have not defined what action they will take. They hold private meetings in which they are not willing even to share some practical explanation of what will happen next. Is it impossible to understand why the public are feeling so let down and why organisations that support families in difficult circumstances are worried about whether this Government have the gumption to get on top of this issue, when they are failing in so many other areas? If there is a choice between the interests of the big energy companies and those of people who are struggling to make ends meet, it seems that under this Government the energy companies win every time. That is the real problem with the Government: not only are they out of touch, but they stand up for the wrong people.

[Laura Sandys]

Having got quite a lot of exercise in the last few minutes trying to intervene, I welcome the opportunity to point out a few facts. In 13 years of Labour Government there were six or seven energy White Papers, I think, but only one Bill. In two years of this coalition Government, we have got retail market reform coming through from Ofgem; one piece of energy legislation has been passed, and there is a second in this Queen’s Speech. That shows that the Government are absolutely committed to delivering a competitive and fair market to a greatly squeezed consumer.

[Caroline Flint]

The truth is that the Labour Government left in place—[Hon. Members: “A recession.”]

[Mr Chuka Umunna (Streatham) (Lab)]

We did not leave a recession.

[Caroline Flint]

As my hon. Friend says, we did not leave a recession, that’s for sure. That is at the door of this Government. When we left Government, we were a world leader in setting targets for reducing emissions and signing up to international agreements—acknowledged by the present Government as an historic effort by a British Government in any situation—and unlike in many other countries, we had a consensus around that, which is good. The problem is that this Government are squandering that legacy with the measures they are taking. We have fallen back in investment in renewables. Families are being abandoned, left on their own to deal with rising energy bills. In addition—I am sorry if the hon. Member for South Thanet (Laura Sandys) did not catch my earlier remark—we do not have an energy Bill that will achieve real reform of the energy market to make it more competitive and fair for British citizens.

Warm Front has collapsed. The Government are not standing up to the energy companies. A lot is resting on the green deal. We want the green deal to work. It is an idea on which the leader of the Labour party worked very hard; it was included in our manifesto and the pilots started under our Government. The truth is, however, that unless Ministers want the green deal to be a good deal, it simply will not work. Time and again, in debates in this Chamber and in Committee, we have proposed improvements, but the Government have refused to listen. Last year, the Government said that the green deal would help 14 million households to improve their energy efficiency, but today their impact assessment forecasts that the programme will reach fewer than 4 million. Even the Government’s own advisers think that is optimistic: the Committee on Climate Change now thinks it will help only 2 million or 3 million households. The Government claimed that the green deal would help to create 100,000 jobs, but today that estimate has been halved to just 60,000—[Hon. Members: “That’s not half.”] I said nearly half. It is still nothing to be proud of.

My next point is very important, because one of the Government’s trails for the green deal was that it would save households money. The so-called golden rule was supposed to guarantee households that the savings they made from greater energy efficiency would cover the costs of the original measures, and just last month the Deputy Prime Minister promised:

“We’ll ensure customers are never charged more for the home improvements than we expect them to make back in cheaper bills.”

However, in answer to a written question from me, the Department was forced to admit:

“It is not possible for Government to guarantee people will save money”—[Official Report, 26 April 2012; Vol. 543, c. 983W.]

If Ministers are not careful, they will have a mis-selling scandal on their hands, and it will be entirely of their own making.

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

The right hon. Lady talks about the Leader of the Opposition, when he was Energy Secretary, working very hard on the green deal. Why then, when we proposed an amendment to the green deal in the Labour Government’s last Energy Bill, which became the Energy Act 2010, was it voted down by Labour Members, and why did the then Minister, the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock), say it was simply illegal and impossible to deliver it?

[Caroline Flint]

The hon. Gentleman has been a Member of this House for some time and he knows that the last Government, under the leadership of my right hon. Friend the Member for Doncaster North (Edward Miliband), were absolutely committed to pursuing the green deal. That is why the pilots started under our Government. That is why the measure was in our manifesto. I think the record speaks for itself. The fact that, on one occasion, we did not support an amendment tabled by the Conservatives is proof, and the result was that the green deal was going ahead. The pilots were under way, it was in our manifesto, and had we won the last election—sadly, we did not—it would be in a better state today. The green deal was meant to be up and running by this October, and the secondary legislation should have been laid in March. With just over a week until the House rises, we will not see anything until the middle of June at this rate.

There are question marks over whether the energy companies even have the technology in place to bill people correctly. No green deal assessors have been trained, because the courses have not even started yet. Most importantly of all the public, the people who are meant to be taking up the green deal, have absolutely no idea what the interest rate will be or how much it will cost them.

So desperate are Ministers to prop up the policy that they are now considering whether to force it on people who find that their boiler breaks down. Imagine—a family whose boiler breaks down on Christmas eve could have to wait for the council to come round to do a full audit of the property’s energy efficiency, and then have to agree to take out other measures, before they get their heating and hot water turned back on. That is the type of policy that the Government are proposing, and it just shows how out of touch they are.

The truth is, even when times are tough and money is in short supply there are still things that a Government can do to help families and businesses. I know that the Government are short of ideas. At one of my speeches earlier this year, no fewer than 18 civil servants were on the attendance list, including five from the Department of Energy and Climate Change alone. If the Secretary of State is in the market for good ideas for his energy Bill, here are two that I offer him.

First, let us put all those who are over 75 on the cheapest tariff. We know that the elderly are the most vulnerable to the cold weather, the least able to access the best online deals and the most likely to pay over the odds for their energy. In the Secretary of State’s own constituency, if we put all those over 75 on the cheapest deal it would help nearly 8,000 pensioners. It would help more than 8,000 in my constituency. Across the country, it could save as many as 4 million pensioners as much as £200 a year on their energy bills, not through spending more money but by getting our energy firms to show greater responsibility to their most vulnerable customers. However, I am afraid this do-nothing Government stand idly by, content to leave Britain’s pensioners paying more than they need to.

[Mrs Anne McGuire (Stirling) (Lab)]

Does my right hon. Friend also accept that given the number of people who self-disconnect because of the higher charges on key cards, it would be valuable for energy companies to consider how there could be a lower tariff for families who are under pressure? Those families have to take the decision themselves not to continue to heat their homes.

[Caroline Flint]

I absolutely agree with my right hon. Friend. There are a number of areas in which more could be done to make energy companies more responsible, but we hear nothing from the Government about issues such as people on prepayment meters or key cards.

We are talking not about a social tariff but about people over 75 missing out on a deal that they could get if they looked online. For all sorts of reasons, they do not necessarily use online systems as much as others do. Putting them all on the cheapest tariff would be a simple way of making the energy companies step up to their responsibility, and it would get those people the deal that they deserve. They should be able to do that, but every time I have mentioned it in the House I have been knocked back by the Government, who think it would be a measure just for rich over-75s. It would not. It is about justice and tackling the way in which energy companies run their customer services, which are not working in the interests of customers. I would have thought the Secretary of State, as a former Consumer Minister, would understand that a little better.

The second idea among many that we have is that we should consider the position of small businesses. We believe that some straightforward, practical steps can be taken to help relieve the pressure on them and give our economy a shot in the arm. First, we should put an end to unfair contracts and the practice of rolling small businesses on to more expensive tariffs without their consent. Secondly, we should stop small businesses being subject to six years of crippling back-billing for mistakes made not by them but by their energy supplier. We do not allow that to happen to households, and we should not allow it to happen to small businesses either. Thirdly, we should ensure that the energy companies act responsibly towards small firms that have fallen into difficulty with their bills. Just as they have to take all factors into account when a family find themselves in trouble, so should we ask them to come up with sensible and realistic repayment plans for small businesses.

There we go—two ideas: helping the over-75s to get the tariff they deserve, which through no fault of their own they cannot get because it requires online technology, and helping small businesses with some of the ways in which energy companies are exploiting them. We are accused of not having ideas, but there are a few for which I hope we can get Government support. We are trying to think practically about ways to rein in the energy companies and make them more accountable to their customer base, whether it is households or businesses.

What is the biggest drag on people’s living standards? The scandal of millions of people being unemployed, and a Government who have no vision and strategy for putting them back to work. I was at the Yorkshire Post environment awards last week and met businesses at the cutting edge of innovation. I saw that Britain is not short of the skills or technology to lead the world to a new low-carbon economy. However, the Government are short of the political vision to do so, and today we learn that even the Foreign Secretary, a fellow Yorkshire MP, told businesses just last weekend to work harder. He does not believe the Government are doing enough to support Britain’s green businesses.

As I have argued many times, the transition to a low-carbon economy has the potential to be a major source of wealth and employment for this country, both for young people looking to get their first job and for older workers looking to put their skills to use in new industries. However, Britain is falling behind. When Labour left office, the UK was ranked third in the world for investment in green business; today we are seventh. Investment levels are still billions short of where they were in 2009, and jobs and industries that should be coming to this country are now going overseas.

Let us look at solar energy. The Minister of State, the hon. Member for Bexhill and Battle—he has his fingerprints all over these projects—took a knife to the solar industry and had the audacity to claim that more people would get solar power and more people would be employed in the solar industry as a result. Today we see that because of his cuts and his strategy, solar installations have fallen by 90% and 6,000 people have lost their jobs, with yet more cuts on the way. In the end, whether it is solar or any other type of clean energy, businesses will not invest, build factories and create jobs until the Government end the dithering, stop shifting the goalposts and get behind the industries of the future.

We have an electricity market reform Bill that does not reform the electricity market, a Queen’s Speech that does nothing to help families with the cost of living and a Government who, I am afraid, are too much on the side of the big energy companies and not enough on the side of hard-pressed households. I am aware that a number of the Secretary of State’s colleagues, led by the right hon. Member for Wokingham (Mr Redwood), have put forward an alternative Queen’s Speech on energy. The Prime Minister has to decide whether he is going to run with the Vulcans or stick with the huskies.

To advocate cutting support for clean energy, and instead dash for gas when wholesale gas prices are the single biggest factor in driving up people’s bills, is madness. There is an alternative—Labour’s fair deal on energy. It would put the public first, protect the most vulnerable and deliver a competitive energy market with fair prices for all. I commend the amendment to the House.

13:07

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I am grateful to the Opposition for selecting a debate on the cost of living, which is a very important issue. There can be no doubt that many people in our country have been through, and are going through, some tough times, not least because inflation has cut into their living standards. I am sure that all of us pick that up in our constituencies. I do two advice surgeries a week for my constituents, and the cost of living comes up frequently.

When we talk to and listen to people, we find that the rising cost of electricity, gas and fuel has been hurting the most. We should all be concerned when we see pensioners and families worrying about basics such as food and fuel, groceries and gas. Despite the rhetoric that we have just endured, infused with the memory of an amnesiac, I wish to make it absolutely clear to the House that this Secretary of State and this Government understand those worries, share them and are acting to relieve them. Labour sometimes talks as though it had a monopoly on compassion and caring, but it never has, it never will, and to boot it does not have the record to show that it ever did.

The Government are committed to helping households cope with rising energy bills. We cannot control volatile global energy markets, and I think reasonable people understand that. However, we can act, and are now acting, to ease the pressure on consumers. In the short term, we are making it easier for people to get a better deal from their energy suppliers, about which I will say more shortly. In the medium term, we are making it easier for people to save money by insulating their homes. In the long term, we are making it easier for investors to build clean power plants here in the UK, protecting British consumers from global wholesale energy prices.

I want to set out the short, medium and long-term policies that are helping, and that will continue to help, consumers with their energy bills, not least by explaining the purpose of the energy Bill, as contained in the Gracious Speech, before its publication, which will come shortly. However, before I do so, it is only right to respond to the amendment and the speech of the right hon. Member for Don Valley (Caroline Flint). The key thing I have learned in my first few months as Secretary of State for Energy and Climate Change is that energy and climate change policies take a long time. They involve big infrastructure, huge shifts in the structure of the economy, and changing behaviours that have developed over years. Therefore, to get results, we must act decisively and strategically. This Government have been doing just that for the two years we have been in office.

We are introducing some of the most innovative and ambitious policies to bring forward billions of pounds of investment, which will be essential for our country over the next few decades. Such investment will help our growth, from the green investment bank to electricity market reform, and enable us to decarbonise our economy, especially our electricity generation sector, so we can tackle climate change.

The problem is that the previous Labour Government did not act decisively or strategically, but lurched from one White Paper to the next consultation document. Unable to make up their mind, they delayed and dithered. This Government have been left to pick up the pieces.

However, let me give the previous Government credit. They were very good at setting targets; they just never hit them. Even on fuel poverty, they set a target. However, Professor John Hills has examined their fuel poverty targets in detail, and it turns out that they could not set a target for fuel poverty competently—they could not even measure fuel poverty properly. This coalition will clear up the Labour Government’s legacy on energy as well as on the economy.

Let me therefore explain to the Opposition why living standards have fallen in the last year. It was partly down to high world prices for oil, gas and food, but it was also partly because they left the country poorer and borrowed to hide the truth. When the economy contracts in one of our country’s deepest ever recessions, when the country’s national income falls by 7%, and when the Government borrow to compensate, there must be a day of reckoning. The problem is that the Opposition are incapable of admitting that.

The right hon. Lady and others make out that the problems are all the Government’s fault because of the cuts to feed-in tariffs or because of lower take-up on Warm Front, but they simply do not understand their legacy or the changes we are making.

[David Wright (Telford) (Lab)]

I have been in the House for 11 years and have watched the right hon. Gentleman progress in his career. I remember him sitting on the Opposition Benches and consistently calling on the previous Labour Government to spend more. It is interesting that he now completely ignores that fact. What are his targets for reducing fuel poverty and how will he deliver them?

[Mr Davey]

I must remind the hon. Gentleman that the Chief Secretary to the Treasury of the previous Government left a message to say that there was no more money. That is the legacy this Government are dealing with. We will take fuel poverty seriously. My predecessor commissioned a report to ensure we have proper targets and measurements of fuel poverty. John Hills has produced a welcome report, on which we will consult—[Interruption.] We have plenty of policies to tackle fuel poverty and I will come to them, but we want to ensure we are tackling the real thing, not the fake one.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Raising the personal allowance to £9,200 is worth about £220 in cash to the average basic taxpayer. It also takes many low-paid people out of tax altogether. Does my right hon. Friend agree that that is one way of protecting people, particularly the low paid, from the rising cost of living?

[Mr Davey]

My hon. Friend is absolutely right. By next April, we will have saved a two-earner family on the basic rate of tax more than £1,000 a year in income tax. That is a policy to help people on low pay.

[Caroline Flint]

The Labour Government left office with 1 million fewer people in fuel poverty than we inherited in ’97. No doubt this is a complex area, but the truth is that in the last two years, according to Consumer Focus, there has been a sharp increase in the number of homes in fuel poverty in England and Wales—it has increased from one in five to one in four. What are the Government doing about that?

[Mr Davey]

The right hon. Lady ought to know that we saw a massive V-curve because of how fuel poverty was measured under the previous Government—fuel poverty came down earlier in their period of office and shot up dramatically as global gas prices increased. She is not living in the real world if she thinks that is the correct way to measure fuel poverty. That is why this Government are getting to grips with the problem. We are ensuring we measure the problem properly so we have the right policies, which the previous Government never did.

To return to feed-in tariffs, I remind the right hon. Lady that we have had to reform the scheme designed by the Leader of the Opposition so that huge windfalls do not go to a few people. Our reforms will ensure that many people benefit from solar PV. We are the party of the solar many; they are the party of the solar few.

On Warm Front, the right hon. Lady offered no recognition of the progress we have made to spend our budget; of the reality that a warmer winter last year reduced demand; or of the fact that the shameful scaremongering by Labour Members on Warm Front, who said the scheme was closing more than a year before it will, might just have put some people off applying.

When it comes to Governments being responsible for putting people’s bills up, the right hon. Lady ought to talk to the leader of her party. Let me refer her to the UK’s low carbon transition plan, published by the Leader of the Opposition when he was in my job. Let me further refer her to the analytical annex, page 66, table 9, and the estimate of the cost of the renewable heat incentive on people’s gas bills, as proposed by Labour. The estimated increase in gas bills by 2020 was £179, but this Government stopped that approach, because we were not going to put £179 on people’s gas bills. That is 179 reasons for not taking Labour seriously on energy bills.

[Albert Owen (Ynys Môn) (Lab)]

I welcome the right hon. Gentleman to his post. I am a member of the Select Committee on Energy and Climate Change, so we will have a bit of knockabout on some issues, but knockabout on fuel poverty is not right. Whether or not we are changing the measures, more people have found themselves in fuel poverty this year and last year, and the previous Government reduced the number by 1 million people. That is a fact, whether the curve is V-shaped or not. What measures are this Government taking to assist those people who have fallen into fuel poverty?

[Mr Davey]

Let me give the hon. Gentleman one exact policy, for which Labour never legislated: the warm home discount is a way of targeting cuts in people’s bills directly, for the poorest people in our country. We have legislated for that, it is delivering, and we are proud of it.

[Sir Bob Russell (Colchester) (LD)]

I congratulate my right hon. Friend on the measured approach he is taking from the Dispatch Box. Further to the previous question, does he agree that requiring the major energy suppliers to notify customers of the lowest tariff every year will help many of the people in fuel poverty with their cost of living?

[Mr Davey]

I was just about to come to that measure. My hon. Friend will know that our right hon. Friend the Deputy Prime Minister announced that package, which will be a big help, last month.

On our agenda for helping consumers in a practical way, I should like to highlight three things—they are part of our short-term approach to ensure that we help consumers and get more competition in our markets so we can make it easier for people to take advantage of good deals.

[Angie Bray]

Will my right hon. Friend give way?

[Mr Davey]

I will in a second.

First, the consumer deal was agreed with the big six last month and announced by my right hon. Friend the Deputy Prime Minister. Secondly, I have pushed collective switching since becoming Secretary of State for Energy and Climate Change, following on from the work I did as Minister with responsibility for consumer affairs. Thirdly, Ofgem is working on tariff simplification. I will describe the detail of the practical measures that we are taking and that the previous Government never took after I have given way to my hon. Friend.

[Angie Bray]

Talking about energy is important, but I would like to draw my right hon. Friend’s attention briefly to another important utility in people’s lives—water. Water rates are a big cost of living and are particularly frustrating in London, given that we are under serious drought orders, despite the rain tumbling down almost every day. Particularly galling is the discovery that the very slow pace of plugging water leaks is apparently well within the target range set by the water regulator. If the water regulator is not on the side of consumers, who is?

[Mr Davey]

My hon. Friend makes a very good point. I am sure that my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs will note her arguments.

[David Wright]

rose—

[Mr Davey]

I want to make some progress. I have already given way to the hon. Gentleman once.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Will the Secretary of State give way?

[Mr Davey]

No, I will not.

Our first priority is to encourage consumers to switch suppliers, which could save households up to £200 per year. I am surprised that the right hon. Member for Don Valley was so negative about switching. The problem is that, despite rising prices, only one in six consumers switched their supplier in 2010. She was right that the number of people switching has been falling. There are several reasons for that, one of which, as she will know, is the plethora of energy tariffs. There are currently about 120 tariffs. We want fewer tariffs and much clearer pricing, so that customers can find a better deal more easily. That is the right approach. We support much of Ofgem’s work as part of its retail market review and will work with it to bring more transparency to the energy market.

Last month, my right hon. Friend the Deputy Prime Minister announced the deal that we secured working with the six big energy companies to give customers a guaranteed offer of the best tariff. From the autumn, suppliers will contact consumers annually to tell them which is the best tariff for their household, and if consumers call energy companies, they will have to offer them the best tariff. That is real progress—progress that Labour failed to make but which I have made in my first few months as Secretary of State.

[Lyn Brown (West Ham) (Lab)]

May I tell the right hon. Gentleman about a constituent of mine living in a two-bedroom flat with her daughter and grandson? She works as a teaching assistant in a local primary school and earns just £1,025 a month, of which she pays £201 on utility bills—nearly 20% off her income is spent on utility bills. She is already on the lowest tariff, and she is in massive debt and worried. What can the Secretary of State offer her from the Queen’s Speech?

[Mr Davey]

Actually, the hon. Lady’s constituent will be a big beneficiary of the coalition’s policy to increase the personal income tax allowance. She will benefit from that big income tax cut—bigger than anything that Labour did. In fact, I remember Labour taking the 10p rate away from people such as her constituent, costing them £236 a year. So I am afraid she has shot herself in the foot.

[Caroline Flint]

I thank the right hon. Gentleman for providing the House with more information about what the Government are attempting to do. The chief outcome of last autumn’s summit, however, was that the companies agreed to write to people to let them know that they should switch and save. Labour argued that the energy companies should be much more specific and make it clear to people what cheaper tariff they should be on. I take it from what he has just said, therefore, that we have a Labour policy gain today.

[Mr Davey]

That was a good try, but no one believes the right hon. Lady.

We are working with energy companies in a range of ways that Labour failed to do. For example, we are working to ensure that companies put special barcodes on energy bills, so that people can scan them, search for quotes and switch suppliers. We are also working with consumer groups to make it easier for people to band together, get the best deal and bring down bills without having to negotiate them. That is called collective switching. It brings people together to make a collective purchase based on collective, mutual and co-operative principles. One would have expected Labour to use those principles in government. It did not, we are, and it should be ashamed.

We have already seen the big switch campaign from Which?—the first big collective switching scheme—and I am delighted it was so successful. Through the big switch, people have saved £120 on average—but £200 if they have paid by cash and cheque. [Interruption.] The right hon. Member for Don Valley says we did nothing. Let me explain to her. As consumer affairs Minister, last April I published a consumer empowerment strategy, right at the heart of which were proposals to look at collective purchasing. While working on that strategy, I noticed that under Labour no work had been done on that. As a result of our work, we got Consumer Focus to work on collective switching and we talked to Which? and others, and that work is bearing fruit. She is on the wrong track again.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

My right hon. Friend knows that I greatly welcome his robust and clear attitude to these issues and the Government’s strong policy. I encourage him to be really tough with Ofgem and the big six energy companies, which have often had far too easy a time. May I put a suggestion to him? Every year, local authorities send out council tax bills and people address their council tax and housing benefit requirements. Will he see whether, within that same mailing, everyone—in all our constituencies—could be sent information about the cheapest tariffs? That would ensure that local authorities share the responsibility for spreading the news about how housing costs can be kept down.

[Mr Davey]

As always, my right hon. Friend has come up with an ingenious idea. The good news is that the Deputy Prime Minister, following my work with energy companies, is already on to that, through this annual communication that the big six will now send out to ensure that people know the best tariff for them. However, my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) is right that local authorities have a role—in the green deal and many other things. I am happy to talk to him in detail about that.

My right hon. Friend might also be interested to know that the collective switching schemes we are trying to promote through trusted third party intermediaries, such as Which?, are beginning to take off. Many social housing providers and councils are interested in seeing whether they can work with their communities to push these schemes, and People’s Power, a social housing provider, has pushed the huge switch after the big switch. That is exceedingly good news.

[David Simpson (Upper Bann) (DUP)]

One big issue facing all our constituents is the price of fuel for their vehicles. Is it not a sad state of affairs that it costs families more to fill up their cars than to put food on the table? Surely something needs to be done about the 3p increase and other increases.

[Mr Davey]

The Government have taken many measures to try to keep down the cost of fuel, but the hon. Gentleman will know that we do not control the price of oil globally. I am delighted, however, that we are not suffering from a tanker fuel dispute. The resolution of that dispute is extremely important. [Hon. Members: “No thanks to you!”] That shows how little Opposition Members follow these things.

I will shortly be holding a round-table discussion at my Department to continue the momentum building behind collective purchasing schemes. Together with our policies to make markets work better and to help consumers to get the best deal, we are also making it easier for people to save energy. As the right hon. Member for Don Valley reminded us, one of our mantras is that the most affordable energy of all is the energy we do not have to pay for—she is quite right about that—yet too many of our homes and businesses are leaking heat and wasting energy. Making them more efficient will help consumers and small businesses to cope with costs. We can cut those bills and keep people warmer for less.

Later this year, we will introduce the green deal, bringing energy saving within reach for millions of homes across the country. A new Government-backed scheme will enable householders to make energy efficiency improvements at no upfront cost. Trusted local and national brands will pay for the work with the costs recouped from energy bills, and the green deal will help householders to stay warm for less. We estimate, for example, that a three-bed semi could save £120 a year by installing wall cavity insulation.

When costs rise, the poorest are often hardest hit, so we are committed to helping the most vulnerable heat their homes more affordably. I mentioned the warm home discount in response to the hon. Member for Ynys Môn (Albert Owen). It will continue to assist about 2 million low-income households with the cost of heating their homes in 2012-13. Alongside the green deal, parts of the new energy company obligation will deliver heating and insulation measures to low-income vulnerable households, including those in some of the most deprived communities.

[Caroline Flint]

Will the right hon. Gentleman provide clarification on the energy company obligation? I understand that about 50% of the money will go to the most vulnerable families and the other 50% to those with hard-to-treat homes—we are talking about solid walls. Within the second group, is he prepared to consider prioritising the most fuel poor, rather than subsidising people on large incomes? We recognise that hard-to-treat homes are a problem, but we must ensure that that side of the budget prioritises the fuel poor and the vulnerable living in such homes and gets the subsidies to them.

[Mr Davey]

Since becoming Secretary of State, I have spoken to Professor John Hills, given all the work he did analysing fuel poverty, and I have made changes to the energy company obligations as originally designed. The Deputy Prime Minister talked about this issue recently. We will be laying regulations before the House for debate this summer which will contain all the details that the right hon. Lady seeks. I say to her in the nicest possible way that she needs to wait a little bit, but those regulations will be laid before this House.

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Does the Secretary of State accept that unless action is taken on the interest rates charged by those providing the loans for the green deal, the green deal is unlikely to deliver what he says its likely benefit is? What action has he taken to get that right, and why is he doing nothing further to ensure that the interest rate is compatible with an effective green deal for the future?

[Mr Davey]

I have been looking at the financial arrangements of the green deal. When we are able to announce even more details than we have already, I believe that people will see that it is a very attractive offer. I also believe that there are many low-income households that will actually welcome the rate of credit that will be asked through the green deal, compared with some of the rates of credit that they have to pay other lenders.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

rose—

[Anas Sarwar (Glasgow Central) (Lab)]

rose—

[Mr Davey]

I will not give way, because I want to make some progress and address the Queen’s Speech.

We need to make dramatic changes to our energy policies in the longer term. The right hon. Member for Don Valley said, in a rather bizarre passage towards the end of her speech, that we were not really reforming the electricity market—but we are making the biggest reform of the electricity market since privatisation. It is the sort of reform that Labour Members failed to get their head around and failed to deliver, despite 13 years in power.

There are huge challenges for our electricity market, with 20% of our power plants coming offline during the next decade. There is an energy security issue. We will have to ensure that the infrastructure is brought forward in the most competitive way, otherwise there will be a big impact on bills. We will have to attract more than £110 billion of investment in a way that ensures that low-carbon technology can be introduced, so that we can meet our carbon budgets. That is a heck of a challenge, and this Government have developed the policies to meet it.

If we do not act now, we estimate that by the mid-2020s up to 2.5 million households will be affected by blackouts, costing the economy more than £100 million a year. Even without interruptions to supply, our consumers would be exposed to volatile global energy markets if we did not do anything. Wholesale energy costs already make up half of the average consumer bill. Last year, the winter gas price was 40% higher than the year before. That is the real reason why bills have been going up so dramatically. We have to act and make the strategic changes to tackle that issue.

[Mr MacNeil]

Following on from the point made by the hon. Member for Upper Bann (David Simpson) about road fuel, what stage are the Government at in introducing a fair fuel regulator, which was much talked about while the two coalition parties were in opposition?

[Mr Davey]

I am sure that my right hon. Friend the Secretary of State for Transport will touch on those issues. This Government have done far more on petrol duty than the previous Government did. However, I will not pretend that we can isolate ourselves from world oil prices—the hon. Gentleman will know how high the price of oil has gone internationally.

We will do everything we can to insulate consumers from such price spikes. That is why, as stated in Her Majesty’s Gracious Speech, the Government will introduce legislation to reform the electricity market. The measures in the forthcoming energy Bill will ensure that we have secure, reliable low-carbon electricity supplies. We want to build a diverse portfolio of clean-energy technologies, including nuclear, renewables, clean coal and gas, and let them compete on cost.

[Jim Shannon (Strangford) (DUP)]

Is the Secretary of State aware of the proposed 15% increase in gas prices? There is much talk about the increase in oil prices and other prices, but gas prices are also going to cause real hurt. What steps can the Government take to help those who have gas as their sole source of energy?

[Mr Davey]

The hon. Gentleman is right to say that there are people predicting that wholesale gas prices will go up later this year. We had the announcement from Centrica last week, and we also had the announcement from E.ON. I am sure that other providers will be competing on price. However, I have already laid out some of the measures that we have been taking, whether it is the discussions that we had with the energy providers on gas and electricity bills, the collective switching or the work that Ofgem is doing on tariff simplification. All those measures make up quite a strong package to try to help the constituents he has just mentioned.

Returning to the energy Bill, there are four parts to our reforms: new long-term supply contracts to provide stable incentives to invest in low-carbon electricity generation; a capacity mechanism to ensure that we can keep the lights on; an emissions performance standard to keep carbon emissions from new fossil fuel plants down; and a carbon price floor to give investors certainty to commit capital to low-carbon projects. These reforms will attract the investment that we need to secure our electricity supplies. The investment will bring real rewards: up to 250,000 jobs in the construction and operation of new power plants, 19 GW of new electricity capacity, and an energy system that is fit for the future.

This is one of the biggest delivery programmes that this Government will oversee. It will stimulate growth, support new skilled jobs, upgrade our ageing energy infrastructure and bring down consumer energy bills. Our latest analysis shows that over the next two decades the average household energy bill will be 4% lower than if we did nothing. If we do not act now, we face a higher risk of blackouts and more exposure to price spikes, and higher consumer bills for both homes and businesses. That is not a future that this Government are willing to consider, so we will take the right decisions for the long term. The provisions in the forthcoming energy Bill will keep the lights on and our carbon emissions down, at the lowest cost to the consumer.

[Dr Whitehead]

As the right hon. Gentleman has made specific mention of the consumer benefit that will arise from electricity market reform, would he care to place on the record this afternoon how many consumer-based levies are in his energy market reform proposals, and what price effect their implementation will have on consumer bills?

[Mr Davey]

When we publish the draft Bill for pre-legislative scrutiny, I will set out a range of details, with a lot of technical documents. What I can say to the hon. Gentleman ahead of that is that there will be fewer levies than Labour planned. Labour planned a levy on bills for carbon capture and storage, which I believe would have cost consumers £9 billion. We are not going ahead with that.

This is a difficult time for many households. I am sure that Members on both sides of the House have heard from constituents who are struggling to pay their bills or keep their businesses afloat. Promises from politicians will not make the end of the month come any sooner, but the Government are doing what they can to help. We are making it easier for people to get a better deal from their energy suppliers; we are bringing energy efficiency to the mass market, making homes in every corner of the country cheaper to heat; and we are reforming our electricity system, to protect consumers from a more unstable and more expensive energy future. These three objectives share a common cause: not only will they insulate our consumers from energy price rises, but they will deliver a cleaner, more secure and more affordable energy system for generations to come. This is government for the long term, and that is what this coalition stands for. We are taking action where the last Government delivered inaction.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Please resume your seats. I remind the House that the amendment in the name of the Leader of the Opposition has been moved and that the House is therefore now debating the amendment.

13:29

[Malcolm Wicks (Croydon North) (Lab)]

Welcome to our debate, Mr Deputy Speaker; it is good to see you again.

My intention today is to talk about aspects of family life and how they relate to the “cost of living” theme. However, as a former Energy Minister, I am bound to say that I have been stimulated by the debate to make a few other remarks. Let me offer some friendly advice to the Secretary of State: his soundbite of the speech—that he is in favour of the “solar many” rather than the “solar few”—may not go viral. Indeed, I think it represents a formidable rewriting challenge for his speechwriters, if I may say so.

I will not get too cross with the Secretary of State for saying, as a bit of political knockabout, that the last Labour Government made no strategic decisions at all. Empirically, that is incorrect, as I think of the formidable legislation on climate change, which was supported throughout the House. For the first time, Parliament—the Labour Government were in power—decided to legislate to reduce carbon emissions. That is probably the most radically ambitious piece of legislation ever to go before this House. As I recall—I do not work for News International, so I do have a memory—it was also the Labour Government who set renewable energy targets, although they were more than just targets. [Interruption.] I hear a Member mumbling “Europe” at me from a sedentary position. I do not know whether it was a Eurosceptic, but yes, of course Europe is relevant; our party believes in Europe. We subscribe to European targets and during the period of the Labour Government we became the biggest country in the world in terms of investment in offshore wind. So much for us not having any strategic direction!

[Dr Huppert]

rose—

[Malcolm Wicks]

I will give way in a moment—if the intervention is a good one.

As a Government, we also tried to push forward carbon capture and storage—a formidable endeavour, and I congratulate the Norwegians on the progress they have made. It would be good to hear from the Government at some stage where they think we are on CCS because it is a vital part of our low-carbon objectives, given that despite renewables and nuclear, we will continue to invest in and use a great deal of fossil fuels in the future.

We also need to talk about nuclear energy. The withdrawal of the German consortium has been a formidable blow to our plans for nuclear energy, but I put it to the Secretary of State that, despite what he says, the last Labour Government’s decision to allow a new generation of civil nuclear reactors was a crucial strategic decision. As I recall—again I draw on my memory—one reason why Parliament took rather a long time to reach that decision was that one of our major parties, and I think it was the Liberal Democrats—

[Jim Dowd (Lewisham West and Penge) (Lab)]

Major?

[Malcolm Wicks]

I am a kind person, and I suppose it was major until recently. That party was adamantly opposed to nuclear energy. I ask the Secretary of State whether he has now made a strategic realignment in his own mind to support nuclear energy. I hope he has. I think the fact that the Prime Minister has appointed Liberal Democrat Members to this important role of Secretary of State for Energy and Climate Change shows that he maintains a sense of humour—one that he will need in the weeks and the trials, which is a term I use in the generic sense, to come.

While I am speaking about energy policy rather than family policy, which I shall come to in a moment, I want to emphasise the importance of the global context. We cannot discuss this issue only domestically. If I am right, the International Energy Agency projects in one of its central scenarios that global energy demand, mainly from non-OECD countries, will rise by about 40% by 2035. We must view our issues within that global context, we have to take energy security seriously and we have to build up what I have always called home-grown energy as much as we can, alongside reducing energy demand—hence the importance of nuclear and of renewable energy.

[Dr Huppert]

To rewind, let me say that the Climate Change Act 2008 was an excellent Act, and it had cross-party support. I am delighted that it was enacted. Does the right hon. Gentleman agree that Governments have to take a lead in showing that they can use less energy? He will remember the 10:10 campaign, designed to persuade people across the country to reduce their energy usage by 10%. Does he regret the fact that his Government voted down a Liberal Democrat proposal that the entire Government should sign up to that? Will he congratulate this Government on signing up to it and on reducing energy usage by 14% in their first year?

[Malcolm Wicks]

What I am proud of is that across a range of fronts, including transport, where we saw the development of hybrid cars, for example—I do not say that the Labour Government were responsible for them, but we encouraged them—energy demand reduction in industry and in the service and retail sector, and, of course, literally on the home front, with our domestic dwellings, we made many efforts to reduce energy demand. We need to do deal a great deal more. Irrespective of what party we come from, the first item on the agenda for energy policy has to be energy efficiency. It is the cheapest and cleanest solution and the most secure, as we are not dependent on foreign shores for reducing energy demand. That is vital.

[Simon Hughes]

rose—

[Malcolm Wicks]

I will give way one more time, but then I shall move on to discussing what I thought was to be my main subject today.

[Simon Hughes]

To clarify for the right hon. Gentleman, who raised the issue, the Liberal Democrats are opposed to nuclear power. We recognise that there is no majority in this House for that position, so a deal was done in the coalition agreement that allows the Government to pursue nuclear power provided that there is no subsidy—direct or indirect—for it. My view is that that means it will not happen because it has always needed to be subsidised.

[Malcolm Wicks]

A very senior Liberal Democrat Member says that nuclear will not happen, while the Liberal Democrat Secretary of State for Energy and Climate Change says that it will. I suspect that there may well be more rows in that party in the weeks and months to come—for other reasons, too—but an interesting divide has been opened up.

Let me move on from nuclear energy to the nuclear family—and other families, too—as the main focus of my speech today. I start with the proposition that although we are all currently concerned with how to develop a strong economy in really difficult times of economic austerity, equally important for the well-being of our society—I do not think I exaggerate—is what we might call the strong family. Whether families are based on marriage or cohabitation or whether they be two or one-parent families, it is important that they are strong, but many families are struggling and need our support.

Many issues that we debate in this Chamber—education, for example—depend as much on what I call strong families and strong parenting as on other measures the state can provide, such as support for schools and colleges, Sure Start and so forth. I have always taken the view that parents are as important as teachers for education and that families are as important as schools. Many do very well.

How family life has changed in this country is an issue we need to understand, as the family of today is not the family of 1945, and social policy needs to follow the grain of understanding these changes to family life. Not so long ago, a child left school at 14, 15 or 16 and became an economic asset to the family. Now, of course, as some of us know to our cost, our children are financially dependent on us often right into their early to mid-20s—and for good reasons, because of the development of higher education and the need for children to equip themselves for a more sophisticated society.

The strong family, then, is an important theme, and I want to touch on two policy consequences flowing from it. The first is child care and the related issue of parental leave, which is a welcome feature of the Queen’s Speech. We await the detail of the Government’s proposals on parental leave and we will need to scrutinise them. The importance of these issues relates to my theme of family change. Gone are the days when it was assumed that the father would go out to work full time and the mother would stay at home to look after the children—often, in the past, quite a number of children. The fact that those days have gone is very welcome—as is the water brought over to me by my ever-so-kind Whip. I do not want to get away from the idea that the Labour Whips are tough and fearless and nasty, but they can be kind too.

As I said, those days have gone, and the rise of what many people call the dual-worker family—the rise of women and mothers in employment—has come about for good reasons. It reflects a growing equality in our society, and the high educational achievements of our girls and young women. It also reflects the fact that people are now demanding a higher living standard than was experienced by their mothers and grandmothers. In a high-cost society, two incomes are more desirable than one.

[Jim Shannon]

Will the right hon. Gentleman give way?

[Malcolm Wicks]

May I pursue my theme for a while? The hon. Gentleman must remind me later that I was going to give way to him.

This is not a painless revolution. I do not want to compete with the Secretary of State’s soundbite, but for many women and men there is what might be called a care-career collision.

[Mr MacNeil]

That is much better.

[Malcolm Wicks]

The alliteration is better.

What I mean is that the time when young men and women in their mid-to-late twenties and thirties are working hard at their careers, and when their employers are watching them, is precisely the time when they think about the need to have children. That is a dilemma and a difficulty that we have not entirely thought through.

One consequence of the fact that women as well as men are working hard during their period of maximum fertility is the inability of many women to have families of the size that they would like. There is interesting evidence to that effect in a 2006 study by the Eurobarometer, the most recent that the Library could find for me. It states that in the UK in 2006 the mean ideal number of children for women—as it is an average, a funny statistic emerges—was 2.5, but the actual number of children achieved by women aged between 40 and 54 was only 1.9. As I have said, it is possible to laugh at such statistics, but we can see what lies behind them. Many women, and men, who would have preferred to have, say, three children end up with two, many who might have wanted two end up with one, and others may not be able to have children at all.

I am not suggesting that there is some Utopia in which everyone can achieve their ideal family size, but I do believe that there are economic and employment pressures that make achieving an ideal family size difficult in Britain and, indeed, throughout Europe. That ought to concern us, not least at a time when data show that birth rates are below replacement level in this country.

Another consequence of the care-career collision is the sheer hassle and difficulty that many families have to undergo in order to organise substitute child care. The growth of child care is wholly beneficial—it has improved the lot of families and, in many cases, children—but whenever I discuss the issue with younger families today, I have the impression that there is barrier after barrier. Often it is not just one substitute child carer whom parents need to employ. Because of career patterns, children may have to be dragged out of bed early and sent from one carer to another. What happens when a childminder is ill? What happens when the mother herself, who should be working, knows that her child is ill? Many parents have to resort to fibbing to their employers that they themselves are ill, rather than their children.

What I am saying—not too controversially, I hope—is that I do not believe the development of child care has led to some kind of nirvana. People may say, “It would be better if we had more child care, if the training and the quality of child care were better, and if it were cheaper”, and I understand their argument, but I want to challenge more fundamentally the proposition that we have reached a nirvana. I believe that family decisions made by men and women, by dads and mums, would be better decisions for families and for children if parental leave became a much more important feature of our employment and social policy. We have made some progress and I welcome that, but the average citizen of the 21st century will live until her eighties or nineties, and we are threatened with the possibility that many children born today will reach the age of 100. That is a long life span. Are we really saying that, during the two or three critical years after a child is born, substitute child care is the only way of ensuring the well-being of our children and their parents?

Now I will give way to the hon. Member for Strangford (Jim Shannon), as I promised to do a long time ago.

[Jim Shannon]

I thank the right hon. Gentleman, and congratulate him on a speech that we are all finding very thought-provoking and stimulating. One aspect of child care that he has touched on but not dwelt on is the role of the grandfather and grandmother. Has the possibility occurred to him, as it has to some people, that the increase in pension age will mean that they cannot provide families with the free child care that grandparents have provided in the past? Might that not also be a critical factor?

[Malcolm Wicks]

It could well be a factor. Certainly I acknowledge the hon. Gentleman’s main point that, although we often talk about the childminder or the nursery or the crèche, as I have been doing today, the role of the extended family—granny and granddad—can be vital.

To support my case that we need to take parental leave far more seriously, let me cite a recent, or fairly recent, pamphlet published in 2008 and written by a number of people, including Catherine Hakim. The publisher was Policy Exchange. Politically I am widely read, or rather the Library has briefed me widely. Catherine Hakim and her colleagues produced some interesting data. When parents were asked what, ideally, they would like, they did not all say “More child care, more child care”. Many simply wanted to spend more time with their own children when they were tiny. According to the report,

“Overall, a two-thirds majority of working mothers of pre-school and school-age children would prefer to work fewer hours or not at all, even if better childcare were available. Given the choice, what mothers prefer is to be at home with their children, not more and better childcare”.

That is an interesting finding, but I would qualify it by saying that we must not turn this into a debate about how mothers should be at home, as we are in danger of doing. Many mothers have educational qualifications that are superior to those of their partners, and careers that are blossoming. The debate about parental leave is not just about mums, but about dads as well. Too often in family and social policy, we talk about families as if they were just women and children and do not talk enough about fathers.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

Will my right hon. Friend give way?

[Malcolm Wicks]

I will give way to all sorts of people shortly.

We need to draw on some of the experience of Sweden and other Scandinavian countries. We need parental leave which—almost in a social engineering way—enables and encourages dads as well as mothers to take parental leave.

[Mr Davey]

rose—

[Malcolm Wicks]

I will give way to the Secretary of State. Perhaps he is going to answer my question about nuclear energy. He has had enough time in which to think about it.

[Mr Davey]

I have been listening closely to the right hon. Gentleman’s speech. Before I became Secretary of State for Energy and Climate Change I was in charge of employment relations in the Department for Business, Innovation and Skills, and, indeed, did the work that took place before the announcement in the Queen’s Speech of legislation on flexible parental leave, and I can tell the right hon. Gentleman that that legislation will deliver many of the developments for which he is arguing. For instance, it will ensure that dads and members of extended families can be more involved. Shared parental leave, the extension to all of the right to request flexible working, and an increase in unpaid parental leave will tackle all the issues that he has raised. Those are the most radical proposals that have been made in this area, and they derive from the best practice in the world, which I believe is found in Sweden and Germany.

[Malcolm Wicks]

That is good, and when we see the Government’s proposals we can debate whether they go far enough and what our long-term ambitions might be.

On parental leave, perhaps we should be thinking of several years, rather than shorter periods. However, with dads in more and more families playing a much greater role than their own dads did, we must concoct the policy so that we give them, as well as the mothers, maximum encouragement to take parental leave.

The Secretary of State’s intervention—on an aspect of nuclear family policy, rather than nuclear policy, which he is shyer about—made a point that Government Members need to understand. Getting the right balance between work and family life—not just for parents but for carers of elderly people and many others—is not a distraction from economic growth; rather, it enables us to have a modern work force that will help promote growth.

[Mrs Hodgson]

My right hon. Friend is making an excellent and thought-provoking speech, especially on child care. Only one in five women earn more than their partners, the effect of which on the ability to take shared parental leave we should consider.

[Malcolm Wicks]

That raises the serious and fundamental question of why this inequality still exists. It also raises a more practical question, which I think my hon. Friend was implying: how can dads who are bringing in the great majority of the family bacon take much in the way of parental leave?

[Mrs Hodgson]

indicated assent.

[Malcolm Wicks]

I understand that point, which raises the difficult issue of what financial allowance we can make for parental leave. We need to get to grips with this.

I turn to an issue that the House has discussed before. I put it to the Government that their policy on child benefit is a case study in unintended consequences—and I am being kind here. I speak as a great advocate of child benefit, which, along with the family allowance before it, has had its supporters on both sides of the House, right back to the pioneering work of Eleanor Rathbone, who wrote such important works on the importance of what she called family endowment. This Government’s decision to end the universal nature of child benefit by withdrawing it from people who earn above a certain income is a catastrophic strategic decision. It is a move towards potential means-testing that we need to be aware of.

[Jake Berry (Rossendale and Darwen) (Con)]

rose—

[Malcolm Wicks]

The hon. Gentleman wants to defend the policy.

[Jake Berry]

Is the right hon. Gentleman seriously suggesting that people in my constituency, where the average salary is well below the national average—some of my constituents earn £14,000 or £15,000 a year—should pay tax to give child benefit to Members of this House, who are earning £65,000?

[Malcolm Wicks]

Yes, I am, because our welfare state, although a mixture of universal and selective provision, nevertheless needs that universal core if it is to command public respect. Those of the hon. Gentleman’s constituents who have a couple of children, and who will suffer as a result of this provision, have costs, by definition, which the single person or the childless couple do not have. It is part of a decent society that we recognise those costs. It is also important that we do not move toward arguing, as the hon. Gentleman might want to argue, “Why on earth provide free education or a free health service to people earning £70,000? Why not cut that out?” That is a very slippery slope.

[Jim Dowd]

Does my right hon. Friend agree that, given the orthodoxy among Government Members as articulated by the hon. Member for Rossendale and Darwen (Jake Berry), it is patently clear that the winter fuel allowance and universal free travel for pensioners cannot last?

[Malcolm Wicks]

That is the logic of the position and, to be fair, many on the free-market wing of the Conservative party—such as the Institute of Economic Affairs think-tank—have been arguing for decades against universal provision and for a move towards a residual welfare state just for the poor, guarded strictly by the means test. That is the logic of some of these arguments.

I want to make two more specific points that I think colleagues understand. As I said, this policy is a case study of unintended consequences. The Prime Minister, the Chancellor of the Exchequer, Treasury Ministers and officials did not set out to say—I am being generous now—“Let’s design a child benefit policy so that a family in which mum and dad earn just under £50,000 combined will maintain child benefit, but if there is only one earner bringing in over £60,000, that family will lose child benefit.” No sensible Treasury policy would have reached that conclusion, but because this one was rushed and ill-thought-out, that is the consequence. I do not know what the constituents of the hon. Member for Rossendale and Darwen (Jake Berry), some of whom will be affected by this policy, will make of that. Where both members of a couple are earning a lot of money—nearly £50,000 each, following the revision, so they will have almost £100,000—they will keep their child benefit. However, if their next-door neighbours consist of a mum at home looking after the young ones, and a father earning over £60,000, his child benefit will be lost. Not even the hon. Gentleman, in his loyalist rash of enthusiasm, would defend that, surely. Would he?

[Jake Berry]

Surely the logical conclusion of the right hon. Gentleman’s argument is that all benefit should be universal. Does he think that all benefit, such as council tax benefit, should be universal? If there is no means test and people get the benefit regardless of their earning capacity, even if they are among the richest people in the country, that is the logical conclusion of his argument.

[Malcolm Wicks]

As I said earlier, any sensible social policy balances universal and selective provision. Many of these higher-income groups are paying substantial amounts of tax and thereby contributing to the community chest.

The story becomes yet more bizarre if we consider the second unintended consequence. Following the reaction against the Treasury decision to introduce a cliff-edge, resulting in the sudden loss of child benefit, Treasury officials were told to think again, and they came up with the idea of a taper. Those whose income is above the magic number will still get some benefit, but slowly but surely, it will be tapered away. As a consequence, it is estimated that 500,000 more people will have to go through self-assessment or PAYE. This Government, who are good on the rhetoric of cutting red tape and the “back room”, as they call it, have come up with a policy so bizarre that 500,000 more self-assessments or PAYE assessments will have to be made. I put it to them that it is time to admit that they have got this one wrong, to think again and to restore the child benefit, which is such an important policy if we are to build stronger family life.

14:09

[Mr Edward Leigh (Gainsborough) (Con)]

It is a pleasure to follow the right hon. Member for Croydon North (Malcolm Wicks). We all know that he has not been very well recently, but he gave a fantastic speech and we wish him well. I join him in a lot of what he said about promoting family life. He made some interesting comments about the desire of women to have more children—my wife and I would have liked to have had more children, but perhaps six is enough—and about child benefit, and I will say a bit about waste in Government spending in a moment. I support child benefit as we have always had it, because not only is it the most popular benefit, but there is no fraud, error or means-testing to it and it works. So much of the waste in government is down to excessive micro-management of benefits. That is why I, like the right hon. Gentleman, believe in child benefit as we have always understood it. Many middle-class people may be under heavy financial pressure and we should recognise in the benefits system the cost of children, although I suppose I must declare an interest, as people might say, “Well, he would say that, wouldn’t he?”

What I really want to discuss today is something that perhaps not many others—certainly not many Opposition Members—will be talking about. This debate is about the cost of living, but the greatest burden on families is the burden of government, and heavy and wasteful Government spending. Total Government spending increased under the previous Labour Government by 55% in real terms over the 13 years. We hear a lot from the Labour party, and indeed from the Government, about how we are now trying to correct that. Indeed, it is in the political interest of both the Labour Opposition and the Government to exaggerate what the coalition is doing to try to rein back a disastrous financial situation. Let us just imagine what would happen if a family’s spending increased by more than half but there was a paltry increase in the real wealth coming into that household. This coalition Government’s spending cuts from 2010 to 2015 will amount to only 3% of Government spending, so let us not get too excited when the Labour party tells us that these “horrendous cuts”—up to now there have been no cuts in spending; there have been cuts in the deficit, but no cuts in spending—have produced the dire economic situation we are in.

The Office for Budget Responsibility, an independent body, forecasts that for the coming year almost 41% of all output in our country—all that hard-earned money, from people slaving away in offices, factories and services—will go to the Government. That is more than the figures for America, Australia and Canada. We have heard a lot about the European Union in the past week—we have heard about its difficulties, its waste, its over-taxation and its overspending—but even many EU countries have a lower tax burden than Britain. Such countries include Ireland, Greece, which is apparently the basket case of Europe, and Spain; they all tax their economies less than we do. We are in a dire situation and we have to address it.

The Government expect to borrow a staggering £126 billion this year—imagine an ordinary family having to borrow such a proportion of their total spending every year. I take a particular interest in this because I firmly believe that we can deliver the same outputs for people in effective public services with very much more efficient inputs. I believe that big government is always accompanied by big waste.

[Albert Owen]

When the hon. Gentleman said that other European countries tax less, was he talking about the total tax take, including from industry, or just about personal taxation? As I recall it, personal taxation is significantly higher in the Republic of Ireland than in the United Kingdom.

[Mr Leigh]

I am talking about total taxation, which is the important thing to understand. I know that it is difficult to compare countries. For instance, we often talk about Italy being a basket case in terms of Government borrowing, but private borrowing is very low in Italy. We have to address this problem by considering the total taxation of all output, because that is what is of interest to efficiency and an efficient Government.

As I was saying, big government is accompanied by big waste. I am sure that many hon. Members were shocked, as I was, by a National Audit Office report in January—or rather by a report of reports; I am sure that everybody in this House avidly reads what the NAO says every week. This report was published in January, so it was not an attack on the previous Labour Government; it relates to now and the situation this minute. It is about this apparently hard-hitting, right-wing Government who are cutting left, right and centre, and persecuting the people—that is the charge against the Government; I would not say anything like that, of course. The report suggests that there is waste, at the moment, of more than £31 billion across government. Hon. Members may recall that Philip Green carried out an efficiency review, after which he said:

“You could not be in business if you operated like this. It would be impossible.”

His review identified, among other things, £700 million in saving on the Government telephone bill alone. In the past two Parliaments, the Public Accounts Committee conducted more than 400 hearings on waste. Such hearings are carrying on in this Parliament, as they will in the next Parliament and the Parliament after that. Nobody can tell me that enormous opportunities to cut waste do not remain.

Why is that issue important, given that this is a debate on the cost of living? This is not some anorak issue in which only accountants or economists should be interested. Every taxpayer in this country should be interested in what is going on in government at the moment, because the public sector is funded from the pockets of ordinary people and ordinary firms—many of them small, struggling firms—across Britain. Spending money in such a way means that the public and firms are being hit by a double-whammy, as prices are inflated by wasteful government spending, and firms have less of their own money to invest and families have less to spend. That situation is not fair.

We have mentioned the complexities of the benefits system and discussed child benefit. In addition to a hugely wasteful government system, Britain suffers from a horrendously complex tax system. Our tax code is now the longest in the world. Do a Conservative Government find that satisfactory? Our tax code has recently overtaken India’s in length and has doubled in size since 1997. Our horrendously complex tax system may have allowed the previous Government to keep many of their taxes a secret, but it has led to Britain being ranked 89th in the world, behind Nigeria and Zimbabwe, on the burden of government regulation in a recent World Economic Forum report. That simply is not good enough. I know that my friends on the Treasury Bench are doing their best, but they are not trying hard enough. They have to do better, because ordinary people and ordinary firms are paying for all this.

That complexity is structurally biased against ordinary workers and small businesses, because they lack the resources to investigate all the available loopholes. According to the Centre for Policy Studies, the effective marginal tax rate for some people on low incomes is as high as 96%. We know that, because we have done all these studies; the right hon. Members for Croydon North and for Birkenhead (Mr Field) served with me on the Select Committee on Social Security for many years, and for many years the right hon. Member for Birkenhead has campaigned on the issue of the trap for ordinary people, particularly those at the bottom of the heap, of paying marginal tax rates of 96%. We are crushing our own people, and not just with the waste for which we are responsible in our own spending. We oversee that waste in this House of Commons—we are responsible for it; nobody else out there is responsible. We crush our own people under a hugely wasteful system of government inefficiency and with increasingly complex taxes and benefits.

The rich do not suffer from that. The marginal tax rate for top-rate taxpayers is just 57.8%—the very richest do not even pay that. They do not even pay 57%. With the benefit of having successful and hugely expensive accountants, they are paying 10% or 15%.

In the most recent global competitors report by the World Economic Forum, three of the four biggest problems facing UK businesses were identified as tax rates, tax regulations and inefficient Government bureaucracy. Let me set out what I believe we should have in the Government. Apparently we are going to have a reshuffle soon. What we need are Ministers—the Prime Minister has to check on their performance—who are, like a non-executive director on the board of a private company such as Tesco, obsessed not by policy but by efficiency. We have three excellent Ministers sitting on the Front Bench—the Secretary of State for Transport, the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) and the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns)—as well as our Whip. I am sure they are doing these sorts of things every day, but much more could be done. I hope the Whip is listening to all the kind comments I am making about the Ministers. I sincerely believe that this is one of the most important things the Government could do.

An obvious conclusion to reach, given what I have said, is that the tax system should be simplified. That would reduce costs and simultaneously be likely to increase revenues. As I have argued again and again, this is not necessarily a market-driven, right-wing point of view, because the lower-paid would benefit from it. The natural conclusion of such simplification would be a much flatter rate, or even a flat-rate tax system. Such a system has been successfully introduced in places as diverse as Serbia, Hong Kong and Russia. When I was in Russia recently, I spoke to a young entrepreneur. The flat-rate tax in Russia is 13%. How extraordinary that the former Soviet Union now has a more entrepreneurially based system than we have—a flat-rate tax of 13% in a large economy such as Russia.

There is a precedent for such an approach in this country. When the Thatcher Government more than halved the top tax rate, the proportion of income tax revenue paid by the highest earners rose. As I said in our debates on the Budget, I welcome what the Chancellor of the Exchequer did in cutting the top rate from 50% to 45%; indeed, I think it should be cut from 45% to 40%. Such people do not bury their money in the ground. If they are taxed less, there is more entrepreneurship and more of them stay in this country. They earn more and give more, and less effort is spent on tax evasion and tax avoidance.

As important as tax reform is, the key to Government finance is a reduction in spending. If we spend less, we can tax less—it is that simple. There is nothing inherently good about Government spending, although Ministers from parties on both sides of the House have apparently congratulated themselves on how much they have spent on the health service and education. They congratulate themselves on spending inefficiently what other people earn.

[Mr MacNeil]

The hon. Gentleman says there is nothing inherently good about Government spending, but good can come from Government spending if it is on assets in order to redevelop capacity in the economy. We could have that rather than the current austerity programme, which is starving the economy.

[Mr Leigh]

We all accept that the Government can usefully spend on assets. I do not deny that. There is nothing wrong with Government spending, but there is something wrong with wasteful Government spending. In a recent global competitiveness report, Britain was ranked an unbelievable 72nd in the world behind Ethiopia and Tajikistan on the wastefulness of Government spending. That simply is not good enough. If a private company was ranked so low in the pecking order, questions would be asked about the people serving on the board, would they not? We have to try harder and do better. Government money does not come from nowhere. Every pound wasted by Whitehall is a pound that could have been invested by a British company or spent by a British family.

Before I conclude, let me speak about a few other issues, including aspects of the Queen’s Speech which I welcome. The right hon. Member for Croydon North talked about family life. One reason I have supported a marriage tax allowance, which sadly was once again not in the Queen’s Speech, is that it would address precisely the point he was making—the tax disincentive for a parent, usually a woman, to stay at home to look after her children. Nobody pretends that a tax gets people married or keeps people married. It simply deals with the totally unjust situation that a married person, normally a woman, who stays at home and looks after her young children is uniquely attacked by the tax and benefit system. That cannot be right.

I am glad that the high-speed rail line was not in the Queen’s Speech. I will do a deal with my right hon. Friend the Transport Secretary, who will sum up the debate. I will support her high-speed line, which will admittedly cut the journey time between London and Birmingham—no doubt that is all very good and means spending the assets that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) spoke about—if she will support the building of a third runway at Heathrow airport.

[The Secretary of State for Transport (Justine Greening)]

indicated dissent.

[Mr Leigh]

She shakes her head, sadly, but one never knows: we might win this argument in the end. This is about ensuring that the UK is globally competitive. I have talked a lot about waste in Government spending and about spending less. We have to be globally competitive, and Heathrow has to remain globally competitive. The City of London and Heathrow are the two things that have really propelled the British economy forward over the past 15 years. The situation seems madness to me. If Heathrow is prepared to expand with virtually no cost to the Government, we should do it. I know there is a long way to go on that argument, but we will keep trying. By all means, if people want to build a new high-speed line between Gatwick and Heathrow, I am all in favour of that, but I want to create the biggest and best international airport in the world, because I want Britain to be a successful transport hub. I cannot believe that on, frankly, spurious green grounds—I do not think the argument has been particularly well made—we are denying ourselves the opportunity of creating the best airport transport hub in the world.

If I may change the subject before I conclude, I am sorry that we are not going further on education. The Secretary of State for Education gave a marvellous speech last week. He rightly bemoaned an issue about which there is very little conversation in the House. Why is it that half the places in our best universities are taken by private school pupils, despite the fact that only 5% or 10% of people go to private school? That is scandalous. What is the left doing about it? Why do we have a situation in which people are able to afford such an extraordinary advantage for their children by sending them to a private school?

I believe we should go further with the education reforms. We have created academies, which are a great success, and the Secretary of State for Education is one of the most successful members of the Government, but as well as creating academies we could learn from the success of the independent sector and create independent academies. I am not saying that the existing academies that perform well should be allowed to become independent, but what if the bottom half—those that are not performing very well—were allowed to become independent academies? What about free schools not being allowed to charge but in all other respects having the total freedom of independent schools? Let us set them up in the poorest areas and see if we can remove what is almost an appalling bias which prevents people from rising up from the ghetto and our poorest areas. Let us try to be innovative in education.

I was talking to a Labour councillor last week. Funnily enough he was from the Speaker’s constituency; I was amazed that there were any Labour councillors left in the Speaker’s constituency, but apparently there are. That councillor, who is a very good man, not a market-driven, Thatcherite, right-winger like myself, said, “This situation can’t carry on; perhaps we should actually pay some of our poorest people to go to private school.” As a way round, we could say that any child who has never been to a private school—so there would be no deadweight cost—or any pupil coming from one of the 100 poorest postcodes should be subsidised by the state to go to private school. Why should we not at least try that? Why should we, whether we are on the right or the left, be prepared to accept the great elephant in the room: that a smaller proportion of people on free school meals across the entire country get into Oxford or Cambridge than those from schools attended by the leader of the Conservative party and the deputy leader of the Labour party? Why do those two private schools send more people every year to Oxford and Cambridge than come from the entire stock of pupils in the country on free school meals? Why are we not prepared to be radical and try to think of new solutions to help those at the bottom of the heap to rise to the top and get the same opportunities enjoyed by people going to private schools?

Those are the kind of radical ideas that the coalition could propel. We have a coalition and we have to live with that. There is no point bemoaning its existence, because we did not get enough votes to get a purely Conservative Government. There are many areas where our two parties can work together. One of the best things the Liberal party has done in recent years is to make the economic the ideological case for taking people out of tax. That is the best way to help the low-paid—ordinary people—and it is one of the very best things the Government are doing.

We heard an excellent speech from the Secretary of State. He talked about freeing up the electricity sector. That is something we can work on with our Liberal friends—radical ideas to free up the economy.

This morning, there was a press conference about reforming the Public Order Act 1986 and getting rid of section 5, which outlaws insulting language. Again, Liberals, Labour people and Conservatives can unite. Section 5 has a chilling effect on debate out there. We want more vigorous debate not just out there, but in here. We want fresh and radical ideas to try to free people from the overwhelming incubus of wasteful Government spending and regulation that holds down families and small businesses. I firmly believe that this Government—a coalition of Conservatives and Liberals—is moving in that direction.

14:31

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

It was deeply refreshing to listen to the hon. Member for Gainsborough (Mr Leigh) make—literally—a reactionary speech. We do not often hear such sentiments openly expressed in the House of Commons.

Although the hon. Gentleman claimed that he was seeking to bring us into the real world, he was actually creating a world of fantasy. He gave us two exemplars of countries with lower taxation rates. The first was Russia, one of the most corrupt economies in the world, and a country run to a large degree by corrupt oligarchs, where democracy is only marginal. In the United States, under their posturing President, taxation may be lower, but such is the extent of poverty that many, many millions of people live in abject poverty in slums, without jobs and food, under a Democrat President—something I never thought I would live to see. Statistically, the hon. Gentleman may claim those countries as exemplars, but I fear that in the real world not one of us would want to live in the United States or in Russia under the conditions that prevail there.

The hon. Gentleman talked about education, and young people rising from the ghetto. I represent a constituency that has some of the greatest deprivation in the kingdom. None of my constituents, whatever their income, would wish to be described as living in a ghetto, but the result of what the Government have done in two years, and what they propose in the Queen’s Speech, will be to turn parts of my constituency into a ghetto. I do not believe that the people I represent deserve the fate of living in such conditions.

The hon. Gentleman talked about cutting waste. Yes, of course all of us are strongly in favour of cutting waste, but it depends how we define waste. What the hon. Gentleman might regard as waste, large numbers of my constituents would regard as essential. For example, one of the best high schools in my constituency has opened a new kitchen—with finance from the Labour Government and Manchester council, although the building was completed under this Government—and the head teacher told me that for many of the children the meal they get in school is their only solid meal that day. We have to look at contexts.

I do not say this rudely. Just as the hon. Gentleman is an avowed reactionary, I am an avowed Keynesian. I believe in spending our way out of recession—while of course cutting out waste, as the hon. Gentleman recommends—because recession and poverty mean people out of work. According to today’s figures, just announced, 10.7% of people in my constituency are out of work. We have to give them benefits, however miserable they are to be, whereas if people had jobs they would be taking home money and paying taxes in order to fund the essential public services that the Government are attacking, downgrading and in some cases destroying.

In response to an intervention from one of my hon. Friends, the Secretary of State alleged that shameful scaremongering was coming from the Labour Benches, but the most shameful scaremongering of recent months was when the Prime Minister and the Minister for the Cabinet Office created a totally unnecessary panic about petrol supplies, which had appalling effects throughout the country. The Session that the Queen’s Speech covers will take us beyond the halfway point of the Parliament and into the run-up to the next general election, so one might think that the Government’s programme would deal with the problems and challenges of the present while looking to the future, including the cost of living issues referred to by my right hon. Friends the Members for Don Valley (Caroline Flint) and for Croydon North (Malcolm Wicks). No such luck.

The Queen’s Speech proposals are a combination of irrelevance and actual damage. The Government have no more idea how to deal with the cost of living problem and the severe economic problems they have created than before they created them. Instead, they are making the poor and deprived, and average families, pay the price for the massive handouts they are providing for their rich cronies, including big business and the banks. Their cronies do not worry about the cost of living. Sir Philip Green, an adviser to the Government, whose money is stowed away in Monaco through tax dodges, and Lord Ashcroft are not interested in what anything costs; they are only interested in how much tax they can dodge and in what they can buy with the money on which they pay little or no tax.

From young children to pensioners, from Sure Start to winter fuel payments—one of the most valued innovations of the Labour Government, but which the Conservatives opposed—this Government are already deliberately inflicting grave harm. Public service pensions, including those of the police, are being wrecked. Massive unemployment is being created; as I said, in my constituency, the figure announced today is 10.7%—the 47th worst constituency for unemployment.

The policing cuts are having devastating consequences. Inspector Damian O’Reilly, one of the greatest police officers in this country, and a recipient of the national award for community police officer of the year, told me that in my constituency the ability of the police to prevent and pursue crime, on both of which they have a first-rate record, will be harmed irreversibly. No wonder he and other police officers took part in the march last week. Today in Bournemouth the Home Secretary is being told by the chairman of the Police Federation that because of her policies, we are

“on the precipice of destroying a police service that is admired throughout the world”.

That is the situation under this Government.

Meanwhile, not only are the cruel cuts continuing while the cost of living continues to rise, but we are told that further cuts are planned—that this Government are planning £25 billion-worth of cuts, all targeting the most vulnerable in our society—and all this comes from Ministers who themselves will not in the slightest feel the impact of those cuts. The whole ethos of this Government was demonstrated a few days ago when it was disclosed that the Prime Minister had sent a text message—one of a barrage of such messages—to a wealthy and controversial crony, saying that they must avoid being seen together. And where? At the Heythrop point-to-point. It almost makes one laugh out loud—or should I say, lots of love?

This, in terms of cost of living, public services, creating unemployment and not creating wealth, is not only the most incompetent Government of my political lifetime, but the most right-wing that this country has had, with the connivance of the Liberal Democrats, since Neville Chamberlain in the 1930s—the most corrupt, but the most arrogant. The Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Home Secretary all refuse to sully their lily-white hands by replying personally to letters from Members of Parliament. The Prime Minister threw an infantile tantrum when he was called the other week to this House to respond—incompetently, inadequately and offensively—on a further example of current Government corruption.

The contrast with previous Conservative Governments is stark. Conservative Cabinet Ministers such as Douglas Hurd, Michael Heseltine, Willie Whitelaw and Margaret Thatcher all made themselves available to MPs seeking access on behalf of their constituents. Indeed, Margaret Thatcher issued an open invitation to MPs to come to No. 10 and discuss employment problems in their constituency with her. This Government, neither party of which has a majority and neither party of which has a mandate, are behaving in a far more right-wing way than Margaret Thatcher did when she had an overall majority with big electoral victories, which she scored over the Labour party at its worst.

If the Home Secretary, the worst in my experience, had been willing to take a hands-on approach to immigration problems, we might have avoided the awful crumbling mess in border control that she personally has created and which is in danger of humiliating this country as the Olympic games approach.

Meanwhile, the Liberal Democrats pursue irrelevancies, seeking always to advance not the interests of our constituents, but their own party’s self-interest, with an obsession with constitutional change which is irrelevant to the lives of our constituents, such as the alternative vote, on which happily they were defeated, and now the House of Lords, their action on which would gum up the parliamentary works—which might not be a bad thing, considering what damage the Government would otherwise seek to legislate.

[Dr Huppert]

I hope the right hon. Gentleman realises that he is the one who has raised this obsession. It was in his party’s manifesto as well, so I am sorry he feels that way. We have been focusing on things such as giving 24 million people who are poorly paid a tax cut, lifting the lower-paid people up. Will he welcome that as a Liberal Democrat obsession that will help many constituents across the country for all of us?

[Sir Gerald Kaufman]

What I would welcome would be for the hon. Gentleman, as parliamentary representative for a university city—the second university as between Oxford and Cambridge, naturally, but not a bad university in its way—to go to his constituency or stand up here and apologise for the deception of the Liberal Democrats on the issue of university fees.

[Dr Huppert]

I will make no apology for the fact that I voted against fees. I will make no apology for the fact that I campaigned against them when Labour introduced them, having a large majority and having promised not to do so, and when they tripled them, having promised never to increase them again, and claimed that they had legislated against them. Will the right hon. Gentleman apologise for that deceit?

[Sir Gerald Kaufman]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before the right hon. Gentleman resumes his speech, I remind the House that this is not a general debate; it is a debate on the cost of living. Touching on one or two other things I will allow, but not an in-depth debate on other matters.

[Sir Gerald Kaufman]

I am grateful to you, Mr Deputy Speaker, for that reminder, and I am sorry that I was diverted by the irrelevancies of the hon. Member for Cambridge (Dr Huppert). I will simply say to him that if he is talking about higher education, it is not only university fees, but the education maintenance allowance, the withdrawal of which is depriving thousands of my young constituents of getting advanced education.

[Mr Leigh]

rose—

[Sir Gerald Kaufman]

Oh, I must give way to the hon. Gentleman, if Mr Deputy Speaker will allow me to do so.

[Mr Leigh]

Will the right hon. Gentleman be too alarmed if an old reactionary like me supports him on House of Lords reform?

[Mr Deputy Speaker (Mr Nigel Evans)]

Let’s not go there.

[Sir Gerald Kaufman]

The hon. Member for Gainsborough knows that I would have responded to him, but I have been banned from doing so by the Deputy Speaker, and I must maintain my cringing relationship to him.

On issues such as the cost of living, which was very much to the fore in my city, the Conservatives were obliterated in Manchester and the Liberal Democrats were massacred the week before last. One Liberal Democrat now ex-councillor in a formerly safe Liberal Democrat ward moaned at a hustings meeting that he was local and had nothing to do with the Government. But it did him no good.

The Roman historian Tacitus said of the emperor Galba, “Capax imperii nisi imperasset”, which, for those who did not have a public school education, translates as, “He would have been judged capable of government had he not governed.” Tacitus said as well, “Solitudinem faciunt pacem appellant”—“They make a wilderness and call it peace.” That will be the epitaph on this Government.

14:47

[Dr Julian Huppert (Cambridge) (LD)]

It is entertaining to follow the speeches from the hon. Member for Gainsborough (Mr Leigh) and the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), who have shown that there is an obsession about House of Lords reform, at least in trying to stop it, among certain people who have been in this House for a very long time. It is a project that has been going on for a long time, too. It was in all three party manifestos. We can achieve it; it does not have to be an obsession for any of us.

[Mr MacNeil]

rose—

[Dr Huppert]

If the Deputy Speaker does not object, I will happily take an intervention.

[Mr MacNeil]

Does the hon. Gentleman agree that House of Lords reform will not be meaningful in this place while there are a number of people hanging around who view the House of Lords as a political lifeboat when their careers here are finished?

[Dr Huppert]

I do agree, and at some point we can have the debate about why we need that reform to have a properly democratically accountable Chamber in the other place, but now is not that time.

We heard an interesting take from the hon. Member for Gainsborough on how the Government would be doing much better if they were a pure Conservative Government—they would be cutting much more—and we heard from the right hon. Member for Manchester, Gorton that they are cutting far too savagely. The truth is that a pure Conservative Government probably would be cutting more and we are acting as a restraint on that and trying to achieve the correct outcome, which lies somewhere between the—in my view—excessive cuts advocated by one side and the continued overspending advocated by the other.

There is often a debate about Keynesian economics. Keynes was a good Liberal and a good Cambridge man, and he said a number of very sensible things. One was about making sure that we spend in recessions, but the flip side of that is that we do not spend as much during the boom years, so that we have money left. We cannot spend in the boom and also have money to spend in the bust; it simply does not work. Keynes was also clear about how much could be spent and, indeed, the high priority on keeping bond yields low so all that could be afforded. He was a very complex man and his work should not be reduced to a simple catch phrase.

I want to talk about the cost of living in relation to transport, because it is one of the areas I focus on in this House and on which I lead for the Liberal Democrats, but also because it is one of the few parts of Government activity that affects most people pretty much every day of their lives. Transport has a huge effect on us, and the cost of travel affects a huge amount of what we do throughout our lives. Governments for many decades, when focusing on the cost of transport, have thought principally about cars; too little thought has been given to cycling, walking and public transport.

[The Minister of State, Department of Health (Mr Simon Burns)]

And train spotting.

[Dr Huppert]

Let us consider the railways, as the Minister suggests. We know about the cuts. The length of our railway network has halved since 1950, but ever since 1980 the number of people using the network has doubled, resulting in a crippling downward spiral in which fare rises have been used to prop up a creaking system while services have declined. British railways are now 30% less efficient and 30% more expensive than their European counterparts. Under Labour, fares rose significantly above inflation year on year. The shadow Secretary of State for Energy and Climate Change did not seem to know the figures when I challenged her on this earlier, so let me give them to the shadow Secretary of State for Transport. Rail fares during Labour’s 13 years in government went up by 66%—inflation over that period was 17% in real terms—which is a huge increase. Even now their policy has not changed; it is still to have rail fares going up above inflation. Even the amendment to the motion calls for rail fares to go up 1% above inflation.

[Maria Eagle (Garston and Halewood) (Lab)]

Will the hon. Gentleman give way?

[Dr Huppert]

I would be delighted to hear the shadow Secretary of State say that Labour accepts that fares are too high but, if she will not, will she confirm that her policy is still to have rail fares going up above inflation?

[Maria Eagle]

The hon. Gentleman fought the last general election on a promise to cut rail fares. His party and the Government whom he supports now support rail fare rises of 3% above the retail prices index. He voted for that. He is being just a tad hypocritical.

[Dr Huppert]

I am sorry that the shadow Secretary of State is not prepared to defend her party’s record in government or the fact that it is still calling for fares to rise above inflation. I would like them to go below inflation—[Interruption.] If the hon. Lady listened more and spoke less, she would hear what I am going to say. I think that rail fares need to come down, but we do not have a majority Government. As we heard earlier from the hon. Member for Gainsborough, this is not a pure Conservative Government, but it is not a pure Liberal Democrat Government either.

[Mr Simon Burns]

Thank God!

[Dr Huppert]

On that point we are all united.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that it was the Labour-led Transport Committee that produced the analysis revealing that the Labour party had shown “breathtaking complacency” towards value for money on customers’ rail fares?

[Dr Huppert]

The hon. Gentleman is absolutely correct, as he so often is on rail matters. The Labour Government failed on trains and, rather than trying to patch it up now, are looking for short-term political advantage.

Let me move on from trains to buses. We talk a lot about trains, but buses are used hugely. What is Labour’s record on buses? Bus fares during Labour’s years in government went up by 76%—24% in real terms—which is a huge amount, and that affects the cost of living for people who try to travel by bus. We know that there is a different socio-economic distribution for people who take buses, compared with those who take trains, so this is very tough.

In 2008, Dr Iain Docherty of Glasgow university and Professor Jon Shaw of the university of Plymouth reviewed Labour’s 10-year transport strategy and said that it was a failure. Bus services were described as “poor” compared with the rest of Europe. They said that the Government had pursued the

“wrong kinds of transport policies”.

To their credit, we saw some success in London, but that was the only part of the country that saw the sort of devolution and innovation that we would like to see across the country. Outside London, from 1997 to 2008, when the report was written, the number of bus trips fell by 10%, which is not exactly a resounding victory for Labour’s centralising 10-year plan, and something that the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), is taking steps to change.

We all know that our roads are utterly unsustainable. We have not yet managed to decarbonise our cars adequately. We failed to support the basic principle that road users should have to pay to use the roads, and the tax system has problems. Treasury Ministers are already nervous about how they will fund road infrastructure in future as we manage to reduce the use of fossil fuels.

I am proud of much of what the Government are doing on transport, although not absolutely everything, and pleased about the work being done by the Under-Secretary on issues such as cycling and bus use, which I will say more about later. I am also proud of the work being done by the other Transport Ministers. However, we need more radical and liberal thinking to heal our sclerotic transport network. What we need are bold reforms, but I am sad to say that what we have from the Opposition is short-term politicking, not long-term and evidence-based public policy making.

Let me give an example. The shadow Secretary of State made an interesting series of comments to The Guardian recently. She said that she accepted two thirds of the coalition’s transport spending cuts. I think we all agree with her when she said:

“Labour will not be elected unless it has credibility on the deficit and recognises the new economic reality.”

She said that she was committed to two thirds of the cuts. The interesting question is this: which two thirds? It is a nice game to keep whichever third of things seems politically sensible and cut the things that are not popular. I have been trying to find out from the hon. Lady—

[Maria Eagle]

I have replied to the hon. Gentleman’s letter, but I can tell him that Labour supported the entire £1.7 billion of efficiencies that Ministers have required across the transport expenditure. We have not opposed cuts beyond those efficiency savings in the Highways Agency totalling £3 billion or in Transport for London totalling £1.7 billion, a total of £4.7 billion, so we have not opposed £6.4 billion of cuts, which is more than two thirds of the efficiencies and cuts that the Government are making. But we would not have made the other £3 billion of cuts, which would have given us extra money so that we could cap annual fare rises, protect local bus services and deliver additional investment. Our plan is quite clear.

[Dr Huppert]

The hon. Lady is absolutely correct. I wrote to her in February asking for the figures and it took her over a month to respond—

[Caroline Flint]

Pathetic.

[Dr Huppert]

I absolutely agree with the right hon. Lady that that is pathetic—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. This is not a general conversation; it is a debate and Dr Julian Huppert has the Floor.

[Dr Huppert]

Thank you, Mr Deputy Speaker. It took the hon. Lady over a month to direct me to a speech in which a shadow Minister outlined some of those figures. I do not know how much was made in the London election about the fact that Labour proposed taking £1.73 billion out of the TfL budget, which is interesting, but the key point is that she is yet to reply to a letter I wrote to her a month ago asking, of the £3.36 billion that she would take out of the Highways Agency’s budget, as opposed to the half a billion she would leave in, which—

[Maria Eagle]

Will the hon. Gentleman give way?

[Dr Huppert]

I will if the hon. Lady lets me finish my sentence. Which half a billion pounds would she leave in, and which £3.36 billion would she take out? She has not responded to the letter, but she can respond now.

[Maria Eagle]

I promise to respond in great detail to the hon. Gentleman when he gets his ministerial team to reply to letters from me and to answer parliamentary questions properly.

[Dr Huppert]

I am flattered by the shadow Secretary of State’s faith that I have the power to control the ministerial team. She can certainly control when she responds to letters, and I think that a delay of over a month is rather poor. I am sure that she thinks she has better things to do, but I would still love to hear how Labour would fund the rest of its budget on this area.

If the Opposition are truly concerned about the cost of living, surely one way of addressing that is to let people keep more of the money they earn. Raising the income tax threshold puts money back into people’s pockets and lets them spend it on whatever they want: rail fares, fuel for their car, a new bike, bus tickets, training, or whatever it is that they would like to do with that money. Of course, that is something that Liberal Democrats campaigned for and it was on the first page of our manifesto, and it is exactly what Liberal Democrats in government are doing and which, for reasons I simply do not understand, the Opposition voted against. I simply fail to understand why they are against giving money back to people who earn £10,000 a year. It makes no sense to me. I assume it was some sort of error, like the fact that they failed to vote on various aspects of the Budget which they said they would vote on.

In my view, this tax cut, combined with the uprating of unemployment benefits and the triple lock in pensions so that pensioners get a better deal than the 75p that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) offered them, is exactly the right mix of measures. It allows people to keep their money and spend it as they please when times are tight. It is a responsible, liberal approach, and one that we need to take further, as I am sure we will do during the rest of the Parliament, but it is there—[Interruption]—and it has been supported by the Conservatives, as the hon. Member for Mid Norfolk (George Freeman) reminds me.

But let me return to rail fares. I passionately believe that rail fares are too high and need to be lower, and, unlike Labour and the Conservatives, both of which have argued for above-inflation increases, we in the Liberal Democrats believe that they are too high and should not be made any higher. I am delighted that we managed to persuade our coalition colleagues to reduce the most recent rise by 2%, and I have to say that Conservative Transport Ministers supported it.

I hope that we can do the same or better in the years to come, but it cannot be a one-off measure; it has to be part of the kind of serious structural reform that the McNulty review will bring. If it is true that the McNulty changes will save £1 billion a year, half of it should be used to reduce rail fares and half to invest further in rail infrastructure, although this Government are already investing massively in our railways—more than any Government since Victorian times.

We have committed to electrifying more than 800 miles of track. How much did Labour manage? The answer is less than 10 miles, in 13 years: less than 1 mile per year. The Victorians would not have been impressed by that rate. The Liberal Democrats in government are firmly committed to getting people and freight on to our railways so that they do not take up space on our roads, and that applies to my local road, the A14, where we have to ensure that as much freight as possible is put on to railways in order to avoid the congestion that we see. We need to invest in services to make them cheaper, more affordable and more attractive. That is the right thing to do.

What about buses? We believe firmly that the way forward is devolution, community involvement and more effective funding. Services have to be local for them to be popular and effective, and communities must have their say in the governance of local buses. I believe, from what the shadow Secretary of State says, that the Labour party is finally looking at ways of devolving bus services. We have argued for that measure for decades, so I am delighted that Labour agrees, and I hope that we will be able to deliver it. We have had less than two years with very little money to spend; Labour had 13 years, so I am delighted that it is finally coming around to the idea and I hope that we will be able to deliver it. Indeed, I hope that Labour supports the reforms that we are implementing, such as the local sustainable transport fund, which is delivering £500 million to local communities. Just before the Queen’s Speech my hon. Friend the Under-Secretary announced new funds for better bus areas and green buses: a £120 million boost for buses which will enable people to take affordable buses more easily.

By trusting communities to do what is best for themselves, we are revolutionising bus travel. Already since 2010 we have seen bus patronage rise outside London and throughout the country, and seen funding for 439 low-carbon buses, helping us to be a much greener Government. That is a fantastic achievement after a decade of decline and without spare money to slosh around.

Of course, if we really want to reduce the cost of living, we will find that there are even cheaper forms of transport. A huge number of journeys could be taken on foot or by bike, and that really would save people money. More people should do that. This Government have invested millions of pounds in promoting cycling, from the local sustainable transport fund, to Sustrans funding for new routes, bikeability training and new cycle-rail links, and they have also taken other steps to promote safe cycling by, for example, making it easier to introduce 20 mph zones.

We have heard much from the Opposition about the lack of a Bill in the Queen’s Speech to deal specifically with the cost of living, but we have heard also from my right hon. Friend the Secretary of State for Energy and Climate Change about the steps being taken with the Bills that are in the Queen’s Speech, and in any case the Opposition should know that it is not necessary to announce a Bill in a Queen’s Speech in order to help with the cost of living. Not everything needs legislation.

[Laura Sandys]

This Queen’s Speech is very much directed at the consumer and at consumer prices. We have a draft water Bill, which is looking at supporting water prices; the grocery adjudicator measure, which is looking to develop a much more effective supply chain and to deliver better prices to consumers; and we have an energy Bill, which will make the market more responsive to the consumer. This is a consumers’ Queen’s Speech.

[Dr Huppert]

I thank the hon. Lady for her comments—and I will leave out the next paragraph of my speech. She is absolutely correct to highlight the importance of all those issues, which will make a real difference to consumers, as will a range of other activities, such as breaking up the banks so that they can focus more on consumers and less on the casino capitalism that we saw in the previous decade.

We do not need to legislate to make a difference. We gave money back to millions of working people without any new Bill; it did not take a Bill to make that happen. After reams and reams of failed legislation, one would have thought that Labour would have learned one simple fact: we cannot just legislate our way out of a problem. But I am not surprised that Labour’s response to a Queen’s Speech that, as well as the items mentioned earlier, finally tackles defamation law and Lords reform is that we need more legislation. It is certainly true that if the test of a successful Government was the volume of laws they introduced, 13 years of Labour would have been an unmitigated success, because the sheer volume of legislation was a record, but that is not what government is about.

I am deeply proud to be a Liberal Democrat in government, standing up to vested interests to ensure that every citizen, no matter how poor, will be able to protect their reputation from defamation—and that we will not see the chills that we have seen from the threat of action. I am proud that we are tackling constitutional reform, because I am sure that all honest politicians know that the Government are quite capable of doing more than one thing at once, and of course we are cleaning up the mess that this country was left in by Labour and continues to be left in by what is happening in the eurozone.

There is much more to do on fares, and I should like to see a more efficient local transport system with greater support for community services, which is something we are already working on, but we have achieved a lot with what we have got—much more than can be said for the squandered Blair-Brown years. In 1997 a Liberal Democrat majority Government, enjoying an unprecedented period of global growth, would not have jacked up fares year after year. We would not have let transport services decay in the dead hand of Whitehall, and we would certainly not have introduced tuition fees in the way the Labour party did.

[Anas Sarwar]

Will the hon. Gentleman give way?

[Dr Huppert]

I should like to conclude so that others can speak.

I welcome the Queen’s Speech and all the things that Liberal Democrats in government have done already to help with the cost of living. I hope to see members of the Labour party welcome those achievements and support our measures, which will put our transport system on a sustainable footing for the long term and help to reduce the cost of living for everyone in this country.

15:06

[Barbara Keeley (Worsley and Eccles South) (Lab)]

There was little, as we have already heard today, in the Queen’s Speech to do with the rising cost of living. We have recently had a Budget that helps millionaires with tax cuts while penalising pensioners and families, and throughout the country people are struggling with the impact of a double-dip recession made in Downing street, so the Government, whether in the Budget or in the Queen’s Speech, are offering little help to those working people or pensioners on modest and low incomes who are struggling to manage.

But I want to talk about the Government’s failure to introduce in the Queen’s Speech a Bill on the financial reform of social care, because it has implications for the cost of living of the millions of vulnerable people who need care. There is also a major effect on carers who drop out of work or reduce their working hours in order to care, because that has an impact on the economy.

First, however, I send best wishes for a speedy recovery to the hon. Member for Truro and Falmouth (Sarah Newton), who I understand has had a fall—an accident here—and is in hospital. She is the vice-chair of the all-party group on social care, and we work well together. This is a vital time for social care, so I am really sorry that she might not be with us for a few weeks, but I wish her well.

Every few weeks we see another article or report about the crisis in social care. The Association of Directors of Adult Social Services has reported cuts of more than £1 billion in local council budgets for adult social care since the general election, with a further £1 billion of cuts expected this year. Those cuts have led to service reductions and to substantial increases in charges.

We learned today from research by my hon. Friend the Member for Leicester West (Liz Kendall) that the number of vulnerable, older and disabled people who have home care services fully paid for by their local authority has fallen by 11% in England over the past two years, and a survey by the Care and Support Alliance also shows that services to 24% of disabled adults have been cut, even though their needs are the same or have increased.

Research by Age UK shows that cuts to council budgets mean increased fees for services. Two thirds of local councils are increasing fees for services such as meals on wheels, and fees have increased by 13% over two years. Almost half of all local councils are charging more or making new charges for home help or day care services, and my hon. Friend’s research shows that the average charge for one hour of home care has risen by 10% in the past two years, from £12.29 to £13.61. On average, older people pay for 10 hours’ home care a week when they are using it, so the annual bill for care has risen to more than £7,000, an increase of £680 since 2010. Yet, as we know as Members of Parliament, these services are a lifeline to many vulnerable people. The Age UK research also showed that one in six councils has reduced personal budgets for care packages and that almost half of councils have frozen the rates that they pay for residential care, leaving older people and their families who pay top-ups to absorb any price increases—and there have been price increases. Care homes have been increasing their fees. The fees for residential care have increased by 5% on average over the past year, taking the average up to £27,200 a year. Nursing home fees have risen by a similar amount and now cost £37,500 a year on average.

In addition, councils are raising or abolishing the caps on the care costs met by individuals who need care. Four out of 10 councils have abolished funding caps in the past two years, with another four out of 10 increasing the cap so that people now have to pay more, while rates charged for respite care have tripled in some parts of the country. My hon. Friend the Member for Leicester West is calling these increased care charges a stealth tax on the elderly and people with disabilities, and I agree. More and more people are footing the bill for care themselves, and that bill has grown. The need for care often starts suddenly and unexpectedly due to a medical event such as stroke or the sudden worsening of a condition such as Alzheimer’s or vascular dementia. That often leads to bills that are very hard to meet. A quarter of people are faced with care costs in their lifetime of over £50,000, with one in 10 paying £100,000. These care costs can be catastrophic. Indeed, more than 20,000 pensioners every year have to sell their homes to pay for residential care.

It is not just a question of care charges, which are bad enough. People needing care often tend to be disproportionately hit by increases in the everyday cost of living. People who are older and frail, or ill or with a disability, spend more time at home and need to keep warm, so increases in heating and electricity bills hit them hard. Besides paying more for care, they have had to cope with VAT increases, higher fuel and travel costs—this group of people spends a lot of time attending GP surgeries and hospital visits—and increased prescription charges. All these have increased the cost of living for people needing care.

Under this equation, reduced care services and increased costs for care ultimately mean that unpaid family carers take on heavier caring workloads. Carers UK has estimated that 1 million carers have given up work or reduced their working hours in order to care. Over two thirds of those who had given up work to care were more than £10,000 a year worse off as a result. Over 45% of the carers it surveyed were cutting back on essentials such as heating or food in order to make ends meet. Sadly, the cost of caring can push carers into debt. Almost half the carers surveyed by Carers UK had fallen into debt. While over half the younger carers had been in debt, for carers over 65 the debts were greater; 15% of them had debts of at least £25,000. Unsurprisingly, the stress of this financial hardship had affected the health of nearly half those carers.

We can therefore say that the need for reform of the funding of social care is urgent. In fact, it is so urgent that 78 charities wrote an open letter to the Prime Minister ahead of the Queen’s Speech reminding him that social care is in crisis. They said that without reform

“too many older and disabled people will be left in desperate circumstances”.

[Dr Daniel Poulter (Central Suffolk and North Ipswich) (Con)]

The hon. Lady is making a very good speech outlining many of the problems with caring for the elderly and the challenges that carers face. Will she accept, though, that while it is right to highlight these problems, the Labour party, when in government for 13 years, did nothing substantially to tackle these problems, many of which have taken a long time to manifest themselves and should have been dealt with under the previous Government when this country had more money?

[Barbara Keeley]

The hon. Gentleman was not here in the previous Parliament. As somebody who was here, I can say that we did take substantial steps. I have been speaking on these issues ever since I came into Parliament in May 2005. With cross-party talks, we came very close to achieving consensus until the Conservative shadow Secretary of State—now the current Secretary of State—walked out on those talks and did a lot of scaremongering in the general election with posters about a “death tax” featuring tombstones. I am sure that Members will remember that.

Moreover, we did not just have a draft Bill; we had the Personal Care at Home Bill, which went through Parliament. That would have helped the 400,000 people with the greatest needs, while 300,000 people with very substantial care needs, such as those with dementia, could have had personal care at home, and over 100,000 people would have been helped with reablement. I know from working with the hon. Gentleman on the Select Committee that he is very keen on dealing with issues such as reablement, for which support would have been provided. Those 400,000 people are now paying for that themselves. They could have been helped if this coalition Government had not got rid of that Bill, which they could have enacted, as it had gone through this House. It is not true to say that we did nothing on this; we did a lot.

[Dr Poulter]

It is wrong to say that Members who came into the House in the 2010 intake do not understand these issues, because many of us, including me, were working in the real world picking up the pieces of the broken care system. The hon. Lady is looking around for little bits and pieces that the previous Government may or may not have done to address the issue. The previous Government had 13 years to deal with these big challenges of elderly care, of better integrating health and social care, and of dealing with the funding crisis. They did nothing substantial to deal with those things; will she accept that?

[Barbara Keeley]

No, I absolutely do not accept that. In our 13 years in government, the first thing we did was to fix the health service following the mess that we inherited from the Conservative Government. We had a lot of other priorities in dealing with what the Conservative Government had done through privatisation. I am amazed that Members are arguing about bus fares and train fares. It was not a Labour Government who privatised these things. All the privatisations and reductions in services came about through Conservative Governments, not Labour Governments. We were tackling these issues.

We now have a Minister for social care who believes that there is no funding gap. He is arguing with all the directors of adult social care services, who say that £1 billion has gone out of adult social care in the past couple of years, with the loss of another £1 billion to come. The crisis that I am detailing as regards the cost of living impacts on individuals and their families is undoubtedly made hugely worse by the £2 billion that is going out of adult social care. However tight things were or whatever struggles were going on during the last Parliament, when I did a lot of work on this topic, it was never said that social care is in crisis, whereas now that is said every single week.

In the open letter to the Prime Minister ahead of the Queen’s Speech, 78 charities reminded him that social care is in crisis. As I said, they feel that older and disabled people will be left in desperate circumstances. There are 800,000 people with unmet needs, and that figure will possibly grow to 1 million. Some people will struggle on alone and do not even have an unpaid family carer to help them.

[Dr Poulter]

I do not always like to quote outside agencies or charities in this House. However, Age UK successfully put together a campaign, with a petition that was handed into Downing street, in which it acknowledged that the chance to tackle this issue was flunked by the previous Government and should have been better dealt with. That was an inherent part of that campaign. This is a creeping crisis that began and was manifested over a number of years, and it is very disingenuous of the hon. Lady to say otherwise.

[Barbara Keeley]

It is very disingenuous of a member of a Government who have just massively ducked this issue in the Queen’s Speech, causing huge disappointment across any organisation that is involved in social care, to talk about the previous Government.

[Jim Dowd]

Whether or not this goes back to the letter from the 78 charities before the election, the Local Government Association, on behalf of all the parties represented in social services authorities throughout England and Wales, wrote to the Government immediately before the Queen’s Speech highlighting the fact that there was this crisis which needed to be dealt with now, and that if they did not do so in the Queen’s Speech—not as a draft Bill but as proposed legislation—an already alarming position would be made far worse.

[Barbara Keeley]

I thank my hon. Friend for that clarification. The letter went on to say that “delay or half-measures” cannot be tolerated because of how hard it is for people to manage, as I have just outlined.

In July 2010, the Government promised that they would introduce

“legislation in the second session of this parliament to establish a sustainable legal and financial framework for adult social care”.

That could not have been clearer, but we do not have that legislation. All that was mentioned in the Queen’s Speech was a draft Bill on social care law, with no Bill on the funding of social care.

What does the delay in reforming the funding of social care mean? It means that people who need care will have to continue paying larger and larger bills or go without and struggle. There are also costs to the NHS and to the economy. That should concern us. The lack of appropriate social care for older people at home is costing the NHS £18.5 million a month, or more than £600,000 a day, in delayed discharges. Since August 2010, the total bill to the NHS of delayed discharges has been £324 million. Delayed discharges keep on increasing, which is an indication that the crisis in social care is deepening.

On the cost to the economy, a recent report by Carers UK suggests that failing to address the funding of care, as other countries have done, means that we are missing out on jobs and growth. The biggest thing that was missing from the Queen’s Speech and the Budget was action on jobs and growth. In France, a development strategy for the home care sector led to a growth of 100,000 jobs a year. A recent report by Dr Linda Pickard of the London School of Economics shows that it costs about £1.3 billion a year in lost tax revenue and benefits when carers give up work to care. The adult social care system has been pushed into crisis by cuts, and that is costing the economy more than a billion pounds and the NHS hundreds of millions of pounds. Surely that shows that we should do something about social care.

The Government’s distinct failure to deliver on their promise to bring forward legislation, which I think will become more apparent in the coming months, is hitting older people and those who need care. It has cost £324 million since 2010, and that bill is climbing by £18.5 million every month. As carers give up work to care, it is costing the economy £1.3 billion every year in lost revenue. It is time the Government delivered on their promise and addressed the vital issue of the funding of social care.

15:22

[Mr Robin Walker (Worcester) (Con)]

It is a pleasure to follow the hon. Member for Worsley and Eccles South (Barbara Keeley), who made a thoughtful speech on the important issue of social care, about which people from all parts of the House feel strongly. I echo her good wishes to the hon. Member for Truro and Falmouth (Sarah Newton).

It is a pleasure to be called to speak in the debate on the Gracious Speech and to be able to mark, as MP for the faithful city of Worcester, the celebrations that will rightly take place around the country for the diamond jubilee of our sovereign. After the splendour and pageantry of last week’s Gracious Speech, this debate focuses on its grittiest elements—those that relate to the cost of living. I am constantly reminded on the doorsteps of Worcester and in my surgeries that the cost of living is a matter of prime concern for many constituents. I will first address the parts of the speech that relate specifically to the cost of living, before making a few broader points on the economy, which is referenced in the Opposition amendment.

There was much to be welcomed in the Gracious Speech on the cost of living. Contrary to the rhetoric that we have heard from Opposition Members, the speech is imbued with concern over the cost of living. It promises vital reforms that will make a difference to the price of the water and electricity in our homes and the food in our shops.

There are some things that I would have liked to have been included in the Queen’s Speech that were not present. In some quarters, the speech has been criticised for not doing more to tackle the issue of fuel duties or to spearhead vitally needed growth. I will return to the latter point at the end of my speech. On the former point, I have enormous sympathy for people across the country and from all parties who want to see a permanent shift in the balance of fuel duties. Although I am doubtful that a programme of legislation is the right place for such a move, I will continue to push for it in future Budgets and Bills. The price of petrol has become too high. It is a major cost to our economy and a driver of inflation. I hope that the Government will listen carefully to the many voices that have been raised—from Upper Bann and Belfast to Harlow—to call for more action on this front.

I want to see a Government who are resolutely focused on supporting the economic growth that will deliver better living standards. I am confident that we will see that, without the need for further legislation. The best weapon that we can wield against the cost of living is material prosperity for the many, not the few. In that regard, we should look at what has been done to help the lowest-paid workers stay out of tax and at the commitment in the Budget to extend the tax-free threshold to up to 2 million more lower-paid workers, which have been mentioned by my hon. Friend the Member for Bury St Edmunds (Mr Ruffley) and the hon. Member for Cambridge (Dr Huppert).

I do not accept the suggestion from some quarters that economic growth is the enemy of sustainability and that we should juxtapose the need to grow our economy with the desire to be green and efficient. Nor do I accept the argument so often heard from the Opposition that fiscal stimulus is the only path to growth. I believe that we can deliver greener, more diverse and more sustainable economic growth that will increase the wealth of our nation and provide individuals and families with the tools to overcome a higher cost of living. That does not mean that the Government can neglect the need to deal with the cost of living.

I am delighted that the Government are committed to major reforms in the provision of electricity and water to make those industries more efficient, to ensure that there are clean, secure and affordable supplies, and to ensure that prices are fairer over the long term. It is a shocking indictment of the last Labour Government that we inherited a situation in which a fifth of the UK’s energy generation capacity was due to be taken offline within 10 years, while electricity demand is to double in the next 40 years. We need to act fast to secure the £100 billion of investment that is necessary to keep the lights on.

I am glad that the Government are setting out detailed plans for an energy Bill to bring market reform. Winston Churchill said that energy security is energy diversity. The Bill must reflect that by supporting all technologies, whether nuclear, renewable or gas-based, that can make our electricity more affordable, more efficient and more sustainable. The introduction of a capacity mechanism will be vital to improve our security and to maximise the enormous potential for diversity that our island nation has.

The introduction of an emissions performance standard, alongside the Government’s earlier decision to look at carbon pricing, should ensure that we have cleaner, greener generation in the future. However, that must be carefully balanced, so as not to push costs too high.

I understand that the Government’s analysis shows that although some years might see higher prices as a result of the electricity market reforms, the overall impact will be to bring prices down. That is to be welcomed, but I urge the Government to recognise the need to do everything in their power to accelerate that trend. By 2020, it is expected that bills could be 7% lower than they would have been without the reforms. As the Secretary of State said earlier, over two decades, bills are expected to be 4% lower. I would like to see more progress and a greater impact as the Bill makes its way towards becoming an Act.

After months of drought followed by torrential rain, it might be suggested that water reforms would be best focused on regulating the weather. However, I am pleased to see a serious focus on that industry as well. It cannot be right that we have one of the lowest proportions of metered households in Europe, and that prices are rising so sharply for everyone, including the poorest in the country. The measures to encourage the water companies to introduce cheaper tariffs to support the most vulnerable customers are welcome. It is vital that the Government work to drive down water bills by increasing competition in the water industry.

Across water and energy, there is increasing pressure from a growing population for finite resources. As the right hon. Member for Croydon North (Malcolm Wicks) pointed out in a thoughtful speech, it is important that we do not just concentrate on the day-to-day minutiae of market structures and prices or on what is happening just within the boundaries of the UK, but that we raise our eyes and recognise that there are big strategic challenges for our management of energy and water supplies. In a world in which the population is growing fast and where the wealth of those who previously consumed the least is rising more swiftly than that of the formerly gluttonous west, we will face increased competition for all resources. Realistically, politicians of all colours have to admit that we cannot wave a magic wand and bring prices down every year for the resources we need. We have to face up to a far more competitive and far more volatile world and take on the long-term challenge of keeping costs under control and reducing consumption. Acknowledging that entails an ever greater focus on efficiency and on ensuring that resources are not wasted—itself a potential driver of growth for businesses such as Worcester Bosch, which makes energy efficient boilers in my constituency, or Vickers Electronics, which I visited recently and which has opened an office in Worcester to market its energy saving devices for factory heating.

There is an old saying, “Where there’s muck, there’s brass,” and we should ensure that where there is a waste of resources, there are opportunities for British businesses to get involved in reducing it. Previous actions by the Government, such as the green deal and the renewable heat incentive, are important elements of that, and I encourage Ministers to take those measures forward further and faster. The creation of the Green investment bank will provide vital investment for the sector and encourage its growth. That does not mean that the Government are wrong to be acting on prices and reforms, but action must be part of a bigger strategic approach to ensure that Britain is best placed to compete in the 21st-century world. In that respect, I recognise the enormous value of many of the initiatives discussed in yesterday’s debate on foreign affairs: the emerging powers initiative, the commitment to work with the Commonwealth, and the broad focus that this country is putting on maintaining our place on the world stage. Our energy and water resources will not be secured in isolation, nor can we feed our nation purely from the produce of our own shores.

Moving closer to home, I strongly welcome the introduction of a groceries code adjudicator to regulate the big supermarkets, ensure a better deal for our farmers, and put fairer food at the heart of our food system. The adjudicator must have strong powers to act on behalf of shoppers and suppliers and it must be prepared to take on some of the powerful vested interests that have dominated the sector hitherto. Diversity of production is as important in food as it is in energy and we must support diversity of supply so that there are more farmers markets, more co-operatives and more direct selling of food by growers or producers. Worcestershire has some fantastic food producers, whether it is our fruit growers and asparagus champions of the vale of Evesham, our dairies and sheep farmers across the county, or global brands, such as Lea & Perrins Worcestershire sauce, which is produced in the very heart of my constituency. I want all those producers to be able to get a fair price for their product and to market those products at a reasonable price to consumers. I believe that the groceries code adjudicator can play a key role in achieving that.

Keeping down the price of food would also be helped enormously by a reduction in the price of diesel, which is important both in the growing and harvesting of our crops and in their delivery to market. That is another reason why the Government should consider further action on that important issue.

[Dr Poulter]

My hon. Friend is making a very good speech. On the subject of the groceries code adjudicator, I am sure he agrees with me that it is important to have fair prices not only for consumers, but for producers, and that if we do not look after our food producers prices will go up for our consumers, because we will be far too reliant on food imported from overseas. Does he also agree that one of the key purposes of establishing the groceries code adjudicator must be to support producers better and ensure that we have a more sustainable food and agriculture sector in this country?

[Mr Walker]

I could not agree more with my hon. Friend.

[Albert Owen]

The hon. Gentleman mentioned the importance of diesel prices. This is not a party political point, but one of the stark problems confronting this country is our lack of diesel refining capacity. Much of the oil extracted from the North sea is exported to India and the sub-continent, refined there and brought back to this country, which puts up the price. As a result, we have a shortage of diesel and pay more for it. Surely we should all work together on ways to increase distillery capacity, so that we can refine diesel in this country? Diesel used to be a damned sight cheaper than petrol, but the reverse is now true because of this problem.

[Mr Walker]

I absolutely agree that we need to work together on long-term planning to get back some of the refining capacity that we have lost. I also think we should consider the potential for differential taxation of diesel and unleaded petrol, which most other countries in Europe already have, and I have mentioned that idea in previous debates. This is an issue that should be debated and explored in more depth.

Pensioners are people living on fixed incomes and are directly affected by changes in the cost of necessities. I am proud that our coalition Government have not only restored the link between the basic state pension and earnings, which the Labour Government failed for such a long time to do, but strengthened it with the triple-lock guarantee. It is crucial that the Government legislate to make public sector pensions sustainable—to reduce the cost not just for the sake of it, but so that we can continue to provide high-quality pensions for public servants.

Council tax is a major issue for pensioners, and we have a good record on keeping it frozen. Earlier, we heard a little Labour triumphalism from the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman) about the local election results, but I am pleased to say that, in Worcester, the Conservatives remain the largest group, although Labour gained seats and the Liberal Democrats lost one to us. The Liberal Democrats are now working with the Conservative administration in Worcester to try to make the council more efficient and to keep council tax down.

As I said, the hon. Member for Worsley and Eccles South (Barbara Keeley) spoke passionately about social care. I am pleased to see in the Queen’s Speech a draft Bill on modernising social care, but I agree with the hon. Lady that there is more to be done and that the Government have to take yet more action to tackle the enormous challenges set out clearly in the Dilnot review. I urge the Government to make swift progress on that issue, which is hugely important for the long term. As has been pointed out, Labour does not have a strong record of addressing it.

Part of the cost of living is the need to ensure that there is the best possible support for those in the later stages of life, which means better provision of social care as well as more investment in palliative care, an issue that is dear to my heart.

I am glad that the Government are doing more to support families by expanding child credits for those most in need, protecting child benefit for people earning up to £50,000 and expanding the provision of nursery education. The right hon. Member for Croydon North (Malcolm Wicks) described the changes to child benefit as a “case study in unintended consequences”, and that accusation certainly could be levelled, but I would say they are a case study of the Government listening to concerns and doing something about them. That is to be commended.

My hon. Friend the Member for Witham (Priti Patel), in an earlier part of the Queen’s Speech debate, and the right hon. Member for Croydon North today, pointed out that child care is a huge cost to many families. Like them, I hope that the Government can do more to help on that front in the future. I hope the contentious and argumentative line in the Gracious Speech that states:

“My Government will strive to improve the lives of children and families”

will enable the Government to act on both that issue and the essential one of delivering fairer funding for our schools.

The greatest thing that the Government can do to improve the standards of living of people in this country, and to help them overcome the challenge of the rising cost of living, is to succeed on the economy. As I mentioned earlier, there has been some commentary that there was not enough about the economy in the Queen’s Speech. As I discussed with businesses at my business breakfast in Worcester last week, that misunderstands what the Queen’s Speech is about. It is not a description of everything that the Government must do but a programme of legislation. As the hon. Member for Cambridge eloquently pointed out, the Government do not need to legislate to make a difference. Most of the major issues affecting our country and economy do not require legislation. As shown by today’s welcome job numbers, which have improved in Worcester, across the country, we can create jobs and grow the economy without new laws.

[Mrs Madeleine Moon (Bridgend) (Lab)]

One thing that the House desperately needs to do is give a feeling of hope to young people, who are being particularly badly hit at the moment. The hon. Gentleman mentions the unemployment figures. In Bridgend, I had five youngsters between the ages of 18 and 24 claiming jobseeker’s allowance in April 2011, and in April 2012 I had 70. That is an increase of 1,300%. That is not a message of hope, and the House has to do something about it. There was nothing in the Queen’s Speech about—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We must have shorter interventions. I know that it was important to the hon. Lady to get that point on the record, and she has done so now.

[Mr Robin Walker]

The hon. Lady is of course right to be concerned about youth unemployment. In my constituency it is lower than when we took over from the Labour Government, but there is clearly more to be done. The Government are already investing in apprenticeships and many other schemes to help people into work, and we must continue to do more, but I do not believe that that required legislation to be announced in the Queen’s Speech.

Fixing the deficit and getting our country to live within its means is firmly at the centre of the coalition’s programme for government, and there it must remain. The cost of living for millions of families and for businesses that employ young people would increase appallingly if the Government were to lose control of those central aims and allow interest rates to spiral out of control. It is our responsibility to all our constituents to ensure that that does not happen, and good government and efficient management, not legislation, will deliver what we need.

As my hon. Friend the Member for Gainsborough (Mr Leigh) suggested, we need not more laws and regulation but less. However, there are some important measures that require legislation, including supporting enterprise and encouraging small businesses. As a former entrepreneur, I am glad that the Queen’s Speech included an enterprise and regulatory reform Bill, which will repeal many unnecessary requirements on business and promote early resolution of employment disputes.

Earlier this week, I was pleased to attend the launch of the all-party small business group’s recent report on breaking down the barriers to entrepreneurship, and to hear from local entrepreneurs such as Neil Westwood of Magic Whiteboard. The more the Government can do to implement the all-party group’s proposals the better.

Safeguarding our banks and ensuring that they continue to lend is another vital matter for economic growth, and I am pleased that the Government will bring forward measures to ring-fence commercial banking and encourage lending. I also welcome the fact that they are already beginning to support alternative lending sources, including community development financial institutions such as Impetus, which is doing good work in Worcestershire, and innovative new private sector solutions such as ThinCats.

Of course issues beyond our control affect the economy, and at a time of crisis in Europe, when the eurozone appears to be teetering on the brink, it would be wrong to omit a mention of the broader economic crisis that persists and is driving up the cost of living for everyone. I am as disappointed as anyone that the UK’s growth figures have not been stronger, and as determined as anyone that the cost of the European project should not become an unfair burden on our country. I am glad we have a Prime Minister who is prepared to stand up in Europe and say no when he needs to, and I am confident that he and our Foreign Secretary will continue to hold the line that the UK cannot be asked to pay for the failings of a currency we rightly stayed out of. Britain must continue to forge its own path through this crisis, working with our friends and allies all over the world, not just in Europe, to ensure that we have the best possible opportunities for growth and to protect our economic stability. We should continue to refuse to allow the costs of the EU to increase and guard our own interests in foreign policy and international trade. I believe the time will come when we have to renegotiate our relationship with the EU. Although that is not referred to in the Gracious Speech, it is essential the Government stand ready on that vital matter.

Overall, I welcome the Queen’s Speech. I welcome the fact that, in the year when we celebrate a glorious 60-year reign, we have a Government who are firmly focused on the future. I want to see a thousand flowers flourish in small business and I am excited by the opportunities that will be created in this programme of legislation, whether for companies engaged in helping us to manage energy and resources better, for small enterprises, or for food producers, who will benefit from the new groceries code adjudicator. The economy is at the heart of the Government’s programme, and growing it will be key to allowing Government and people to deal with the cost of living in the years to come.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We have quite a lot of people to get in and speeches are getting rather long, so I have to put a 12-minute time limit on speeches.

15:40

[Albert Owen (Ynys Môn) (Lab)]

It is pleasure to follow the hon. Member for Worcester (Mr Walker), who was courteous in giving way. I pay tribute to his late father, who was Secretary of State for Wales and an Energy Minister—I will discuss energy reforms later in my speech. When I lobbied him when he was Secretary of State and a Minister, I found that he agreed with me more than he agreed with Mrs Thatcher, his leader at the time.

The grocery market ombudsman is a very good inclusion in the Queen’s Speech. In the previous Parliament, I introduced a private Member’s Bill on a supermarket ombudsman, which gained cross-party support and went into Committee. We unfortunately ran out of time, but there was a consensus. The Conservative party said at the time that such an office would be a priority in government, as did the Liberal Democrats and the Labour party, and here we are, two years down the road. I am a bit disappointed that it has taken two years for the Government parties to achieve action on a “priority”, but I welcome the fact that it has been achieved.

If we are to have an adjudicator for the code of practice, it is important that it has the right tools and the teeth to do the job. The adjudicator should not exist in name only. We should work together to continue that consensus to ensure that our suppliers, producers and consumers get a better deal out of the code of conduct by having an independent adjudicator to oversee it. I look forward to scrutinising and improving the Bill.

As hon. Members know, the code of conduct has been in place for a couple of years, which is why it was a priority to have an adjudicator. I want the adjudicator to be more proactive in looking at the industry—not just waiting for there to be victims of rogue trading in the grocery market industry. It is important to include in the legislation provision for a third party to bring a problem to the attention of the grocery market adjudicator.

I welcome that proposed legislation, but given that it has been two years since the last Queen’s Speech—Her Majesty has not visited Parliament in only three years of her 60-year reign—many people, including me, were expecting this one to be a beefy Queen’s Speech. However, it is paper thin. The hon. Member for Cambridge (Dr Huppert), who is not in his place, said that we do not need a legislative programme to create growth and do many of the things we need to do in the country, but then he mentioned Liberal Democrat taxation policies. I must remind him that getting taxation measures through the House needs a Finance Bill, so he was not quite correct.

It is important that we have a programme, particularly after what has been described—not by Labour Members, but by the Tory-friendly press—as a botched Budget and a Queen’s Speech that lacked any strategy for growth and job creation. I welcome the drop in unemployment announced today, but it is not a trend and we should not get carried away. As the Prime Minister said in Question Time earlier, we must do more to stop the increasing number of part-time jobs. The rate of full-time equivalent employment is falling not rising. Many people are moving from full-time employment into part-time jobs, and as a result their cost of living is rising and their standard of living falling. We need to address that issue.

I want to mention the Chancellor’s botched Budget. Like the hon. Member for Worcester, I have been visiting businesses in my community, including Conservative businesses that have never been particularly Labour friendly. They have told me that the measures on VAT have reduced their capacity to invest, and that is hurting them. The fact that the Foreign Secretary, the Defence Secretary and others have said that businesses need to work a little harder shows, unfortunately, how out of touch the Government are. Those businesses are telling me that they are working flat out, while their costs are rising. Some of those rising costs are the result of external factors—I acknowledge that energy and wholesale prices have risen—but many extra burdens are not as a result of that.

For instance, the Budget contained a 20% increase in taxation on the caravan and hospitality industry. Many hon. Members either abstained or voted for that measure and did not vote against it. Operators have told me that it is a huge burden, because 60% of their turnover comes from the sale of caravans. In the past, it was from that profit that they could reinvest in their parks—and they invested substantial sums. In my constituency alone, an estimated 300 jobs will go if that measure is introduced, because operators will be unable to reinvest. That is a tax on jobs. Before the election, the Chancellor, with his political hat on, talked about a tax on jobs, yet now he has created a tax on jobs by increasing VAT.

[Mr MacNeil]

The hon. Gentleman mentioned the vote on VAT. Was it a mistake, therefore, for Labour not to vote with the Scottish National party and Plaid Cymru against the rise in VAT from 17.5% to 20% and instead to abstain?

[Albert Owen]

The hon. Gentleman knows that I do not always vote with my party, and if he checks the record, he will see that I have voted for several SNP measures. If they are sensible, I will vote for them, but not many are. [Interruption.] I cannot speak for the rest of Labour, but I can speak for myself very comfortably in this House, and have done from both the Government and Opposition Benches.

It was wrong to increase VAT. It took money out of the economy at a time when we needed a fiscal stimulus. That is what business is telling me. That is why it is disappointing that the Budget increased VAT instead of addressing the situation. As the Institute for Fiscal Studies said, VAT is a regressive tax which most hurts the poorest and most vulnerable in our society. The Prime Minister and the leader of the Liberal Democrats said as much before the general election, yet when they entered government, they increased it. That is what turned small economic growth into a double-dip recession. That is what business tells me. I am willing to stand up and speak for businesses, especially hard-working businesses. It is a disgrace for senior Ministers to say that businesses should simply work harder, given that the Government are increasing taxation and taking money out of the economy, as a result of which people are not spending on their businesses.

[Laura Sandys]

I remind the hon. Gentleman that the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), wrote in his published memoirs that he, too, was going to increase VAT.

[Albert Owen]

I had many debates with my right hon. Friend when he was in office. I did not shirk that responsibility. He felt that increasing VAT was the best thing to do but was outvoted in Cabinet. It was not a Government decision. He wanted to increase VAT, but he was wrong. He also wanted to increase vehicle excise duty, but I argued and voted against that measure because it, too, was wrong. On those issues, he was wrong. He did many brave things. For instance, he introduced the 50p rate at the end of our time in office. [Laughter.] Government Members laugh. He did it at the end, but he did it because we were in a crisis and needed extra revenue. That was supported by a lot of people at that time, yet this Government have managed to reduce the taxation for the richest while putting VAT on businesses and as a result a tax on jobs.

[Dr Poulter]

Does the hon. Gentleman accept that the biggest tax on jobs would be if this country tried to spend its way out of debt, which is exactly what Labour would have us try to do?

[Albert Owen]

I understand what has come from the Government Whips—I have seen copies of it, and it says that all the time; indeed, it has probably got into the psyche. However, let us look at proper economics. When we have low interest rates—and we have had historically low interest rates—it is during a recession. That is what happens; it is a natural phenomenon. Since January 2009, interest rates have been at an historic low. That did not start when this Government came in; it started in January 2009. Gilts and bonds are low as well, which gives us a golden opportunity to borrow at lower rates. That is how we got out of recessions in the past across the world. Pure austerity measures have never worked. People should look at economic history. Austerity is part of the package, but unless we get growth and jobs, we will not get out of the double-dip recession we are in.

We sometimes get accused of being deficit deniers. I am neither a deficit denier nor a deficit extremist. It is extremism that gets us into trouble, and I have to say that there are many people in this House who are recession deniers—they are denying the fact that we are going down. Many people are paying the price, and that is why the cost of living is so important.

Let me move on to energy and electricity market reform. I support reform in principle, although we do not know the details, so it would be a little naive to support it fully until it is implemented. I am a member of the Select Committee on Energy and Climate Change, and we have looked at the principle of electricity market reform. We produced a report highlighting some of our concerns. There has been a White Paper for a long time, but we are only going to get pre-legislative scrutiny. We need to know what is in the Bill in order to deal with the issue properly and provide the certainty needed to invest in our infrastructure.

The Government have missed an opportunity in this Queen’s Speech. On one side, yes, there should be incentives for investment—that is very important—but there is very little protection for consumers. I have long argued in this House that Ofgem, the energy regulator, should have more teeth. It should be standing up. It is a damned cheek for the new Energy Secretary—whom I welcome to his place today—to try to claim some credit for the fact that energy companies are providing greater transparency in their bills. It is campaigns by the likes of Which? and Consumer Focus and so on that have highlighted the problems and embarrassed the energy companies, while the Government stood by and watched. Ofgem should have greater teeth. I make a plea to the Government to take that on board, because energy costs are hurting people, in peripheral areas in particular. Many are off the gas mains and off the grid. I want Ofgem, the regulator, to have the same powers to protect customers who are not on the gas mains as it enjoys in protecting those who are on the gas mains.

Finally, let me move on to the subject of transport. I welcome the concept of High Speed 2, but I want to see it up and running. The Transport Secretary is quoted as saying, “Well, we’re preparing for legislation.” The legislation is vital, so can she give some indication of when it is likely to be introduced? We have done the consultation and the matter has been agreed by this House, although it is not popular with certain sections.

[Justine Greening]

The hon. Gentleman is right that there is an awful lot of preparatory work to be done to ensure that the hybrid Bill contains the information that this House needs to scrutinise the proposal properly. We expect that preparatory work to be done through the course of this year and next, and for a hybrid Bill to be introduced by the end of next year.

[Albert Owen]

I appreciate that. A hybrid Bill in itself will take a long time, so we are unlikely to see anything soon. However, I support the main thrust of high-speed rail. We saw benefits under the previous Government in north-west Wales, north-west England and Scotland after we invested in faster line speeds. High-speed rail is important.

My final point is about VAT on fuel duty. Every time people spend £1 on petrol, they have to pay an extra 2.5p. That really hurts people. It is wrong, and it should be reversed.

We needed a Queen’s Speech that set out proposals for jobs and growth. This has been a missed opportunity, on top of a botched Budget which has led us into a double-dip recession. That is damaging the living standards of my constituents and those across the United Kingdom.

15:55

[Sir Bob Russell (Colchester) (LD)]

The title of today’s Queen’s Speech debate is “Cost of Living”, yet at 10 o’clock this morning, only 10 Members had put their names down to speak, and the Whips were rushing around trying to get more people from all parts of the House to participate. That suggests to me, despite the Opposition amendment, that the serious financial situation facing millions of low-income and disadvantaged people is considered to be a lower priority than the subjects debated on other days when so many MPs wanted to speak that there had to be a time limit of as little as six minutes for each speaker.

The Chancellor’s decision to cut the top rate of income tax from 50p to 45p was a political error on a big scale, for it gave the impression that this Government are one who favour the rich at the expense of the poor. The notion that “we are all in it together” lacked credibility because of the Cabinet’s decision on that. It is the way the Chancellor tells them that is the problem. Regrettably, his announcement on the reduction from the 50p top rate completely overshadowed the good news that 20 million people would have lower taxes. In the context of the cost of living, that is wonderful news. The last Budget resulted in a tax cut of a further £220 on top of the £550 income tax cut already achieved since Labour lost the 2010 general election. That has to be good news, too, in the context of the cost of living. In my Colchester constituency, nearly 5,000 low-income people will, thanks to the coalition, be lifted out of paying any income tax. That is the second-highest number in any local authority area in Essex.

[Albert Owen]

The hon. Gentleman is right to say that the thresholds have raised and that some people are coming out of paying income tax. Does he not acknowledge, however, that his party and coalition colleagues voted in favour of VAT rises, which will wipe out any gain that the lower-paid will have had? The VAT has increased Budget on Budget.

[Sir Bob Russell]

If the hon. Gentleman checked the record, he would see that I voted against the VAT increase.

The headlines were all about the cut to the 50p top tax rate for those earning more than £150,000 a year. There are very few people in my constituency who get paid upwards of £3,000 a week. Thus, all the good things done to help those on low incomes—whether they be families or old-age pensioners—have been lost in the minds of many people because of the cut in the 50p tax rate.

Before the Opposition get excited, I must point out that, for all but the final few weeks of the last Government—and let us not forget how Labour left the country in a financial mess—the top rate of tax under new Labour was 40p for high earners, and that for almost 13 years. Our 45p rate is higher than the 40p rate levied by new Labour.

Let me remind the House of what I said on 11 May last year at Prime Minister’s Questions:

“The Labour Government took Britain to the brink of bankruptcy. The gap between rich and poor widened, and nearly 4 million children were left living below the poverty line. Last month, the coalition Government cut income tax, liberally helping millions of people, but I have to ask the Prime Minister this: if we are all in this together, what is he going to do about the obscenity of 1,000 multi-millionaires boosting their personal wealth by 18% in the past year?”



Responding, the Prime Minister said:

“One of the things we absolutely will do—and we have put in the money to make sure it happens—is crack down on the tax evasion that takes place so widely in our country. The Treasury has put money into that campaign to make sure it happens. The hon. Gentleman makes a good point.”

Well, I normally do. He continued:

“Because of our coalition Government, we have lifted 1 million people out of income tax and, at the same time over the past year, we see exports up, private sector jobs up, the economy growing and borrowing down—all radically different from what would have happened if we had listened to the recipe from the Labour Party.”—[Official Report, 11 May 2011; Vol. 527, c. 1158-9.]

In concluding today’s debate, will the Minister give us a progress report on what the Prime Minister said a year ago? Perhaps what is needed on both Front Benches are people with experience of the university of life, and the school of hard knocks.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

Given his experience in the university of life, would the hon. Gentleman recognise, albeit grudgingly, that some people who have done particularly well in our society are major employers and major taxpayers in the UK, so they should be viewed as positive contributors, not the negative contributors that he portrays?

[Sir Bob Russell]

I appreciate that intervention, because my point was that the problem was not necessarily the content but the presentation, and the perception of millions of people out there that the Government were interested only in the rich. I endorse the hon. Gentleman’s point and hope that he will endorse my observation.

Increasing the personal allowance to £9,205 takes us within touching distance of the Liberal Democrats’ No. 1 manifesto pledge to ensure that no one pays any tax on the first £10,000 of earnings. I hope that that figure will be reached or, better still, raised even further in the next Budget. That would be good for the cost of living of those with limited financial means.

For most people, the most significant cost is that of housing, whether it be a mortgage or rent. One does not have to be an economic wizard to know that the more of the family budget is spent on housing, the less will be available to be spent on all other aspects of the cost of living. If the rent or mortgage goes up there is less money to be spent, and that has an impact on the economy, particularly the local economy.

I will concentrate my remarks on rent, because the subject of social housing—that is the current terminology, although I prefer the concept of democratically accountable council housing, given that successive post-war Labour and Conservative Governments strove to outdo each other in the building of hundreds of thousands of homes—has interested me throughout my political life, the 42nd consecutive year of which, in my home town, began this week.

As a nation, we need to follow the excellent record of successive Labour and Conservative Governments in the 35 years or so that followed the second world war, and to put right the damage inflicted by successive Conservative and Labour Governments from around 1983 onwards. I look to the coalition Government to follow the lead of the Governments of Attlee and Churchill, Eden, Macmillan, Douglas-Home, Wilson and Heath, Callaghan, and Thatcher in her first Parliament. It is a startling fact that the Thatcher Government built more council houses for families than new Labour managed to build in 13 years.

We need to build council houses today, on publicly available land. That would help to boost the economy, create jobs and provide decent homes for the hundreds of thousands of families living in accommodation that is not suitable for their needs. I am grateful to the National Housing Federation, whose East of England bulletin states:

“155,900 households are on social housing waiting lists in the East of England, one in 16 of all households in the region, and a 59% increase since 2000.”

Let me issue one caveat. We must not, in the process, sacrifice the special greenfield sites that provide a positive contribution to the quality of people’s lives.

I merely ask that the coalition seeks to follow the post-war consensus of politicians from all parties: people who had grown up in the terrible times of the 1920s and 1930s and who, in post-war Britain, knew that providing decent family homes would transform lives. Incidentally, I have no objection to the right to buy provided that each house sold is replaced by a new house, and I understand that that is the policy of the coalition. I invite Ministers to read the report of the housing debate that I led in Westminster Hall on 11 June 2003. Sadly, new Labour failed to take action, and I urge the coalition Government to do so.

I also invite Ministers to look at the Education Act 1944. On studying it, I realised that it was about more than just teaching, and that it adopted an holistic approach to the upbringing of children. It dealt with education, of course, but also with such matters as school health, dental checks and school meals. The architects of that Act recognised the importance of bringing everything together. If we are to succeed with a jigsaw, we need to fit the pieces for the corners and edges first, and the same applies to the jigsaw of life. If a decent home is provided for a family, the other pieces of the jigsaw of life are more likely to fall into place.

All this has a bearing on the cost of living, because if people have a decent home at an affordable rent, they will have money to spend in local shops and on local services. It is not a cap on housing benefit but a cap on rents that we need. While building council houses is the mid to long-term solution, a cap on rents is the immediate requirement.

The private sector and housing associations—the latter being dependent on public money—have not been able to fill the gap caused by the near-collapse of council house building under successive Governments over the past 30 years. Private landlords have made a killing and tenants have been given a worse deal at a much higher cost, much of it coming from the public purse. Public money is far better invested in public housing than lining the pockets of those who have become property millionaires courtesy of the publicly funded housing benefit regime. If a family’s housing benefit is cut, they have less money to spend on food, clothing, energy bills, local services and so on. The landlord still gets an inflated rent—or the family is forced to move. I call the latter economic cleansing. The local economy also has less money circulating because tenants spend more on rent and less on local purchases.

At the weekend, celebrity chef Jamie Oliver and England footballer Steven Gerrard called for better knowledge of food nutrition to be made part of the national curriculum. However, before getting carried away with this good idea, I have concerns that the school meal service is not what it used to be, and I fear that Government policies are not helping the needs of many children. I urge Ministers not to damage the school meal service even more.

I return to the good idea from Messrs Oliver and Gerrard. What would be even better is if first aid training also became part of the national curriculum, as I called for in a ten-minute rule Bill that I put to the House on 19 November 2003. Both ideas should be incorporated. The case I made nine years ago is arguably even stronger today. By the way, earlier this month the all-party parliamentary group on first aid was formed, and I have the honour of being its first chairman.

If every child in this country knew first aid and, over time, took this knowledge into adult life, the national health service would make huge savings. As I said when I introduced my Bill, it would

“save many hundreds of lives every year, produce annual savings to the national health service of hundreds of millions of pounds and result in a better quality of life for all age groups throughout the land.”—[Official Report, 19 November 2003; Vol. 413, c. 808.]

It would lead to savings in people’s spending, because they would be more knowledgeable about what constitutes a healthy lifestyle. Today, an increasing number of children suffer from obesity, but I fear the prospect of a return to many children being under-nourished, because they are becoming the innocent victims of rises in the cost of living. Our Government must not allow this to happen.

I shall support the coalition Government in the Lobby this evening and tomorrow, but I urge Ministers to look at what was achieved on the housing front by Governments between 1945 and the early 1980s, and seek to emulate them.

00:00

[Phil Wilson (Sedgefield) (Lab)]

I want to address the transport rather than the energy aspect of today’s debate, and raise three issues that affect my constituency: the local airport, the big Hitachi investment, and the state of rural bus services not just in Sedgefield but throughout County Durham, including Darlington.

As local people know, Durham Tees Valley airport has gone through difficult times in the past few years, especially recently. Just three or four years ago, some 1 million passengers used the terminal. That figure has gone down significantly recently, but at an engagement at the airport a couple of weeks ago, it was good to see KLM making everybody aware of its ongoing commitment to the airport. Hopefully, at some point it will put some more routes on, or use the airport more often than it currently does.

I want to discuss the long-term sustainability of regional airports—I am pleased that the aviation Minister, the right hon. Member for Chipping Barnet (Mrs Villiers), is in her place, and that she has agreed to a meeting next week—and air passenger duty. The latter is critical to the aviation industry in more ways than one, and to the passengers who have to pay it. It has gone up by twice the rate of inflation in the Budget. The aviation industry has told me that we need to look at regional variation of the APD. That does not mean varying it region by region, but having one rate for the south-east, where there is a lot of passenger congestion, and another for the rest of the country. Some would say, especially the Scottish National party, that we should devolve this matter to each of the devolved Administrations—Scotland and Wales, for example—but that is not the way forward. Devolving it to Scotland would impact on Durham Tees Valley airport and Newcastle airport. We need to gain the evidence for our approach. I am meeting a Treasury Minister on 18 June, along with my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell), to discuss this matter and try to get an evidence base pulled together, so that we can say that having regional variation in air passenger duty will work.

I also wish to discuss Hitachi, which I always mention when I can because it provides a massive boost to the north-east economy; it is providing the biggest private sector investment in the north-east since Nissan. Hitachi is going to build a £90 million factory—a train-building facility—in my constituency at Newton Aycliffe. The company is going to refurbish the rolling stock for the east coast main line and for the great western line into Wales. Hitachi is going to create 500 jobs, with thousands in the supply chain. This will be one of the most exciting industrial stories that we have in the north-east of England. I congratulate the Government on making the right decision on it and I pay tribute to the previous Labour Government, whose idea it was in the first place.

The big issue I want to talk about, which is really affecting not only my area but all rural areas, is the state of rural bus services. The Sedgefield constituency covers about 150 square miles and contains about 30 to 40 towns and villages, some of which are very small. Brafferton, for example, has a population of only about 200, whereas Newton Aycliffe has a population of 20,000-odd. There is a lack of rural bus services and subsidies that have gone to local authorities have been cut. The subsidies are then withdrawn from bus companies such as Arriva, the big one in our area, and if they do not get the subsidies, the bus does not run. Sometimes that happens without the local people having been consulted, so they find that their bus does not turn up at their bus stop because the service has been pulled off the road and nobody has bothered to tell them.

The situation is creating problems in the area. For example, people are having difficulty getting to work. We have actually had to write to the local jobcentre and the Employment Minister to say, “If someone cannot get to work any more and they pack in their job, what does that mean for their benefits? It is not their fault that they have had to resign their job, so will they still not get benefits for six months?” I have been told that this would be looked at on a case-by-case basis, but the local jobcentre has pointed out to me that it has actually considered buying bicycles to get people to work because of the state of the local bus services. It seems to me that we are going back not to Victorian times but to mediaeval times in respect of the state of transport in the area. A sophisticated society such as ours must be able to put on adequate bus services for people.

[Gloria De Piero (Ashfield) (Lab)]

I, too, represent a semi-rural constituency, where bus services, and school buses in particular, are becoming a real issue. Just last week, a mum contacted me about the removal of the school bus in Bagthorpe. Getting children to school is not a luxury; it is a necessity. Should not Ministers take that on board?

[Phil Wilson]

Ministers do need to take that on board, because the state of bus services is not just an issue about people getting to work, getting to see their family or getting to medical appointments; it is also an issue for schoolchildren and their parents.

[Pat Glass (North West Durham) (Lab)]

This issue is having an impact on every rural and semi-rural constituency across this country and it is having an impact on our future. Young people are now telling me that they are choosing courses on the basis of where they can get to, not on the basis of what the right course is for them or for the future economy of this country.

[Phil Wilson]

These are all issues to address. Ultimately, they are not just about bus services; they come down to the effect on society in rural areas. People living in rural areas should have the same rights as those who live in urban areas, which on many occasions have adequate transport facilities.

I wish to discuss one or two villages in my area. Hurworth, Sadberge and Brafferton are all in the Darlington borough, and my hon. Friend the Member for Darlington (Mrs Chapman), who is in her place, wishes to discuss these same issues, as they are affecting our communities in that borough. For example, Sadberge has lost its shop, its post office and its school, and from the end of the year it will lose its bus service, too. At a surgery there two or three weeks ago, I was told by a disabled person who works at Lingfield Point in Darlington, “If that bus route is withdrawn, I do not know how I am going to get to work, unless I hire a taxi.” We all know that going by taxi is a very expensive way of getting to and from anywhere, never mind just using it to get to work.

Brafferton is, as I have said, a very small community, containing 60 to 70 houses and perhaps 100-odd people. I have been contacted by Mrs Firby, who lives in that village, and I want to read one or two extracts from her letter to explain the state of transport in the area. It says that now the bus has been withdrawn, residents

“must walk to the A167”—

the main road—which is

“much too far for elderly or infirm, or anyone to carry much more than a light bag. There is no shop in the village and the partial footpaths away from the village are poorly maintained.”

The letter goes on to explain that 50% of households have someone over the age of 60, and states:

“More people are becoming reliant on family and friends or a second car when retiring from work and losing easy access to shops.”

In fact, the nearest shop to that village is the motorway garage at the interchange on the A1. Imagine the nearest shop being at the motorway caff and having to go there to get groceries. That shows the issues affecting our local villages and the stark contrast of the situation in those areas.

Darlington council, because of the cuts it is facing, has had to take some really difficult decisions about subsidies to buses and how it will deal with adult care. Because of the cuts, it will not be able to continue giving subsidies to bus companies, especially at the end of this year. What it is able to do—there are particular grants for doing this—is set up community transport systems. It does not want to run the systems itself but wants a third party to do it. It is currently consulting with local parish councils and others to find a way of doing that. I am pleased about that and I and my hon. Friend the Member for Darlington will help and support the council in its efforts in that regard.

The report of the Select Committee on Transport on its financial scrutiny of the Department for the 2010-12 Session says that £500 million was handed back to the Treasury. It says at page 8, paragraph 10, that that money is

“likely to have exceeded the total reduction in annual revenue for the English bus industry following the Spending Review.”

The report goes on to say:

“Money voted by Parliament for expenditure on transport should be spent on transport, not handed back to the Treasury.”

We have all these constituents facing these cuts and having difficulties getting to work. We have elderly people having to walk a mile and go to a motorway caff and back to get groceries, but this £500 million was sent back to the Treasury. I think some questions need to be asked about that.

[Mrs Moon]

The Bridgend Coalition of Disabled People recently held a transport summit at which they pulled local bus and taxi companies and train operators together to talk about how disabled people can access transport. Increasingly, moving around is expensive and difficult for disabled people and requires prior planning. That money could have been spent on facilitating access to transport for disabled people. Does my hon. Friend agree that it is bad that that money was sent back to the Treasury?

[Phil Wilson]

That amount—£500 million—is not a drop in the ocean. It is a lot of money that could have done a lot of good for transport throughout our rural areas. I hope that Ministers will address this issue in winding up tonight.

Finally, let me make one or two other comments. Arriva runs bus services in County Durham, where a lot of those services have a bad name. With Arriva buses in London, if you see one, you see three at a bus stop, but in some of the villages we represent, people are lucky if they see one all day. Obviously bus companies need to make a profit to invest in better buses and so on, but the private sector also relies a lot on subsidy. Those companies have a right to make a profit but, given that they are providing a social service, they should have some kind of social conscience.

For me, this issue highlights elements of all the talk about the big society. People cannot get to work or see their friends.

[Jake Berry]

It is interesting to hear the hon. Gentleman talking about the cuts at Darlington council. All of us in politics accept that in tough financial times, we have to take decisions about how we serve our constituents, but why has Darlington council chosen to cut the bus subsidy when in March 2011, on its own admission, it had more than £10 million in cash reserves?

[Phil Wilson]

Those are figures we do not recognise, but—[Laughter.] Let me answer the question. Tough decisions have to be made, but they are even harder when the amount of money given to local authorities is being cut drastically.

[Mrs Jenny Chapman (Darlington) (Lab)]

Darlington borough council has had £100,000 withdrawn from its bus operating grant and has made some very difficult decisions on adult social care. It has a responsible reserves policy. It is a sensible council, which shares a lot of its back office functions with neighbouring authorities. It is a low taxing council; we have the lowest council tax in the north-east. It is a well run council and there is not a lot of fat. These decisions are being taken—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. There must be a question in there somewhere.

[Mrs Chapman]

There is a question, Mr Deputy Speaker, which is that—

[Mr Deputy Speaker]

Order. I think the hon. Lady should give up now.

[Phil Wilson]

I thank my hon. Friend for clearing up some of the issues. There certainly are choices, but if grants and subsidies are being cut, the difficult decisions that have to be made are even harder. It is not just that the council has to take those difficult decisions, but that particular things have been thrust upon it.

The whole situation undermines the big society. There is a lot of hot air and a lot of big words, but what is actually happening is that people are suffering at the grass roots.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. We still have a lot of speakers and I am constantly looking at the time, so I shall have to introduce a 10-minute limit.

16:19

[Laura Sandys (South Thanet) (Con)]

Thank you, Mr Deputy Speaker, for cutting me off in my prime.

When Her Majesty read the Gracious Speech, I picked up immediately on a couple of things that I felt were extremely important for my constituents, but when I read the newspapers over the next few days, I did not recognise the speech I had heard in the commentary about it. I know exactly what my constituents are concerned about: the cost of living and the bills that come through the door.

I heard that there was to be a draft water Bill and that we would be focusing on electricity market reform, on which the Energy and Climate Change Committee has done a lot of examination, and as a member, I am particularly interested in that. The draft Groceries Code Adjudicator Bill has also been announced. Those measures represent the three biggest bills regularly faced by my constituents, and where the Government can actually have an impact, so they have decided to focus on them in their second Queen’s Speech.

I felt that it was very much a consumer’s Queen’s Speech, but there is a backdrop. Costs are increasing for water—a resource where we face particular pressure at the moment—for energy in the international wholesale markets and for food, which consumes energy and is subject to global pressures. It is crucial that we put consumers at the heart of the proposed legislation to ensure that we develop greater resilience for them, while making sure that their rights are protected and secured.

The water Bill is in draft form, but I was pleased to hear during the Budget debates that the south-west is to have a dispensation on water bills. There will be an obligation on the regulator to secure social tariffs. The water system will be under more stress. We have had drought alerts over the past couple of months, and those problems will not go away. I find it extraordinary that, as I understand it, the regulator cannot take into account issues of climate change when a water company puts forward a proposal to build a reservoir. We need a total review of what Ofwat believes its priorities are, and we must make sure that the water Bill ensures that the overall water system delivers sustainability and good pricing, plus a strong responsibility to work with consumers to protect and conserve water.

Earlier there was discussion of the proposed energy legislation. Members of the Energy and Climate Change Committee from all parties have been persistent in pursuing consumer issues in relation to the energy market, such as the retail market review that Ofgem is putting in place, which is crucial for consumers. We have doggedly pursued the issue of mis-selling. Doorstep mis-selling has been going on for years and it is only in the past year or 18 months that the public have received recompense from the companies that were putting many of my constituents under pressure.

One thing that the Secretary of State mentioned which I think is an exciting dynamic and an exciting new level of engagement is consumer activism. Consumers are starting to find their voice. Because they are under financial pressure, they are starting to look, for example, at energy switching. Which? came down to my constituency and we signed up about 3,000 consumers who are under considerable pressure financially. They have switched energy supplier, we have got a better deal for them, and we are in a much stronger position because consumers are exercising their voice. I urge our Government on every level to support consumers to have a voice, to exercise their choice and to make sure they are getting the best deal for water or energy or in the food sector.

The green deal is a fundamental part of creating a more resilient consumer. I am honoured to be the chairman of a commission that has been set up to look at hard-to-reach homes when it comes to the green deal roll-out. We should not deceive customers about energy prices. We need to put in place measures to ensure that consumers use less energy and are more resilient.

The third key piece of consumer legislation relates to the grocery adjudicator. I have concerns about the legislation, because I do not believe that it necessarily drills down far enough into the supply chain. It is an important step in relation to the large retailers, but we have to understand how the agricultural supply chain works. Often the producer—the farmer—does not have a direct relationship with the retailer. Sometimes wholesalers and intermediaries have that relationship with the producer. It is crucial that the grocery code is open and that it is offered to all parts of the supply chain, and that the market is much more transparent and effective and does not allow the market power of the retailers to distort it.

Let us be frank with the consumer. Food prices are going in only one direction, and that is up. There will be a doubling of the global calorific intake in the next five years. Energy prices will increase. We must redesign our food system to ensure that it is not that food prices are going up and costing our constituents money, but that our constituents have the ability to feed their families at a cheaper price. That will include much more work on food education, which has already been mentioned, which I think is crucial. We need to ensure that we waste less within the system and value food more across the whole supply chain.

One other thing I urge the Government to do is look at where consumers are, in my view, being ripped off. On Friday I had a meeting with a group of young mothers at a Sure Start centre. I brought along a range of different products that I had bought in a supermarket, including a packet of corn flakes, a third of which was empty, and other products in packaging that, in many ways, was meant to deceive consumers—for example, a full packet of biscuits in which a large chunk was filled with plastic padding. We must not allow the consumer to be unable to make the smart choices. I used to work for the Consumers Association and know how smart consumers are, but they must be given transparent information and must not be deceived by presentation or packaging. We must ensure that we protect them so that they can make the smart decisions and ensure that they get the best value for their food, water and energy.

16:31

[Yvonne Fovargue (Makerfield) (Lab)]

I am pleased to follow the hon. Member for South Thanet (Laura Sandys) talking about consumers being ripped off, because that is an area I want to explore. Thousands of hard-working people in my constituency and across the country looked to this Tory-led Government to provide some support to ease the pressure on their squeezed living standards and help them cope with ever-rising bills, but they looked in vain. They got an energy Bill that will do nothing for the consumer, no legislation to reduce water bills and nothing on soaring train fares. There is no help for those people who saw their mortgages rise by 0.5% last month, pushing them off the step of “just about coping” and into the pit of “not managing”. There was no help for the people in my constituency who lost their tax credits because they cannot get extra hours from their employers. Where are those people to go? Far too often they go to payday lenders. If we are talking about people who rip consumers off, let us talk about payday lending.

Debt Advice research has shown that one in four people who take out a payday loan needed the money to buy food or essentials for their household and 44% used them to pay off other debts, but that does not help the situation. Indeed, if there is too much month left at the end of the money one month and a payday loan is taken out, the pressure is exacerbated the next month, and so on until the individual either rolls over the loan, using it as a long-term credit facility—an extremely expensive one—or takes out more and more loans from different companies.

I have met a constituent who took out a £300 loan. Unfortunately, she lost her job within two weeks when the company she worked for closed down, and 18 months on she owes £2,700 to the payday loan company, Toothfairy, which still refuses to negotiate a payment plan with the citizens advice bureau. I hate to disillusion thousands of children, but in this case Toothfairy is really the wicked witch. Over a three-month period I have collected 29 cases locally from the local citizens advice bureau and the local credit unions; it is a short time to amass the evidence that I am presenting to the Office of Fair Trading.

At the Credit Today conference on alternative lending last week, research was submitted showing that the average borrower from a payday lender also has overdrafts and credit card debts and is often paying only the interest on those. A payday loan is not a way of managing a deficit budget, and I worry that the lack of credit and affordability checks by these companies is pushing individuals into a worse situation, because by providing expensive loans they are delaying those individuals facing the issue and seeking help with their debts, which they need to do earlier. Nobody wants to push people into the arms of loan sharks or into offshore lending, but there has to be a point when the realities of the situation are pointed out and people are encouraged to seek free debt advice. Loans cannot keep being provided to people who cannot afford to pay for them time after time, but companies do not stop.

There were many excellent suggestions in the Business, Innovation and Skills Committee’s report, which came out on 7 March, but did any protection for such consumers make it into the Queen’s Speech? Not one recommendation made it into the legislative programme; in fact, the Government have chosen to ignore the recommendation that, given all the research that is available in the USA and Canada, further research, with all the associated costs, is unnecessary.

The implementation of any measures has been delayed by commissioning the university of Bristol to carry out a study. In the meantime, people such as the constituent to whom I referred can continue to obtain 14 payday loans in one day because of the lack of a real-time database owned by the regulator. My unemployed young constituent, who took out a loan with repayments that were higher than his benefit payments, with no affordability or credit check, will continue to be unprotected.

What of the people who realise their problems and look for debt advice to help them? They are still at risk from the fee-charging debt management sector. In December 2011 I highlighted the fact that if someone types any combination of “debt”, “advice” or “citizen” into Google, they find that the first three companies shown are fee-charging. I typed them in again yesterday, and yes, the first three that came up were adverts for charging companies.

The first site titles itself:

“Government Debt Help—Write off up to 70% of your debts.”

The second one states:

“Write off Your Debts—Debts over £3,000? Government help available to clear your debts”—

I was not aware that that was in the Queen’s Speech. And the third one titles itself:

“Citizens Debt Help Bureau—Help for debts over £2000.”

I have said many times that such loans are a distress purchase, and these sites are where people who are awake at 3 o’clock in the morning go to look for help to clear their debts. If I was up at 3 o’clock in the morning after being worried by the bailiffs or by bills, I am not sure that I would see that those sites were adverts and scroll down to the first search ranking, Citizens Advice.

To provide the advice that is needed, not just advice at the point when someone loses their home, the agencies need to be given hope—the hope that money is available to help their clients. In the UK last year, one home was repossessed every 15 minutes: somebody lost their home every 15 minutes. To stop the misery and the costs of that, early advice is essential, not advice at the point when someone loses their home.

So where was the help for the big society, the organisations that use volunteers, supported by paid staff, to deliver advice? It was certainly not in the Queen’s Speech, and with the advice review once more kicked into the long grass—I believe that it might report in the autumn—there will be more uncertainty and more unplanned closures of law centres, citizens advice bureaux and other invaluable local advice agencies. There is no hope in this Queen’s Speech for the agencies, and that means no hope for their clients. The cost of living is going up, debts are going out of control, payday lending is proliferating and there are no measures to deal with it.

This Government are out of touch with the real lives of the people I represent in Abram, Ashton, Hindley and throughout Makerfield. They do not want Lords reform. They want practical help to keep their heads above water and to pay their bills, not a Government who allow an industry to flourish unchecked. This industry appears to throw a lifebelt to people, but it is all too often lead-lined, and it ends up finally drowning them in debt.

16:38

[Tim Farron (Westmorland and Lonsdale) (LD)]

I want to focus my remarks on the parts of the Queen’s Speech relating to rural affairs, particularly farming and the groceries code adjudicator, as mentioned by my hon. Friend the Member for South Thanet (Laura Sandys).

I hope that all of us, whatever our politics, would at least have been relieved and encouraged when we saw this morning’s unemployment figures, while not finding them the source of a desire to punch the air and celebrate. I guess that during the day most of us will have seen in our inboxes reference to the unemployment levels in our own constituencies; we always look at those, as I did. I can claim pretty much no credit whatsoever for the fact that Westmorland and Lonsdale has the lowest unemployment in England. When we look at these stats and what they mean for the cost of living and for people’s ability to keep their heads above water, we see that nothing is more important than whether someone has a job and whether it pays well. The latter is equally important. The fact that we have very low unemployment in our part of the world is a credit to businesses and the public sector, both local and national, but it overlooks the fact that our local average income is less than £20,000 a year while the average house price in Westmorland is £240,000. That means that the average person is earning a twelfth of what it costs to buy a home. That is why we have so many people on the social housing waiting list and why so many people find it a struggle. If someone lives on my patch, the chances are that they are in work but that they are still struggling because the cost of living is a significant problem given the nature of what it is to live in a rural area.

When we talk about the cost of living, it is worth reflecting on something that has changed drastically during the post-war period. In 1954, 33% of the average household budget was spent on food; today, that figure is about 11%. Of course, that progress is welcome, but it has not happened entirely for good reasons. It is good that food is less expensive these days—Members will be delighted to know that I do not claim credit for that either—but we need to remember that one of the reasons for that is the imbalance in the food market. We have a handful of very powerful retailers who do a good job; they do what any of us would do if we were given the freedom to do what the supermarkets are enabled to do. We have a handful of processors and many hundreds of suppliers. In such a market, as everyone knows, the powerful few are able to take advantage of the relatively powerless many. Let us be honest—the reason why food prices have been as they have over the decades has as much to do with exploitation as with progress.

[Pat Glass]

Last year, during the long summer holidays, I was told by the chief executive of the local hospital trust that children in my constituency had been admitted to hospital with malnutrition. Would the hon. Gentleman and his Government like to take responsibility for that?

[Tim Farron]

As a human being and as someone who is involved in politics, I do take responsibility and do not pretend that it is somebody else’s fault. It is not peculiar, two years into a particular Government, to point the finger at them for something that is a moral crime. If those things are genuinely happening—I am absolutely prepared to believe that they are—then we all take responsibility. One of things that I find unseemly about this world of politics in which we work is how we can sometimes be delighted at people’s misfortune because there is a political point to be made. I try to be reasonable, non-partisan and non-tribal, although I do not always succeed, and I try not to bracket together those in one party or another as having a collective psyche. However, similarly to the hon. Lady’s stance on this issue, I suspect, I observed earlier Labour Members cheering when someone mentioned that we are in recession, as if that were a good thing; I suppose that it might be seen as a political benefit. There was almost embarrassment on the part of Labour Front Benchers about the fact that there was some good news today on unemployment. We must be prepared to take collective responsibility for the things that are wrong and celebrate the things that are positive.

Let me therefore point out something that is wrong. Over the past month, there has been a drop of 2p a litre in the amount paid to dairy farmers for milk. That means that the average dairy farmer is now getting 3p to 4p less per litre than it costs him to produce it. At the back end of the previous Government’s time in office, I tabled some parliamentary questions which showed that the average annual income of a hill farmer, after all the relatively small payments that they get through the single farm payments scheme, was £5,000. Now, I do not know how many hours most hill farmers work each day, but the ones that I know work 16, 17 or 18-hour days. That means that they make about a quarter of the minimum wage. That is an outrage. I wonder whether the hon. Member for North West Durham (Pat Glass) would take responsibility for that, given that it happened under her Government. Of course, we all bear collective responsibility and it is right to say so. The exploitation of dairy farmers, sheep farmers and farmers in general happens because of an imbalance in our market and because of market failure.

Everyone in this House ought to be committed—I am sure that we all are—to fair trade. However, there is something peculiar about the fact that we can wander down one aisle in a shop and buy some Colombian fair trade coffee, and feel good about ourselves for having done so, and then go down the next aisle to buy the milk to put in that coffee, which has been ripped out of the hands of some underpaid Cumbrian farmer. We want fair trade for British farmers, as well as for farmers across the world. Fair trade at home matters. That is why the announcement in the Queen’s Speech of a groceries code adjudicator with teeth is a massive step forward for rural areas and for food producers of all kinds. It is fair and just to do that, but it is also sensible because unfairness damages us all.

Over the 15-year period of 1995 to 2010, which is not entirely coterminous with the Labour Government, there was a 50% drop in the number of dairy farmers in this country. Over the past 30 years, there has been a 25% drop in our country’s capacity to feed itself. If we do not take account of that, we will go down together. It has happened partly because the supermarkets and the food processors are too keen to make a quick buck at the expense of the exploited supplier and producer, rather than looking to the long term.

[Bob Stewart (Beckenham) (Con)]

May I ask, in support of what my hon. Friend is saying, how the Government can make a substantial difference to dairy farmers in his constituency to put things right?

[Tim Farron]

There is a bunch of things that we can do. I thank my hon. Friend for asking the question. We can ensure that there is a fair and decent referee in the groceries code adjudicator. Through the Foreign and Commonwealth Office and our other missions, we can help our farmers to have an export market, because they will get a much better deal from the supermarkets if the supermarkets know that there is someone else who the farmers can sell to and who will compete. We also need to invest in research and development to help people improve their effectiveness and efficiency. I will come back to that point if I have time.

[Laura Sandys]

Does my hon. Friend agree that the issue of contracts is also important? The relationship between supermarkets and producers is extraordinary in that they often have no contracts whatsoever.

[Tim Farron]

Yes, farmers need to be encouraged and enabled to co-operate. I always thought that it was peculiar that the milk marketing board was got rid of because it was a monopoly—what the heck is a supermarket, for pity’s sake? It is important that there is balance in the market.

The reality is that unregulated markets do not work. I believe in a free market, but markets are not free when there are powerful entities that control them. Markets do not always work in the interests of the people who are being exploitative. It is not in the interests of Tesco, Sainsbury’s, Asda or Morrisons to exploit their farmers, even though they often do so. I acknowledge that they do good things too. As John Maynard Keynes once said, among the many other wise things that he said,

“The market can remain irrational longer than you can remain solvent.”

The supermarkets are putting people out of business, despite the fact that it is not in their long-term interests, just because it is in their short-term interests.

That highlights something that this Government and all Governments have failed to do—set out a coherent food production strategy for the country. As my hon. Friend the Member for South Thanet said earlier, over the next 40 years the population of planet Earth will increase by about 50%, but the demand for food will roughly double. If we as a country preside over a 25% drop in our ability to feed ourselves, as we have over the past 30 years, it is completely witless and massively damaging. The food crisis—I say that with no exaggeration at all—that the planet faces and that this country will face is at least as big a concern as climate change and, dare I say it, is a bigger concern than the economic crisis.

That challenge must be met. It must be met by having regulation of our market, with a referee to make sure the market is fair and effective, and the groceries code adjudicator will do that. We also need to have an integrated strategy, so that our approach to common agricultural policy reform is focused primarily on maximising sustainable food production; we have a science policy that has food production at the top of the agenda—research and development is crucial to ensuring that we maximise the amount of food we produce in this country—and we have a planning policy that is fit for purpose and allows rural areas and rural businesses to develop, so that they can meet the needs of this country. The reality is that people’s ability to enter the farming industry and to provide the food that this country desperately needs also depends on young people being able to afford a home of their own for their family in a rural area.

16:50

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

The cost of living is an excellent theme for our debate on the Queen’s Speech, because alongside and intertwined with the strength of the economy and the availability of jobs, it goes to the core of what ordinary people are most concerned about right now, as I see in my inbox and hear from constituents on the doorstep and in my surgeries. Frankly, I am amazed that the Secretary of State was able to speak for so long, given the lack of action to help with the cost of living in the Her Majesty’s Gracious Speech.

I think the Queen’s Speech was best described by the deputy political editor of The Daily Telegraph, as

“a ragtag bag of second-order legislation and moderate tinkering, partly to address some quite important issues, but also simply to look as if they’re doing something.”

There are one or two Bills that I am pleased to see and will discuss later, but where was the meat? Where was the creativity? Where were the drive and ambition to get this country out of the first double-dip recession in almost 40 years? Nowhere. There was no change, no hope, and Ministers still act like they have no idea of the impact of their policies on the lives of my constituents. Quite frankly, they just do not have any ideas.

One of the biggest cost of living pressures that working families are feeling is child care. According to the Daycare Trust’s annual child care costs survey, the average price of nursery provision in the north-east has increased by 7.5% over the past year, but the cost of out-of-school child care has increased by more than 25%. That is but one part of the triple whammy that parents are facing, because at the same time the help they receive from the Government has been cut by 12.5%, and child care places are becoming scarcer as the money councils get to ensure availability and affordability is slashed and de-ring-fenced, and private nurseries face a daily struggle to stay afloat, due to the increasing number of women who are leaving the work force or finding alternative care, coupled with increased costs and cuts to child care tax credits.

Add to all that this year’s changes to working tax credit eligibility, which affect an estimated 355 families in my constituency, and ever-rising costs of petrol and public transport, and the result is a situation where the cost of working is forcing parents, particularly women, out of work at an alarming rate. After last year’s cuts to child care tax credits, about 44,000 parents stopped claiming. Many will have left work because continuing just did not make financial sense any more. Last month’s changes will no doubt exacerbate that worrying trend. Where were the measures in the Queen’s Speech to help? Again, nowhere.

The cost of child care is normally higher for children who are disabled or who have special educational needs. In addition, places for those children are scarce: according to the Daycare Trust, only 12% of councils have sufficient places to meet local need. A children and families Bill was announced in the Queen’s Speech; I welcome that and look forward to working on it when it comes before the House. I am delighted that, as part of that debate, the House is to discuss how we can improve outcomes for children and young people with special educational needs and disabilities. Where, though, is the commitment to increase the availability and affordability of child care for children with special educational needs and disabilities, to allow their parents to hold down a job, which is not only important financially, but provides much needed respite in some cases?

The Government have also said that, in that Bill, they will continue Labour’s reforms on flexible working, allowing mothers to transfer some of their maternity leave to their partner. There are of course social benefits to that, but where are the financial benefits for families? Research commissioned by my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) back in 2010, when she was Minister for Women and Equalities, showed that only about one in five women earned more than their partner, although the number is thankfully rising. With that in mind, transferring statutory leave will come down to a practical economic decision for many families. It will be a luxury that most cannot afford, especially if the Government continue to do nothing to mitigate the rising cost of living.

Colleagues have mentioned a number of other pressures on household budgets, and I will echo their points if I have time. Those pressures include rising energy bills, rising shopping bills exacerbated by last year’s rise in VAT, which took £450 out of family budgets at a stroke, and the rising cost of fuel and public transport, about which we have heard quite a bit.

One particular problem that has been raised with me, and mentioned in the media in the past few months, has been banks hiking up mortgage interest rates while the base rate remains at a record low. Mr Edward Cairns of Washington called my office to complain that on the same day as the Royal Bank of Scotland announced a total bonus pool of £785 million for 2011, despite the fact that the bank had made an overall loss of £2 billion, he had received notification that the interest on his mortgage was being increased by 0.25% to 4.25%. I wrote a letter to Stephen Hester asking him to explain that hike and the fact that it coincided so insensitively with the announcement of the huge bonus pot. Unfortunately, I am yet to receive a response from Mr Hester, so I also wrote to the Chancellor to see what he was going to do about it. I received a letter back from the Financial Secretary to the Treasury saying, in a nutshell and in a very polite way, absolutely nothing.

RBS is a bank in which Mr Cairns, as a taxpayer, has an 84% stake, yet it and other banks are needlessly hitting people like him in the pocket while their executives are being rewarded for failure. That is bad news not just for consumers but for the Government.

[Robert Flello (Stoke-on-Trent South) (Lab)]

I am sure my hon. Friend is aware that in the letter that Halifax sent out to mortgage customers, it stated that the reason why it had increased its rate was the parlous state of the economy and the recession born out of No. 10.

[Mrs Hodgson]

Very interesting. I hope that Ministers are listening and that my hon. Friend’s point will be fed back.

Banks putting their standard rates up means that average interest rates increase, so the amount that the Government have to pay out in support for mortgage interest also increases. It also means that people have less disposable income to spend in shops, pubs and restaurants, so tax receipts are hit as well. Did the Queen’s Speech do anything to address that worrying trend? No, it did not.

What my constituents wanted from the Queen’s speech was a sign that this Tory-led Government had listened to the message that had clearly been sent to them through the ballot box on 3 May. They wanted a change of direction and some hope for the future. They actually wanted what Labour is offering—a fair deal on tax, instead of a great deal of tax being given back to the wealthiest few; a fair deal on energy, wresting power back from the big six and ensuring that pensioners get deals that allow them to eat as well as to heat their homes; a fair deal on transport, reining in the constant price hikes by train operators; a fair deal for consumers, stopping rip-off charges and practices by unaccountable companies, including payday lenders and secondary ticketing websites; and, above all else, a fair deal on jobs, getting young people in my constituency and others involved in working our way out of the recession that this Government have created. They did not get any of that. It was just more of the same from an out-of-touch and incompetent Government.

Ministers need to listen to Paul Dixon, who lost his seat on 3 May, before which he was the only remaining Lib Dem on Sunderland city council. He said that the coalition Government need to open their eyes, take a good look and realise the damage they have done. I agree with Paul, but the Government need to start putting it right. I hope they do so sooner rather than later, or else they should step aside and allow Labour to do so.

17:00

[Jake Berry (Rossendale and Darwen) (Con)]

May I say what a privilege it is to have the opportunity to speak on the cost of living? All hon. Members would accept that the cost of living is the issue raised most often with us in our advice surgeries. In an era of static if not falling incomes, ensuring that our constituents can live their lives, support their families, continue to get work, put fuel in their car and keep their houses warm, is one of the most important issues we can debate in the House.

Recent media coverage seems to revolve around whether MPs know the cost of a pint of milk, and that decides whether they are in or out of touch with their constituents. I know the cost of a pint of milk, because I am particularly fond of a milky coffee with two sugars on a Saturday morning before I go to my advice surgery.

[Gavin Shuker]

How much is it?

[Jake Berry]

It was 46p when I bought it last weekend, but since the general election, the cost of the pint of milk that I buy for my milky coffee has gone up by 10%. Although that is not the world’s greatest economic indicator, all hon. Members can accept that it is a symptom of the huge increase in the cost of fuel, which puts pressure on families in all our constituencies.

I am a great supporter of the great British pint—I am sure some of my colleagues think that litres are a European abomination—but one thing that we buy in litres is fuel. The cost of fuel in my constituency is 6p or 7p a litre more expensive than in the neighbouring towns of Bury and Bolton. I became absolutely fed up with that, so I wrote to the major supermarkets to ask why there is such a difference. Apparently, for people who live in rural isolated areas such as Rossendale and Darwen, the local supermarket sets the cost of the fuel at the pump. Therefore, in a small geographical area that encompasses my constituency alone, the biggest retailer in my patch—the supermarket—sets the price and is the major supplier.

People in my area say, “Welcome to rip-off Rossendale or dearest Darwen if you want fuel in your car.” That situation cannot be right. It is wrong that supermarkets behave in that way on fuel pricing. I can find out the price of a Tesco pint of milk or a can of beans by going on its website, but it is not prepared to set a tariff for fuel nationally and instead discriminates against rural and isolated areas.

I support the Government’s idea of getting energy suppliers, particularly the utility companies, to write to their customers to offer them the lowest tariff, but supermarkets should offer petrol at the cheapest price to the young, hard-working families in my constituency—they might have to put diesel in a van to go to work or petrol in a small car to take children to school—and not at a price that they know they can get away with just because of location. The major supermarkets have had a monopoly—the hon. Member for Westmorland and Lonsdale (Tim Farron), who is no longer in his place, spoke extremely well on farming and the price of milk in that respect. Anti-competitive practices on fuel are pushing small, independent fuel retailers out of business, which is bad for businesses and for my area.

That extra £5 a week where I live to put fuel in a vehicle to go to work is the difference between people being able to turn the heating on or not, being able to feed their children healthy food or not, or being able to go out and spend money in the economy or not. I hope fuel price setting is part of the Government’s programme to look at the relationship between supermarkets and their suppliers.

The cost of gas and electricity is another major issue raised by all our constituents. Those costs have ballooned beyond anyone’s increase in income over the past few years. They have risen by as much as 20%. We tell people to switch supplier. When people visit me in my patch, they say they will not switch supplier because they are nervous of bill shock. Uniquely, virtually, in a service industry supplying utilities to our houses, it is expected to be self-service. People are asked to read their own electricity meter. People in my advice surgeries have told me that they purposely underestimate how much electricity or gas they have used to help manage their cash flow. That builds up a huge legacy bill. Others simply have underestimations having had their meter readings underestimated over a long period.

Those people are worried about switching, because they know that when they switch they will have to give an up-to-date meter reading and will have a huge legacy bill that they cannot pay. These people, sometimes those on the most expensive tariff, are unable to switch because they cannot pay their historical bill. That is why it is absolutely right that the Queen’s Speech sets out a programme to introduce smart metering. Bglobal, a successful business in my constituency, which I am delighted to see has retained its profitability, does business-to-business smart metering. There is an opportunity for us all to have smart meters in our homes.

[Dr Whitehead]

Does the hon. Gentleman think that consumers should pay for smart meter installation or should other methods of payment be considered?

[Jake Berry]

However they are paid for, ultimately the consumer will pay, because if the electricity company pays, it will be added to the bill somewhere.

I am glad that the hon. Member for Southampton, Test (Dr Whitehead) is interested in smart metering. As I said, Bglobal, a business-to-business smart meter supplier in my constituency, is doing very well. The great thing about smart meters is that they enable us to pay only for the energy we use. There is not the bill shock; there is not the legacy bills which make people nervous. Paying only for the energy we use helps us to manage our electricity consumption and means that we can reduce it over time. People underestimate their readings so that they can manage their cash flows and pay their bills, but that is not real; they are simply putting off the pain. I want people to understand that by smart metering they can regulate their utility use and genuinely reduce their bills.

Bill shock is a real block to switching, as too is the fact that switching between the majority of energy suppliers involves an online medium. I refer to the uSwitch website, which I am sure many Members have used. That is a real block for the elderly and people on low incomes who do not have an internet connection. There are plenty of silver surfers in my constituency—they e-mail and tweet me—but that is not for everyone, so switching online is not right for all. People without phone lines or internet connections cannot switch.

Having said that, uSwitch does make the switching facility available in paper form. I am sure that many Members, like me, have collected the uSwitch envelopes and taken them out to elderly constituents, saying “Get your last utility bill, put it in here, and uSwitch will write back telling you the best tariff to go on.” As MPs, we should be publicising that and ensuring that vulnerable constituents are not excluded from saving what can be hundreds of pounds by switching their electricity supplier.

I support the Government’s proposal that energy suppliers should be compelled to write to their customers every year offering them the cheapest tariff. That does not enable people to switch between suppliers, but it at least ensures that they are on the best tariff. Of course, that is not always the one with the lowest electricity charge. Some people—those with very low usage, for example—might choose not to pay the standing charge and pay slightly more for their electricity. Tariffs have to be tailored to individuals.

Finally, I turn to the proposal to ensure that power generation in this country is environmentally sustainable. Often in this place we obsess far too much about short-term issues. As important as things are such as the eurozone, part of our job has to be horizon scanning. If I scan the horizon and think about what might affect our children or grandchildren, global warming is probably the biggest issue that I spot. I absolutely support the Government proposals to move to more sustainable electricity generation, but we have a problem with wind energy. In my constituency, 30 planning applications for wind turbines are currently under consideration by the local authority. That points to a market that is completely out of kilter with commercial reality. We saw it with solar energy: we had a sort of gold rush, because people suddenly realised that they could get 16% guaranteed by the Government tax-free. We are now seeing similar speculation by major energy suppliers, with the applications for large wind turbines in my constituency.

We all support wind generation, but I do not want to see my patch become the wind capital of the UK—although colleagues might look at me and think that it already has become that. I hope that the Government will have a look at the subsidy for wind generation and try to ensure that we cut the “get rich quick” merchants—the speculators—out of the market. I am happy to see the development in my area, but I want to ensure a local benefit, so that it really works for our children and grandchildren.

17:11

[Jim Dowd (Lewisham West and Penge) (Lab)]

I am conscious that there are many more Members—certainly on the Opposition Benches—who still wish to speak, so I shall be as brief as I can. I am happy to speak in today’s debate on the Queen’s Speech about the cost of living, and to support the amendment in the name of my right hon. Friend the Leader of the Opposition, concentrating as it does on energy costs, fares and petrol prices.

Fares, and particularly rail fares, are critical to people in Lewisham generally, and in my part of it especially, as we have the highest proportion of residents in any London borough who commute to work outside their borough, although we do not have as many people in work as we once did. I welcome today’s marginal fall in unemployment, as any sensible person would, but in Lewisham in particular there are still 20 people unemployed for every vacancy. The cost of commuting by rail from my part of the constituency into London Bridge, Charing Cross and Victoria is extremely important, which is why I am keen to support what the Opposition are saying today.

Following on from what many other colleagues have said today, my constituents are also very concerned about the conduct of the big six energy companies. There is a strong feeling, not just across my constituency but across the country, that people do not get a fair deal from the big six—that they effectively operate a cartel, with myriad deals, special deals, “supersaver” deals, “half-past-Tuesday deals” and God knows what else, so that people do not know whether they are getting the best deal. I accept that the big six have stopped the scandalous cold-calling campaigns of recent years—as far as I am aware, all but one do not do that any more. However, there is still a major concern among the public generally that the big six are not as accountable as they should be.

The previous speaker, the hon. Member for Rossendale and Darwen (Jake Berry), mentioned smart metering and the opportunities that it provides. Smart metering could be a huge benefit to the economy and to the public more broadly, provided that it is done in the most objective and reasonable fashion, and not merely to accommodate the whims of the big six, which of course have a critical role to play in its implementation.

I also had a passage in my speech about the social care Bill, or rather the lack of a social care Bill in the Queen’s Speech. However, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) dealt with that issue far more elegantly and eloquently than I could, I will not belabour the point—although it is not unusual in this place for at least half a dozen people to say something that somebody else has said already. Nevertheless, the absence of a social care Bill is a huge missed opportunity, given the amount of spadework that has been done on the subject by local authorities and by the Dilnot review.

I want to deal with an issue mentioned by the hon. Member for South Thanet (Laura Sandys), my hon. Friend the Member for Ynys Môn (Albert Owen) and others—the setting up of an adjudicator on the groceries code of conduct. Everyone has welcomed it, quite reasonably, but I fear that there is not as much to it as meets the eye.

I am sorry that the hon. Member for Colchester (Sir Bob Russell) is no longer in his place. He used to be vice-chairman of the all-party small shops group back in 2005 when I was the chairman. We conducted an inquiry into “High Street UK 2015”, looking into what the future of the high street would be 10 years on from 2005 if the current trends in retailing and the current regulatory regime remained in place. Staggeringly, we are now only three years away from 2015, and much of what we suggested in the report has, sadly, proved to be true. That was echoed in the report by Mary Portas and the proposals she made to address the situation.

Having looked at this subject in great detail over a long time, I have to admit, sadly, that I am deeply pessimistic. I am not sure that many of our traditional high streets have not changed for ever—and not necessarily for the better. The belief that something probably cannot be achieved should not stop us from making the effort, and I welcome the efforts of those involved.

One recommendation in our report was to establish a supermarket ombudsman, but one who would have power across the whole sector, not just across the supply chain, important though that is. When the detail of the Government’s legislation is made public, I believe people will see that only a narrow and restrictive role is proposed for the adjudicator. We wanted the office and the office holder to have the ability to examine in detail the effect that the disproportionate power of the big supermarkets—the big four, as they are known—has on dictating the climate for retailing, and the disproportionate impact they can exert on small and independent retailers.

All we are likely to get from the Bill will be enforcement of a code of conduct that already exists. Even six years ago, a code was in place, but no one ever used it. The suppliers were able to take things up directly with the big supermarkets, but nobody ever did. There was not a single recorded case of suppliers ever taking forward an official complaint about one of the big supermarkets they supplied. Some would say that it is fairly obvious why they did not do so—because they would have lost the business, and it was better for them to carry on with the business, even under onerous terms, than to lose it altogether. On the other side, some argued that it showed how effective the code was—that it did not need to be enforced, that nobody needed to have recourse to it and that people could continue their relationship with their suppliers.

Incidentally, the bulk of suppliers are not, as many people think they are, small farmers with small supplies. That is not true. The bulk of suppliers to the big supermarkets are large corporations and large food processors. Most of the supermarkets’ product comes from them. While I welcome the introduction of the new office, I am pessimistic about its effect, as I do not think it will address the real problem, which is the disproportionate market power of the big four.

I shall skip over a few other matters and move on to the heart of the debate on the Queen’s Speech. I accept the qualification that some Members have highlighted—that the Queen’s Speech cannot say everything and that a Queen’s Speech cannot necessarily legislate for everything. That is perfectly true. Within the past few weeks, however, we have become aware of both the Budget and the Queen’s Speech. Those two items together should demonstrate the priorities, direction and intent of the Government. We now have a pretty good view of what their priorities are.

All this should be seen against the economic background of a double-dip recession at home and a eurozone crisis abroad. We are witnessing convulsions in Greece, Portugal, Italy, Spain and perhaps even France: the southern economies in the eurozone are in a parlous state. There is also growing concern, both nationally and internationally, not about debt, inflation or interest rates, but about growth, or rather the lack of growth. The Federation of Small Businesses drew attention to that last week, and yesterday the Bank of America Merrill Lynch Survey of Fund Managers observed:

“The proportion”

of leading international investors

“saying global fiscal policy is ‘too restrictive’ has… doubled to a net 23 percent”

within a month. That lack of demand is the most acute problem. It is more significant than either employment law or the impact of regulation. Even access to finance and credit is cited more often than those factors as a cause of businesses’ inability to expand and become profitable.

Today the Governor of the Bank of England downgraded the growth forecast from last year’s 2% figure to 0.8%. The Government must look, listen and learn, and reverse the damage that they are doing to the people, businesses and social fabric of this country, for it is that, more than anything contained in the Queen’s Speech, which will determine whether the future of the people of Britain is bright or bleak.

17:21

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

It is an enormous privilege to have the opportunity to contribute to the debate on the Queen’s Speech, and in particular to speak today about the cost of living, which I think is the subject that touches the constituents of every Member most closely. It is a subject that resonates especially in rural areas such as the one that I represent, because for us the cost of living differs in so many respects from the cost of living for those who live in urban areas. One of the reasons for that is associated with the cost of fuel, and the cost of filling our cars at the pumps.

For those who live in my constituency and in other rural parts of England and the rest of the United Kingdom, having a car is not a luxury but an absolute necessity. The car is the thing in which people drive their kids to school in the morning, it is the thing that they need in order to get to work, it is the thing that they must have in order to do their shopping, and it is the thing that gets them to the doctor and the dentist. For my constituents, journeys that can be made on public transport in London and other metropolitan areas must be made by car, and are quite often lengthy.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Will the hon. Gentleman give way?

[Stephen Phillips]

I am only just beginning my speech, but I will be kind and give way to the hon. Lady.

[Angela Smith]

When the hon. Gentleman talks of metropolitan areas, he should recognise that they include areas such as South Yorkshire. Two thirds of Barnsley is rural, but it is also a metropolitan area. The issues to which the hon. Gentleman refers apply in many metropolitan as well as rural areas.

[Stephen Phillips]

They certainly apply in such areas to some extent. I do not dissent from that proposition. However, the hon. Lady needs to know the direction in which I am going. Because our constituents—including hers—are so affected by this issue, it is an issue on which the Government should take what action they can take. We are debating the cost of living, and one of the principal costs for those who live in the rural areas in her constituency and in rural areas such as the ones that I represent is the cost of fuel. The Government have tackled that. My right hon. Friend the Chancellor has scrapped £4 billion in duty increases that were planned by the last Government. The Opposition do not like to hear this, but the truth is that the price of petrol at the pumps is 10p a litre cheaper than it would have been if the Labour party had won the last election.

Is there more that could be done to deal with the cost of living? Of course, but Opposition Members also need to remember the huge debt bill—£120 million a day—with which the country has been left. If we were not paying that bill, my right hon. Friend the Chancellor and the other Treasury Ministers would have far more scope to tackle this and other aspects of the cost of living. We have heard Opposition Members criticise the Government today, but they need to remember who was responsible for getting this country into the mess in which we find ourselves.

[Phil Wilson]

I remind the hon. Gentleman that we are in a double-dip recession, and that when we left power, growth was increasing and unemployment was coming down. Until 2008, before the crisis, the Tories were supporting our public expenditure plans pound for pound.

[Stephen Phillips]

The hon. Gentleman and his Opposition colleagues are very keen on saying that this double-dip recession is a recession made in Downing street, and they are absolutely right—it was made in No. 11 Downing street under the last Government, and then made in No. 10 when the previous Prime Minister finally made his transition from No. 11. The truth of the matter is that we need not only an apology but a bit of humility from the Opposition. It is they who got us into this mess.

I would desperately like to see more action on the cost of living, and specifically fuel pricing, from this Government, but I know, as I have had to tell many of my constituents, that it is simply not possible because of the mess with which we have been left.

That is the first aspect of the cost of living that principally affects my constituents, but there are of course others, including the other great cost associated with ordinary living: energy. The Government have taken action on this through their agreement with the suppliers, as we know, but again there is more that can be done. I am enormously heartened by not only the measures the Government have taken, but those in the Queen’s Speech that will be brought before the House in due course. The truth is that we face a great problem with energy security and the cost of energy as the developing countries across the world become richer. We need to reduce the reliance on fossil fuels that we have had for the last 50 years.

However, there is a related issue that affects constituencies such as mine and that of my hon. Friend the Member for Rossendale and Darwen (Jake Berry), who spoke earlier: the impact of onshore wind power on rural areas. He may have 30 planning applications outstanding for wind turbines in his constituency; I suspect I have a similar number. The great problem with onshore wind, which the Government will have to grapple with, is that it seems universally to attract no support whatsoever from the communities where the siting of such wind farms is proposed. Some of these very large structures—including in my own constituency—over-top the spire of Lincoln cathedral to a considerable degree. These things are generally not wanted and are uneconomic, to the extent that the subsidy is removed.

The Government will have to look at this issue. Yes, man-made climate change is important, and this generation will have to grapple with it if we are going to live responsibly and hand a decent United Kingdom to our children. However, the problem the Government face—notwithstanding the Localism Act 2011 and everything that was done in the last Session—is that there is no national framework within which wind power is planned. I want to hear from Ministers that that will shift, either in this Session or in other Sessions during the remainder of this Parliament.

The third issue I want to talk about is the cost of food. Government and Opposition Members have spoken about the Government’s plans for a grocery adjudicator. Those who farm in my constituency have too often seen the power of the supermarkets bearing down to such a degree that they have effectively been unable to make a living. That is certainly true of dairy farmers in my constituency, many of whom went out of business long before I became the Member of Parliament. Many farmers in my constituency and other areas of the United Kingdom have been struggling for a number of years. That is why the grocery adjudicator is so important. It is important that we sustain our farming industry in this country, so that we can ensure not only a decent living for our farmers, but future food security. That form of food security will, ultimately, feed through the supply chain and ensure reasonable prices for our constituents. So that is another important aspect of this Queen’s Speech. It is not, as one Opposition Member said, a ragtag Queen’s Speech or a Queen’s Speech full of a ragtag of Bills; it is a Queen’s Speech full of measures that are important to take during this Session and this Parliament to try to rectify some of the damage done to our country between 1997 and 2010.

In today’s debate on the Queen’s Speech we are principally concerned with the cost of living, and I had wished to make contributions on other days on other of the topics that have been debated. I would not wish to find myself ruled out of order, so I shall confine myself to saying that the Government took some brave decisions in the previous Session on foreign policy, and the manner in which the United Kingdom has conducted itself overseas and sought to ensure that democracy is fostered and grows throughout not only the middle east, but the remainder of the world. However, other conflicts that do not find their way into the newspapers and in which civilians are dying are taking place all over the world today. One such conflict is occurring on the borders of South Sudan. I hope that the Minister answering for the Government in this debate will convey my concerns about that and about what is happening in the other areas where humanitarian disasters are occurring, which I know other Government Members and doubtless some Opposition Members share, to my right hon. Friend the Foreign Secretary, notwithstanding the fact that I failed to find my place in yesterday’s debate.

[Several hon. Members]

rose—

[Mr Speaker]

Order. May I remind the House that the wind-ups will begin at 6.30 pm? There is a 10-minute limit, but if hon. Members feel able to speak for less time, demonstrating great concern for their colleagues, that will be an additional benefit. However, it is not obligatory.

17:32

[Jessica Morden (Newport East) (Lab)]

I promise to speak quickly, Mr Speaker, and I thank you for giving me the opportunity to take part in this debate and give a voice to my constituents, who are really struggling with the cost of living. Like other Labour Members, I wish to concentrate on the realities of how those on lower incomes are coping during these times.

Like other hon. Members, I found, in Newport, that the cost of living was the No. 1 issue on the doorstep during the local elections. The good voters of Newport had their say on the Government’s policies, voting out the Tory-Lib Dem coalition in Newport and electing a new Labour council. I feel very much that people are sending a message, and we must listen closely to them.

As other hon. Members have said, the Queen’s Speech undoubtedly contains some worthy ideas; many moons ago in this debate, my right hon. Friend the Member for Croydon North (Malcolm Wicks) mentioned flexible parental leave, a Labour idea, and I wish to mention the attempt to speed up the process of adoption, which was a real issue for the couple I met last week in my constituency. They have waited a long time to adopt and have left me in no doubt as to the difficulties of that process, and this is well worth tackling.

However, the Queen’s Speech is about priorities, and last week the Government failed to offer a glimmer of hope to those families and constituents of mine who find themselves struggling to get by and just managing to keep their heads above water. These are families who are living in the real world, where careful budgeting is thrown out by the washing machine breaking down or by a child needing a new pair of shoes—by just a small unexpected bill. They were looking to this Government to help or at the very least understand, but instead the Queen’s Speech came on top of the measures announced in the autumn statement and in the Budget, particularly the cuts to tax credits, and has done nothing to help and offers little hope.

While food, energy and fuel prices and transport costs are up, wages are stagnant or cut and the Government are taking away tax credits. In April, 730 families in my constituency will have had their tax credits reduced unless they have been able to find extra hours to work. They will have lost around £3,800 a year, but they are the people who can least afford to lose that money. They are on incomes of about £16,000 or £17,000 a year and are those most impacted by the price rises because they spend a disproportionate part of their income on fuel and food. They are the people who are now turning up at my citizens advice bureau with three children saying that they are staying in private rented accommodation, have had their income reduced by £70 a week and are really struggling.

[Glyn Davies (Montgomeryshire) (Con)]

I have a lot of sympathy with what the hon. Lady is saying, but does she welcome the fact that the core measure in the Budget this year raised the very people she is talking about out of the taxation system altogether? The Budget and the Government’s strategy are aimed at helping the very people she is talking about.

[Jessica Morden]

I have a lot of respect for the hon. Gentleman but the Government are giving with one hand and taking away with the other. I just need to say “VAT” and “tax credit cuts”. I am sure that the family I am talking about who presented themselves at the CAB will not recognise themselves as being better off in any way as a result of the measures he mentions.

As other hon. Members have mentioned, there was nothing in the Queen’s Speech about helping with the cost of child care. For many families, it is as much as the mortgage or housing costs, if not more. What are the Government doing for families in my constituency whose child care costs are rising by 4% to 6%? The Childcare Trust recently pointed out that those costs are increasing, particularly for the under-twos, whilst wages are stagnant and the child care element of the working tax credit has been cut. There is an urgent need for creative solutions in this area of policy, as child care is a massive part of the cost of living for many of my constituents.

Last week in my constituency office—I cannot be alone in experiencing this—I saw constituents who are having to wait months, not weeks, for appeals on tax credits. In the meantime they are struggling along. I see people with disabilities who have medical evidence backing up their situation having their benefits withdrawn. Half of them then appeal successfully, but they have to wait months for their appeal. I am even seeing parents who cannot afford to take up nursery places because of the cost of petrol. In my local CAB there were 1,900 extra benefits cases in the last financial year, and that figure is going to increase.

There are two food banks operating in my constituency, with the churches in Caldicot looking to set up and operate another one. In December alone the food banks distributed more than 3,000 parcels. I have to pay tribute to the food banks in my constituency run by the Raven House Trust and the King’s Church. They are a fantastic example of the good society and have heart-warming community support. However, the new people turning up at food banks are often those affected by benefits changes who have to be helped until an appeal is heard or who, because of low pay, just cannot make it to the end of the week.

Finally, into this picture of people struggling with the cost of living in Newport we throw the fact that the Government are raising the spectre of regional pay. There are 23,000 public sector workers in Newport, which has a lot of public sector workers precisely because of the previous Government’s policy of relocating jobs out of the south-east to increase employment in targeted areas, which was a fantastic thing to do. As a result, our employers include not only the local authority and the NHS but the Office for National Statistics, the Prison Service and the Intellectual Property Office, to name a few. Those jobs have been a boost to our city and a huge success story, but public sector workers in Newport have had a pay freeze for two years now and there will be a 1% cap for a further two years. They are also having to pay increased pension contributions. We have had 9,000 public sector job cuts in Wales and the TUC predicts a possible 39,000 more in the years to come.

Regional pay would be devastating for Newport and Wales. Last week, the Welsh Government published their response to the Treasury consultation on regional pay, and all the parties in the Welsh Assembly have expressed their opposition to it. I agree with the First Minister, Carwyn Jones, that the proposal is just

“code for cutting pay in Wales”.

The Welsh Government point to the lack of Treasury evidence that high public sector pay crowds out the private sector. We believe this is a back-door way to drive down public sector wages and will be bad news for Welsh workers and the Welsh economy.

Not only will struggling public sector workers see their pay driven down; there will be a devastating effect on the economy in Wales. In my area, the public and private sectors are inextricably linked—they are intertwined. Money taken from public sector workers means less spent in the local economy, which then hits the private sector.

In Newport, we saw how close that connection was when the Home Office tried to close our passport office. Closure of the office would have devastated our city centre, which relies on the throughput of its staff and customers to survive. The argument that holding down public sector wages will make private sector jobs magically appear is ill thought out.

In Wales, women make up 64% of the public sector work force and 87% of part-time workers. The previous Government made particular efforts on equal pay. Average pay might be higher, but I ask the Government not to roll back progress for women.

In March, like many hon. Members, I challenged Ministers about where the extra hours would come from for families who would lose their tax credits as a result of the Government’s proposals. We said then that the Government had demonstrated no understanding of the real difficulties faced by families. Nothing in the Queen’s Speech demonstrates that they have any more understanding than they did then. I urge them to do all they can to help people with the cost of living.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Six hon. Members are still seeking to catch my eye and I am keen to accommodate all of them. It will be deliverable with an eight-minute limit on Back-Bench speeches, to apply with immediate effect, and some self-restraint as far as interventions are concerned.

17:41

[Dr Alan Whitehead (Southampton, Test) (Lab)]

Today, we heard that energy prices for the average household went up by 12% over the last 12 months, and by 34% over the last four years. That clearly has a tremendous impact on the cost of living and, as we have heard already, on the rise in fuel poverty.

Bills are not increasing because of green initiatives, although they contribute. The Daily Mail and others who have suggested that green and environmental initiatives add hundreds of pounds to energy bills are wrong. They are increasing mainly because of the non-transparent energy market and global fuel prices. The latter are not about to change, but we can do a lot about other issues.

Investing in green energy and the low-carbon economy is one route to lower fuel costs in the future, because of the disaggregation of fuel costs and world mineral energy prices. We can keep getting indigenously produced and stably priced fuel in the future. Investing in energy efficiency in homes and offices—using less energy more efficiently—is a no-brainer, as has been said. Lower energy usage will bring smaller bills. The best method for combating fuel poverty is to fuel-poverty-proof UK homes.

All that investment in energy and the low-carbon economy means jobs, energy security and the development of technologies where the UK can play a world role. In some instances, we already have a world lead that needs sustaining. I understand that the Foreign Secretary recently intervened on these matters in a letter to various Departments. He said:

“I am in no doubt that we must meet this challenge, not only to safeguard the sustainability of our planet and the security of our energy, but also to ensure we are at the front of the queue when it comes to the jobs and industries of the future.”

I agree with many of those sentiments, but it is remarkable that the right hon. Gentleman felt it necessary to write that letter if the Government are indeed the greenest ever, as has been suggested.

Current policy on the challenges is patchy; in practice the Government even fail to get to grips with the targets in their own legislation. It looks as though the carbon emissions reduction and community energy saving programmes will end ingloriously, seriously short of their targets. The targets and likely achievements and ambitions of their replacements—the green deal and the energy company obligation—are being downgraded before our eyes. The green deal is stuck on the question of interest rates.

On fuel poverty and hard-to-treat homes, the overall ambition is being bound by the imposition of levy caps. That is a peculiar element of forward Government policy, in that the response to the question of levies for environmental and green purposes is first to introduce them as a policy instrument in energy policy in the future, and then to disembowel their effectiveness by capping them. There is no plan B, and we can see the results of that process in the recent solar PV feed-in tariffs fiasco. Hence the serious binding of the energy companies’ obligation at £1.3 billion a year, even if successful, leads us only halfway towards those hard-to-treat homes’ insulation targets. If a switch is made towards dealing with fuel poverty, that target will be further downgraded and there will be no serious impact on long-term fuel poverty.

The levy theme is recurrent in future energy policies, as well as in present initiatives. We have a levy for the energy company obligation, a levy for smart meters, a levy for the warm home discount, a levy for feed-in tariffs and a levy for carbon reduction commitments. In the energy Bill, levy mechanisms are the engine oil of the measures to reform the energy market, although as I have commented previously, the Bill is remarkable in seeking to promote energy market reform without reforming the way the energy market works—that is, it continues with the loose regulation of non-transparent bilateral deals a long time ahead, without any change in the new energy Bill.

We will shortly see what the Bill consists of, but we know already that there will be a new levy, effectively for capacity payments, a levy for contracts for difference, a likely levy for a fund to underwrite the counterparties to the contract for difference, and indirectly at least, a levy fund to anticipate payments into Government when energy prices rise above the agreed strike price level. So a series of new levies will come in with new legislation, undoubtedly being capped by the Treasury in the process.

That seems to me not to be a sensible long-term form of green and low-carbon energy policy. It is a dead-end in policy development, and one that we need to get over if we are to meet the ambition, among other things, set out in the Foreign Secretary’s recent letter. We can start to do that, in the context of this Queen’s Speech, by redesigning the Bill that is coming up on energy market reform genuinely to reform the energy market, so that it works around a transparent pool which will drive prices down through full contract transparency and the ability of new and competitive entrants to come in on a level trading playing field.

There seem to be no demand-side measures in energy market reform, unless there are big surprises in the Bill when it emerges, to incentivise and support reductions in energy demand and the advance of energy efficiency in our energy market. Is it because DECC cannot negotiate further levies with the Treasury that there are no demand-side measures in electricity market reform as it stands? We should go further and look at the relationship of green taxes in the future, not the hypothecation of current taxes, to the advancement of the low-carbon economy.

Why should new green taxes that are supposed to tax bads and reward goods simply disappear into the Treasury, thereby underlining the often unjust accusation that they are not green taxes at all, and are merely stealth taxes? Should not those new forms of taxation, such as the carbon floor price and the auction of EU emissions trading scheme credits, be placed behind our move to a low-carbon economy and our support for low-carbon technologies within it, rather than acting as an arguable one-way tax that does not connect with the promotion of environmental goods in any way?

The energy bill revolution campaign suggests that at least some of these taxes should be applied to the promotion of energy efficiency, and in particular to home insulation. I applaud that idea. I would like to go further, to relate green taxes to our support for green initiatives, instead of the dreary round of levy imposition, followed by Treasury cap, followed by policy fiasco. This can be, among other things, mediated and given enormous added value by the green investment bank, the other environmental measure contained in the Queen’s Speech—a green bank hobbled at present by Treasury formulae so that it cannot be a bank and do what banks do as far as credit, bonds, lending and so on are concerned until 2017 at the earliest. Legislation to make it a real bank early is another important matter.

It is the lack of ambition for the green and low-carbon economy, and the difficulty in creating policy instruments to move the low-carbon economy forward, that stand out in the proposed measures. These are measures to which we should pay urgent attention as we debate the Queen’s Speech.

17:49

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Mr Speaker, I am mindful of what you have said about time and self-restraint when it comes to interventions. I would like to focus my remarks on something that the Queen’s Speech seems to have flown past: the cost of living. Right hon. and hon. Members are no strangers to my concerns about the cost of living, particularly in Na h-Eileanan an Iar, an island constituency that feels the impact of UK Government changes harder than most. Fuel duty and VAT are exacerbated in remote, rural and island communities and businesses face ever-increasing costs for services. However, we do welcome the rural fuel derogation, which will hopefully lead to a better differential between fuel prices on the islands and on the mainland. I hope that the pilot projects for the change of 5p a litre prove a success so that it can become permanent and be extended to other areas on the mainland. I am sure that people in Sutherland, Caithness, Argyll, the Isle of Skye and other areas would welcome it.

Another problem recently is that companies delivering to my island constituency have been charging my constituents exorbitant rates simply because we live there. I would like the Government to act on that and ensure that people are treated equally no matter where they live in the kingdom. Those companies frequently cite distance and difficulty as the reasons for the ever-increasing prices. Ever since I came to this House, I have fought to ameliorate the cost of living for my constituents and those travel costs. That is why I have chosen to speak on that in the Queen’s Speech debate. I feel that, sadly, there is too little in the Queen’s Speech that will bring down the cost of living for Scottish families.

I will start with fuel. I know that the Government have put off the 3p duty rise until August and brought in the fuel duty derogation, as I have said. The 5p is very welcome, but we still have the ever-present problem of the high cost of fuel in rural Scotland. Some drivers in my constituency currently spend nearly a quarter of their yearly income on fuel. Some fill up their tanks only once a week, but others do so several times a week. As long as the UK has the highest petrol duty in Europe, we will still have to pay that price. We have heard the Chancellor speak about dealing with that through the fair fuel stabiliser, but to date we have seen very little action on this subject, and I hope that the Government bring that forward as a second leg to follow the welcome rural fuel derogation.

Additionally, VAT adds to the burden of the cost of fuel, and that 20% hits our pockets hard. It is a shame that the Labour party, with a couple of honourable exceptions, did not support the Scottish National party and Plaid Cymru in the Lobby by voting against the VAT increase. Instead, they abstained. As we know, VAT is no respecter of ability to pay; it is a tax that hits need and hits lower incomes disproportionately.

The list goes on. The cost of energy in general is increasing at an untenable rate, and in my constituency that means increasing costs for the basics, such as light and heat. Sadly, my constituency leads the UK fuel poverty statistics. The Government say that we cannot spend our way out of a recession and that in theory the Government and the people have to tighten their belts to survive until something happens to bring the economy back on track. Some might say that that is a good microeconomic plan for growth that follows the example of how an individual saves money, but I question it as a macroeconomic plan. Here is a quotation:

“Unemployment, and fear that it will spread, drives down wages, incomes, and consumption—and thus total demand. Decreased rates of household formation… depress housing prices, leading to still more foreclosures. States with balanced-budget frameworks are forced to cut spending as tax revenues fall”.

That is a destabiliser that Europe, and the UK specifically, seems intent on adopting. That quote was from the Nobel prize-winning economist, Joseph Stiglitz, who once worked in the Clinton team but has now gone on to higher and greater things: he is on the Scottish First Minister’s council of economic advisers. In essence, his words are a stinging rebuke to the Prime Minister, who has said that the answer to debt is not more debt. I think he sees that from the wrong perspective. Surely the answer to hunger is not greater starvation, and that is what is happening to the economy at the moment.

What we need is to get people back to work. When the private sector fails to provide jobs, surely the Government should look at jump-starting the economy by investing to create assets, as I said when I intervened on the hon. Member for Gainsborough (Mr Leigh). I am saying not that we should spend recklessly for its own sake, but that we should invest in the country’s long-term assets and make wealth by going from cash to assets in the long term. Joseph Stiglitz argues that countries that do that will enhance their long-term growth. That is why in Scotland we have £320 million-worth of shovel-ready projects, from Ullapool pier to Glasgow university and the Clyde gateway to name but a few. We are ready to put people back into work—to stimulate, to prime the economy. Those projects are ready to go and ready to create jobs.

That would surely help the wider economy and the cost of living. Everything that involves getting people back to work sees a community become more active and people off the streets—undertaking productive activities and gaining and providing long-term assets for their communities. It means that locals see an increase in people making purchases, from eggs to clothes and, of course, iPads, which have become a common feature in the House, and that in turn travels up the economy, letting the world know that it is okay to start spending again. Confidence will grow and we will, I hope, see prices moving in the right direction. Rather than waiting for the mystical something that I mentioned earlier, we need to ensure that the tangible something is happening, increasing capacity in our economy.

Mr Speaker, you might be interested to know that new figures point to Scotland having avoided a double-dip recession. How is that possible? The figures are tentative, and of course I make the proviso that success has many fathers and failure is an orphan, but it looks like a possible success. There will be many claims on it, but it is potentially because the Scottish Government have been investing, where we can, and taking economic decisions, where we can, to help alleviate the cuts from the UK Government, following the example and advice of economists such as Joseph Stiglitz and making the right decisions for Scotland.

Scotland needs to be able to grow confidence in our economy, and the only way to do that is to get people back to work. Unfortunately, we currently have to ask permission to help ourselves, but by autumn 2014 we will not need to do so: we will have removed the brakes from Westminster on the Scottish economy, and Scottish growth and recovery from current troughs will be faster and more efficient.

17:56

[Graeme Morrice (Livingston) (Lab)]

It is a pleasure to speak in this debate in support of the Labour Opposition’s amendment.

With the cost of living remaining the primary concern of most families throughout the country, this Queen’s Speech should have started to address the real day-to-day concerns of squeezed households. Soaring energy bills, the increasing price of food and fuel and big rises in the cost of travel are all hitting households hard, but, as we have seen time and again over the past two years, this out-of-touch Government have missed another opportunity to give some relief to hard-working people.

Those people want to know that the Government are on their side, but the coalition has instead offered more of the same failed approach, demonstrating how utterly clueless it is about the real needs of hard-working families in this recession. It has failed to address the cost of living crisis; it has failed to deliver help for hard-pressed families; and it has failed the crucial test of fairness.

Labour would have brought forward measures to help families immediately by addressing the cost-of-living crisis, tackling rip-off prices and creating real jobs for young people. In contrast, this hapless Tory-led Government are adding to the financial pressures that families face by cutting working tax credits, forcing middle-income pensioners to pay more tax and condemning more than 1 million young people to life without work, with the unemployment rate for 16 to 24-year-olds in Scotland, where my constituency is based, standing at 94,000, or just over 23%, in the period from January to March. So the Government are piling the financial agony on to families, when families can least afford it, with some decisions, such as the tax cut for millionaires at the expense of middle-income pensioners, rubbing salt into the wounds.

The Institute for Fiscal Studies, in its analysis of the Chancellor’s autumn statement, stated that median-income families would be worse off in 2015 than they were 10 years ago, with soaring energy bills being one of the main contributing factors. That is borne out by the experience of people in my constituency, with the damaging impact of massive year-on-year increases in fuel bills often highlighted as their single biggest financial headache. The cost of a typical annual dual gas and electricity bill is now £1,310—up by nearly 50% in the past four years alone. Under the toxic combination of a Tory Westminster Government and an SNP Scottish Government, more than one in three households in Scotland is estimated to be living in fuel poverty, including a staggering 65% of single pensioner households—12% higher than the UK average. This dire situation led Citizens Advice Scotland to declare last year that Scotland is now in a “shameful crisis” of fuel poverty.

Despite a mild winter, millions of people are now receiving bigger energy bills than they had planned for. Many with fixed or reducing incomes will struggle to meet these rising bills, and that will result in even more households slipping into fuel poverty. With about 80% of households currently paying over the odds for their energy, there is clearly a massive problem in the domestic energy market that requires an urgent response. However, while voluntary sector groups and campaign organisations such as Which?, 38 Degrees, Consumer Focus and Citizens Advice have taken decisive action to try to tackle the fuel poverty crisis and to help desperate energy customers, the Government have done next to nothing to tackle soaring energy prices.

The Big Switch campaign initiated by 38 Degrees and Which? is a particularly welcome initiative aimed at helping as many consumers as possible to achieve savings on their energy bills by negotiating a collective deal with a supplier. Such mass consumer action has the potential to make an important contribution to securing a fairer deal for energy customers, and I am delighted that the Leader of the Opposition has said that Labour will explore doing something similar to support local communities to achieve better deals on their energy needs. This proactive, co-operative approach, working in partnership with local communities, contrasts sharply with the Government’s approach in sitting back and allowing hard-pressed families to suffer.

The baffling array of tariffs, which now stands at over 400, is one of the biggest frustrations for energy consumers, with 70% saying that they are confused about which tariff offers them the best deal on their energy. In a speech last month, the Deputy Prime Minister heralded a move to force the big six to send their customers an annual update on their cheapest tariffs to try to ensure that consumers have the information they need to switch to a better deal. He described that as a landmark decision, but senior energy company managers have revealed that much of what they agreed with the Government is already being done, and uSwitch warned that consumers would not necessarily be made aware of the “best deal overall”. So while the Government’s agreement with the big six may help some consumers to switch to a better deal, many will still find it difficult to find the best deal for them, and it does nothing to tackle the bigger problem of the stranglehold that the big six has on the energy market.

The bottom line is that the market needs a complete overhaul, but this Government are only tinkering at the margins. Labour will stand up for hard-pressed families and pensioners and end the energy rip-off. We would introduce an energy Bill to break up the dominance of the big six energy companies by requiring them to sell power into a pool, allowing new businesses to enter the market, increasing competition, and driving down energy bills for families and businesses. By forcing energy companies to introduce a new simple tariff structure, we would make tariffs fairer and help all energy customers to get a better energy deal.

We would also require the energy companies, by law, to offer over 75-year-olds the lowest rate available. Such a move would enable more than 10,000 over 75-year-olds in West Lothian, for instance, to save as much as £200 on their energy bills, giving real, practical support to those who need it most. That kind of tangible, affordable measure demonstrates how it is still possible to deliver fairness, even when money is short, by offering ways to help families immediately. It is also indicative of how Labour Members would have acted on the priorities of hard-working people had we been writing this Queen’s Speech.

18:04

[Pat Glass (North West Durham) (Lab)]

Apart from half an hour when I nipped out to a meeting, I have sat through the entire debate. Two things have characterised this debate. The first was at the beginning of the debate, when the two parties of government appeared to blame each other for what was happening. At times, it was like watching a Punch and Judy show.

Putting that aside, the thing that has characterised the debate the most is that Members seem to be living in two completely different worlds. My hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman) and my hon. Friend the Member for Makerfield (Yvonne Fovargue) spoke passionately about the impact of the Government’s policies and cuts on people in their communities—those who are living on the margins, families who are barely keeping their heads above water and even those who have gone under. I even recognised what the hon. Member for Rossendale and Darwen (Jake Berry) spoke about. From listening to other Members, it appears that while those parts of the country are slipping under, others are living in clover as a result of the Government’s policies.

The Queen’s Speech was a lost opportunity. I would have liked the Government to have included some measures for growth, particularly in the construction industry. Those of us who have been around for a while know that in the past we have built our way out of recessions. Tax reliefs on construction and capital projects would have been a good place to start if the Government were serious about growth.

I would have liked the Government to have announced investment in social housing in the Queen’s Speech. In the north-east, 1,900 people are classified as homeless. The north-east is not a region that is usually associated with homelessness, but the combination of high unemployment and stagnant growth is forcing those at the bottom of our society out on to the streets. The Queen’s Speech contained nothing to help with that tragedy.

There was nothing in the Queen’s Speech to support families who are struggling to feed themselves and to heat their homes. The number of food banks in this country has risen from fewer than 10 in 2010 to more than 2,000. The number is growing daily as communities recognise what is happening in their midst and organise themselves to help the most vulnerable. I am involved with the Food4U food bank in my constituency. It is not the feckless or the workshy who are queuing up for food parcels, but decent families who have faced recent redundancies and who have to wait for up to six weeks for their unemployment claims to be processed, and the disabled who are appealing against employment and support allowance decisions and who face a wait of up to 13 weeks for their appeals to be processed. In the meantime, those families are left with nothing to live on, except what their neighbours and communities collect for them.

Since 2010, the Government have shown themselves to be firmly on the side of vested interests. They have shown that in banking, the rail industry and the fuel industry. They stand firmly with the big six energy companies, the rail companies, banks and millionaires; not with the ordinary people of this country who are struggling to bring up their families and pay their bills. The Secretary of State said at the beginning of the debate that he is holding the big six to account, but he could not give us any details. Quite frankly, the secret deal with the big six is not fooling anybody. Instead of supporting British industry, such as the solar industry in my constituency, the Government stand firmly on the side of vested interests and against the consumer. In the solar fiasco, the defence of the big six energy companies and their failure to tackle big bonuses in the water, communications and banking industries, the Government have shown again and again that they stand on the side of vested interests and against the consumer.

I will make one final point because I want to leave time for other people. I want to give a message to the junior partner in the coalition Government. My constituents are desperately worried about their jobs and about how they will make ends meet. One constituent told me at the weekend that it costs him more to fill up his car than to pay his mortgage. People are worried about the cost of heating and fuel. Rail fares are rising. Despite the Government telling us that rail fares have gone up by only 1% above inflation, people tell me that their rail fares have gone up by 11%. People are worried about their public services. They see their libraries closing. They are frightened when they see the police on the streets, marching against 20% cuts in police budgets. They are worried about the impact of rising crime. They are worried about cuts in health and in school budgets. What they are not worried about is reform of the House of Lords. The House of Lords may be of interest to Liberal Democrats and political anoraks, but it is of no interest whatsoever to most of my constituents, who do not have the time to intellectualise about political reform because they are too busy worrying about how they are going to feed the kids, put fuel in their cars and pay their bills.

This Government are out of touch with ordinary people’s lives, they are firmly on the side of vested interests and they are at war with themselves. They need to go now, before they do any further damage.

18:08

[Mrs Jenny Chapman (Darlington) (Lab)]

It is a pleasure to follow my hon. Friend the Member for North West Durham (Pat Glass). I cannot help but agree with her final remarks, contrasting the conflicting priorities of the Government and the people we represent. I have not yet had any correspondence, phone calls or visits to my surgeries to discuss House of Lords reform, and I look forward to having those conversations, should they arise.

At the moment, we talk much more about local bus services in Darlington, a problem that has been brewing for quite some time. It all started for us in the north-east, particularly in my town, in the 1990s, when bus services were deregulated with a view to creating choice and competition, improving service and getting fares down—I think that was the plan. Let me share with colleagues what happened in Darlington—the experience is not unique to Darlington, but I think the problems were perhaps more pronounced there than anywhere else.

We had gridlock on our streets due to bus wars. Two big bus companies decided to compete for the same routes and both ran free buses around the town in an attempt to get the other company off the road. That did not help consumers and passengers in the town. It did not improve public transport. Instead, it landed us with, in effect, a council tax payer-subsided monopoly on bus services in Darlington, and we have pretty much been stuck in that position ever since. Now, the council is having to make difficult decisions on the subsidy it offers to run some of the routes, but I cannot even find out how much council tax payers are paying to subsidise a route across Darlington. Extraordinarily, I have been told that the information is commercially sensitive. Council tax payers in Darlington are subsidising to the tune of roughly £500,000 a year a company owned by a business in Germany that turns a profit of about £500 million a year, yet we do not know exactly how much we are paying for our bus routes. That is an intolerable situation for my constituents.

That is a big problem for us because, according to Passenger Focus, 34% of residents in my constituency have no access to private transport and are forced to use the bus services. Recently, I was quite stunned to see a London Routemaster bus travelling down one of the main arterial roads into Darlington. It was there because the engines of the new Routemasters are made in Darlington, and they were being tested. However, that sight brought home to me the contrast between the services available to people in major cities such as London, which are excellent, and those available elsewhere, where fares are not regulated, ticketing does not allow use across different services, and routes and timetables are not integrated. Most worrying for me, there are few means short of spending hundreds of thousands of pounds each year on subsidies by which residents and communities, and even councillors and MPs, can influence the routes on offer.

Fares in Darlington have increased by 6.1% in the past year, which is considerably more than inflation. We need to take a look at fares, given that bus users tend to be the young, the elderly and those on low incomes. I would strongly support the creation of a strategic transport infrastructure, or a body similar to Transport for London for the rest of the country, so that the system can be monitored and organised much more effectively.

[Gavin Shuker (Luton South) (Lab/Co-op)]

Does my hon. Friend agree that one of the reasons why the major increases in fares are so bad is that for many people, they are essentially a tax on work? People need to be able to get to work to obtain employment and to keep their living standards high.

[Mrs Chapman]

My hon. Friend makes a very good point. It has been made before in the debate, and we need to consider it.

I have constituents who previously needed to use two buses to get to work, at considerable expense and with no cross-ticketing. They were just about able to manage that, but now those bus services have been removed. Somebody who works after 6 o’clock at night, or who lives in one of the surrounding villages, cannot keep their job. I know people in my constituency who are no longer in employment because the bus services have been removed.

It is not just people in work that are affected but people who rely on health services. I am sure we all have stalwart, hard-working councillors in our constituencies, and I have one in particular, Bev Hutchinson, who is relatively newly elected and a fairly formidable woman. She has taken it upon herself to take surveys on buses around the town. She found a constituent, Betty Sowersby, who is 74 and lives on Barmpton lane in Darlington. Betty told The Northern Echo that she was in hospital for a major operation in March and now could not use the bus to get back from her doctor’s surgery, where the doctor checked how her wounds were healing. She said that there were a lot of elderly people like her along her street who could no longer even go and do their shopping independently.

When civil servants and policy people consider bus issues, they too often focus on the problems of getting around London and major cities and do not think enough about the day-to-day problems facing people living in regions such as my own. Those problems exist in rural areas and even in quite large towns such as Darlington, where no integrated structure exists. Local government is not in a position to subsidise bus companies in the way it has in recent years. One could argue that perhaps it should not have been doing that, but that is how the system has been maintained for the past decade. It cannot be maintained like that in the future, so the Government need to give serious thought to how to provide bus services in our regions from now on.

18:14

[Gavin Shuker (Luton South) (Lab/Co-op)]

I am extremely grateful to you, Mr Speaker, for calling me towards the end of the debate. I promised a little variety if I were called. I know that many issues to do with the cost of living have been raised in the course of the debate. In a sense it is hard to narrow them down to one or two, but I wish to refer to a few problems with regard to utility bills, particularly water bills.

We know that we in this country are facing not just some of the toughest global economic times but, as we have highlighted, a very tight fiscal contraction—I nearly said “contradiction”, which might actually be the right term—in the UK economy. Against that backdrop, there is a cost of living crisis. We have heard from many Members of all parties about the rising cost of energy and fuel and the inflation-busting rises in transport fares.

Back in February, I had the opportunity to go to the university of Leeds, where there is a brilliant research centre on water policy. While I was there, I gave a speech in which I talked about the consensus that there has been about the privatised water industry for the past 20 or 25 years. That consensus has stretched across both major parties, customers and companies. It involves a relatively low-risk settlement for investors, with reasonable levels of investment in water infrastructure and rising standards of water quality. Crucially, customer buy-in has also taken hold over the past 20 years or so.

In that speech, I laid out my concern that we risked walking into a perfect storm this year. We have drought conditions, and sadly, there was very little in the Gracious Speech about concrete action on the rising cost of water. While that concern exists there is every chance that, just as the Government and Opposition have rightly targeted energy bills in recent months and years, we will have to take similar action on water as people’s dissatisfaction with the service that they are receiving continues to grow.

[Angie Bray]

One problem I raised earlier in the debate is that the regulator sets soft targets on plugging leaks. One of the most frustrating things for my constituents is finding themselves paying water bills in a drought while the rain is plummeting down. Does the hon. Gentleman agree that it is because the leaks are not being plugged that we are still in a drought, and that we need tougher targets?

[Gavin Shuker]

The hon. Lady makes an excellent point. Ofwat, the industry regulator, lays out tough targets on water companies reducing leakage in some places, but not so tough targets in others. The fundamental problem is that if the cost of water being lost is less than the cost of making the repair, it is not economically viable for water companies to make the repair. That is why we need comprehensive action and a comprehensive water Bill, rather than a draft Bill, in this Session.

[Mr Tom Harris (Glasgow South) (Lab)]

Does my hon. Friend see any merit in the idea of alleviating drought conditions in the south of the country with some form of network distribution of water? That should be implemented in order to allow water from Scotland—believe me, we have too much of it—to be transported south in an efficient manner through a national pipeline network.

[Gavin Shuker]

We are jumping around in water here. My hon. Friend is my new colleague in the shadow Environment, Food and Rural Affairs team and I am sure hon. Members on both sides of the House would want to welcome him back to the Front Bench. He makes an extremely good point. What is required in the industry to move water from places where it is in good supply to areas where there is less? For me, that is not primarily about building a big pipeline from north to south; it is also means getting interconnectors between different water companies working appropriately. Of course, the carbon cost of that is great.

[Mrs Chapman]

Does my hon. Friend believe it is easier to move water around than it is to move people? We have plenty of water in the north-east, but we could do with more people and more jobs. If there were a more even distribution of people and jobs, we could save ourselves the job of moving water.

[Gavin Shuker]

My hon. Friend once again makes a great point, but the key point missed by the lack of action on water in the Queen’s Speech is that we can reduce demand as well as increase supply. There is increasing need in growing areas such as London, the south-east and, for example, Yorkshire, where there could be 1 million new household customers in the market in the next 10 years, but there would be benefits for all if we could increase the number of people in an area without increasing the amount of water used.

Last month—April—water bills increased on average by about 5.7%, which is about £20 per year on the average bill. Ofwat estimates that 2.2 million households spend more than 5% of their disposable income on water. Sadly, the Queen’s Speech promises only the publication of a draft Bill, which shows a Government who refuse to take action.

The Gracious Speech contained a commitment to bring forward only a draft water Bill, which is disappointing because the Government have broken their promise to introduce a comprehensive water Bill in this parliamentary Session to reform the water industry. That means that the much needed reforms—the Opposition agree on what needs to be done—and action to keep bills affordable will be even more delayed, which is a slap in the face for the many families who are struggling to pay their water bills.

There was a flurry of activity in the previous Session to rush through the Water Industry (Financial Assistance) Act 2012. That legislation does nothing to tackle water affordability in the long term. In the short term, it will help households in the south-west to pay their water bills by giving them a direct £50 subsidy, but it is worth noting that without action to tackle affordability in the long term, that £50 will be gobbled up within two years because of the existing increases in that area. The Opposition believe that assistance should be extended to all households who are struggling to pay their bills, which is why I proposed amendments to ensure that water bills remained affordable for all.

As the Opposition know, with the wettest drought on record and hosepipe bans imposed on almost half the country, now, more than ever, we need urgent action to reform the water industry, to ensure that water supply meets demand and to stop the harmful practice of taking water out of the natural environment in places where we cannot afford to do so. It seems, however, that the Government have no sense of urgency. As we know, in politics momentum is everything. Right now, water issues, whether flooding, drought, rising costs for customers or other things, are at the forefront of people’s minds. This is a once-in-a-Parliament opportunity to take action on water.

The impact of climate change means that water resources will become more and more scarce. The recent droughts and floods could be an indication of what is to come. What needs to be done to ensure that water remains affordable for hard-pressed bill payers in the long term? Since the botched privatisation in the early ’90s, water bills have increased year on year. We could take urgent action on abstraction—taking water out of the natural environment—but the Government have promised no legislation until 2015, and they do not propose to complete that process until 2030.

We could also take urgent action on leakage. The problem is that water companies generally repair leaks only if it costs more in lost water not to do so. Ofwat sets targets, but many companies can go years at a time without making a significant reduction in their leakage rates. We need to ensure that the comprehensive water Bill, when it comes, tackles the issue of leakage head on. By 2015—the end of this Parliament—more households will be metered than unmetered, yet there is little evidence of the deep thought required on the matter from the Government.

The further delay confirmed in the Gracious Speech to the comprehensive water Bill is serious not only for those who care about the environment but for people right across Britain struggling to pay their utility bills against the backdrop of the highest unemployment rate for 16 years and the first double-dip recession in 37 years. While the Government continue to delay desperately needed reforms, hard-working families are feeling the pinch and footing the bill.

18:26

[Maria Eagle (Garston and Halewood) (Lab)]

It is good that the Transport Secretary has made it here for the debate—indeed, she made it from the beginning. We have all enjoyed her attempt to revive the 1970s-style public information films, with her call to the public to re-route, re-mode and re-time their travel. The Opposition were worried that “re-moding” would mean she might have still be en route from Putney, but she was here right from the beginning—so congratulations to her. I am even more pleased that she is closing the debate, because had it been the Under-Secretary of State for Transport, the hon. Member for Lewes (Norman Baker), he would probably have sent a DVD, as he now frequently chooses to do—presumably to avoid having to face the outside world. That probably explains why he is still using expressions such as, “Get into the groove”, as he does in this now infamous film.

The debate has focused on the cost of living crisis. We have managed to get 23 Back-Bench contributions into the debate, which is a decent number. It has been a wide-ranging and excellent debate, and we have heard good and powerful speeches from Members on both sides of the House, but particularly from my right hon. and hon. Friends on the Opposition Benches—especially from my right hon. Friend the Member for Manchester, Gorton (Sir Gerald Kaufman), who declared himself a devout Keynesian before uncompromisingly demolishing the record and credentials of both parties in government. I particularly enjoyed that speech.

We have heard excellent contributions, including on social care from my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), on consumer issues and in particular payday lending, from my hon. Friend the Member for Makerfield (Yvonne Fovargue). On transport issues, I enjoyed hearing from my hon. Friends the Members for Sedgefield (Phil Wilson) and for Lewisham West and Penge (Jim Dowd). We heard interventions from my hon. Friends the Members for Ashfield (Gloria De Piero) and for Bridgend (Mrs Moon) and a speech from my hon. Friend the Member for Darlington (Mrs Chapman). We heard interesting contributions on fuel costs from across the House.

As my right hon. Friend the Member for Don Valley (Caroline Flint) set out so well at the start of the debate, the Government’s legislative programme for the year ahead contains not a single measure to address the rising cost of living. Just as the Government have shown that they have no practical answers to address the rising energy bills facing households, nor do they have any solutions to tackle rising rail and bus fares or to reduce the pressure on motorists. The truth is that this is a Government completely out of touch with the impact that rising transport costs are having—on household budgets; on families struggling to make ends meet; on those who want to work or stay on in education or training; and on pensioners who want to stay active rather than becoming isolated.

The rise in transport costs is happening not in isolation from the decisions that have been made by this Government, but as a result of them. Cutting investment in the rail network too far and too fast, creating a black hole that has to be filled with inflation-busting fare rises; cutting funding for local transport too far and too fast, forcing local authorities to reduce their support for bus services, with one in five supported services already lost and with fares rising too; increasing VAT, which has contributed to prices at the pump reaching record levels—these are choices that have been made by the Chancellor and the Transport Secretary because they are out of touch with the pressures that families face and with the consequences of their decisions. It simply is not good enough for Ministers to use the deficit as a catch-all excuse for rising costs—as they seek to do all the time—because the decisions they have taken will make it harder to reduce the deficit. Indeed, they have already led to the Government having to borrow £150 billion more than they had planned.

There is no joined-up government, and making the wrong choice comes at a price. For example, the Government are telling young people to stay on in education post-16, yet many young people are no longer able to take up college courses because the bus into town has been cut or the concessionary fare scheme has been axed.

[Andrew Gwynne (Denton and Reddish) (Lab)]

My hon. Friend is making a superb case in respect of the bus services to college. Let me give her an example from my constituency of a barmy outcome of bus deregulation. We now have different bus companies operating the buses going to the schools from those operating the buses coming back, which means that parents are having to pay twice for their children’s bus fares.

[Maria Eagle]

My hon. Friend is correct, of course. The Government have said that those who are out of work should be willing to travel for up to 90 minutes to take up a reasonable job offer or lose their jobseeker’s allowance. The Secretary of State for Work and Pensions has said:

“The truth is there are jobs. They may not be absolutely in the town you are living in. They may be in a neighbouring town…We need to recognise the jobs often don’t come to you. Sometimes you need to go to the jobs.”

Not only is he out of touch about the extent to which there are actually jobs, but he seems to have no concept of the cost of travel under his Government. Those on the minimum wage will have take-home pay of just over £10,000 a year, but a season ticket for the 90-minute journey between Newark Northgate and King’s Cross would cost more than £8,000. Under the Government’s policy, therefore, they expect someone to spend up to 77% of their take-home pay just to get to work. Coming into London from Braintree would cost someone in a minimum wage job 46% of their take-home pay. There are other examples. The cost of transport is making it harder for people to take up jobs or to stay in education, as my hon. Friend the Member for Sedgefield made clear in the examples that he gave.

Of course we need to bring down the deficit, but we need the right balance between a plan for reducing spending and a plan for jobs and growth. That is why I have supported more than two thirds of the Government’s cuts to transport spending—difficult cuts, which we would have had to make in government as well, to the Highways Agency, Transport for London and major transport schemes. However, £6 billion is two thirds of the reductions in expenditure planned across this Parliament. We would not have cut support for rail and local transport services so far or so fast. We could then have relentlessly focused on keeping down the cost of transport, helping households through tough times and not adding needlessly to the pressures that they face. We would have held fare rises at 1% above inflation during this Parliament, and without the need to cut one penny from the investment in the network that the Government are rightly taking forward. We could also have protected local bus services and kept fares down.

Of course, Ministers are so out of touch that they claim that those fare rises and cuts to services are not actually happening. In his autumn statement, the Chancellor claimed that he had succeeded in keeping increases in rail fares at just 1% above inflation. He said:

“RPI plus 3% is too much. The Government will fund a reduction in the increase to RPI plus 1%...It will help the millions of people who use our trains.”—[Official Report, 29 November 2011; Vol. 536, c. 810.]

Why did fares rise in January by as much as 11% on some commuter routes? What the Chancellor perhaps forgot to mention was that the Transport Secretary—not this one, but her predecessor—had given back to the train companies the right to add up to a further 5% increase on top of that cap. [Interruption.] That was banned when we were in government once times were getting tough. By not cutting the rail budget so far and so fast, we would set the minimum—[Interruption.] If the Minister of State, Department for Transport, the right hon. Member for Chipping Barnet (Mrs Villiers) wants to intervene, perhaps she would like to do so properly instead of chuntering from a sedentary position. By not cutting the rail budget so far and so fast, we would not only set the maximum fare rise at 1%—

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

The point I was making is that if the hon. Lady has such a problem with fares basket flexibility, why are her Labour colleagues in Cardiff still applying it in Wales?

[Ms Eagle]

There is devolution in Wales, where they make the choices on the basis of the budgets assigned to them by this Government. We have been very clear that we abandoned flex and stopped it, and Lord Adonis made it clear that, because times were so tough, we were not going back to it. The current Government have reintroduced it, while pretending that they are cutting fares, which they are not. It is simply not true, as Ministers claim, that this is just an additional cost to the taxpayer. As the National Audit Office has said,

“there is a risk that the benefit of the resulting increase in passenger revenues will not be passed on to taxpayers fully, but will also result in increased Train Operating Company profits.”

This is a Government who are not just out of touch with the impact of these fare rises, but unwilling to stand up to the train companies and enforce even the cap they claim to have set. This is indeed a Government who are in hock to the TOCs.

The pressure on commuters is set to spiral over the next two years because Ministers have decided that next year’s fare rises are to be even higher—up to nearly 12% on the current rate of the retail prices index. That is nearly 12% in both 2013 and 2014, and the tender documents for the new franchises reveal even more pain on the way. Bidders are promised even more freedoms on fares, including the right to introduce a new super-peak fare at even higher prices, hitting hard-pressed commuters still further. Franchise bidders are promised that they can cut daily services by up to 10%. They are no longer required to improve performance over the life of the franchise and no longer required to maintain the same level of CCTV on trains.

As we exposed last month, a programme of ticket office closures has already been signed off by Ministers, but staffed ticket offices are not a waste or an inefficiency that can be cut out with no resulting impact on service. The impact will be passengers cheated out of the cheapest fares, which are not always clearly advertised or available at ticket machines. Those without access to the internet, often those seeking work or older people, are unable to get the better deals and are left to pay over the odds for their train tickets.

Ministers continue to deny that they have signed off these closures. At the last Transport questions, the Minister of State assured the House that “they are not happening”. That is what she said, yet we have seen the e-mail from the Department’s own rail fares and ticketing review, warning the Department’s press office not to deny that ticket office closures have been given the green light because

“the Minister has already decided to approve some ticket office closures…it’s just not been announced yet.”

I have a further leaked document with me. This is from London Midland, the company set to be the first to implement a closure programme—for the first of the 675 ticket offices across the country that we know have been earmarked for closure. This leaked document reveals that London Midland will save £1.25 million a year by closing 86 ticket offices—profits before passengers. It also refers to a payment of £200,000 from the Department for Transport. Perhaps the Secretary of State—or the Minister of State—can confirm when she closes the debate whether the Department for Transport is actually paying companies to push through these closures? A reference in this document suggests that that might be the case. The Minister of State can tell me now if she would like to intervene. She does not want to, so perhaps the Secretary of State will address the issue at the end of the debate. The future of rail under this Government will be higher fares, more overcrowding, less CCTV and fewer ticket offices.

If Ministers are out of the loop when it comes to what is happening to rail fares and ticket office closures, they are even more delusional when it comes to bus services. Last month the Under-Secretary of State for Transport, the hon. Member for Lewes, told the House that what had been said about bus cuts was “entirely untrue”, and claimed that

“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]

It is not the Opposition who are talking up bus cuts, but the major operators. Arriva told my hon. Friend the Member for Nottingham South (Lilian Greenwood) that

“with the 20% reduction in BSOG, the ongoing cuts to the concessionary fare scheme, and a reduction in tenders across the UK, this has put enormous pressure not only on Arriva, but the bus industry as a whole.”

These are real cuts. Evening and Sunday services have been withdrawn on Route 32 in Wycombe. The Saturday service has been withdrawn on Service 84 in Maidstone. Route 1 in Watford, Route X9 in Milton Keynes and Service 50 in Guildford have all been cut. In fact, one in five of all supported services have been lost, and fares are spiralling. The Under-Secretary of State should stop coming to the House and claiming, as he did during last week’s Transport questions, that there have not been any bus cuts, because there have.

The Government need to understand that not just buses but lifelines are being cut: lifelines connecting young people with colleges, parents with child care, and older people with shops and services. The loss of a bus service can have a devastating impact on those without cars, and on those in rural areas in particular. It can have a devastating impact on their lives, their chances, and their capacity to get out and about.

Like the train fare rises, the bus cuts are a direct consequence of the Government’s decision to cut the councils’ funds for local transport by 28%, and their decision to remove any requirement for what is left of that money actually to be spent on transport. At the same time, the Government have cut the subsidies given directly to bus companies by a fifth. The result is that not only are there additional pressures on family budgets, but young people are simply unable to reach their full potential.

Ministers need not take my word for that. They can listen to the Association of Colleges, which has warned of a drop in further education enrolment. They can listen to the 60% of colleges that report a drop in transport spending by their local authorities. They can listen to the Joseph Rowntree Foundation, which has revealed that 40% of young people say that their decisions on post-16 education were influenced by transport, not by courses. When students travel, on average, between nine and 35 miles to get to college, and when 72% of them rely on the bus to get them there, it is no wonder that the loss of bus services will hit them and their life chances hard.

The hon. Member for Lewes told the House that he had held discussions with bus companies about the costs of travel for young people. No doubt they delivered the same message to him as they have delivered to me when I have raised our own proposals for a concessionary fares scheme for 16 to 19-year-olds in education or training. I believe that the bus companies want to be helpful, but Brian Souter of Stagecoach told me—

[Mr MacNeil]

A good man.

[Maria Eagle]

He is a controversial man. Anyway, he told me,

“we do not believe we could fund this as BSOG is being cut by 20% next year”.

Let us be clear about the fact that it is the policies of the two parties on the Government Benches that are preventing us from reaching agreement with the bus companies on such a scheme.

Ministers should consider the impact on school transport. They should listen to the Campaign for Better Transport, which has demonstrated that almost three quarters of local education authorities have made cuts in school transport. As a result, parents are struggling to afford the fuel costs of the school run, or to juggle their jobs with getting the kids to school. The Government’s actions are adding to the burden on families. They should also take account of the impact on older people, and listen to Age UK and the National Pensioners Convention, which have said in a letter to the Prime Minister:

“Cuts to bus services will hit the poorest and most vulnerable hardest—contrary to the Government’s message that the cuts will be socially fair”.

They are not fair. The Prime Minister may think that he has stuck to his election pledge to protect free bus passes, but up and down the country pensioners are asking, “What is the point of a free bus pass if there is no bus?”

For motorists, too, the Government have created higher costs. Despite all the pre-election promises, they have failed to tackle the cost of fuel. Those on average incomes have seen the cost of running their cars reach 13% of household expenditure, and it now accounts for a quarter of the monthly budgets of those in the lowest income group. That is before we consider the huge rises in insurance premiums in the past year—up 74% for a small family car. Yet all the Government’s claims to have cut fuel duty have been wiped out by a VAT hike that has pushed up the price at the pump by more than 3p a litre: the wrong tax at the wrong time, hitting families and businesses hard, and all because Ministers stubbornly refuse to stand up to the banks and repeat the bank bonus tax that we imposed in government.

So on rail fares, on bus fares, on fuel costs, this is a Government out of touch with the impact of the rising costs of transport. Fare increases are outstripping wage increases several times over—if people are fortunate enough to see a wage rise at all. There are families now paying more on commuting than on the mortgage or rent. That is the cost of living crisis facing households up and down the country—families feeling squeezed across the board, energy and water bills rising, the cost of transport rising, nothing in the Budget to help, and nothing in the Queen’s Speech to help. Whether it is the energy companies or the train companies, this is a Government unwilling to stand up to vested interests. We will do so.

18:45

[The Secretary of State for Transport (Justine Greening)]

I am obviously delighted to be here today. The hon. Member for Garston and Halewood (Maria Eagle) ought to try re-moding some time. We re-moded a lot of Ministers out of their cars at the last election, and I am pleased to say that many of them have had to get used to using the public transport system that many Ministers themselves use today, and very good it is, too. I came in on the District line today, and it was working perfectly.

We have had a broadly constructive and important debate on the cost of living, and some measured contributions from around the House. They have borne out that everybody realises the pressures that global oil and food markets and prices—combined, of course, with inflation—have put on household bills in recent years. That is why, even as we deal with the deficit left to us by Labour, this Government are taking action wherever we can to help family budgets. It is why, through raising the personal allowance, we are cutting income tax for 24 million people and taking 2 million people on the lowest incomes out of income tax altogether. It is why we have helped councils up and down the country to freeze the council tax for the second year running. It is why we cut fuel duty in the Budget last year, deferred the increase planned by the last Government in January, and cancelled another increase proposed by the last Government for this August.

When it comes to home owners being able to pay their bills, the most important thing we as a Government can do is to help maintain the conditions for the Bank of England to keep interest rates low. The hon. Member for Washington and Sunderland West (Mrs Hodgson) talked about the importance of that aspect of family budgets, and she is absolutely right. We have focused on that through the spending review, making a number of announcements setting out a credible plan to tackle the deficit and get control of our debts, meaning that we really help to keep interest rates low for the 11 million households with mortgages. That is in stark contrast to the impact of Labour’s plans.

I was very pleased to hear a number of Members welcome the Groceries Code Adjudicator Bill, which is in many respects long overdue. I look forward to the debate that will take place in this House to ensure it can be as effective as I am sure many Members want it to be.

The right hon. Member for Croydon North (Malcolm Wicks) and the hon. Member for Newport East (Jessica Morden)—I cannot see her in her place—talked about the importance of supporting families. This Government agree, which is one of the reasons why we have extended free nursery care to 15 hours for all three and four-year-olds and doubled the number of disadvantaged two-year-olds receiving 15 hours of free child care a week, helping 260,000 families. These are difficult decisions that we face, but we are doing our best to ensure that, in spite of that, we are helping the families that need our help and taking action wherever we can.

We need not take any lessons on the cost of living from Labour. Most people in Britain remember their record in government. Theirs was a Government who never lived within the public’s means, giving us the deepest recession since the war and running up the biggest budget deficit in our peacetime history. When it comes to measures that help to put money back into people’s pockets, we need not take any lessons from a party whose only approach to helping hard-working people make ends meet was to take more and spend more, raising tax 178 times, including 12 hikes in fuel duty. Labour Members talk about the cost of living, but on their watch band D council tax more than doubled; gas bills doubled; between 2004 and 2009 regulated train fares went up by nearly 20% and unregulated train fares went up by a quarter; and, for the first time since records began, GDP per capita actually fell in the last Parliament.

[Mr Harris]

rose—

[Ian Lucas (Wrexham) (Lab)]

rose—

[Justine Greening]

I will not give way to the hon. Member for Glasgow South (Mr Harris), as he has not been in this debate at all. I will give way to the hon. Member for Wrexham (Ian Lucas).

[Ian Lucas]

The right hon. Lady is talking about hard-working families, so can she explain why her Government chose to give tax cuts to millionaires rather than put money in the pockets of hard-working families so that they could stimulate the economy?

[Justine Greening]

I remember being in the Finance Bill debates last year, when the hon. Gentleman’s party voted against closing tax loopholes, which would really have strengthened our tax system. He knows full well that alongside reducing the top rate of income tax to 45%, which will help to stimulate entrepreneurship, we are closing loopholes, which will raise five times as much money from those very same people. We know that this sort of economic illiteracy that we are hearing yet again from the Labour party, which has no credible plan to tackle the deficit—its only plan is to spend more and borrow more—would mean that the economic credibility of the UK would collapse and interest rates would be likely to increase. Any business with a loan, any home owner with a mortgage and taxpayers funding the huge debt that Labour left our country would suffer the consequences, and that is not a path we plan to go down.

I shall briefly discuss some of the particular cost of living issues that hon. Members across the House have raised today. First, let me briefly address some of the challenges associated with rail fares. We know that keeping rail fares affordable is important, which is one of the reasons why we took action this year to limit the increase in regulated fares to 1% above inflation—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I apologise to the Secretary of State, but a lot of private conversations are taking place on both sides of the House and they are disturbing my ability at least, let alone that of hon. Members, to hear what she is saying. Perhaps people who want to have private conversations could go outside.

[Justine Greening]

Thank you very much, Madam Deputy Speaker. That was extremely helpful.

We have taken action to limit the rise in rail fares, but all in this House know that if we are really going to tackle the underlying reason why rail fares are pressured to go up year after year, we have to make the railway system that we inherited from Labour, which is costing us £3.5 billion a year more than it needs to, work more efficiently. That is the best way of bringing a long-term end to the era of inflation-busting increases in regulated fares.

I have to say that one of the most depressing things in this House is to hear Labour Members raise a whole load of problems but provide no solutions. Making the railway industry work more effectively together is another area where I have heard no solution from the hon. Member for Garston and Halewood (Maria Eagle). I recall that when I delivered my Command Paper oral statement she said, “I will be setting out our alternative shortly,” but she has never done so. I will not even talk about the response to the flex, because the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), demolished the hon. Lady’s argument so comprehensively that there is no need to go over that, compounding injury with further insult. In addition, we are, of course, making huge investments in rail and road. Those things will not only tackle some of the challenges we face today, but will build our country for the future.

On fuel duty, my hon. Friend the Member for Rossendale and Darwen (Jake Berry) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) made vital points about why it is important that we make sure that motoring remains affordable, and about some of the pressures on motorists arising from the high cost of fuel. We have all seen the oil price go up across the world and how that has fed into the price of petrol at the pumps. It is one of the reasons why, last April, we cut fuel duty, why we scrapped Labour’s automatic fuel duty escalator and why we have postponed the planned rise this January to August, as well as cancelling the next planned increase. As a result of that action from the Chancellor we have eased the burden on motorists by £2.5 billion this year. In fact, over the coming two years it will add up to £4.5 billion in motorists’ pockets that otherwise, under the previous Government’s plans, would have been in Treasury coffers.

[Mr MacNeil]

I am grateful to the right hon. Lady for giving way. Is there any news on the fair fuel stabiliser coming down the tracks at all?

[Justine Greening]

The hon. Gentleman will be pleased to know that we have done that. He knows that we introduced it in the Budget last year and that it was partly funded by the tax rise for oil companies. I know that he welcomed the rural fuel duty discount pilot and I was pleased to get that from him. It is an important pilot and we will see how it progresses over the coming months and years.

Let us make a comparison with what would have happened under Labour’s fuel duty plans. Labour would have had motorists paying £144 more and the average haulier would have been £4,400 worse off if we had not taken the action we have taken. When it comes to prices at the pumps, no one will forget Labour’s record: 12 increases in fuel duty while they were in office and a further six fuel duty hikes planned for after the election.

Let me address the very important issue of buses. I listened intently to the speech by the hon. Member for Darlington (Mrs Chapman) and I am happy to meet her to talk about her local issues. She asked whether we could have a Transport for London-type approach in the rest of the country, but local transport authorities have had the power to impose such a model locally since 2000 and the flexibility to do so should they want to do that. The Government think it is up to local authorities, rather than Whitehall, to take that decision, but I am very happy to talk to her about her particular local issues.

We have protected capital spending on transport but have also had to take difficult decisions regarding the bus service operators grant. Nevertheless, I am delighted that we continue to make improvements in bus services, not least through the £70 million for the better bus area fund, the £31 million for green bus funding to cut carbon emissions and support British jobs and, of course, the £560 million of local sustainable transport fund money that funded 35 successful bids in part, including for improvements to bus services. Some £200 million has been spent on local major bus schemes. There is £20 million going to community bus services and £15 million supporting the roll-out of smart ticketing technology across England’s bus fleets. There are lots of good things going on in buses and we are still taking the steps needed to tackle the fiscal deficit left by Labour.

To conclude, whether we are talking about an income tax cut for 24 million people, taking 2 million of the lowest-paid out of income tax altogether, freezing council tax, helping home owners with their energy bills or limiting increases in rail fares, the Government recognise the pressures on the cost of living. Wherever we can we will continue to take action to help further, but there is no getting away from the fact that we are operating in a financial straitjacket as a result of the deficit. As my hon. Friend the Member for Worcester (Mr Walker) pointed out, there is no magic wand we can wave; we have to work hard to sort out our public finances and get our economy back on track.

Perhaps the greatest tragedy of the Labour years in office was what we got for all the money that was wasted and all the debt that was racked up. Nothing. In addition, there was an infrastructure deficit that was as bad as the financial deficit. Long-term security of energy supplies? Nothing. Low-cost railway? No. Reform of the welfare system? Nothing. Sustainable pensions? Nothing.

The reality is that tackling the financial deficit is one of the problems the Government need to solve, but we will make sure that we help out on the cost of living wherever we can as we rebuild our country. It would be fundamentally wrong to continue with Labour’s failed policy—to spend more, borrow more and pass the buck for our debts to our children and the next generation.

[Mr Alan Campbell (Tynemouth) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the question be now put.

Question agreed to.

Question put accordingly (Standing Order No. 31(2)), That the amendment be made.

18:59

Division 1

Ayes: 250

---

Labour: 236
Scottish National Party: 5
Democratic Unionist Party: 4
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Alliance: 1
Green Party: 1

Noes: 319

---

Conservative: 272
Liberal Democrat: 46

00:00

The debate stood adjourned (Standing Order No. 9(3)).

Ordered, That the debate be resumed tomorrow.

Speaker’s Statement

Wednesday 16th May 2012 Commons Chamber

[Madam Deputy Speaker (Dawn Primarolo)]

We now come to the results for the election of the Chair of the Backbench Business Committee. Nominations closed at 5 o’clock this afternoon for candidates for the post of Chair of the Backbench Business Committee. One nomination has been received. A ballot will therefore not be held tomorrow. May I be the first to congratulate Natascha Engel on her—[Hon. Members: “Hear, hear!”]—popular re-election as Chair of the Committee?

[The Leader of the House of Commons (Sir George Young)]

May I be the second to congratulate the hon. Lady on that unanimous vote of confidence in her performance as Chair of the Backbench Business Committee, and may I say how very much I and the Deputy Leader of the House look forward to working with her again in the forthcoming Session?

Peel Holdings

Wednesday 16th May 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

19:15

[Mr Jack Straw (Blackburn) (Lab)]

This short debate is on the subject of Peel Holdings and planning law. Peel Holdings is one of the largest property investment groups in the country. Among its many properties, Peel owns the Whitebirk retail park, at the eastern edge of Blackburn on the town’s outer ring road, close to its junction with the M65 motorway. The park is geographically within the town of Blackburn, but historical boundaries bring it administratively within the adjacent borough of Hyndburn and the constituency of my hon. Friend the Member for Hyndburn (Graham Jones).

My hon. Friend shares the concerns that I will now raise, and he would indeed have spoken this evening, but Her Majesty the Queen is today paying a jubilee visit to Accrington in the heart of his constituency, and for reasons therefore that everybody will understand his first duty is to be there.

The context for this debate is the Mary Portas review of the high street, which itself arose from profound public and parliamentary anxieties, and the Government’s revised national planning framework, published by the Secretary of State for Communities and Local Government on 27 March, which took account of that review. I greatly welcome both, and I repeat my commendation of the Government on the commitment that they have shown to sustaining the viability of our town centres, something that is so fundamental to the development of strong and sustainable communities.

Having referred to my hon. Friend the Member for Hyndburn, whose constituency is on the eastern side of mine, I am delighted to see in his place the hon. Member for Rossendale and Darwen (Jake Berry), with whom I share a borough to the south of my constituency.

I intend to show how Peel Holdings has made use of a legal subterfuge, which has had the effect of disguising its true intentions from local councils, verges on calculated deceit and, if allowed to continue, could seriously undermine the Government’s commendable efforts to revive our town and city centres.

The trigger for this debate has been the planning applications that Peel submitted in respect of the Whitebirk retail park, but its behaviour there is part of a pattern that it has adopted nationwide. It should be of concern to every council in the land to beware of Peel Holdings making apparently trivial planning applications, because their motive and their effect will be wholly different from their appearance.

Whitebirk retail park was developed in the 1980s on the site of a redundant power station. It has 250,000 square feet of retail floor space. To protect the town centres of Blackburn and Accrington, what could be retailed from the site has long been restricted to bulky goods—electrical white goods, furniture, bedding, and so on—with an effective bar on “comparison goods” such as fashion and footwear, and on food. These restrictions were contained in so-called section 55 and section 106 agreements made under the Town and Country Planning Act 1971 and the Town and Country Planning Act 1990 respectively. In recent years, there has been a fall nationally in sales in the bulky goods sector. A number of DIY, furniture and carpet retailers have gone out of business, and there are now a significant number of vacant units on this site.

The first attempt of which I am aware that Peel made to arrest the decline on the site was in June 2005. It submitted a planning application to Hyndburn borough council for the partial redevelopment of the site and, crucially, for a relaxation of the existing restrictions for some of the remodelled units to permit what is known as open class A1 non-food floor space, with the intention of bringing in new tenants such as Boots, Next, and ASDA Living, all of which sell goods typically found in high streets and town centres. The application was refused by Hyndburn in July 2007. Peel appealed, and an inquiry was held in April and May 2008.

Coincidentally, efforts were being made in Blackburn to revive our town centre. Blackburn with Darwen borough council was negotiating with the owners of the Mall shopping centre, Capital and Regional, for a major redevelopment of a significant part of it to provide an additional 200,000 square feet of new floor space, including a new market hall and extra car parking, at a cost of £66 million.

The appeal by Peel Holdings against Hyndburn’s refusal to lift the bulky goods restriction was dismissed. I quote from the inspector’s decision letter of 9 June 2008:

“In this respect I have expressed my concern that geographically superior locations”

to Whitebirk

“exist in the centres of both Accrington and Blackburn for the type of development proposed in the scheme. Furthermore, I fear the development would have a negative and harmful impact on these critical areas of both towns…Notwithstanding the benefits included in the scheme, I consider it is of vital importance in this case that the policy in respect of town centres should not be compromised.”

Following this decision, Capital and Regional had the confidence to proceed with its investment, in partnership with the council, in Blackburn town centre. The new development opened in phases in 2010 and 2011. It has brought a number of new retailers into the town centre, there has been a marked increase in footfall, and both the overall development and the new market hall have recently won major national awards.

The appeal that Peel lost should have been the end of the matter, but Peel is famous for its single-minded pursuit of its own interests, regardless of the interests of others; it does not enjoy taking no for an answer. So having failed to get in via the front door, in daylight, it embarked on a strategy of forcing its way in, at night, by a back window that had not been sufficiently locked and barred. Initially, its subterfuge went undetected.

What Peel did was this. Two months after the planning inspector had comprehensively rejected its major up-front application to permit fashion and food retailing on the Whitebirk site, for the following two years it submitted, in turn, 29 separate planning and associated applications for alterations to the various units, with one for a new second access road. On the surface, these applications appeared minor and uncontentious, and therefore received approval. I will give the House a flavour of just two of these apparently innocent and, indeed, trivial applications. The first is

“for the reconfiguration and refurbishment of units 6a and 6b...including…new partial cover mezzanine floors and demolition of rear parts...to create a servicing area”.

The second is for

“reconfiguration of Unit 1 including partial re-cladding and creation of mezzanine floor”.

I have looked at all these applications; they are of the kind that that property owners make every day for minor improvements.

Planning officers and their committees are entitled to expect straight dealing by applicants for planning permission. In this case, however, only if the planning officers had suspected Peel’s motives from the start, and if they had been clairvoyant, could they have divined its real strategy. That became clear only in December 2011, more than two years after the initial appeal was rejected, when Peel sought six so-called lawful development certificates. It claimed that the effect of the 29 separate, minor and apparently unrelated planning approvals, when taken together, was sufficient to liberate it from the restriction to bulky goods that had been on the site since its inception as a retail park. It was claiming that the whole was infinitely bigger than the sum of those 29 parts.

Peel had been emboldened to adopt that series of subterfuges with Hyndburn borough council because it had used a similar approach successfully with Sunderland borough council, even though the facts and the legal base differed substantively.

When Peel made its 29 minor applications, it repeatedly provided the planning authority with reassurances that they were minor. In respect of one of the applications, it stated that

“the scope of the application is therefore confined only to the external alterations to the building”.

When the authority raised questions about the impact of another minor application on the existing section 106 agreement for bulky goods only, Peel replied that it would be unaffected:

“this application process proposes only alterations to the building; the legal agreement is of course concerned solely with regulating the use of buildings not altering them”.

However, the moment that Hyndburn borough council sought to take Peel at its word and refused the lawful development certificates that would have lifted the bulky goods restriction, Peel resorted to threats. It abandoned the soft soap of its earlier reassurances, and instead threatened the council with huge legal costs if it stood in its way.

My hon. Friend the Member for Hyndburn and I were so concerned about what Peel was doing that I raised the matter in the House during oral questions to the Secretary of State for Communities and Local Government on 30 January this year, having given the Secretary of State prior notice. He replied:

“The whole process of securing small plots of land within a larger plot under change of use and making minor modifications is normal and, by and large, that works reasonably well. However, a local authority can take into consideration the cumulative effect on the larger plot in looking at those individual applications. If it appears to the local authority that the developer has abused the system or has taken a number of measures that will affect the whole, it is perfectly possible to take that into consideration.”—[Official Report, 30 January 2012; Vol. 539, c. 548.]

I was extremely grateful to the Secretary of State for that answer, not least because after that guidance, the Hyndburn borough council planning committee decided on 11 April to reject all Peel’s lawful development certificate applications.

It is not yet clear what further steps Peel may take to pursue the lawful development certificates, but it issued a belligerent press notice in reaction to the refusal on 11 April. As I indicated earlier, it is aggressive in the pursuit of its interests, regardless of what local people or elected councillors think about them.

I raise this matter now for two linked reasons. First, although I readily acknowledge the constraints on the Minister and the Secretary of State in planning matters, I would be grateful to hear the observations the Minister is able to give on what Hyndburn borough council, the local authority that is concerned directly, and the adjacent Blackburn with Darwen borough council should do next to ensure that in practice they are not undermined in their endeavours to implement the Government’s excellent policy on high streets and town centres.

Secondly, I want to draw to the Minister’s attention that this is a national issue, not a local one, as many hon. Members from both sides of the House have made clear to me since the debate has been on the Order Paper. A survey by my council suggests that about a dozen authorities have been caught out by a subterfuge of this kind—mainly, but not exclusively, by Peel—or fear that they are in the process of being so duped. My authority has made detailed proposals to the Minister’s officials on how this practice of Peel’s and others could be closed off immediately and, in slower time, be stopped by changes to the statutory provisions.

I know that the Minister shares our concerns and that he wants the Mary Portas pilots to be a success. There is great anxiety that if this subterfuge is allowed to continue it will, among many other things, undermine those pilots. I hope, therefore, that he will feel able to respond positively to our concerns, as did the Secretary of State in January. What is at stake is the viability of town centres and high streets not only in east Lancashire, but across the country.

19:30

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

I congratulate the right hon. Member for Blackburn (Mr Straw) on securing this debate on Peel Holdings and planning law. I am conscious that he has been actively pursuing the matter with my Department, and I thank him and his hon. Friend the Member for Hyndburn (Graham Jones) for the constructive way in which they have engaged the Department. I shall pass on the right hon. Gentleman’s good wishes to the Secretary of State. Like the Speaker, my right hon. Friend is engaged at the all-party beer group’s annual dinner, so I am responding to the debate on behalf of the Department.

The right hon. Gentleman is correct that I have to be a little careful in replying to the debate, because of the Secretary of State’s and other Ministers’ quasi-judicial role in the planning process, but he is quite right to point out that the debate raises some important points on the impact on town centres of out-of-town-centre retail development, and I hope to be able to give him a constructive and positive response. I should add that I had the pleasure of visiting Blackburn quite recently to open the new fire station, which is part of the town centre’s regeneration. I recognise the work that is being done there.

First, let me make clear the Government’s commitment to ensuring that we have vibrant and vital town centres. A critical part of our policy, that commitment is reflected in our response to the Portas review: not only have we accepted nearly all of Mary Portas’s recommendations, but we have gone further by offering a “Portas plus” package designed to revive our ailing high streets. Measures announced in March include a new £10 million high street innovation fund to be shared between the 100 local authorities with the highest percentage of empty properties; a £1 million future high streets challenge fund, which will be awarded to the locations that deliver the most creative and effective schemes for revitalising their high streets; and a £500,000 loan fund to help those looking to set up business improvement districts, which can make a real contribution to the revitalisation of high streets.

Our commitment is also reflected in the national planning policy framework, published in March, which maintains a strong town centre first policy and provides a framework for local councils to promote competitive and thriving centres. The NPPF is entirely clear that in drawing up local plans, local planning authorities should recognise town centres as the heart of their communities and pursue policies that support their viability and vitality. The NPPF urges local authorities to promote competitive town centres that provide customer choice and a diverse retail offer and reflect the individuality of their town.

To address the threat of out-of-town-centre development harming town centres, the NPPF also makes it clear that local planning authorities should apply a sequential test to planning applications for main town centre uses that are not in an existing centre and are not in accordance with an up-to-date local plan. Under the sequential test, local planning authorities should require applications for main town centre uses to be located in town centres, then in edge-of-centre locations; and only if suitable sites are not available in town centres or edge-of-centre locations should out-of-centre sites be considered. Furthermore, when assessing applications for retail, leisure and office development outside town centres that are not in accord with an up-to-date local plan, local planning authorities should, for development above a certain size threshold, require an impact assessment that assesses the impact on existing, committed and planned investment, and on the vitality and viability of the centre, in line with the requirements set out in the NPPF. Where an application fails to satisfy the sequential test or is likely to have significant adverse impacts on one or more of the factors listed, it should be refused.

It is important to stress that local plans are key. It is critical that the framework, together with our wider planning reforms, helps to empower local people and their accountable councils to produce their own distinctive local and neighbourhood plans that reflect the needs and priorities of their communities.

Local plans are the key to delivering sustainable development that reflects the vision and aspirations of local communities. Alongside many other objectives, they provide an opportunity to support sustainable economic development and respond positively to wider opportunities for growth. Each local authority area has a unique blend of settlements both large and small, with varying opportunities for, and constraints upon, development. It is therefore very important that through their plans, local authorities define a network and hierarchy of centres that is resilient to future economic changes, and allocate a range of suitable sites to meet the scale and type of development needed in town centres.

Local authorities should also approach decision-making in a positive way, to promote sustainable development. Planning law requires that applications for planning permission must be determined in accordance with the development plan unless material considerations indicate otherwise. Where it is right to attach planning conditions or seek planning obligations, local planning authorities can do so to ensure that an otherwise unacceptable development can be made acceptable.

Of course, what form of development is proposed is entirely at the discretion of the developer. It could range from entirely new, large-scale development to one or more incremental changes to existing developments. However, if a series of incremental changes to existing development is proposed, a local authority may take into account the cumulative impact of the development proposed, and previous changes, when it is appropriate to do so. Similarly, if planning conditions or obligations are currently in place in relation to the existing development that is the subject of the application, it will be important to consider those conditions or obligations, having regard to the development plan and other material considerations. If planning obligations are in place, they are of course legally binding and enforceable.

[Mr Straw]

May I take it from what the hon. Gentleman is saying—this seems to be the implication—that his welcome comments, which build on what the Secretary of State said on 30 January, apply whatever the form of the application? Do they apply to an application for a lawful development certificate as well as to an application for planning permission?

[Robert Neill]

I am not sure about that, but I will come back to the right hon. Gentleman on it. The test is slightly different in relation to lawful development certificates. I know that the chief executive of his council has been in touch with the Department about that, and we intend to respond to a number of the points that have been made. I want to ensure that a legally tricky matter does not lead us into a minefield, but I will ensure that the point is addressed.

[Mr Straw]

I am grateful to the Minister for that. I have examined the matter in some detail. I fully acknowledge the constraints on him, but I hope that he and his officials will take into account the fact that the reason why we have this problem in the first place is precisely because there is some uncertainty about LDCs, which are supposed to be an enforcement mechanism rather than anything else.

[Robert Neill]

I understand that, and we are anxious to ensure that there is an appropriate and legally secure means of enabling local authorities to reflect their neighbourhood’s policy desires. I promise that I will come back to the right hon. Gentleman on that point.

As I said, planning obligations are legally binding and enforceable. If a developer wishes to challenge their content, legislation requires that the local authority can determine whether the obligations should continue to have effect or no longer serve a useful purpose. If they continue to serve a useful purpose, it can determine whether they could serve that purpose equally well with some modifications.

Regardless of the scale or type of change proposed, the importance of an up-to-date local plan is clear. It must be underpinned by a robust evidence base and identify sufficient and suitable opportunities to meet future identified need. With such a plan in place, it is far easier for both developers and local planning authorities to assess objectively whether a proposed development will contribute to the delivery of the community’s vision for its area or harm it.

The right hon. Gentleman raised the question of lawful development certificates. I will come back to him on his specific point, but I am sure he will understand that the general purpose of LDCs is to confirm what is lawfully permitted, having regard to existing extant planning permissions. They cannot be used to secure planning permission for a new form of development.

As the right hon. Gentleman has pointed out, seeking confirmation of what development can lawfully take place by virtue of a large number of planning permissions across a wider site is, in the Government’s view, permissible within the relevant legislation. That could be used to secure some form of overarching confirmation of what development can lawfully take place across a site to provide additional clarity for investors and potential occupiers. It is for local planning authorities to decide whether a development detailed in an application is lawful and therefore whether to grant the certificate.

The local authority has raised specific issues, which we will take on board. We are anxious to take such views into account as we go forward with the development of planning policy in the light of the national planning policy framework. I welcome the opportunity the debate has given us to confirm our strong support for ensuring that high streets and town centres more generally continue to be at the heart of thriving local communities. I can assure the right hon. Gentleman and the House that our policies in the NPPF provide a clear framework to help local authorities to achieve that and to resist out-of-centre development when it is appropriate to do so, and that we have taken proactive steps in response to the Portas review, the importance of which he acknowledged, which is central to our thinking.

We have taken proactive steps on the back of the Portas review to support local communities who want to deliver improvements to their high streets. Having provided a clear framework and that effective support, it is important to let local communities, through their plans and their decisions, taken by democratically accountable local representatives, to articulate and deliver their vision and strategy for their areas. I am clear that local planning authorities have the tools to ensure effective control over development. With the NPPF in place, and with the improvements to local plan-making processes that are coming on stream, local planning authorities have a stronger opportunity to guide development to the most appropriate locations.

I thank the right hon. Gentleman for the constructive way in which he has posed the issue, and assure him that the Department will continue to engage constructively with local authorities on this important matter.

Question put and agreed to.

19:42

House adjourned.

Written Ministerial Statements

Wednesday 16th May 2012 Written Statements

Wednesday 16 May 2012

Trial of Charles Taylor (Special Court for Sierra Leone)

Wednesday 16th May 2012 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

On 26 April the Special Court for Sierra Leone (SCSL) handed down its judgment against Charles Taylor, former President of Liberia. The SCSL found Taylor guilty of all 11 charges against him, including crimes against humanity and war crimes. The judges were unanimous in concluding that Taylor aided, abetted and helped plan the commission of all these crimes through the provision of significant operational, military and moral support.

This verdict is a landmark judgment in the fight against impunity. Taylor is the first Head of State since Nuremburg to be found guilty by an international tribunal for crimes against humanity and war crimes. It is a salient reminder of the importance of accountability, especially in the current climate of events in Syria. We hope that this judgment provides some comfort to the victims whose horrific experiences were recorded by the court.

My right hon. Friend the Foreign Secretary led international support for the verdict with his press statement on 26 April. Prosecutor Brenda Hollis applauded the verdict and noted it provided some measure of justice to the victims of Taylor’s crimes. In her words this verdict was also a reminder that,

“no one was above the law”.

The UN Security Council also released a statement reinforcing the significance of the verdict.

The International Tribunals (Sierra Leone) Act 2007, which allows for SCSL sentences to be enforced here, was passed with wide cross-party support in June 2007. During the passage of the Bill it was made clear, and accepted by the House, that Charles Taylor would serve his sentence in the UK and that Her Majesty’s Government would meet the associated costs directly. The costs of sentence enforcement are better controlled if they are managed and paid for directly by the country which is enforcing the sentence.

Taylor will be sentenced on 30 May. The verdict and sentence will be subject to an appeal. The plenary of judges will meet soon to finalise an appeals timetable which is likely to take around 12 months to complete. This will have financial implications as the court already has a financial shortfall for 2012 despite the UK’s recent contribution of £600,000 and the UN subvention grant agreed late last year. We will continue to encourage other states to contribute to the court, and to consider making voluntary contributions to fund the Residual Special Court for Sierra Leone, to ensure its legacy is protected.

If there is no appeal, or if Taylor is unsuccessful in his appeal, the president of the SCSL is expected to ask the UK to enforce his sentence. The Foreign and Commonwealth Office will continue to work with UK Border Agency and the Ministry of Justice, National Offender Management Service to ensure that all necessary arrangements are in place for any transfer to the UK and detention on arrival.

Specified Proceedings Processes

Wednesday 16th May 2012 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

I am announcing proposals to simplify and extend the processes where the police prosecute specified offences, (which currently cover a range of low level traffic cases), to reduce unnecessary bureaucracy and ensure swifter justice.

Currently, the police have the power to prosecute uncontested, low-level traffic offences, such as speeding, driving without insurance, or failing to produce a driving licence.

As part of the wider reform of the criminal justice system, I have, with the Attorney-General, been examining the procedures in these cases in order to identify ways of removing duplication, giving the police greater discretion and delivering faster justice.

We will introduce changes which enable the police to continue to prosecute these cases when there is no plea or the defendant fails to appear, avoiding unnecessary adjournments and the handing of cases over to the Crown Prosecution Service.

We are working with police forces and prosecution teams on the details of the process. I will also extend this approach to a wider range of low-level offences for which this simpler police-led model would be appropriate and will update Parliament on which offences this will cover in due course.

Airport Charges Price Controls

Wednesday 16th May 2012 Written Statements

[The Secretary of State for Transport (Justine Greening)]

Today, I am issuing directions under section 40(9) of the Airports Act 1986 to the Civil Aviation Authority (CAA) not to make references to the Competition Commission (CC) in respect of mandatory airport charges conditions for Heathrow, Gatwick and Stansted airports. These references would have been made in the context of the economic regulation of these airports under the 1986 Act before the expiry of their current price controls on 31 March 2014.

The Civil Aviation Bill is proposing to remove the Competition Commission reference from the price review process permanently and replace it with a licensing and appeals regime. This will enable proportionate and accountable regulation, and will give airlines and airports a new right of appeal which the aviation sector has not had before—modernising the airport regulatory framework and putting in place a more flexible and responsive regime for the future.

The Civil Aviation Bill has already made significant progress through Parliament, having successfully concluded Report stage in the House of Commons, and will shortly continue its passage through the House of Lords.

In light of this, it would be unrealistic to ignore that a new regime is on the near horizon which will form the basis for the next regulatory settlement due to come into effect on 1 April 2014. Progressing with the mandatory reference under the existing legislation is likely to introduce unnecessary costs and uncertainty into the process for the CAA, the Competition Commission, and the aviation sector, in a manner that would undermine the Government’s objective of reducing unnecessary regulation. I have therefore decided to remove the mandatory Competition Commission references for price controls at these airports now.

The directions that I am issuing follow an informal consultation between 19 January and 29 February 2012 with industry and careful consideration of their responses. I am also publishing today my letter to industry setting out my response to the issues raised in that consultation and my letter to the CAA.

House of Lords

Wednesday 16th May 2012 Lords Chamber

Wednesday, 16 May 2012.

15:00

Prayers—read by the Lord Bishop of Wakefield.

Environment: Green Growth

Wednesday 16th May 2012 Lords Chamber

Question

15:06

Asked By

[Baroness Worthington]

To ask Her Majesty’s Government what assessment they have made of the recent Green Alliance report into the use of tax reliefs to promote sustainable, green growth.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the views of stakeholders, including the Green Alliance, are given serious consideration when formulating policy. The Government remain committed to increasing the proportion of revenue from environmental taxes. This needs to be balanced with ensuring predictability, stability and simplicity in the tax code. In Budget 2012 the Government further demonstrated their intention to meet their environmental commitments while reducing unnecessary administrative burdens.

[Baroness Worthington]

My Lords, I thank the Minister for his response. I imagine that, as a member of the “greenest Government ever”, the Minister will have warmly welcomed the Green Alliance’s recent report into using tax relief on savings products to bring about green growth. Will he comment specifically on the suggestion that those companies offering products that receive reduced tax relief should be required to adhere to the standards code, which is currently voluntary, and that there should be greater transparency in how they invest the money that is saved?

[Lord Sassoon]

I am grateful to the noble Baroness for confirming the green credentials of this Government. She raises an interesting point because, on the question of transparency, the Green Alliance report refers to all ISAs—so to a broader suite of savings products than merely green products. Any contribution to the debate about increasing transparency is to be welcomed. Other reports have been written recently about transparency around fees in particular, while this one is more about the transparency of the investments in the portfolio. I note that a number of green ISAs already on the market make a virtue out of the transparency that they offer. Generally this is an important debate but one in which the voluntary approach, backed up by the code that the noble Baroness refers to, is right.

[Baroness Kramer]

Would your Lordships agree that many individuals would like the opportunity to put their ISAs into sustainable investments? Is that not an argument for looking at the green investment bank as an opportunity? Are the Government considering opening up the possibility of investment into the green investment bank for institutions and individuals who could then use their ISAs in this way?

[Lord Sassoon]

First, it is important to recognise that there are at least 16 funds that I have been able to identify in the ISA space that are already green or ethical in their scope and branding. More generally, there have been lots of proposals for tailor-made ISAs, such as big society ISAs, small company ISAs, corporate bond ISAs, social investment ISAs and early intervention ISAs. There are a lot of worthy ideas around, all of which have their merits, but on the ISA brand we intend to keep it as simple and broad as it has always been. As for the green investment bank, as my noble friend knows, at the moment it has its initial capital for the next four years and is actively looking at its 21st project. In time it will be able to borrow, but not for the first four years.

[Lord Davies of Oldham]

My Lords, my noble friend Lady Worthington asked an extremely significant question—although she should note, in referring to this “greenest Government”, that irony is wasted upon them, particularly upon their Treasury Ministers. Why are the Government not investigating these matters with greater urgency? Why, for instance, is the relief on capital gains with regard to housing not tied to the energy efficiency of the house being sold? Why are the Government not pursuing strategies like that which would give reality to their somewhat disputed claim?

[Lord Sassoon]

My Lords, the private residence capital gains tax relief means that most people are not liable for capital gains tax on their main residences. If access to that relief were linked to energy efficiency improvements, not only would it override the broad policy aim of that relief—that people are encouraged to save for their house—but what about the large number of people who do not necessarily have the funds to be able to improve the efficiency of their homes? Is it really the position of the Opposition that capital gains tax relief on people’s main residences would be taken away if they were not able to afford efficiency improvements? That is certainly not the policy of this Government.

[Lord Lawson of Blaby]

My Lords, will my noble friend slightly contain his green enthusiasm? Is he aware that the Green Alliance’s headline for the paper to which the noble Baroness referred is “Save tax relief for low-carbon savings and investments”? It is arguing—it may be the view of the Opposition—that all reliefs for savings, investor start-up and business should be abolished except for those devoted to greenery, which should be increased. Will my noble friend confirm that that is not the policy of Her Majesty’s Government?

[Lord Sassoon]

My Lords, I can indeed confirm that that is not the policy of Her Majesty’s Government.

[The Earl of Caithness]

Would my noble friend also bear in mind, in response to the question asked by the noble Lord, Lord Davies, that what the noble Lord proposed about greenness and efficiency would hurt hardest those in the country who do not have cavity walls but have solid brick or stone houses and no access to mains gas? It would penalise those in the country. That again shows that the Labour Party is very anti those living in the countryside rather than those living in urban areas.

[Lord Sassoon]

Apart from the fact that taking away people’s capital gains tax relief by linking it to green efficiency is absolutely not on the agenda, the key point here is that the forthcoming Green Deal—a world-first policy proposal—will mean that many people will be able to make their homes warmer and more efficient. That is what really matters. Of course we want to see more efficient homes, but there are ways to do that, and the Government have a policy.

Eurozone

Wednesday 16th May 2012 Lords Chamber

Question

15:14

Asked by

[Baroness Falkner of Margravine]

To ask Her Majesty’s Government what is their assessment of political developments in the eurozone after recent changes of Governments.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the eurozone crisis is having a real impact on economic growth across the European continent as well as in Britain. Eurozone leaders have to do whatever is necessary to stand behind their currency and resolve the crisis. However, these decisions must be made in conjunction with the democratic wishes of people across the eurozone.

[Baroness Falkner of Margravine]

I thank my noble friend for that reply. Does he agree that conditions in several eurozone countries—huge rises in unemployment, particularly youth unemployment, and significant falls in living standards—are resulting in the rise of right-wing parties in particular, as seen in the most recent democratic elections, and putting democracy under strain? Will he tell the House whether the Prime Minister, when he next goes to the European Council, will support pro-growth measures, including additional funding for the European Investment Bank if necessary, so that European countries, as well as the UK, can get back on the right track?

[Lord Howell of Guildford]

My noble friend is quite right: youth unemployment is a blight and a very serious issue everywhere, not least in this country as well as throughout Europe and many economies in the Middle East. The problem is general. My noble friend raised two points. She mentioned the European Investment Bank and the possibility of expanding its activities. This is a possibility and may well be discussed. As a broader point, she posed the question of austerity versus growth, as though they were opposites. The reality is that this polarised choice is a complete myth. Unless we can control our budgets effectively and run them with fiscal discipline, there will be no growth. There will instead be still further inflation, undermining the very growth that we want to see. A balance must be struck. It is not a choice; it is a balance.

[Lord Liddle]

On this side of the House we welcome what the Minister said about being open to increased resources for the European Investment Bank. However, will he tell us whether the Government broadly agree with the growth agenda being pursued by the new French President, François Hollande? Does he draw from the spate of election results that we have seen the conclusion that austerity in the eurozone is reaching its limits? Given that growth in the eurozone was larger than ours in the past year, will he draw that lesson for economic policy at home?

[Lord Howell of Guildford]

Neither the noble Lord nor I know how the discussions between the new French President and the German Chancellor will work out. However, he has read the newspapers, as I have, and it is fairly clear that some aspects of both arguments will have to be taken into account. That will demonstrate the very point that I just made to my noble friend. The picture that has been painted of either austerity or growth is completely unrealistic. The reality is that there will have to be the discipline on which the German people and Government have led very strongly, and in which they believe for strong reasons connected to their history, combined with the necessity to erode youth unemployment and to create and restore confidence in investment. This is a balance that must be struck. We certainly hope that the leaders of France and Germany will, in their wisdom, strike the right balance and maybe convey to the people of Greece the necessity for this balance, from which there is no escape. There is no unrealistic choice between going one way or the other—you cannot.

[Lord Forsyth of Drumlean]

My Lords, given that we refused to join the euro because we believed it was an ill conceived project—

[Lord Dubs]

Gordon Brown!

[Lord Forsyth of Drumlean]

We, the British, refused to join the euro because it was an ill conceived project. Will my noble friend give an absolute assurance that not a cent of British taxpayers’ money will be spent on sorting out this shambles?

[Lord Howell of Guildford]

I can give an assurance that there is no intention of spending public money on precisely the eurozone problems that have to be sorted out by the eurozone Governments. Nevertheless, the world economy will be affected by the success or failure of these policies in Europe, and in supporting aspects of the world economy we are regular contributors to the IMF and have worldwide responsibilities. It may well be that we will contribute to maintaining those responsibilities.

[Lord Barnett]

My Lords, is it true that the Prime Minister said recently that the Government are committed to finding £1 billion, which would be very helpful in restoring confidence of some kind in the eurozone? Can the Minister confirm that?

[Lord Howell of Guildford]

I am afraid that I have absolutely no idea about a statement of that kind. I do not know where the noble Lord read it. Perhaps I may find it later. If it was said by the Prime Minister, I am sure that it is true but I do not think that it was.

[Lord Dykes]

My Lords, I thank the Minister for once again showing HMG’s resolute determination to help the eurozone leaders in solving this crisis and for ignoring the flimflam from the anti-Europeans. But, without giving instructions of course, would he give some friendly advice to the British press to restrain and reduce their hysteria on this subject of the eurozone crisis at a time when the United States 16 trillion dollar irreducible debt system, which is facing national default yet again, is totally ignored by the British newspapers?

[Lord Howell of Guildford]

It is not for me to advise the media on their priorities but clearly the eurozone crisis could have considerable impact on all economies in the region and certainly on the United Kingdom. We are right to be concerned about it and the media are right to examine it and to bring home—through their experts and commentators, in addition to the expertise already in this House—that if there are further difficulties and the problems in the eurozone are not resolved, it will certainly hurt the British economy as well. That is inevitable.

[Lord Grenfell]

My Lords, as regards those who are pleading for not one single cent more of British money to be spent on sorting out the problems in the eurozone, will the Minister bear in mind what the consequences might be if a newly elected Greek Government after the next elections wish to tear up all the agreements made, which would almost certainly provoke an exit from the eurozone leading to extraordinary problems for Greece? But the most important point, which has not been much discussed, is whether we are prepared to consider seriously the impact of a failed state in the Balkans and the probability that this will provoke a resurgence of nationalism in the region. It is the Balkans that we need to think about and not just Greece.

[Lord Howell of Guildford]

The noble Lord is right that there are serious political implications. He mentions the Balkans. One only needs to think of the problems facing Cyprus, for instance, and the whole south-eastern region of the Mediterranean. Further instabilities there on top of all the existing instabilities would certainly be against our interest. These things must be examined very carefully. But that is a different question from who steps forward with the financing for a problem which is strictly for the European countries to sort out and on which they are working now. But at the political level we fully recognise, as I am sure everyone does in this House, that serious political developments are ahead if the whole stability of the eurozone is not secured one way or another.

Immigration: Controls at Airports

Wednesday 16th May 2012 Lords Chamber

Question

15:22

Asked By

[Lord Dubs]

To ask Her Majesty’s Government what steps they are taking to improve the efficiency and effectiveness of immigration controls at British airports.

[The Minister of State, Home Office (Lord Henley)]

My Lords, the Government have announced several measures on these issues. National resources are being used flexibly to provide up to 80 additional staff at Heathrow every day. Mobile teams are deployable to assist with surges in passenger numbers and the skills and experience of staff are being maximised. Additionally, a border force is working with the airport operators and airlines to ensure that they receive accurate and timely information to enable resources to be deployed effectively.

[Lord Dubs]

My Lords, it does not seem to be working. At 10.30 pm one evening last week in Terminal 1, five immigration officers were dealing with British and EU people and two were dealing with people with other passports. The e-passport system was not working. Although it may have taken under half an hour for people like me to get through, the foreigners with other passports looked like they were waiting for hours and hours. Does the Minister agree that this is simply not acceptable and is a consequence of the Government’s cutbacks in staff?

[Lord Henley]

My Lords, I totally reject what the noble Lord says about cutbacks in staff affecting what is happening. It is not a question of numbers. The important thing is to make sure that we get the right people in the right places at the right time. Rostering, therefore, is done in line with the schedules as they vary between summer and winter. We then adjust them accordingly in line with information we receive, say, from BAA or the airlines about flight delays, weather and so on. We have also brought in this mobile force which we can move around a certain amount to make sure that the right people are there at the right time to deal with the numbers. Obviously, it will always be difficult but we want to continue to improve things and I believe that we are making progress. Perhaps I may remind the noble Lord that at the Home Affairs Select Committee meeting only yesterday, Andrew Lord, director of operations at British Airways, made it clear that it had seen great improvements in recent weeks.

[Lord Dholakia]

Will my noble friend confirm that the denial of visas at British posts abroad is not used as a means of controlling the administrative chaos at some of our airports? This morning, in the Commonwealth Parliamentary Association Room, the Commonwealth Parliamentary Association had a meeting with the Tanzanian parliamentary committee on privilege and ethics. None of them could attend because they were all denied a visa to enter the country.

[Lord Henley]

My Lords, we are not using denial of visas to adjust these numbers, but obviously we want to deal with passport control as we can at the point of exit, where it is possible. That is one of the things that we do, and it is good to make things easier for visa control later on.

[Baroness McIntosh of Hudnall]

My Lords, the Minister referred in his Answer to people with skills and experience and referred in his subsequent answer to the right people in the right places. Will he explain to the House what skills and experience are required for somebody to become a member of the UK Border Agency, how they acquire those skills and where the UK Border Agency is recruiting from?

[Lord Henley]

My Lords, at the Dispatch Box, in answer to a question, I am not going to go through in detail the recruiting processes of UKBA and the border force. Obviously, they have to make sure that they get the right people who get the right training, and that they deal with things in the proper ways. At the same time, we also want to make sure that we use technology as best we can, as in the past we did with IRIS and in the future we will do that with e-gates. As a result, we hope that we will be able to improve the service for all those people and improve the security that we can offer to the country in dealing with these matters.

[Lord Rogan]

My Lords, will the Minister make representation to the Government of the Republic of Ireland and request that they also review and, if necessary, improve their border securities, ensuring that persons arriving in the Republic of Ireland and then crossing into the United Kingdom by the unmanned and thus unchecked land border are given suitable clearance?

[Lord Henley]

The noble Lord will be well aware that we have common border arrangements with the Republic of Ireland and that they will continue, as is quite convenient. But I shall certainly make sure that appropriate representations are made to the Government of the Republic of Ireland.

[Lord Mawhinney]

My Lords, recently a good friend of mine who has for many years been a prominent businessman and economist in the north-eastern part of the United States rang me to demand to know why he and his wife had been held for two and a half hours at Heathrow trying to get through border controls. What explanation or excuse would my noble friend wish that I had given him?

[Lord Henley]

My Lords, I cannot give an answer to my noble friend on an individual case. If he wishes to write to me, I will be more than happy to take a look at that case.

[Baroness Afshar]

My Lords, there are very simple answers to these problems, and we need better training for the immigration officers. I refer to the way in which they treated me when I came through and waved my passport at a British entrance. Because I was born in Iran, I was treated like a real terrorist. I kept on saying, “Look, it says ‘Baroness’ here”, and he said, “Oh, I thought that was your first name”. I really do think that they need better training.

[Lord Henley]

I am sure that the noble Baroness is right to point to the need for better training. I am sure that the border force and the border agency will take that on board. But it is more than that; there are other matters that we can deal with to improve service in this area.

[Baroness Smith of Basildon]

My Lords, does the noble Lord find it humiliating that the queues at Heathrow are the butt of Twitter messages and jokes around the world? Does he accept the strong criticism from the Chief Inspector of Borders and Immigration that the problems at Heathrow are caused by massive cuts of 15% of the staff, at the same time as massive organisational changes and a massive lack of good management; or, does he agree with the Immigration Minister in the other place, Damian Green, who says that since May 2010 there has been the wrong kind of wind?

[Lord Henley]

My Lords, the noble Baroness is very selective in what she says about my honourable friend’s evidence to the Home Affairs Select Committee yesterday. That is not surprising. I say yet again that all we get from the Opposition is that this is due to a reduction in numbers of staff. It is nothing to do with reductions in numbers of staff.

[Noble Lords]

Oh!

[Lord Henley]

It is a matter of getting the right staff into the right place, getting rid of some of the union restrictions that are in place within the border force and making sure that we get rostering under control. We can get these things moving far better, and we will.

Immigration: Detention of Children at Heathrow

Wednesday 16th May 2012 Lords Chamber

Question

15:30

Asked By

[Lord Avebury]

To ask Her Majesty’s Government what is their response to the Report of the Independent Monitoring Board on the non-residential short term holding facilities at London Heathrow Airport for the year February 2011 to January 2012 on the “degrading and disgraceful” conditions in which children are being detained at Heathrow.

[The Minister of State, Home Office (Lord Henley)]

My Lords, we take very seriously the findings of the Independent Monitoring Board and are working with our partners, including BAA, to address them. We will respond to the report fully in due course.

[Lord Avebury]

My Lords, does my noble kinsman agree that keeping a child in these disgraceful conditions, in one case for 31 hours and 50 minutes, is inconsistent with the coalition’s commitment to end the detention of children and possibly with our obligations under the UN Convention on the Rights of the Child? Will my noble kinsman therefore consider appointing a joint inquiry by the chief inspector of the UKBA and the Children’s Commissioner into the conditions and length of detention at all the United Kingdom ports of entry by sea or by air?

[Lord Henley]

My Lords, I remind my noble kinsman that the holding rooms we are talking about are designed to hold people for relatively short amounts of time—a few hours in the main and up to 24 hours in extreme circumstances. We accept some of the criticisms that we have received from the Independent Monitoring Board and we hope that where it looks as though people, particularly with children, are going to be held for a long time, the relevant staff will make use of other available facilities, such as Tinsley House. However, I think that even my noble kinsman, and most Members of the House, would accept that where we are dealing with people who are going to be returned to another country, they have to be kept somewhere relatively secure, whether or not they have children with them, to make sure that they can be sent back, as appropriate, after their decision has been dealt with.

[Baroness Massey of Darwen]

My Lords, does the Minister agree that we are talking here about children who are defenceless and need support? Does he further agree that the conditions in which they are being kept must be very stressful and distressing for them? What support are those children receiving to help them overcome the stress that they have suffered?

[Lord Henley]

My Lords, the IMB’s report makes it clear that it thinks the officials dealing with these matters are doing so in a professional manner. What it was complaining about was the actual facilities in which these people were kept for up to 24 hours at the maximum. If people with children are going to be kept longer, at Heathrow there are other facilities such as Tinsley House that can be used and where those children can be sent with their parents. The idea that the children should be sent off somewhere else, therefore bringing in social services, would create even greater problems and trauma for the children. It is far better that they should stay with their parents for what we hope will be a relatively short amount of time while a decision is being made on whether they can stay in the country or not; and, after that, while they wait for a plane to take them back to where they came from.

[Baroness Sherlock]

My Lords, will the Minister clarify the Government’s position as regards the board’s report? The BBC website said that the UK Border Agency had reported that it had raised the issue with BAA on numerous occasions in the past and would continue to do so. However, the BBC website says that a BAA spokeswoman said that BAA was,

“somewhat surprised by UK Border Force's response, since we have had many meetings with them recently and it has not been raised”.

Who is correct?

[Lord Henley]

All I know is that the UK Border Agency and BAA have had considerable discussions about these matters over the years. Obviously I cannot give evidence about the precise detail of those discussions, but we know that they are aware of the problems because we have also discussed the matter with BAA. The important point to remember is that we will do what we can to improve things. We have only just received this report, which came in two days ago. We will be responding to it within the appropriate period of six weeks. We know that things are not entirely satisfactory but we are talking about holding people only in the very short term while a decision is made. We hope that that will not be longer than 24 hours. If it is, as I made clear, we have other facilities, such as Tinsley House, available.

[Lord Foulkes of Cumnock]

This matter was raised during the time of the Labour Government and the Liberal Democrats attacked us, understandably, about the detention of young children. They promised that once the coalition took over, the detention of children would be ended immediately. Now, two years later, children are still being detained. This is yet another promise—one put forward particularly by the Liberal Democrats—that has been reneged on.

[Lord Henley]

Dare I say that the noble Lord makes a very silly point, and not for the first time, as my noble friend the Deputy Leader says? We are talking about getting rid of detention. We are not talking about detaining children; we are talking about detaining people for as little as 24 hours in this facility.

[Lord Foulkes of Cumnock]

You are still detaining children.

[Lord Henley]

Is the noble Lord suggesting that they should be removed from their parents and sent somewhere else? That strikes me as even worse. This is complete nonsense. We think that the children should stay with their parents for that short time in the holding facility. If they cannot go there, they go to Tinsley House—a place that we have all accepted as being perfectly acceptable for children and their families to go to.

[Baroness Hamwee]

My Lords, I have a question. This Baroness—who has also been thought to have the first name Berenice—visited Cedars, a new facility near Gatwick. I was very impressed by the good work being done there by the border agency and Barnardo’s. Will the Government learn from that in dealing with families and children—some of them unaccompanied children—and deciding on the best way to respond to what everyone must acknowledge is a very difficult situation?

[Lord Henley]

My Lords, of course we will learn from what we have done at Cedars at Gatwick and we will do what we can. I am very grateful to my noble friend for mentioning that. Because of where these very short-term holding facilities are located within the airports, it is very difficult to think of design solutions. However, if anyone is going to be kept longer than that very short period of time, we obviously have to look at other facilities.

Marriage (Approved Organisations) Bill [HL]

Wednesday 16th May 2012 Lords Chamber

First Reading

15:37

A Bill to make provision for amending the law on marriage to permit the Registrar General to permit certain charitable organisations to solemnise marriages.

The Bill was introduced by Lord Harrison, read a first time and ordered to be printed.

Interception of Communications (Admissibility of Evidence) Bill [HL]

Wednesday 16th May 2012 Lords Chamber

First Reading

15:38

A Bill to make provision for permitting the introduction of intercept evidence in certain criminal proceedings and for connected purposes.

The Bill was introduced by Lord Lloyd of Berwick, read a first time and ordered to be printed.

Caravan Sites Bill [HL]

Wednesday 16th May 2012 Lords Chamber

First Reading

15:38

A Bill to make provision for securing the establishment of caravan sites by local authorities in England for the use of Gypsies and Travellers.

The Bill was introduced by Lord Avebury, read a first time and ordered to be printed.

Contaminated Blood (Support for Infected and Bereaved Persons) Bill [HL]

Wednesday 16th May 2012 Lords Chamber

First Reading

15:39

A Bill to make provision for establishing a committee to advise on haemophilia; to make provision in relation to blood donations; to establish a scheme for NHS compensation cards for people who have been treated with and infected by contaminated blood or blood products; to make provision for the financial compensation of people treated with and infected by contaminated blood and blood products and their widows, dependants and carers; to establish a review of the support available for people who have been treated with and infected by contaminated blood or blood products; and for connected purposes.

The Bill was introduced by Lord Morris of Manchester, read a first time and ordered to be printed.

Business of the House

Wednesday 16th May 2012 Lords Chamber

Timing of Debates

15:40

Moved By

[Lord Strathclyde]

That the one-hour time limit shall apply to the Questions for Short Debate set down for Tuesday 29 May.

Motion agreed.

Deputy Chairmen of Committees

Wednesday 16th May 2012 Lords Chamber

Administration and Works

Communications

Consolidation etc. Bills

Constitution

Delegated Powers and Regulatory Reform

Economic Affairs

Human Rights

Hybrid Instruments

Information

Liaison

National Security Strategy

Parliamentary Office of Science and Technology (POST)

Privileges and Conduct

Procedure of the House

Science and Technology

Secondary Legislation Scrutiny

Standing Orders (Private Bills)

Statutory Instruments

Works of Art

Membership Motions

15:40

Moved By

[The Chairman of Committees]

Deputy Chairmen of Committees

That, as proposed by the Committee of Selection, the following members be appointed as the panel of members to act as Deputy Chairmen of Committees for this session:

B Andrews, B Anelay of St Johns, L Bassam of Brighton, L Bichard, L Brougham and Vaux, L Colwyn, L Faulkner of Worcester, B Fookes, L Geddes, B Gibson of Market Rasen, B Harris of Richmond, L Haskel, B Hooper, B McIntosh of Hudnall, B Morris of Bolton, B Pitkeathley, V Simon, L Skelmersdale, V Ullswater.

Administration and Works

That a Select Committee be appointed to consider administrative services, accommodation and works, including works relating to security, within the strategic framework and financial limits approved by the House Committee;

That, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

B Anelay of St Johns, L Bassam of Brighton , L Brougham and Vaux, L Cameron of Dillington, Bp Exeter, L Faulkner of Worcester, L Laming, B McIntosh of Hudnall , L Mancroft, L Newby, L Roper, L Rowe-Beddoe;

That the Committee have power to send for persons, papers and records;

That the Committee have leave to report from time to time.

Communications

That a Select Committee be appointed to consider the media and the creative industries and that, as proposed by the Committee of Selection, the following members be appointed to the Committee:

B Bakewell, L Bragg, L Clement-Jones, B Deech, L Dubs, B Fookes, L Gordon of Strathblane, L Inglewood (Chairman), Bp Norwich, L Razzall, L St John of Bletso, E Selborne, L Skelmersdale;

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 power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee in the last session of Parliament be referred to the Committee;

That the evidence taken by the Committee shall, if the Committee so wishes, be published.

Consolidation etc. Bills

In accordance with Standing Order 51, that, as proposed by the Committee of Selection, the following Lords be appointed to join with a Committee of the Commons as the Joint Committee on Consolidation etc. Bills:

L Campbell of Alloway, L Carswell (Chairman), L Christopher, E Dundee, L Eames, L Janner of Braunstone, B Mallalieu, L Methuen, L Razzall, L Swinfen, L Tombs;

That the Committee have power to send for persons, papers and records.

Constitution

That a Select Committee be appointed to examine the constitutional implications of all public bills coming before the House; and to keep under review the operation of the constitution;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Crickhowell, B Falkner of Margravine, L Goldsmith, L Hart of Chilton, L Irvine of Lairg, B Jay of Paddington (Chairman), L Lexden, L Macdonald of River Glaven, L Pannick, L Powell of Bayswater, L Renton of Mount Harry, L Shaw of Northstead;

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 power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee in the last session of Parliament be referred to the Committee;

That the evidence taken by the Committee shall, if the Committee so wishes, be published.

Delegated Powers and Regulatory Reform

That a Select Committee be appointed to:

(i) report whether the provisions of any bill inappropriately delegate legislative power, or whether they subject the exercise of legislative power to an inappropriate degree of parliamentary scrutiny;

(ii) report on documents and draft orders laid before Parliament under sections 14 and 18 of the Legislative and Regulatory Reform Act 2006;

(iii) report on documents and draft orders laid before Parliament under or by virtue of section 7(2) of the Localism Act 2011 or under or by virtue of section 5E(2) of the Fire and Rescue Services Act 2004; and

(iv) perform, in respect of draft orders referred to in paragraphs (ii) and (iii) above, and in respect of subordinate provisions orders made or proposed to be made under the Regulatory Reform Act 2001, the functions performed in respect of other instruments and draft instruments by the Joint Committee on Statutory Instruments;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

B Andrews, L Blackwell, L Butler of Brockwell, L Carlile of Berriew, B Gardner of Parkes, L Haskel, L Mayhew of Twysden, B O’Loan, L Soley, B Thomas of Winchester (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 Reports of the Committee 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.

Economic Affairs

That a Select Committee be appointed to consider economic affairs and that, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Currie of Marylebone, L Forsyth of Drumlean, L Hollick, B Kingsmill, L Lawson of Blaby, L Levene of Portsoken, L Lipsey, L McFall of Alcluith, L MacGregor of Pulham Market (Chairman), L Rowe-Beddoe, L Shipley, L Smith of Clifton, L Tugendhat;

That the Committee have power to appoint a sub-committee and to refer to it any of the matters within the Committee’s terms of reference; that the Committee have power to appoint the Chairman of the sub-committee;

That the Committee have power to co-opt any member to serve on the sub-committee;

That the Committee and its sub-committee have power to send for persons, papers and records;

That the Committee and its sub-committee have power to appoint specialist advisers;

That the Committee and its sub-committee have power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee in the last session of Parliament be referred to the Committee;

That the evidence taken by the Committee or its sub-committee shall, if the Committee so wishes, be published.

Human Rights

That a Select Committee of six members be appointed to join with a Committee appointed by the Commons as the Joint Committee on Human Rights:

To consider:

(a) matters relating to human rights in the United Kingdom (but excluding consideration of individual cases);

(b) proposals for remedial orders, draft remedial orders and remedial orders made under section 10 of and laid under Schedule 2 to the Human Rights Act 1998; and

(c) in respect of draft remedial orders and remedial orders, whether the special attention of the House should be drawn to them on any of the grounds specified in Standing Order 73 (Joint Committee on Statutory Instruments);

To report to the House:

(a) in relation to any document containing proposals laid before the House under paragraph 3 of the said Schedule 2, its recommendation whether a draft order in the same terms as the proposals should be laid before the House; or

(b) in relation to any draft order laid under paragraph 2 of the said Schedule 2, its recommendation whether the draft Order should be approved;

and to have power to report to the House on any matter arising from its consideration of the said proposals or draft orders; and

To report to the House in respect of any original order laid under paragraph 4 of the said Schedule 2, its recommendation whether:

(a) the order should be approved in the form in which it was originally laid before Parliament; or

(b) the order should be replaced by a new order modifying the provisions of the original order; or

(c) the order should not be approved;

and to have power to report to the House on any matter arising from its consideration of the said order or any replacement order;

That the following members be appointed to the Committee:

B Berridge, B Campbell of Surbiton, L Faulks, B Kennedy of The Shaws, L Lester of Herne Hill, B Lister of Burtersett;

That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;

That the quorum of the Committee shall be two;

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 power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee in the last session of Parliament be referred to the Committee;

That the evidence taken by the Committee shall, if the Committee so wishes, be published.

Hybrid Instruments

That a Select Committee be appointed to consider hybrid instruments and that, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

L Addington, L Campbell of Alloway, L Grantchester, L Harrison, L Luke, L Quirk, L Swinfen;

That the Committee have power to send for persons, papers and records.

Information

That a Select Committee be appointed to consider information and communications services, including the Library and the Parliamentary Archives, within the strategic framework and financial limits approved by the House Committee;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Aberdare, L Black of Brentwood, L Feldman, L Haskel, L Kirkwood of Kirkhope (Chairman), E Lytton, B Massey of Darwen, L Maxton, B Pitkeathley, L Rennard, L St John of Bletso, L Selsdon, B Stedman-Scott;

That the Committee have power to send for persons, papers and records;

That the Committee have leave to report from time to time.

Liaison

That a Select Committee be appointed to advise the House on the resources required for select committee work and to allocate resources between select committees; to review the select committee work of the House; to consider requests for ad hoc committees and report to the House with recommendations; to ensure effective co-ordination between the two Houses; and to consider the availability of members to serve on committees;

That, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

L Alderdice, B Browning, L Campbell-Savours, B Corston, L Fellowes, L Laming , L McNally, B Royall of Blaisdon, L Strathclyde, V Ullswater;

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.

National Security Strategy

That, as proposed by the Committee of Selection, the following Lords be appointed to join with a Committee of the Commons as the Joint Committee on the National Security Strategy, to consider the National Security Strategy:

L Fellowes, L Foulkes of Cumnock, L Harris of Haringey, L Lee of Trafford, B Manningham-Buller, B Neville-Jones, B Ramsay of Cartvale, L Sterling of Plaistow, B Taylor of Bolton, L Waldegrave of North Hill;

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 adjourn from place to place in the United Kingdom;

That the Committee have leave to report from time to time;

That the reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee in the last session of Parliament be referred to the Committee;

That the Committee have power to appoint specialist advisers;

That the evidence taken by the Committee shall, if the Committee so wishes, be published.

Parliamentary Office of Science and Technology (POST)

That, as proposed by the Committee of Selection, the following Lords be appointed to the Board of the Parliamentary Office of Science and Technology (POST):

L Haskel, L Krebs, L Oxburgh, L Winston.

Privileges and Conduct

That a Select Committee be appointed and that, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

B Anelay of St Johns, L Bassam of Brighton, L Brooke of Sutton Mandeville, L Eames, L Howe of Aberavon, L Irvine of Lairg, L Laming, L Mackay of Clashfern, L McNally, B Manningham-Buller, L Newby, B Royall of Blaisdon, B Scotland of Asthal, L Scott of Foscote, L Strathclyde;

That the Committee have power to appoint sub-committees and that the Committee have power to appoint the Chairmen of sub-committees;

That the Committee have power to co-opt any member to serve on a sub-committee;

That the Committee have power to send for persons, papers and records;

That in any claim of peerage, the Committee shall sit with three holders of high judicial office, who shall have the same speaking and voting rights as members of the Committee.

Procedure of the House

That a Select Committee on Procedure of the House be appointed and that, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

B Anelay of St Johns, L Bassam of Brighton, L Blencathra, L Butler of Brockwell, L Campbell-Savours, B D’Souza, B Gould of Potternewton, L Laming, L McNally, L Newby, L Patel, B Royall of Blaisdon, L Strathclyde, B Thomas of Winchester, L Tyler, V Ullswater, L Wakeham, B Wall of New Barnet;

That the following members be appointed as alternate members:

V Craigavon, L Filkin, B Hamwee, V Montgomery of Alamein, L True;

That the Committee have power to appoint sub-committees and that the Committee have power to appoint the Chairmen of sub-committees;

That the Committee have power to send for persons, papers and records;

That the Committee have leave to report from time to time.

Science and Technology

That a Select Committee be appointed to consider science and technology and that, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Broers, L Cunningham of Felling, L Dixon-Smith, B Hilton of Eggardon, L Krebs (Chairman), L O’Neill of Clackmannan, L Patel, B Perry of Southwark, L Rees of Ludlow, E Selborne, B Sharp of Guildford, L Wade of Chorlton, L Willis of Knaresborough, L Winston;

That the Committee have power to appoint sub-committees and that the Committee have power to appoint the Chairmen of sub-committees;

That the Committee have power to co-opt any member to serve on the Committee or a sub-committee;

That the Committee and its sub-committees have power to send for persons, papers and records;

That the Committee and its sub-committees have power to appoint specialist advisers;

That the Committee and its sub-committees have power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee or its sub-committees in the last session of Parliament be referred to the Committee or its sub-committees;

That the evidence taken by the Committee or its sub-committees shall, if the Committee so wishes, be published.

Secondary Legislation Scrutiny

That a Select Committee be appointed to scrutinise secondary legislation.

(1) The Committee shall, with the exception of those instruments in paragraphs (3) and (4), scrutinise—

(a) every instrument (whether or not a statutory instrument), or draft of an instrument, which is laid before each House of Parliament and upon which proceedings may be, or might have been, taken in either House of Parliament under an Act of Parliament;

(b) every proposal which is in the form of a draft of such an instrument and is laid before each House of Parliament under an Act of Parliament,

with a view to determining whether or not the special attention of the House should be drawn to it on any of the grounds specified in paragraph (2).

(2) The grounds on which an instrument, draft or proposal may be drawn to the special attention of the House are—

(a) that it is politically or legally important or gives rise to issues of public policy likely to be of interest to the House;

(b) that it may be inappropriate in view of changed circumstances since the enactment of the parent Act;

(c) that it may inappropriately implement European Union legislation;

(d) that it may imperfectly achieve its policy objectives.

(3) The exceptions are—

(a) remedial orders, and draft remedial orders, under section 10 of the Human Rights Act 1998;

(b) draft orders under sections 14 and 18 of the Legislative and Regulatory Reform Act 2006, and subordinate provisions orders made or proposed to be made under the Regulatory Reform Act 2001;

(c) Measures under the Church of England Assembly (Powers) Act 1919 and instruments made, and drafts of instruments to be made, under them.

(4) The Committee shall report on draft orders and documents laid before Parliament under section 11(1) of the Public Bodies Act 2011 in accordance with the procedures set out in sections 11(5) and (6). The Committee may also consider and report on any material changes in a draft order laid under section 11(8) of the Act.

(5) The Committee shall also consider such other general matters relating to the effective scrutiny of secondary legislation and arising from the performance of its functions under paragraphs (1) to (4) as the Committee considers appropriate, except matters within the orders of reference of the Joint Committee on Statutory Instruments.

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Bichard, L Eames, B Eaton, L Goodlad (Chairman), B Hamwee, L Hart of Chilton, L Methuen, B Morris of Yardley, L Norton of Louth, L Plant of Highfield, L Scott of Foscote;

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 Reports of the Committee 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.

Standing Orders (Private Bills)

That a Select Committee on the Standing Orders relating to private bills be appointed and that, as proposed by the Committee of Selection, the following members together with the Chairman of Committees be appointed to the Committee:

L Geddes, B Gould of Potternewton, L Luke, L Naseby, L Palmer, V Simon, B Thomas of Walliswood;

That the Committee have power to send for persons, papers and records.

Statutory Instruments

In accordance with Standing Order 73 and the resolution of the House of 16 December 1997, that, as proposed by the Committee of Selection, the following members be appointed to join with a Committee of the Commons as the Joint Committee on Statutory Instruments:

L Clinton-Davis, L Geddes, L Kennedy of Southwark, E Mar and Kellie, L Rees-Mogg, L Selkirk of Douglas, B Stern;

That the Committee have power to send for persons, papers and records.

Works of Art

That a Select Committee be appointed to administer the House of Lords Works of Art Collection Fund; and to consider matters relating to works of art and the artistic heritage in the House of Lords, within the strategic framework and financial limits approved by the House Committee;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Cormack, L Crathorne, L Harries of Pentregarth, B Howells of St Davids, L Luke (Chairman), B Maddock, L Myners, B Rendell of Babergh, L Roberts of Llandudno, E Shrewsbury, L Stevenson of Coddenham, B Valentine;

That the Committee have power to send for persons, papers and records;

That the Committee have leave to report from time to time.

[The Chairman of Committees (Lord Sewel)]

My Lords, I beg to move the first 20 Motions standing in my name on the Order Paper. I shall move the Motion relating to the European Union Committee separately.

Motions agreed.

European Union

Wednesday 16th May 2012 Lords Chamber

Membership Motion

15:40

Moved by

[The Chairman of Committees]

European Union

That a Select Committee be appointed:

(1) To consider European Union documents deposited in the House by a Minister, and other matters relating to the European Union;

The expression “European Union document” includes in particular:

(a) a document submitted by an institution of the European Union to another institution and put by either into the public domain;

(b) a draft legislative act or a proposal for amendment of such an act; and

(c) a draft decision relating to the Common Foreign and Security Policy of the European Union under Title V of the Treaty on European Union;

The Committee may waive the requirement to deposit a document, or class of documents, by agreement with the European Scrutiny Committee of the House of Commons;

(2) To assist the House in relation to the procedure for the submission of Reasoned Opinions under Article 5 of the Treaty on European Union and the Protocol on the application of the principles of subsidiarity and proportionality;

(3) To represent the House as appropriate in interparliamentary co-operation within the European Union;

That, as proposed by the Committee of Selection, the following members be appointed to the Committee:

L Boswell of Aynho (Chairman), L Bowness, L Cameron of Dillington, L Carter of Coles, L Dear, B Eccles of Moulton, L Foulkes of Cumnock, L Hannay of Chiswick, L Harrison, L Maclennan of Rogart, L Marlesford, B O’Cathain, L Richard, E Sandwich, B Scott of Needham Market, L Teverson, L Tomlinson, L Trimble, B Young of Hornsey;

That the Committee have power to appoint sub-committees and to refer to them any matters within its terms of reference; that the Committee have power to appoint the Chairmen of sub-committees, but that the sub-committees have power to appoint their own Chairmen for the purpose of particular inquiries; that the quorum of each sub-committee be two;

That the Committee have power to co-opt any member to serve on a sub-committee;

That the Committee and its sub-committees have power to send for persons, papers and records;

That the Committee have power to appoint specialist advisers;

That the Committee and its sub-committees have power to adjourn from place to place;

That the Committee have leave to report from time to time;

That the Reports of the Committee shall be printed, regardless of any adjournment of the House;

That the evidence taken by the Committee or its sub-committees in the last session of Parliament be referred to the Committee or its sub-committees;

That the evidence taken by the Committee or its sub-committees shall, if the Committee so wishes, be published.

[The Chairman of Committees (Lord Sewel)]

I beg to move the final Motion, standing in my name on the Order Paper, to appoint the European Union Committee.

Amendment to the Motion

Moved by

[Lord Pearson of Rannoch]

As an amendment to the above Motion, after paragraph (3), insert:

“(4) To make an annual report to the House for debate on the effect of its work on the European Union’s legislative proposals and legislation.”

[Lord Pearson of Rannoch]

My Lords, several times over recent years I have intervened at this juncture in our appointments procedure to complain about the composition and effectiveness of your Lordships’ Select Committee on the European Union. I have also suggested that the number of its sub-committees should be reduced and their energies redistributed to other committees of your Lordships’ House and future ad hoc committees. I remind noble Lords that the appointment of our Select Committees is a matter for the whole House and not just for the usual channels, whatever they may be. We have just approved a heavyweight committee to consider economic affairs and we have been generous enough to give it one sub-committee. Do we have the balance right?

Would it not be more sensible to disband EU Sub-Committees A and B on economic and financial affairs, international trade, the EU’s internal market, energy and transport and pass their activities to our Economic Affairs Committee, perhaps giving it another sub-committee in the process? Are we right to have a Sub-Committee C on foreign affairs, defence and development policy when we do not have a committee on our own defence and foreign affairs? Should we not set one up and include the work of Sub-Committee C in its remit?

Furthermore, do we really need two EU sub-committees: on justice and institutions, Sub-Committee E; and on home affairs, Sub-Committee F? Could they not be rolled into one? These suggestions would leave us with an EU Select Committee and just two sub-committees: Sub-Committee D, on agriculture, fisheries and our environment—all areas firmly under the control of Brussels; and a new combined E and F Sub-Committee? That would largely free up the energies of four sub-committees for distribution elsewhere.

In this respect, I am not sure whether our Science and Technology Committee feels that it is now adequately equipped with its new second sub-committee. Clearly it is a vital area of our national life. If so, I merely point out that it had to struggle to get what it needs with the powers that be.

I make these suggestions because I believe that the committee work of your Lordships’ House, with the single exception of our EU committees, is of huge value to the nation. The expertise and wisdom that resides in your Lordships’ House is unrivalled anywhere else in the country. The standard of debate is dauntingly high. I see our committees as one of the irrefutable justifications for your Lordships’ House in its present composition and at or somewhere near its present size. How could we field anything like the number of Select Committees that serve this House with a House of some 300 Members?

15:45

However, our EU committee is different. Brussels pays virtually no attention to its views, as can be seen from a series of Written Questions tabled in 2008 by my noble friends Lord Vinson, Lord Tebbit, Lord Stoddart of Swindon and Lord Willoughby de Broke, and by me. The only example that the Government could give of Brussels taking up in legislation one of our committee’s suggestions was a small amendment to the audiovisual media services directive. That information is to be found in Written Answers, col. 38, on 10 March 2008. I will put a copy of the written exchanges in your Lordships’ Library.

The effectiveness of our EU committees is further scandalously undermined by the Government’s continual breach of the scrutiny reserve, whereby they promise not to sign up to any new law in Brussels that is still under scrutiny by the Select Committee of either House of Parliament. The latest Written Answers on this problem—to the noble Lord, Lord Roper, and to me—confirmed that the reserve was broken 281 times in your Lordships’ House and 299 times in the Commons in the five and a half years to June 2011. That means that 580 new pieces of legislation from Brussels passed into law in breach of the Government’s promise that they would not do so when they were still under scrutiny by the Select Committee of either House.

I do not blame the Government for this; it is more that the juggernaut in Brussels could not care less about national parliaments and their democratic sensibilities. The whole project of European integration was set in motion precisely to delude and destroy national democracy. I will not go into all that again now; events are speaking for themselves.

In conclusion, I am aware that many noble and Europhile Lords believe that our Select Committee is taken very seriously in Brussels. They tell us of our famous red reports being consulted with much respect by Eurocrats of all descriptions. In our last debate on this subject, the noble Lord, Lord Sewel, told us that Brussels was at long last going to reform the common fisheries policy, thanks to advice from our Select Committee. I said then, and say again now, that that remains to be seen. The noble Lord has now been elevated above such mundane debate. I welcome him to his new position and congratulate him on it.

I hope that noble Lords who support our EU Select Committee as presently constituted will welcome the amendment. It would give them the chance once a year to show us how valuable its work has been in the national interest. It would give your Lordships the opportunity to decide its future and whether there is any merit in the suggestions that I put forward.

I hope for one last thing: namely, that we will not be told that the advantages of our EU committee, like our membership of the EU itself, are so obvious that there is no point in discussing them. I beg to move.

[Lord Boswell of Aynho]

My Lords, the House will have noted the comments of the noble Lord, Lord Pearson, on the importance of effective scrutiny, and his interesting and detailed suggestion on the configuration of committees. First, I briefly thank the House for entrusting me with responsibility for the European Union Select Committee; and, secondly, I acknowledge the fine example set by my predecessors, including my immediate predecessor, the noble Lord, Lord Roper. I have no conceptual problem with the need for efficiency and scrutiny, and I remind noble Lords that they will shortly receive the sessional report of the Select Committee and will have ample opportunity thereafter to consider it further.

[Lord Willoughby de Broke]

My Lords, I support the amendment of my noble friend Lord Pearson. It seems eminently sensible. I spent four years on the EU Select Committee. Any Members on the committee now will know exactly how much time is taken up by membership of that committee and of its various sub-committees—the amount of reading, work and supporting of the committee reports when they are debated in the House. However, like my noble friend, I remind the House that precisely one item only has ever been amended by the Commission following the issuing of a Select Committee report. I really wonder whether this is right and whether the committee should be required—it seems a harmless amendment, I must say—to report back to this House and to the nation on the effectiveness of its work and on the effect of its reports on the legislation coming out of Brussels. At the moment, the latest fact is that just one piece of legislation in the past 10 or 15 years has actually been affected by the vast number of reports issued by the EU Select Committee.

I am not sure whether the noble Lord, Lord Boswell, supported my noble friend’s amendment or not, but it seems to be very sensible. I hope that the House will support it.

[Lord Grenfell]

My Lords, I take this opportunity to congratulate the noble Lord, Lord Boswell, on his appointment to the chairmanship of the committee, a chairmanship which I enormously enjoyed when I had the honour to hold it.

What the noble Lord, Lord Pearson of Rannoch, is saying today is so familiar to me it is almost like listening to “Auld Lang Syne” every New Year’s Eve. It is utterly predictable but probably less tuneful. Every year, he shows that he misunderstands the purpose of the European Union Committee. It is not to tell Brussels what to do; it is to hold the Government to account for what they do. The function of a committee of the House of Lords is to hold the Government to account, and that is precisely what it does. If it takes that number of sub-committees to examine the more than 1,000 documents that come through, so be it. You need the people and the Peers to do that.

However, the real point is this: in order to be able to advise the Government on how they should react to what comes from what the noble Lord described as the juggernaut in Brussels, you need to explore the minds of those working in Brussels and spend a lot of time examining the Green Papers and the White Papers, attending the meetings and so forth so that you can fulfil your function, which is to advise the Government on how they should react. That is what the committee is all about. It is not about telling Brussels what to do.

[Lord Stoddart of Swindon]

My Lords, I am afraid that the noble Lord, Lord Grenfell, will now hear the second verse of “Auld Lang Syne”. Before I remark on the amendment of the noble Lord, Lord Pearson, I congratulate the noble Lord, Lord Sewel, on his appointment as Chairman of Committees and the noble Lord, Lord Boswell, on his as Principal Deputy Chairman of Committees. However, I support the noble Lord, Lord Pearson, in the amendment that he has put before the House. He has been very persistent in doing so. It is right that the House should hear some alternative views about the European Union. It often does not and should do so more often.

The Select Committee has six sub-committees; it used to have seven but now it has six. However, their very existence shows the power of the European Union over matters relating to this country and how it has encroached on our national life and into the very nooks and crannies of our country.

The Select Committee on the European Union costs £2 million a year, which is not a mean sum. It is absolutely true that the benefits from its discussions, although they are erudite and make easy reading, are nevertheless not influential, so far as this House and Parliament can see, in altering the views and policies of the European Union itself. Decisions are taken in secret so that we do not even know what views are being put forward by the Government, so again we cannot see what influence our own Select Committee has on our own Government.

We spend £2 million on this committee. There is another Select Committee in the House of Commons. It does not do quite the same thing, but I wonder whether it might be worth considering a joint Select Committee of both Houses to scrutinise EU legislation and regulations. That is a matter that might be taken up by the House and the other place at some point in the future. I support the amendment moved by the noble Lord, Lord Pearson.

[Lord Hannay of Chiswick]

My Lords, I would like to say a few words on this, having been a member of your Lordships’ European Union Committee on two occasions and still currently so. There are many errors of fact in what has been said by the noble Lords, Lord Pearson of Rannoch and Lord Stoddart of Swindon, and others. Our job is to make recommendations to the British Government, and the point about the British Government not telling us what account they have taken of our recommendations is untrue. They are required to do so within two months and they always do so. They state their reaction to every single one of the recommendations. It is also untrue that the Commission does not say what it has done in reply to the recommendations. Every one of the reports is now replied to by the vice-president of the Commission responsible for relations with the national parliaments, and they are all on the website. I wish the noble Lord, Lord Pearson, good reading because there are probably several thousand replies from the Commission that he could usefully read. He might then understand a little better what is done.

My penultimate point is that we have not yet reduced the number of sub-committees to six. We are waiting for the Chairman of Committees to be allowed to put his proposal to us in order to reduce them from seven to six, but we have not yet done so. The last point that I want to make about this is that it does not always seem to be very well understood that the job done by the EU Committee and its sub-committees is that of scrutiny of EU legislation, a job that is done by the whole House on UK legislation. If it is not done properly through the EU Select Committee and its sub-committees, it will not be done at all, and that would be a real loss of influence for this country.

[Lord Tebbit]

My Lords, it verges upon the unbelievable to think, from the description just given to us by the noble Lord, Lord Hannay, that the bureaucrats of Brussels are waiting in fear of what the sub-committees in this place might say about proposed European legislation and are then devoting thousands of hours to reasoned arguments against it. I suspect that that does not actually happen.

To come back to the clear point, we have before us a proposal that these distinguished and hardworking Members of the House should consider these matters time and time again, even though there is no evidence that anything changes as a result of their consideration and recommendations. That is a fact that has been shown to be so from the answers to PNQs. Either we change what we are doing and do something to draw attention to this so that the Government might get excited about it and act in some way, or we simply say to these distinguished Members of the House, “You are wasting your time. Why not go home and dig the garden? Do something constructive”, or something like that.

These Members are simply wasting their time. If they are wasting their time, as I believe they have been in recent years, it should be brought to the notice of this House by means of a debate so that we can consider what to do about it, one way or the other: either close down the operation or require Her Majesty’s Government to do something effective. The amendment proposed today is one way of getting something moving on that front.

16:00

[Baroness O'Cathain]

My Lords, I hesitate to disagree with my noble friend Lord Tebbit, but there are occasions when the workings of the sub-committees and the Select Committee have actually borne fruit. We have done a number of reports where we put the consumer first, as well as the management of money.

Only recently we had huge success in dealing with the issue of the roaming of data when abroad. That might not sound important to a lot of people but with the growth in the use of iPads, I can assure noble Lords that it is. I spent a night in a hotel in Ireland recently with my iPad—I mean, reading my two newspapers on my iPad in the morning; sorry about that—and it cost me £30. I just could not believe it. We then made our report in a very short exercise—and I see members of my sub-committee agreeing with me—and we got huge acres in the techie press of agreement that this was the way to go, and I am sure that something will happen. It is only a small thing but it is something to convince my noble friend that in fact we are achieving something.

[The Chairman of Committees]

My Lords, I had anticipated an amendment from the noble Lord, Lord Pearson of Rannoch, although not the one that actually emerged. He has put me in something of a difficulty. I do not know whether to respond to his amendment or to his speech because the two seem to be somewhat disconnected.

As the noble Lords, Lord Hannay and Lord Grenfell, have pointed out, the noble Lord fundamentally misunderstands the function of the committee. The committee’s job is to scrutinise Her Majesty’s Government’s response to European initiatives. It also takes on the role of inquiry into particular policy areas. This is where the argument about effectiveness is cited.

The noble Baroness, Lady O’Cathain, has already pointed out with regard to roaming how the committee is able to influence the development of policy. I have previously pointed out with regard to fisheries policy that if you look at the proposals coming forward from the Commission on the reform of the common fisheries policy, they are heavily drawn from the report of our own EU Committee. That is the sort of influence that can be brought to bear in a positive way.

Finally, on the issue of preparing an annual report, the committee already has the power to issue an annual report if it so wishes. Again, listening to the words of the Deputy Chairman of Committees, it seems that he—and the committee—would be quite happy to look at whether something like an annual report could be produced. On that extremely helpful note, I invite the noble Lord to withdraw his amendment.

[Lord Tebbit]

Back in May 2008, I asked the then Government whether they could find more than one example of a European Union legislative institution having been altered as a result of proceedings in either House of Parliament. It was a fairly straightforward question. No such examples were given. I wonder whether my noble friend has some examples that might have occurred in the past two years under this Government.

[The Chairman of Committees]

My Lords, I am much more concerned about being able positively to influence policy development rather than seeking the post-hoc position of trying to change policy and legislation once it has been enacted. Surely it is much better that we are in there, bringing to bear the expertise of this House on issues of major European policy.

[Lord Pearson of Rannoch]

I am most grateful to all noble Lords who have spoken: to the noble Lords, Lord Grenfell and Lord Hannay, and partially to the Chairman of Committees. They all said the same thing: that I had got it all wrong, that I had not understood that the EU Select Committee is there not to tell Brussels what to do but to hold the Government to account and to advise them how to act. Well, as a matter of fact, I am aware of that; my point is that the result is ineffectual, as witnessed by the 580 scrutiny overrides and so on. I accept the point made by the noble Lord, Lord Hannay, who said that the Government indeed reply, copiously, to all our Select Committee reports and that the Commission replies to the Government’s views. However, the result remains the same. On the example relating to fish that has been given by the Chairman of Committees, let us wait and see.

The amendment and the debate have been worth while. I have to disagree with my noble friend—if I may refer to him as such—Lord Tebbit in one regard. I agree that members of the European Union Select Committee are largely wasting their time, but I do not propose that they should go and dig their garden. Their energies should be redistributed around the other committees of your Lordships' House, particularly the ad hoc committees of the future, which will be increasingly important.

I am grateful to the Chairman of Committees for giving me some support and to the chairman of the Select Committee for not ruling out of order what I had to say. I am grateful, too, to both noble Lords for giving us the hope that future annual reports of your Lordships’ Select Committee may indeed include what I have requested. I am most grateful to the noble Lord for his generous reply. I beg leave to withdraw the amendment.

Amendment to the Motion withdrawn.

Motion agreed.

Infrastructure Planning (Waste Water Transfer and Storage) Order 2012

Wednesday 16th May 2012 Lords Chamber

Advisory Committee on Hazardous Substances (Abolition) Order 2012

Motions to Refer to Grand Committee

16:07

Moved By

[Lord De Mauley]

That the draft orders be referred to a Grand Committee.

Motions agreed.

Arrangement of Business

Wednesday 16th May 2012 Lords Chamber

Announcement

16:07

[Lord Newby]

My Lords, if Back-Bench contributions to today’s debate on the gracious Speech are kept to seven minutes, the House should be able to rise before midnight.

Queen’s Speech

Wednesday 16th May 2012 Lords Chamber

Debate (5th Day)

16:08

Moved on Wednesday 9 May by

[Lord Cope of Berkeley]

That an humble Address be presented to Her Majesty as follows:

“Most Gracious Sovereign—We, Your Majesty’s most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most Gracious speech which Your Majesty has addressed to both Houses of Parliament”.

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Baroness Wilcox)]

My Lords, it is a privilege for me to open this debate, which my noble friend Lord Sassoon will wind up later today—much later today, because 58 Peers are down to speak.

I look forward greatly to the maiden speech of the right reverend Prelate the Bishop of Durham. He brings a broad experience to this House and it will be very welcome to hear him give us some more information on that.

The measures laid out in Her Majesty’s gracious speech reflect the Government’s ongoing efforts to revive the fortunes of the economy, to create the best possible climate for business investment and to steer the UK firmly in the direction of growth.

As my colleague, the Business Secretary, pointed out in another place, the global financial crisis destroyed roughly 10 per cent of our economy. Recovery to date has been slow and halting; ongoing turmoil in the eurozone will especially make further progress equally challenging.

We can look with some satisfaction to the creation of more than 600,000 new private sector jobs within two years, almost twice as many as have been lost in the public sector, and to today’s news that unemployment is falling. That is heartening, but there are still too many families missing a breadwinner. This, above all, is testament to the misguided economic stewardship of the previous Government. Theirs was a flawed approach, predicated on ever greater debt, overly dependent on an unstable banking sector and neglectful of manufacturing.

I regret, therefore, that the noble Baroness, Lady Royall, is moving her amendment. It is only two years since Labour was thrown out by the electorate. I echo the Prime Minister in noting that her party’s only solution to overborrowing, overspending and excessive debt is more of the same. We stand firmly by the measures we have taken to date: tackling the deficit, reducing burdens on business and maintaining low interest rates. This latest legislative programme is again focused on economic rebalancing, rewarding hard work and delivering sustainable growth.

At the same time, we recognise that simply passing more laws will not in itself create the change we need. The Foreign Secretary reached the heart of the matter in today’s Times:

“Governments never have and never will create wealth solely through their own efforts. We can pave the way, but it will be talented and hardworking British people and companies who propel our country towards a prosperous future”.

I intend to devote much of my speech to those Bills which focus most directly on addressing that issue, although I will also cover key measures, including pensions and local government. Under the banner of the enterprise and regulatory reform Bill, we are promoting the UK’s transition to a green economy. The UK green investment bank—a global first—has initial funding of £3 billion to March 2015. Its mission as an independent institution will be to mobilise private finance in green infrastructure, helping to give UK businesses a head start in nascent markets.

Secondly, the Bill will tackle anti-competitive behaviour and ensure more open markets by establishing a new Competition and Markets Authority. Assuming the functions of the Competition Commission and the competition functions of the Office of Fair Trading, it will speed up existing processes within clearer time frames. Regulation is sometimes unavoidable, but it must never be excessive. Some burdens will be entirely done away with under this Bill; others may face sunset clauses. In addition, we will extend the primary authority scheme, allowing more businesses—especially SMEs—to access consistent advice on specific regulatory issues. The new arrangements will save many more small businesses from time-consuming, and often duplicative, inspections.

Many SMEs also regard the current operation of employment tribunals as a disincentive to expansion and hiring extra staff. We agree that it is absolutely necessary to protect people from abusive employers and no measures in this Bill will dismantle those protections. It is also important, however, that where disputes do arise, employers and employees receive help to resolve them without facing the costly and time-consuming employment tribunal process. I trust your Lordships will agree that this objective can be best achieved through helping parties to settle any dispute before a tribunal claim is lodged. We will encourage greater use of settlement agreements and streamlining the tribunals process itself, including a new rapid resolution scheme.

A similar desire to improve the lot of small businesses informs the Groceries Code Adjudicator Bill, designed to protect their interests as supermarket suppliers. Retailers, of course, should not be prevented from securing good deals on behalf of consumers, but nor should they be able to take unfair advantage of farmers and other small suppliers. I know that noble Lords on both sides of this House are eager to see the adjudicator introduced.

The adjudicator will have the powers necessary to uphold the code. As importantly, he or she will support investment and innovation in the supply chain by stopping supermarkets passing on excessive risk and costs to suppliers. That means serving the long-term interests of consumers and the economy, in which agriculture and food manufacturing are major segments.

This wish for business to be both successful and responsible explains another section of the enterprise Bill. In this case, we are seeking to re-establish the link between performance and reward at director level. In March, we issued proposals on giving shareholders binding votes on directors’ pay, and invited comments. We are now considering the consultation responses.

Britain needs a resilient banking sector that lends to productive business in the real economy. Our conclusion, following the independent commission led by Sir John Vickers, is that essential banking services must be ring-fenced from other activities and that insured depositors should have priority over unsecured creditors in cases of insolvency. The banking reform Bill will make these changes to foster financial stability and achieve a more resilient banking sector. The retail ring-fence will separate the vital services on which households and SMEs depend from more volatile wholesale and investment banking. This will insulate those services from the effect of shocks elsewhere in the financial system and ensure that if banks get into trouble, problems can be resolved without taxpayer support. The Government will complete all primary and secondary legislation by the end of this Parliament, and banks will be expected to implement the ring-fence as soon as practically possible thereafter.

We are legislating in two other sectors of vital national importance. The energy Bill will reform the electricity market to guarantee supply, reduce emissions more cost-effectively and improve regulatory certainty by making government and Ofgem better aligned. It ensures that the Office for Nuclear Regulation will be able fully to meet the future challenges of regulating the nuclear industry, as the first new power plants since the 1980s are built. Overall, the Government want to see a balanced portfolio of renewables, including new nuclear and carbon capture and storage, with gas playing a role during the transition and as back-up. The draft water Bill, meanwhile, will increase choice for business and public body customers, meaning they can obtain more competitive prices and demand more tailored services. The existing competition regime for water supply will expand to cover sewerage and there will be greater opportunities for new firms to enter the water and sewerage market.

Perhaps your Lordships will allow me to conclude by highlighting three other elements of the Government’s programme. The Local Government Finance Bill, introduced in another place in the previous Session, will shortly be debated in your Lordships’ House. Creating growth, reducing debt and handing back power to local people are at the heart of this Bill. It will incentivise local authorities to go for economic growth by reforming the business rates system, make councils more accountable to taxpayers and give local authorities autonomy in providing for their most vulnerable people. The local audit Bill, which we are publishing in draft for consultation and pre-legislative scrutiny, includes proposals to abolish the Audit Commission and open up local public audit to the private sector. We estimate that this could save £650 million of public money over the next five years.

Finally, following the agreements reached with trade unions for the three largest unfunded schemes, the public service pensions Bill will deliver affordable, sustainable and fairer pensions, and ensure that costs and benefits between employers, workers and other taxpayers are balanced more fairly. Pension benefits that have already been earned will be protected. These pensions will remain among the best available, continuing to provide guaranteed, index-linked benefits in retirement. Equivalent private pensions would cost around a third of an individual’s pay. Those closest to retirement will not see any change regarding when they can retire or any decrease in the pension they receive at normal retirement age.

The fundamental principles behind this programme are clear. As my right honourable friend the Prime Minister made clear in his reply to the debate on the Address in another place, this is a coalition Government prepared to confront the long-term challenges which this country faces. We are a Government prepared to roll up our sleeves and deal with the deficit. We are a Government determined to unleash the private sector, to encourage growth across our country and to sort out our financial services. We are a Government who back hard-working people. We are a Government acting for the long term and in the national interest.

16:20

Amendment to the Motion

Moved by

[Baroness Royall of Blaisdon]

As an amendment to the motion for a Humble Address, at the end of the Address to insert, “but regret the failure of Your Majesty’s Government properly to address economic recovery, especially promoting growth and jobs, and the issues of general living standards and the one million young people out of work, and deplore the incoherence and the lack of vision of the measures proposed by Your Majesty’s Government for the coming Session of Parliament”.

[Baroness Royall of Blaisdon]

My Lords, I move the Opposition’s amendment to the Motion on the gracious Speech. We on these Benches do not do so lightly, and we acknowledge that it is a serious step. To do so is not unprecedented, although we recognise that it is unusual. In fact, the last time it was done was back in 1999, in an amendment against the overall thrust of the policy of the then-Labour Government. The mover of that amendment was none other than the noble Lord, Lord Strathclyde, so we are completely confident that the government Benches will strongly support our right to argue for this amendment today.

Our reason for tabling the amendment is straightforward. We believe that the Government are putting the wrong priorities first because the Government are putting the wrong people first: tax cuts for the rich, but hard-working families being asked to pay more; nurses being laid off, but an expensive and wasteful NHS reorganisation; and police numbers being cut back—indeed, as the police themselves say, 20% cuts are criminal—but nothing being done to tackle crime. There is no legislation, as was promised, on ASBOs. Rather than concentrating on Lords reform, the Government should be concentrating on jobs, on growth, on living standards and on youth unemployment.

Let us consider the economic state of the nation. The economy is in a double-dip recession with no end in sight. Indeed, the latest dismal figures for the building industry suggest that the estimate of national GDP growth of minus 0.2% in the first quarter was overly optimistic, an underestimate of the true scale of economic decline. The UK, as a direct result of this Government’s policies, is set to endure a longer depression than the country suffered in the 1930s. Just today, the Bank of England has cut its growth forecast for this year from 1.2 per cent to 0.8 per cent, and warned that the UK would not be unscathed by the storm which is still convulsing the eurozone. That is precisely why we should be part of, and influencing, the debate rather than standing in isolation. But it is still this Government, not events beyond our shores, who are responsible for the double-dip recession in which we are mired.

What is there in the Queen’s Speech that will do anything to kick-start the economy back into growth? Of course there will be Bills on competition policy and on banking, and on a green investment bank, as the noble Baroness, Lady Wilcox, said, but I would be grateful if in her reply, the Minister would confirm that the banking Bill is not going to be a carryover Bill, as we had understood.

These may be worthwhile measures. We certainly hope that they will be, but any effect that they have on economic performance will be in the medium to long term. They will make no discernible impact over the next few, crucial, years. The noble Baroness mentioned a Bill to reduce burdens on business by repealing unnecessary legislation. Well, we are all against “unnecessary legislation”, though it seems to me that we have encountered a lot of seriously unnecessary legislation recently—for example, on the National Health Service, something that produced a plethora of quangos. But I leave the verdict on these proposals to none other than the leader writer of that organ of radical thought, the Daily Mail:

“The promised bonfire of the quangos and red tape has been pathetic, with last week’s Queen’s Speech paying only lip service to deregulation”.

I do not think that the Government really understand. They do not seem to understand that it is their policies that have mired the economy in recession and that, without a change of course, without active intervention now, the prospects for a return even to the levels of output seen in 2008 are bleak. The coalition appears to be in recession denial. There is no hope and the people of our country are desperate for vision, hope and opportunity. But the Government lack any vision of how Britain might return to prosperity.

[Lord Roberts of Conwy]

Would the noble Baroness give way? I am very surprised that she does not give a hearty welcome to the increase of 105,000 in employment and the decline of 45,000 in the unemployed that were announced today, facts that were welcomed by the Leader of the Opposition at Prime Minister’s Questions.

[Baroness Royall of Blaisdon]

If the noble Lord will give me a few minutes, I will get to the part where I do indeed welcome what has happened today with the unemployment figures. However, I will of course qualify that.

The oft-stated primary objectives of government policy to maintain sterling as a safe-haven currency by protecting at all costs Britain’s triple-A rating with the ratings agencies, and keeping interest rates low to stimulate investment, is interesting and important. However, the strengthening of sterling poses a threat to the recovery of industrial exports from Britain and, in the absence of any prospect of growing demand, low interest rates have been accompanied by a collapse in investment.

Put simply, the Government’s economic policies are incoherent. Consider the fact that almost 90% of the planned cuts in government expenditure are still to come, creating a headwind loss of 6% of GDP before growth can get going again, and the overall damage that their policies are doing to our growth prospects are all too evident. Even the ratings agencies are now beginning to wonder whether the UK’s rating should be downgraded because of the lack of growth.

Moreover, the human consequences of the Government’s economic policies are all too evident. As I said, I welcome the fact that unemployment fell today, but I note too that the number of people unemployed for more than a year—that is, under the definitions used, the long-term unemployed—rose by 27,000 to 887,000, the worst total since 1996, when the Conservative Party was last in power. It is the Government’s policies that have led directly to higher unemployment so that people lose their dignity and purpose and may have to claim benefits rather than working and thus helping to create economic growth and deficit reduction.

The number of people working part-time who say that they want a full-time job is at a record high, but of course the Government do not seem to care. A Downing Street source was quoted yesterday as asking why people only work part-time—more evidence of this Government being out of touch. They briefed the newspapers ahead of the Queen’s Speech about the family-friendly policies within it, yet do not understand that people may need to work part-time because they have childcare or other caring responsibilities, let alone that sometimes part-time jobs are the only jobs available.

The effect of the Government’s policies has been especially wounding for young people. Even after today’s figures, more than one in five young people are unemployed—over 1 million in all. Just when they should be starting out on their careers, perhaps thinking of settling down and building a family, they are left idle, untrained, demotivated, and devastated. As my noble friend Lady Hughes of Stretford spelt out so well yesterday, this coalition’s policies are creating a wasted generation that should weigh on the conscience of every single member of this Government. The Queen’s Speech contains nothing that addresses the problem of the unemployed young. The country as a whole will suffer from this neglect for years to come.

Of course, the assault on the poor continues. The Institute for Fiscal Studies has shown that government measures introduced this April will have a disproportionate effect on the lower half of income distribution, with the biggest hits being suffered by households with children, and there is more to come. Only 12% of the proposed cuts have so far been implemented and we are told that, on the advice of his strategy adviser before he leaves the sinking ship and heads off to California today, the Prime Minister is considering a further £25 billion in welfare cuts. The much vaunted Budget increase in the personal allowance, which the coalition partners pretend help the worse off, is also systematically biased against the poor: 70% of the benefit will go to those in the top half of income distribution.

All this, and yet there is nothing concrete in the Queen’s Speech to address the pressing needs of so many people in our country—and there is worse to come. In its report to accompany the Budget Statement, the Office for Budget Responsibility tells us that the coalition recession is not just resulting in lost income, lost jobs and blighted lives today, but is blighting Britain’s future, too.

The OBR could not be clearer,

“our estimates of potential growth do imply a significant and persistent loss of potential output relative to the pre-crisis trend … Our … estimates for 2011 imply a potential output loss of around 8 per cent … This shortfall widens to around 11 per cent by 2016”.

That is terrifying. It is because the sharp fall in investment since the coalition took power bequeaths the country crumbling infrastructure and underskilled workers. Yet there is nothing in the gracious Speech that would stimulate infrastructure investment or enhance the skills base.

However, I must admit that since the Queen’s Speech the Government have launched a new economic policy to tackle Britain’s economic problems. The noble Baroness mentioned her right honourable friend Mr William Hague, the Foreign Secretary. A few days ago, he declared:

“There’s only one growth strategy: work hard”.

Then Mr Eric Pickles, the Secretary of State for Communities, chimed in, saying:

“I think we all should work harder”.

So the youngster desperately searching for a job, who has sent of dozens of applications without success, sometimes without an answer or an acknowledgement, is told to work harder. To the thousands put on short time, the message is work harder. To the family struggling in the face of cuts in working tax credits, the message is clear: work harder. To the small business owner, unable to renew his or her bank funding, and seeing the prospect of securing future orders vanish, the message is work harder. To the building contractors facing 5% falls in demand, and retailers facing a shrinking high street, the message is stop whingeing and work harder. As Mr Hague put it so precisely,

“do more with less—that’s the 21st century”.

Well, the coalition is certainly guaranteeing that we will have less. It is not as if the Government are even willing to debate how new measures might boost demand in the economy. What is the Government’s response to UK manufacturers who want more support, including the creation of an industrial bank? Why was there nothing in the Queen’s Speech about infrastructure? Why no HS2 Bill? Why, for example, is there no debate over creating a national infrastructure bank? If Britain can afford to lend £10 billion to the IMF, then it can afford to lend £10 billion to a national infrastructure bank to attack directly the decline in productive potential that the austerity policies have produced. The Chancellor of the Exchequer said the IMF loan would come from the UK’s reserves, that it was not money that would otherwise have been available for public spending and that it would not add to the national debt. So let us perform that trick again, but this time at home. Why is there no debate over the American idea that austerity policies—cuts in spending or increases in taxes—should be contingent on the economy reaching predefined goals in terms of growth and/or employment? Legislation would commit the Government to cutting the deficit when the growth target had been hit, but the Government will not even consider the possibility.

The Government make the claim that they inherited a difficult economic situation. Well, they entered office two years ago in the face of a major world financial crisis, a crisis that had a particularly damaging effect on the UK because of the disproportionate importance of the financial services industry in our economy, as the noble Baroness said. However, she did not add that they inherited an economy on the path to recovery, growing at 2% a year, with a deficit plan in place that would have halved the deficit in four years, the target agreed by the G20 nations. It is their policies that have forced the economy back into recession. Two years on, they have no excuses. Their austerity policies have failed and should be abandoned, and they must also abandon the assault on the poor, the NHS and legal aid which they disguise as necessary pain.

It is not just us on these Benches or my party generally that makes this criticism. Even the most measured and careful of professions, the accountants, are making the same points. The Institute of Chartered Accountants for England and Wales was quoted yesterday as saying that the Government’s child benefit tax is seriously badly engineered. Another accountant said that nuking large-scale philanthropy at a time when the demands of charities are rising steeply does not make sense. That is no doubt why the Queen’s Speech includes a panic provision to reverse the Budget’s impact on charities.

The day after Her Majesty delivered the gracious Speech, the Daily Telegraph headline read:

“Queen’s Speech: why was there no plan for growth?”.

Around the world we see policy makers struggling to develop new ideas to escape austerity and resuscitate growth, the growth that everyone other than the recession deniers in this country knows is the only way to restore the public finances. The only Government not participating in this debate is this one. Their policies lack vision, they lack coherence, and they fail to address the pressing problems of the creating growth and jobs in this country.

The Queen’s Speech illustrates that in just two years their policies are not working and they have no idea what to do next. That is why we have tabled this amendment, to focus attention on what the Government are doing—pursuing policies that are not working and making cuts that go too far, too fast. We wish to focus attention on what the Government should be doing—that is, pursuing policies to promote jobs and growth, improve living standards and cut youth unemployment.

This Government are out of touch. Even elected Conservatives are coming to this conclusion. In Stroud, in my glorious county of Gloucestershire, the Conservative chairman of Stroud District Council, Councillor John Hudson, has recently resigned from the Conservative group, and indeed the Conservative Party, over the effect of the Government’s policies. He said:

“I’m a family man with three very young children, just trying to keep a roof over their heads, food on the table. To be brutally honest, and it sounds a bit socialist and I’m no socialist, the people who run the Government have no idea how the ordinary working man is coping”.

He is right. The Government are out of touch, incompetent and unfair. The elections show that, the polls show that and I look forward to this House showing that today. I also look forward to the maiden speeches of the right reverend Prelate the Bishop of Durham and the noble Lord, Lord Ashton of Hyde. I beg to move.

16:36

[Lord Razzall]

My Lords, I am sure that the students of politics in your Lordships’ House, of which there are many, will entirely understand why the noble Baroness thinks that this is all the fault of the Government and blames the whole thing on government policy. However, we ought first to put into perspective what has happened to government expenditure during the period of the coalition. In real terms, expenditure has hardly been reduced at all.

If we take the official Treasury numbers, stripping out inflation and showing real spending indicates a reduction last year of just £8 billion. In real terms, that is a cut of a pretty modest 1.1%. The figure is also flattered by comparison with Labour’s spending in the election year, when it increased by £31 billion, making the high-water mark unusually high. Therefore, the real level of government spending today, against that in 2008-09, represents an increase of £23 billion, which is a 3.4% rise. I hardly think that the policy of economic cuts that the noble Baroness indicated is responsible for austerity. However, we know that austerity is particularly unpopular. We have to look only at what happened in elections in Greece, France and North Rhine-Westphalia to realise why the noble Baroness is on that particular bandwagon.

The Liberal Democrats on these Benches are of course part of the coalition but we retain our independence—

[Lord King of Bridgwater]

Don’t go too far.

[Lord Razzall]

The noble Lord, Lord King, does not want me to go too far so I will rein that back. As noble Lords will be aware, we have not necessarily been uncritical of a number of government policies and plans. However, on these Benches we stand four-square behind the coalition on the necessity of bringing the deficit down. Now is not the time to spook financial markets. We have to look only at what is happening in the eurozone, particularly Greece, Spain and Portugal, to realise the incalculable cost to our economy if we were to lose market confidence. Look at our current borrowing rates. I think we are now selling our gilt-edged securities at a lower level than we have in modern economic history. That is a huge benefit to our public expenditure and we need to retain the confidence of the markets.

Taking the noble Baroness’s point about there being nothing in the gracious Speech about growth—

[Baroness Kingsmill]

I wonder whether the noble Lord thinks that the confidence of the markets is rather more important than the confidence of the electorate. It seems to me that throughout Europe the confidence of the electorate is being severely tested by the politics of austerity.

[Lord Razzall]

One of the advantages of the Fixed-term Parliaments Act is that it will take three years to discover the answer to the noble Baroness’s question. As regards the provisions about growth—it is a common criticism of the gracious Speech—I say to the noble Baroness, Lady Royall, that you do not legislate for growth; you create an economic climate in which growth can occur.

I have every confidence that the coalition Government’s policy is rather like the swan: above the water it is serenely swimming forward to reassure markets, while under the water it is paddling like mad in an effort to promote growth and hoping that the markets do not notice. There are a number of growth initiatives of which I know that my party is proud; for example, the creation of the green investment bank, the regional growth fund and the pension infrastructure platform to invest in UK infrastructure. Of course, there are more subtle ways in which the Secretary of State for BIS has been trying to encourage growth. It is significant that today, for the first time since 1976, we can announce a trade surplus in the sale of motor vehicles. As a betting person—who is usually successful—I suspect that we will have some good news on Ellesmere Port. All sorts of initiatives are happening.

If we are to go for growth, the role of the banks is critical. The immediate problem, which is a statement of the obvious, is that the banking system is being required to do three things simultaneously. The banks are being asked to maintain and increase lending to the SME sector. At the same time, over the next two or three years, they will have to provide billions of pounds to refinance the borrowing of major companies that fall. They are also being asked to increase their capital base to meet the regulatory requirements. Even Solomon would struggle to meet those simultaneous requirements, which is one of the reasons why we have the problems that we do.

Everyone says that there is not enough lending to the SME sector, which is undoubtedly correct. The noble Lord, Lord Sugar, came to your Lordships’ House and told us that any SME company which wanted a loan could always get one, and if it could not its financial plan was wrong. What world does he live in? The jury is clearly out on Project Merlin. The FSB says that a significant percentage of loans requested by the SME sector are not being granted. If we take the anecdotal evidence of the way in which some banks are behaving, we should look at what Barclays and NatWest did to Clinton Cards. They sold a £35 million loan book to American Greetings, which was the major supplier to Clintons. Immediately, American Greetings foreclosed on the loan and at least 8,500 employees are in danger of losing their jobs. Is that the way in which responsible banking should operate?

As regulation of banking returns to the Bank of England, the Bank must emphasise that effective regulation is crucial. First, the current system makes it difficult for new entrants either to compete with major retail banks or to introduce innovative new models, such as community banking on the American model. I suspect that my noble friend Lady Kramer will refer to that. Secondly, we need to think seriously about how the economy can rebalance as growth returns, away from financial services. The Vickers report looked at how we regulate banking in the context of risk to the taxpayer but the next task for future regulators is how to ensure that, as the economy recovers, the financial sector does not retain its bias in the British economy.

16:44

[Lord Bilimoria]

My Lords, six months ago I read out this quote:

“The era of procrastination, of half measures, of soothing and baffling expedients, of delays, is coming to its close. In its place, we are entering a period of consequences”.—[Official Report, Commons, 12/11/36; col. 1117.]

Those were the words of Winston Churchill in 1936, and we all know what happened three years later.

We have finally had a Queen’s Speech, after what I believe was an unacceptably long gap of two years. Could the Government assure us that this will not happen again, and that we will have year-long sessions in future, as is customary?

One message that the Government have very clearly got across in their two years is talking tough about austerity, and the two big benefits of this have been that Britain has retained its AAA credit rating and continued to enjoy phenomenally low bond yields, as the noble Lord, Lord Razzall, said. But how long can tough talk last? I am glad that the Government have stopped blaming all the problems on the previous Government—although they have just done so. Now they are blaming Europe, and we have the eurozone crisis building up and about to explode, as many of us predicted. France and Germany, formerly the best of friends, are now at loggerheads, and there is growing certainty that Greece will have to leave the euro—it is almost definite—with all the possible contagion that this will bring. We have entered a double-dip recession. The Nobel laureate, Paul Krugman, wrote recently:

“Britain … has achieved the remarkable feat of doing worse this time around than it did in the 1930s”.

And what is in the gracious Speech? We hear that:

“A bill will be brought forward to reform the composition of the House of Lords”.

Is that the most important thing in the public’s mind? We know that it is not. It is the lowest priority to this country, and if we go down that route we will be accused by our people of being like Nero, fiddling while Rome burns.

On top of this, we have had a Budget with some great measures in it, such as cutting the 50p rate of tax. I believe that it should go down to 40p. It also reduced corporation tax, which was fantastic. On the other hand, it was a PR disaster, upsetting so many people: charities, pensioners, heritage lovers, the Church of England and even pasty consumers. Now, as we have heard from the noble Baroness, Lady Royall, the Institute of Chartered Accountants in England and Wales has said that the child benefit plans announced in the Budget are seriously flawed.

On top of that, we have business leaders criticising the Queen’s Speech for not having enough of a plan for growth for business. As we have heard, the response from the Government is that these leaders of business should stop whinging and work harder. I know from running my business how tough it is to grow a business in this economic environment—and the Government are saying to me that I am not working hard enough? How dare they?

We have had blunder after blunder. The NHS reform has been badly handled to the extent that we face the dreadful thought of doctors going on strike. The defence review was rushed through, and now we face the blunder of having no carriers and no Harriers for almost a decade, with the Government executing a U-turn on the carrier aircraft which will cost us billions from the defence budget. Will the Government accept that they have made a blunder with regard to the loss of capability and of money on that score?

The Government have cut higher education funding, one of the jewels in Britain’s crown. Just last week a report was released that found that in government expenditure as a percentage of GDP for higher education, we in Britain came 41st out of 48 countries in the world. I have been saying for many years that we need to increase spending on higher education funding. One reason the United States is always ahead of the game is because it invests far more, in absolute terms and as a proportion of GDP, in both public and private expenditure on higher education. That is why its productivity and its innovation are always streets ahead. Why do not we learn from that? Could the Government explain?

Then we have had the big society—big talk and big platitudes, with the best of intentions. People could genuinely question whether the Government are in tune and in touch with people. Only one city out of 10 wanted an elected mayor. Now we have elected police commissioners, and we know that the public are not that keen on that. The turnout in elections is bad, with that for the London mayor elections at only 38%. In India, in the state of Uttar Pradesh, turnout was at 60% in the recent legislative elections. Do not the Government understand that people do not want more elections, politicians and partisan bickering? People’s worries are about their jobs, job security and economic prosperity; that is the priority.

On top of this we have had the immigration cap, which wrong-headedly encompasses foreign students. Would the Government admit that, by including foreign students in the overall immigration numbers, they are forgoing an enormous opportunity, which brings up to £8 billion into this economy? Nick Pearce, a fellow member of the UK-India Round Table and director of the IPPR, recently asked:

“Will the next generation of world leaders, like Manmohan Singh, Benazir Bhutto or Bill Clinton, be educated in the UK if the UK Government restrict the flow of students to the UK’s world-class universities?”.

As someone who came to study in this country from India, I know how much foreign students bring to this country and the bridges that we build for generations to come.

On the other hand, where schools are concerned, I pay tribute to my old sparring partner, Michael Gove. For two years running he led the Oxford Union while I led the Cambridge Union—although we will not ask what the result was. Last week we both spoke at the Brighton College education conference. I believe that he is doing absolutely the right thing in freeing schools from the shackles of local councils, encouraging free schools and academies, and appreciating the independent schools in this country, which are the best in the world.

The gracious Speech states:

“My Government will build strategic partnerships with the emerging powers”.

As president of the UK India Business Council, which is backed by UKTI, I see the phenomenal opportunities offered by companies such as Tata, which owns Jaguar Land Rover, creates jobs over here and now exports Jaguar Land Rover cars back to India. That makes me feel very proud. However, as a proud manufacturer, I note that there was nothing in the gracious Speech about encouraging manufacturing or providing tax incentives for manufacturing. Will the Minister tell us why the Government cannot do this?

We have a bloated public sector that the Government are rightly trying to cut. Public spending should be 40% of GDP. We have taxes that are too high in terms of VAT, fuel duty and income tax, and we have a welfare state and a benefits trap that need to be addressed. I am glad to see that the Government addressed welfare spending in the gracious Speech although I understand that this is a sensitive issue.

[Lord King of Bridgwater]

The noble Lord says that no encouragement is being given to manufacturing. However, is he aware of the very encouraging recent news about major new investment in this country on the part of two major car companies? That is significant news for manufacturing and builds on today’s very welcome announcement that this year, for the first time since 1976, we have exported more cars than we have imported.

[Lord Bilimoria]

I could not agree more with the noble Lord. All I am saying is that, if we had more incentives for manufacturing, we would have even more such success stories. In fact, Britain has so much going for it. We have the finest universities, the best in design and creative industries, tourism, sport, advanced engineering, the City and our financial markets, the accounting profession, the law profession, and we have our wonderful monarchy and Her Majesty celebrating the Diamond Jubilee this year. We need to harness these amazing assets and use them to generate growth. We need infrastructure spending to create the environment for business to succeed. However, businesses are not getting the money. Will the Minister tell us what is happening with the £20 billion credit-easing scheme? I do not think that it is flowing through.

I conclude: more than anything else, the Government need to show real leadership, not to create fear through austerity or accuse business leaders of whinging and not working hard enough. They need to create hope and optimism—hope, not hopelessness. We have so many strengths in this country; they just need to be unleashed. We need to unleash the great British spirit—the spirit of Great Britain—and unleash hope, optimism, opportunity and aspiration.

16:52

[The Lord Bishop of Durham]

My Lords, I am astonished to be here for two reasons. First, I am astonished that I am here at all. Secondly, I am astonished at the warm welcome that I have received, for which I very much thank your Lordships and all the staff and people who work in this place, who deal very adequately with Bishops wandering around, bleating miserably that they are lost—or, at least, this particular Bishop. It has been a great privilege to have found myself helped in so many ways. I am also grateful to the noble Baronesses, Lady Wilcox and Lady Royall, for their warm welcome today. I look forward to hearing the maiden speech of the noble Lord, Ashton of Hyde, a little later.

I am privileged to be the Bishop of Durham in the north-east of England, which has been one of the most formidable and remarkable parts of this country for more than 1,000 years. It is a source of spiritual and material regeneration and the home of the Industrial Revolution in a way that continues to this very day. We have just heard mention of the new investment by Nissan in car plants and about the SSI steelworks on Teesside and the train assembly by Hitachi within a couple of miles of where Stephenson manufactured the Rocket. These are all areas of intense international competition. These investments show the capacity of the north-east to face anything that comes and to be successful.

This morning I was speaking with the chief executive of the chamber of commerce about a company near Newcastle that makes remotely operated vehicles for subsea work. It has created 500 jobs in the past five years, which, again, is extraordinary. We were talking about how we can develop a trade mission to Nigeria—a country that I know well—in connection with that and with the oil industry, which I also know well.

All these successes mean that the north-east is not a problem to be solved but, rather, an asset to the country to be treasured and valued. At the same time, we face the gathering storms that have been there since 2008 and are getting worse today, threatening even more damage than they have done in the past few years. We see that there are resources and there are great arguments about the rate at which one decreases deficits. However, it is clear to everyone that the Government do not have as much money as perhaps they would like. There are also great arguments about personal indebtedness. Certainly I have recent experience in the north-east of the current level of loan-sharking, which, as someone in Sunderland said to me, is now finding its golden age. People are very stretched.

One area that remains extremely liquid is the corporate sector—an area that I am familiar with, having at one time been the treasurer of an oil company. The Ernst & Young ITEM Club spring report of 2012 said that financial surpluses in the corporate sector are now at 3% of GDP, expected to rise to 5% in 2016, and that last year the sector added £80 billion to its cash hoards. That £80 billion is hoarded in the Keynesian sense of money put away not because it is needed to pay imminent debts or to manage cash flow but, rather, because there is a sense of a lack of confidence. Those are the issues that are being faced.

Even though the north-east is the only part of the country to have a balance of trade surplus, what is making matters worse there is that engineering manufacturers are finding a shortage of skills. With youth unemployment at very high levels, they cannot hire people with the necessary skills for engineering. I have the privilege of being patron of the Northern Echo’s campaign for jobs, which aims to create 1,000 apprenticeships and internships over the next 12 months by asking companies to take on extra interns and apprentices. Skills in engineering and manufacturing are learnt not simply in the classroom but by being part of a working environment. One of the best things that can happen—it is seen in the Budget Red Book and is alluded to in the gracious Speech—is the creation of opportunities for new apprenticeships and new learning and skills. However, that needs targeted resources—mere widespread exhortation is not going to do it.

The second major area is confidence. As I said, £80 billion is being hoarded because of a lack of confidence. Once again, confidence does not come through exhortation but through action, so companies feel that if they do not get on they will fall behind. On 24 April, the noble Lord, Lord Davies of Oldham, made some passing remarks about the pressure on the construction industry, with the 14% fall in January. This morning, looking at the Bank of England agent’s report for the north-east, I read that 15% of all insolvencies in the past quarter were in the construction industry. Confidence comes from cranes and scaffolding: they build confidence as quickly as they erect buildings. Again, when resources are short, we need targeted use of money to bring about quick investment.

All over the country, particularly in the north-east, in schools and in the area of listed buildings—to the unschooled, I am dressed in a white nightie and a black dressing gown which means I have an interest in listed buildings as you might imagine—there is a large number of what President Obama refers to as “shovel-ready” projects. Those targeted investments saying, “You can have funds, grants, help and allowances provided you break ground within six months”, would immediately create large numbers of jobs at a much lower cost than we were hearing last week had been spent on some job creation exercise.

The whole object is not merely economic growth and human flourishing. With economic growth we are able to deal with some of the great issues of human flourishing, such as loan-sharking, the breakdown of families, the high levels of unemployment and the 1,100 people who have visited a food bank that I opened last week—a food bank in this country. Such things destroy human flourishing and diminish the human spirit. The need for confidence and investment in skills is not merely to have a bigger economy but to enable us to see a transformation of our society. These things will not happen merely through exhortation but they require action and leadership.

17:01

[Lord MacGregor of Pulham Market]

My Lords, it is a very great pleasure to follow the right reverend Prelate the Bishop of Durham. I believe he is extremely fortunate to be the Bishop of Durham Cathedral. In my youth, I remember travelling from Scotland to London and I was always astonished by that wonderful building. When one of my daughters went to Durham University, I was able to appreciate it even more. It is a most marvellous institution and how fortunate he is and how well in his speech he has represented the interests and aspirations of his community. As High Steward of Norwich Cathedral, I believe that Durham Cathedral is a very different rival but it is certainly an outstanding establishment.

In the list of his political interests, I was fascinated to see that the top two are finance and the economy, issues not always connected with right reverend Prelates. He has shown in his speech today just how much his interests lie in that area. At a time of very tough public expenditure decisions, I strongly agree with his point about targeted investment of public funds.

The right reverend Prelate has had a most distinguished career in the church, including being Dean of Liverpool. He speaks with great knowledge, giving a spiritual and ethical dimension to the issues that concern many of us, as the personal and ethical adviser to the UK Association of Corporate Treasurers and as chairman of an NHS trust. I hope that as we approach the issues of salaries, high rewards and so on we will hear him speak from his point of view.

In this debate, we have a limited amount of time so I do not want to make a general economic speech as that would take far too long and I would be repeating what many others will say. Therefore, I shall focus on particular points. I say to the noble Baroness on the Front Bench opposite that I believe that she failed to recognise the impact of the huge financial deficit that this Government inherited. I believe that it will take many years to put right. I was interested to see that many of her points would involve substantially higher public expenditure.

As we look at the problem of the huge deficits in many eurozone countries, we should be grateful for the resolute policies that this Government have pursued. Without them, I shudder to think what the costs of borrowing would be now. Here I follow what the noble Lord, Lord Razzall, said. I have been somewhat surprised by some of the comments about the Queen’s Speech not giving priority to the economy. Of course, the Queen’s Speech is mainly concerned with legislation but there are seven pieces of legislation that will have a major economic impact. In particular, the Queen’s Speech makes it clear that the priorities are growth, which involves many policies beyond legislation, reducing the deficit and restoring economic stability. The noble Lord, Lord Bilimoria, mentioned finance Bills, which inevitably are not in the Queen’s Speech, but successive finance Bills have been very helpful to industry and to business generally.

I will concentrate on two issues. The first is the banking Bill, following the report of the independent commission, widely known as the Vickers report. I fully support what the Government are doing on this front and I am delighted that they have acted so quickly and as promised, despite the complexities of the issues. We have yet to see the Bill and obviously there will be a lot of concentration in both Houses to ensure that some of the difficult details are well sorted out. However, I am strongly supportive of the importance of the Bill. The Economic Affairs Select Committee of your Lordships’ House, which I chair, had a long session with Sir John Vickers. Although we did not come to any conclusions—that was not our intention—it was clear from the flavour of all members of the committee that we strongly supported the thrust of the ICB report.

Representatives of the banks, too, appeared before us. They appeared a bit reluctant but confessed that it was a done deal. Their main concern was about costs, and their estimate of these is in our report. However, the estimate of costs for the banks is small compared with the cost to the taxpayers and the economy of the bailout of the banking system over the past three to four years. If we needed a reminder of the importance of separating retail and investment banking, what happened at JP Morgan in the past few days was clear evidence.

I will concentrate on one further issue which has not had enough airing in the House: the impact on pensions of quantitative easing. This will need a longer debate, and I can only sketch out some of the issues this afternoon. Pension schemes in the UK were originally one of the jewels in the crown of schemes in the developed world. We witnessed a very sad decline in recent years in their range and scope, starting with the attacks on ACT by the former Chancellor of the Exchequer, Gordon Brown, which had a big impact. Since then, there has been the impact of longevity, the complexity of accountancy rules, the necessary legislation to prevent fraud and the collapse of schemes, leading to pensions Acts, pension regulators and PPF. The measures were all necessary, but the decline in the number of defined benefit schemes offered to all employees, and the restrictions of schemes on new employees and greater emphasis on defined contributions all accelerated the decline of defined benefit schemes.

Now the impact of quantitative easing is very clear. It is in addition to all that I described. Ten years ago, 80% of defined benefit schemes were open to new members. Now the figure is 19%. That is a dramatic decline. The big trend of schemes being closed to future accrual, as well as other measures to reduce the costs of meeting the deficit, is also substantial. The number of schemes closing to those areas has risen by more than 20% in the past three to four years, and a number are closing altogether.

Much recent concern related to the impact of quantitative easing. The problem here is the way in which liabilities are defined in pension fund schemes. They are defined fundamentally in relation to gilt yields. Therefore, while assets have from time to time improved over the past few years, the problem facing pension fund trustees—I declare an interest as the chairman of three pension fund trusts—is that however well they do on the asset front, they cannot keep up with the increase in their liabilities because these are linked to gilts. In addition to the volatility that company directors and boards face in dealing with their pension schemes, there are big extra costs to meeting the deficit, which are increasingly being spread 10 to 15 years ahead.

At a recent Economic Affairs Committee meeting, I asked the Bank of England Governor what he was going to do about this. I got a string of points in reply about how, if pension schemes matched their assets to their liabilities, it would not be a problem—that is to condense his argument a bit. However, there are very few pension schemes that can do that. I believe that the Bank of England’s scheme is the only one that has matched its assets to its liabilities. The Governor’s case was that asset prices, especially gilts, rise when yields fall, and so in a sense solve the problem of matching assets to liabilities. That option is not available to any other pension fund scheme.

What we have seen on deficits is that the £200 billion of quantitative easing asset purchases pushed up the liabilities of pension funds by £180 billion. The second load of quantitative easing—the £125 billion of asset purchases—pushed up the liabilities by a further £125 billion. These are huge figures. What is happening is that pension schemes are now facing huge deficits as a result of how we define liabilities linked purely to gilts. The Pension Protection Fund estimated recently that the aggregate deficit for defined benefit schemes eligible for entry to the PPF according to its Section 179 liabilities—I apologise for the technicalities—has risen over the past month alone to £217 billion compared with £206 billion the year before.

I am not asking that the policy of QE introduced for completely other reasons—for the economy as a whole—should be changed to accommodate pensions. But what we are seeing is that for short-term reasons—for economic and monetary policy—there are huge long-term consequences for pension funds as a whole and for many individuals caught in a short-term trap if they are reaching retirement and seeking to move into annuities. For example, a pension pot of a 65 year-old was £7,800 pension per year in 2008. It has now fallen to £6,112; a drop of income of 20% driven largely by the fall in asset prices.

I am asking that the method of valuing liabilities should be reconsidered. Actuaries to whom I have talked have been considering alternatives and there are some highly technical areas that provide alternatives. I do not have time to go into those today. But the stumbling block for them and the trustees is that the Pensions Regulator’s way out is to allow longer recovery periods. That is all that they can do if they go by the Pensions Regulator’s advice at the moment. We are having recovery periods going way ahead to 15 years and beyond. But that means an additional burden on the company and another problem that finance directors and boards face.

What is happening is that in this tough economic climate, companies are being asked to make increasing contributions for recovery periods, therefore cutting back on their schemes, when we could find a different way of defining liabilities. What I ask, therefore, is that as the National Association of Pension Funds and others have been urging, the regulator and the Bank of England make a joint statement indicating their understanding of the situation and willingness to explore ways of approving other methods of valuing liabilities during this period of such low gilt yields. In doing so, I am following a recommendation of the Treasury Select Committee in the House of Commons, which asked for virtually the same thing.

I hope that we can return to this matter and debate it in greater detail before long. Meanwhile, I urge my right honourable friend to take up that recommendation in consultation with the others to see if there can be some way of overcoming the serious difficulties that pension funds now face.

00:00

[Lord Myners]

My Lords, it is a pleasure to participate in a speech on the humble Address and in particular to welcome the maiden speech from the right reverend Prelate the Bishop of Durham, who has already warmed the House to his wisdom and sense of social responsibility. I also look forward to the maiden speech of the noble Lord, Lord Ashton of Hyde—another old Etonian added to the House and a former joint master of the Heythrop Hunt. He is therefore incredibly well informed, no doubt, on the Prime Minister’s thinking on so many policy issues.

The gracious and humble Address contains many good measures that I welcome. As an adopted person myself, I am particularly pleased to see that the Government are giving priority to adoption issues. I also welcome the comments from the Minister about board remuneration, although I continue to believe that the core issue requires institutional shareholders to take more seriously their responsibility in the appointment of the directors and members of remuneration committees. They should best achieve that by becoming members of board nomination committees.

I will concentrate on the economy and on the Bank of England. Mr Andrew Tyrie MP, the Chairman of the Treasury Select Committee, who is a wise and informed man, said in October 2011 that the Government needed:

“A coherent and credible plan for the long-term economic growth”.

He was right and that argument remains the same. As he observed at the time, many of the Government’s policies are downright contradictory. The noble Lord, Lord Skidelsky, in our debate on the European Communities (Amendment) Act 1993 held on 25 April, drew the attention of your Lordships’ House to chart 2.4 in the Treasury document, which clearly shows that the deficit is almost entirely due to the collapse in national output.

The engines that the Government assumed were going to drive growth are simply not working at the moment. Manufacturing activity is not picking up and business investment remains extremely low because of the absence of confidence in the economic outlook. The noble Lord, Lord Razzall, said that the jury was out on Project Merlin. I am afraid that he must have been out when the jury reported that the project has not worked, and the Government have admitted that by not renewing it. In fact, we know we are back in recession, and today’s Bank of England forecasts further confirm that, even though in the period immediately after the general election the economy was growing strongly. So noble Lords will recognise that we now have an economic management that has added incompetence to complacency. The Treasury team is too posh to comprehend what is going on and is now petulantly blaming others for its own failures. We have an economic policy that is devoid of intellectual coherence or economic endorsement—a mixture of assertion, dodgy definitions and flawed calculations.

Fortunately, external developments will give this Government the cover to change their economic policy if they so choose so as to give priority to raising demand and addressing the shortfall in output. They should take bold action to encourage housing, both private and social, which has a very positive contribution to make in its multiplier effect on the economy and on job creation. They should encourage investment in infrastructure. This is the time to say that we are going to build a third runway at Heathrow, push ahead with HS2, build more roads and invest in schools. It is a time when the cost of funding is low and when capacity is available—precisely when a Keynesian would expect the Government to be supplying demand into the economy. The Government should be encouraging capital allowances because they would have a much more immediate impact on the economy than cutting corporation tax, albeit that that is a good thing to do over time. Now is the time to invest in skills, and the time to introduce another temporary cut in VAT in order to encourage demand. However, the Government do nothing.

On the supply side we hear a great deal of talk about cutting red tape, yet we have heard today from the Minister about the groceries code adjudicator. I look forward to debating whether this is really going to be a priority for the country at this particular time. The Office for Budget Responsibility has shown us that the output gap is contracting, but the Government do not appear to be challenging its assertion, based on economic statistics on which we all know that it is extremely difficult to forecast.

Market confidence should not be of pressing concern and the Government should not hold back in addressing the need to push for growth. Interest rates are low because we have borrowed prudently in the past and there is an abundant supply of cash on corporate balance sheets, which at the moment, as the right reverend Prelate pointed out, is going into the gilt-edged market. However, the Government should not believe that these low interest rates are in some way an endorsement of the success of their policy. They are actually a clear message that the policy is not working. There are no growth opportunities to encourage investment.

We talk about monetary policy and quantitative easing. I believe that the Treasury should instruct the Government and the Bank of England to produce a report on the economic case for cancelling gilt-edged securities that have been acquired for value in the market so that they are not redeemed. Can the Minister tell us whether this has any different economic impact from holding them to redemption? The immediate impact of such a policy would not be to monetise debt but to address at a stroke one of the Government’s two fiscal objectives: reducing debt as a percentage of GDP.

The governor will not volunteer to do this. He said in his press conference about the inflation report that it would be “a whole lot easier” to contract the Bank’s balance sheet than to grow it. I do not see how he reaches that conclusion. If you look at the recent article in the Financial Times by Professor Tim Congdon, you will see that the Bank of England’s thinking on quantitative easing is becoming increasingly muddled.

Your Lordships’ House will debate the Financial Services Bill soon. This involves a remarkable—and ill considered—concentration of power in the hands of the governor. It will be unfair on the new governor for him to have as much authority as this Bill currently contemplates. Within the next 12 months the current governor will end a period of office that quite frankly is one of a considerable lack of distinction. I can see the Whip about to ask me to come to a close. The Whip allowed the noble Lord, Lord MacGregor, a little more leeway.

[Baroness Rawlings]

My Lords, I remind the House that the suggested length of contribution is seven minutes. Of course, that exempts noble Lords who speak after a maiden speech.

[Lord Myners]

I was referring to the noble Lord’s contribution to the debate as opposed to his endorsement of the right reverend Prelate, which he had completed at the point when we were allowed to leave the Chamber if we wished.

The current governor is probably the least distinguished since Walter Cunliffe, who served from 1913 to 1918. He has politicised the Bank of England and disregarded the outlook for inflation. We are introducing a policy of financial repression. When we debate the Financial Services Bill, we need to look very carefully at the additional authority and responsibilities that the Bill proposes to give to the governor.

17:22

[Baroness Kramer]

My Lords, I also congratulate the right reverend Prelate the Bishop of Durham on his maiden speech. It was genuinely a very powerful speech on the issues that we are addressing today. I do not want to put words in his mouth but I would like to make a couple of comments that essentially spring out of the remarks that he made, because I think they are very important.

The right reverend Prelate’s speech seemed to underscore the need for the rebalancing of our economy, both by region so that the north of England has the opportunity to thrive after so much historically has been concentrated in the south and south-east, and to diversify away from the dependence that we have had for several decades now on the financial services industry, to rebuild other services and our manufacturing base. This Government should take credit for picking up and working with this issue and with the regional development fund, enterprise zones and centres of excellence, and for the stimulus and tax breaks they have given to those investing in new enterprises, in order to begin to achieve that kind of change. This has become a cornerstone of government policy, one that was utterly neglected by the previous Government, and that is crucial.

The right reverend Prelate also talked about the skills gap. I think it is commonly recognised across this House that jobs are available but that youngsters are without the skills to take them, and that is an extraordinary situation. Again, this Government, particularly my colleague and friend Vince Cable, have pushed ahead with apprenticeship schemes, which had been nowhere on the agenda for at least a couple of decades, and with the youth contract, which is a fundamental change in the attitude towards upskilling our young people so that we can build the industries of the future. It is so important that enterprise and manufacturing have long-term, sustainable potential, whereas for years—and I understand that Labour did this partly because it did not see what was going on—we had an economy that was built on very large, growing public debt, on individual and consumer debt growing at an extraordinary rate, and on debt within our banking system, which was taking down and knocking up false profits to expand balance sheets. Instead of an economy based on burgeoning debt in various key sectors, one hopes that we are now moving into an economy that is sustainable because it is based on genuine contribution, creativity and production.

The right reverend Prelate talked about the cash surplus being hoarded by many of our leading companies. That is a crucial issue. This cash surplus is down to confidence, but it is also a result of many of our major companies having failed to take the opportunity to build their export markets. We are in the most extraordinary situation where Belgium sells more to China than we do. Sir Roger Carr has spoken today about business leaders having to earn their way in the world. He regretted our failure to exploit and to do business with emerging markets and said that we were still not punching at our weight, never mind above our weight. We had similar comments from the City of London last night. There is a real recognition that British business has failed to build its trade and business and to take opportunities in the emerging markets. I fear that part of the reason for hoarding this cash is the bad habit of many of our corporations of simply thinking that they are looking for an opportunity for acquisitions rather than building new product lines and expanding into new markets.

I want to raise with the Government the issue of infrastructure. I am a great supporter, as I suspect are many in this House, of the green investment bank. It was extraordinary to hear the noble Baroness, Lady Royall, say that no investment was being made in infrastructure because the green investment bank is an important breakthrough. However, will the Government confirm in relation to the £3 billion that will be used to capitalise the bank that their goal is to get that money out into investment by 2015 and not just to have the money committed? The two things are very different. Commitments can stretch over a far longer period. For economic growth, it will be important to be on a trajectory of getting £3 billion out of the door.

Others will know that I have been disappointed by the tax incremental financing proposals in the Local Government Finance Bill, because this is another opportunity for infrastructure investment. TIF 1 will encompass only very small projects—it is welcome, but it will not change the world. TIF 2, which has the potential to revolutionise and expand our infrastructure and is driven by local recognition of local needs, is capped at £160 million for the period. I hope that the Government will look at that again. Infrastructural investment in affordable housing surely has to be one of the opportunities that we seize. It seems amiss that credit easing has not encompassed housing associations as one of the areas where it can provide some additional stimulus.

I would be very interested in talking about finance for SMEs, but the Government have allocated time for a debate on those issues next week, for which I thank them. However, we must recognise that our high street banks are not in the business of lending to small and micro businesses and that we must build alternatives to that, whether they be some or all of local and community banking structures on the German or US models. We have to start looking at how we credibly expand and take from fringe to mainstream the various online lenders, and we have to look at the innovative bond markets, particularly social impact bonds and social impact financing.

I see that I am running into my seven minutes, so I shall choose to sit down. Before I do so, perhaps I may say that the Government deserve more congratulation than stick on their plans for economic growth.

17:29

[Lord Ashton of Hyde]

My Lords, it is a privilege, but a rather daunting prospect, to address this House for the first time. I am lucky to have had the right reverend Prelate to pave the way with such an impressive speech. I thank the noble Lord, Lord Myners, for his kind words—I think they were kind. His facts were right, but the conclusions were wrong: I am not a confidant of the Prime Minister. In fact, he did actually write me a letter the other day, which was very kind of him, but he got my name wrong.

I echo the right reverend Prelate in thanking all those who have made my short time here so welcome and interesting, especially Black Rod and his staff, the clerks, the doorkeepers and particularly my mentor, my noble friend Lady Sharples. She has treated me with affectionate discipline, rather as one would treat a wayward spaniel, and I am very grateful to her.

In many ways, it would have been obvious to have spoken in the debate about constitutional affairs. My great-grandfather came to this House in 1911, at the height of the furore over what became the Parliament Act. He had for many years been a Liberal MP, from a long line of northern non-conformists. Just over 100 years later, we are still talking about many of the same issues.

Apart from my Liberal heritage, I am able to speak here today because I was elected—albeit, I must admit, not by a huge electorate. I was elected under the alternative vote system, so one could say that I should be a natural supporter of the coalition. It seems, however, that there is very little to say about constitutional affairs that has not been said in the past couple of days, so I thought I would talk about a subject near, if not dear, to my heart—regulation. In doing so, I should declare an interest as the chief executive of two insurance companies and a member of the Council of Lloyd’s.

At the beginning of the gracious Speech, Her Majesty said:

“Measures will be brought forward to further strengthen regulation of the financial services sector”.

I am certainly not advocating a return to light-touch regulation. This would be impossible, and we have seen only in the last week the sort of things that can go wrong at JPMorgan Chase. We expect regulation to be firm and consistent; no business that thinks it is any good wants to be undercut by cowboys acting irresponsibly. However, we also want it to be pragmatic, proportionate and targeted correctly. This is where the implementation of regulation as set out by Parliament is so important. It can make the difference between sensible, prudential regulation and expensive self-serving bureaucracy.

I shall give an example from my own industry, the insurance industry. It is labouring at the moment under the introduction of Solvency II, which is the most far-reaching reorganisation of the way insurance companies organise themselves and their accounts for 30 years. It is driven entirely by EU directives and has produced a tidal wave of bureaucracy and expense which seems to be largely unnoticed outside the industry. Lloyd’s alone reckons that it will spend £300 million on complying with the Solvency II requirements, not to mention the cost of ongoing compliance.

The Lloyd’s Internal Model application pack alone will be 6,000 to 7,000 pages long. It is estimated that the insurance industry is going to produce 500,000 pieces of paper to support the Solvency II application to the FSA. To put that into perspective, if you pile boxes of photocopying paper one on top of the other, 500,000 pages is almost exactly the height of Nelson’s column. Nor is this a light read: it is full of complicated mathematics and mind-numbing details—for example, verifying the complex assumptions in the very detailed and complex stochastic models.

I think that what Parliament might not realise, when it makes perfectly sensible regulations at a high level, is the cost of compliance with the detail. I do not see this improving if this House is full of 450 elected, professional politicians. Everything from minutes of meetings, policies, terms of reference and succession plans to detailed descriptions of the data in a company and all its interdependencies now has to be documented in minute detail. In the words of modern regulators, “If it isn’t written down, it hasn’t happened”. These documents have to be written, reviewed, signed off—often by the board—checked, monitored and reviewed regularly for ever more. The idea that more documentation in itself is useful regulation should, in my view, not be accepted as given.

There is a strong feeling that the FSA has lost its sense of proportion in implementing Solvency II. It is very sensitive to the charge of gold-plating regulation but many in the industry feel that, in its insistence on more and more documents, it has lost its perspective in regulating the process rather than the outcome. You cannot help wondering whether all this detail and the requirements are more to help the regulators regulate, and to attribute blame if something goes wrong, than being about proportionate, risk-based regulation. To cope with this regulatory burden, the FSA has proposed a whopping 37% increase in the annual funding requirement for 2012-13 for the insurance industry. That is on top of the huge cost of Solvency II.

I remind your Lordships that this is all for an industry which did not cost the taxpayer a penny during the financial crisis, employs 350,000 people and contributes £10 billion to the Exchequer each year. I very much hope that when my noble friend the Minister further strengthens regulation of the financial services sector, he will do his utmost to ensure that it is implemented at individual company level in a proportionate way under the new arrangements, and in a way which addresses the outcomes rather than the process itself.

17:36

[Lord Hunt of Chesterton]

My Lords, it is a pleasure to welcome the noble Lord, Lord Ashton of Hyde, to this House. As my noble friend Lord Myners mentioned, the noble Lord was at Eton College. I used to play soccer for Westminster against Eton College. We used to draw honourably, so that was all right. The noble Lord’s background, as he described to us, was in the City—although I might make a party political point here. He said that it was natural that he should be a supporter of the coalition. For somebody who is in insurance to back something as risky as the coalition seems to me not at all clear, so maybe he would like to reconsider his evaluation of risk in that context.

It was of course very interesting to hear the noble Lord’s wise remarks about regulation. I am an applied mathematician and I think that I have worked with all his companies, which are involved in the Lighthill Risk Network involving academics and the City. That was extremely interesting, as the way in which the City has developed risk methods in computers and mathematics is an important part of the world and Lloyd’s of London is a great leader. The breadth of the experience of the noble Lord, Lord Ashton, from hunting through to the Army and in insurance, will, I am sure, make him a very welcome Member of this House.

Turning to my remarks on the Queen’s Speech, I hope noble Lords will have learnt that there is a new principle afoot in this House enunciated yesterday by the noble and learned Lord, Lord Howe. He said, more or less, that if an issue is not in the Queen’s Speech, you had better look it up in Magna Carta to see whether the same issue was discussed. He was referring to standardisation of the measurements of wine and corn, which are well discussed in Magna Carta but were somewhat absent from the Queen’s Speech. In my case, I should like to speak on the environmental issues, which are extremely important. They were mentioned well in the Magna Carta, with its references to the responsibilities of office holders and landowners to maintain as guardians the natural environment and resources of this country—forests, rivers and fish.

In the constitutions of several other countries, the Kings and the Parliaments are given clear responsibilities for the environment. In Malaysia, where I was recently visiting, the King—the Yang di-Pertuan Agong—has to maintain 50 per cent of the land for natural forests. That is a remarkable commitment, which I was pleased to hear from local business is supported. The British Parliament has, over the years, had an international reputation for some of its legislation, from the Clean Air Acts and the formation of the National Trust to the Climate Change Act. Perhaps a reformed House of Lords, with its legislators having several years without electoral pressures, should have certain special responsibilities. The United States Senate is responsible for treaties. For the reformed House of Lords—perhaps with our new Magna Carta—we should have special responsibilities for the environment, natural resources and even the long-term existence of the UK. The Netherlands Government have an Act of Parliament in which their coastline is fixed but, as a debate in the Lords in 2000—my first debate—pointed out, the United Kingdom does only cost/benefit analysis as to whether the coasts are defended as the sea level rises with climate change and the post-ice age land movements continue.

As the noble Baroness, Lady Wilcox, who is a practical environmentalist with her interest in fish, reminded us, the government programme in the Queen’s Speech has two major Bills to be considered, one of which is on energy and the other on water. The Bill on energy aims to ensure that the UK has adequate power supplies that minimise carbon emissions and have different components to ensure security. We need wind and solar power systems but, since these can fail in critical weather conditions that are becoming more frequent with climate change, nuclear power or other clean fossil fuels, such as those with carbon sequestration, also need to be part of the system. I applaud this Government for continuing the previous Government’s solid policy in this direction.

However, I criticise the Government for failing to argue strongly enough about the importance of the continued reduction of carbon emissions, not only by power stations but also by traffic. We are no longer run by Mr Toad at the Department of Transport, going faster and faster, but it is nevertheless important to point out that there is a strong connection between the short-term health benefits of reducing emissions from traffic as well as the long-term benefits of dealing with climate change. The Government should focus on the short-term benefits to explain to people why dealing with carbon emissions is important. They should not be bamboozled by certain Lords, and their well oiled propaganda machine, who continue to comment that there is no such thing as climate change. In fact, temperatures over the land areas of the world and the surface layers of the ocean are steadily rising, as is sea level. Desertification and drought are increasing. Some of the records in peak rainfall are one of the greatest climate change concerns to south-east Asia and southern China. Peak rainfall records are being broken year on year. They are now up to 150 millimetres an hour from about 100 millimetres an hour 20 years ago. The Governments of Brazil, Mexico, China and Indonesia are all introducing legislation. Of course, all of these countries remarkably agreed at the Durban meeting of the United Nations Framework Convention on Climate Change to develop a road map for an international treaty after 2015. The idea that the world is moving away from climate change is simply not correct.

We all support the government objective in the Queen’s Speech of expanding the UK economy, especially its exports. However, I am afraid that many companies and officials think that the UK Government could do a lot more to help export UK products and expertise in environmental technology. Small and medium-sized enterprises—I declare an interest as the chairman of an SME in Cambridge—need some kind of project financing and travel expenses to promote their products. I hasten to say that our own company does not seek this, but many SMEs have spoken to me about this issue. They compare the situation unfavourably with the support given by foreign Governments to their companies. This is why Governments in Asia, I am told by officials, are often asking “Where are the Brits?” at trade fairs and other events that are trying to promote environmental technology. UK officials are too embarrassed, they tell me, to say that the UK Government hardly covers expenses so that SMEs cannot attend these trade fairs.

An equally serious limitation is the UK Government’s technical agencies not being encouraged to use their expertise and people to promote UK technology. I know this—I used to be head of the Met Office. The House of Commons Science and Technology Select Committee is looking into this. Two years ago, at the beginning of the previous Session of Parliament, the noble Baroness, Lady Wilcox, reported on how all this would change, but I am afraid that I have not seen that, nor have I heard it from officials or indeed SMEs.

One of the great successes of this Government in environmental technology is in the development of satellites and remote sensing. I applaud them for that. However, this success also needs more government support. Last week there was a great crisis in the observation of the Earth’s systems and data as one of the most important older satellites ceased operating and no new ones are planned. There were leaders this week in the Economist—most unusual in the Economist on such a technical question—and Nature pointing out this crisis. Without data from these instruments, it will be impossible to provide warnings about natural disasters and long-term climate change.

Government plans for the G8 meeting in 2013 to focus on security and prosperity while monitoring and sustaining the environment are also important and there is great scope for international collaboration and trade to come out of that meeting.

17:45

[The Earl of Lytton]

My Lords, I add my congratulations to the two maiden speakers, particularly the noble Lord, Lord Ashton of Hyde, who I thought was about to shoot my fox in turning his attention to regulation, which I want to concentrate on, too.

I welcome the Government’s commitment to reducing regulation and red tape, and am pleased to see that a number of measures have been put in place. The question that I want to concentrate on relates to business rates. These are one of the largest premises costs after rent, typically relating to about one-third or one-half of the rent itself. Very small businesses get some relief, but the extra cost of that is passed back through the system and is borne by other business rate payers. The businessman has no democratic voice, unlike the council tax payer; no services are provided for his payment and, save for extreme and demonstrable hardship, there is little relief. Empty rates, meanwhile, are levied on all but the tiniest premises and stalk the minds of those with empty and unlettable properties.

The system is under considerable stress in terms of the management of the business rates environment. First, due to inadequate resources made available to the Valuation Office Agency, whose predecessor body I was once an employee of, the initial accuracy of figures in the valuation list has suffered. Secondly, the valuation base year for the 2010 valuation list that we are currently in is in fact the antecedent year of 2008, the peak of the market. Many commercial values have fallen a great deal since then, and rates have accordingly become more onerous for that reason. In fact on 1 April this year they went up by 5.7%, an increase that, had it applied to council tax, would have been fairly instantly stamped on. Thirdly, as I have said, the risk of liability for empty rates makes owners of unlettable buildings desperate to reduce their exposure. Regrettably, the VOA has allowed itself to change its role from being the impartial government valuer, when I was part of its predecessor organisation, to a strategic player in the maintenance of a tax base. I view that with considerable regret, as do a number of other professionals in this field.

I understand that the Valuation Office Agency and the Valuation Tribunal, which deals with appeals against rating assessments, just about manage to handle the current inflow of appeals but have no resources to clear the backlog, amounting to some 146,000 or so outstanding cases, some going back to the 2005 valuation list. Typically it might take two years for an appeal lodged today to receive even an initial substantive response from the VOA. Meanwhile, the rates are payable in full. The Valuation Tribunal, which appears to operate on a computer system different from and largely incompatible with that of the VOA, has in recent times produced a plethora of practice statements and other regulations making for immense complexity, such that even some of the experts no longer understand the system.

The businessman is forced to take advice from others. Unsurprisingly, in the confusion, unscrupulous practitioners emerge promising rate reductions they cannot deliver, charging high up-front fees and making mass appeals which further swamp the system. More draconian regulation then follows naturally from the Valuation Tribunal, and the Valuation Office Agency becomes more defensive in its administration as a natural consequence. Soon nobody knows whether they are coming or going, whether an assessment is correct or up to date and so on. This is a fairly corrosive mix. Justice is denied, fairness has gone out of the window and a rather unsavoury mercantile element seems to have entered the minds of those administering the system, which dents confidence in it. We do not need confidence to be dented.

For years, the smallest of small businessmen have voted with their feet. The threshold costs of moving to a conventional rented office or other commercial accommodation are too high at the margins. The market adjustments are too slow in terms of bringing rents and rates into line with affordability. If the necessary adjustments were made, I suspect that insolvencies and write-offs would be very large indeed. So microbusinesses operate from spare bedrooms, converted garages, garden sheds and other domestic spaces. Their marketplace is the web, which is also their shop window. Good luck to them. I am one of them. I have been using one end of my home since 1988. To use a term from one professional acquaintance, this domestic environment has become the new business enterprise zone, free of rent, rates, business premises regulation, legal set-up costs, travel-to-work overheads and so on. It is not lost on such business operators that the council tax on an average band E or F dwelling is less than half the rates on an equivalent area of business space.

Nobody is charged with policing what happens here, and nobody has any real interest in investigating further what is happening on the ground. There are no checks on, for instance, whether a second home with its council tax reduction is also a holiday home run as a business. Charging authorities have no incentive to check up on this either, as they are merely collection agents for someone else’s revenue stream.

Business rates are not the only place where this sort of thing happens and where the management of all sorts of things from environmental health, health and safety, employment rights, planning rules, landlord and tenant law and so on cumulatively affect small businesses, in particular small businesses that start as microbusinesses and want to become small and medium-sized enterprises and grow on from there. I believe this is a great country in which to start a business, but I am not sure that it is quite such a good one in which to grow it on once it has got going.

17:53

[Baroness Noakes]

My Lords, it is a bit rich that the party opposite has tabled its amendment to the Motion for an humble Address. It seems to have collective amnesia about the economic mess that it left this country in only two years ago. Let me remind it that it left behind a very large deficit. There is no doubt that some of the ballooning of the deficit was down to the financial crisis, but the Labour Government had been consistently spending beyond their means in the run-up to that crisis. They failed to reform welfare spending and failed to deliver efficiency in the delivery of public services. They had overcommitted the defence budget by £38 billion. They left behind a legacy of debt and forecasts of more deficits to come, but they also left no credible plans to reduce them. That was not just our opinion; that is what the IMF and the OECD told us.

Since my Government came to power, we have delivered firm action to control public expenditure and to eliminate the structural deficit. We have balanced the defence budget. Debt will be falling as a percentage of national income by the end of 2015-16. It is through that resolve that we have reduced the cost of borrowing and kept it low. Yesterday, gilt yields were at their lowest for 300 years.

The noble Lord, Lord Myners, who is no longer in his place, is wrong about interest rates. They are a reflection of market confidence, as anyone can find out by looking at what is happening to eurozone interest rates. I hope that, when he winds up this evening, the noble Lord, Lord Davies of Oldham, will tell the House what he thinks interest rates would have been today if his party had continued to manage the economy.

I pay tribute to my right honourable friend the Chancellor of the Exchequer for delivering this impressive result. The economic headwinds have not been favourable in the past two years. He could have lost his nerve and taken the advice of the party opposite to spend our way out of trouble. However, Labour has never explained the magic by which spending more will not result in unsustainably high levels of debt and rising interest rates. Perhaps the noble Lord will do so today.

Our economic policies are often given the label of “austerity” but we are not in the same league as Greece. Our public expenditure will continue to rise. At the same time, we are taking 2 million people on the lowest incomes out of taxation altogether. We are managing to escape from the millstone of a 50p tax rate and reducing corporation tax rates to more competitive levels to support our economy.

There is no doubt that the economic outlook continues to be troubling. The uncertainty created by eurozone instability is a big problem. I can see no future for Greece remaining in the euro and the best thing for it would be to exit, or “Grexit” as Willem Buiter would have us say. Other eurozone countries are also struggling. Spain and Italy are again having a bad week in the bond and credit markets. We need the eurozone to sort itself out, which is why I support the Bill, which has already been introduced, to endorse the eurozone stability mechanism. However, there is not much else that the Government can or should do to support the eurozone. We should certainly not put our cash into any eurozone rescue fund.

The Government can do things to support growth in our economy and have done a lot already. However, there is more to be done and I would have liked to see more in the gracious Speech to support UK businesses. In particular, I would have liked to see a commitment to reverse more of the regulatory burdens and employee rights imposed by the previous Government. These are the very things that make running businesses, especially at the small and medium-sized end of the spectrum, particularly tough.

There are some parts of the legislative plans in the gracious Speech about which I am not entirely enthusiastic. We are promised legislation to reform competition law to promote enterprise and fair markets, which sounds good in theory. However, competition law has often ended up being a big stick with which to beat our most successful businesses. A wholly blame-free company can end up with a lot of costs and huge distractions from running its business if the OFT launches an unnecessary investigation. Let us see whether the Bill really promotes enterprise.

In the same Bill we are promised the green investment bank, about which some noble Lords seem enthusiastic. It is not a bank in any real sense. It will put money into things that sensible banks would not touch with a barge pole. It will be gambling with taxpayers’ money. Even the cheerleading report on the green investment bank commissioned by BIS goes no further than to say that,

“it is unlikely to have a significant impact on economic growth … in the short term, but there might be some benefits in the long term”.

We are paying homage to the green religion at just the time that other countries are seeing that green policies are expensive luxuries. We do not have any spare money for such luxuries. We could spend the £3 billion that has been committed to it on so many more things that would promote our economic growth.

We are also promised a Bill on the reform of the electricity industry. But, in plain English, that means more subsidies for green energy, which in turn means more costs for British businesses and domestic consumers. I hope that the Government will start to understand that the cost of energy in this country is a very real burden. They need to find ways of reducing it and not increasing it. This is another unaffordable green luxury. Last year, my right honourable friend the Chancellor of the Exchequer got it right when he said that he would not save the planet by putting our country out of business. When these Bills come forward, they must be justified against that background.

Finally, I turn to the promises of legislation on the financial services sector. There will be two Bills; namely, the Financial Services Bill, which was carried over from the previous Session, and the banking legislation. I agree with the noble Lord, Lord Myners, on the need to look carefully at the powers of the governor. However, there is one thing that is not likely to be covered in either Bill, which I hope that the Government will want to address. The Bank of England has resisted calls to publish an assessment of its role in the financial crisis. I do not understand how we can be expected to consider legislation explicitly designed to remedy deficiencies that arose during the financial crisis without that background. How will we know whether the problems related to the crisis have been dealt with? I hope that my noble friend the Minister will have an answer to this problem before he brings the Bills before your Lordships’ House.

18:01

[Viscount Simon]

My Lords, I feel somewhat out of step with most noble Lords who have spoken in that I will not be talking about financial matters. The proposal to introduce legislation to address the problem of driving under the influence of drugs was not only in the gracious Speech but was mentioned in the newspapers a few days earlier. It had, none the less, been my intention to raise this subject had the proposals not been included in the Government’s legislative programme.

I find it interesting that the Transport Research Laboratory now estimates that drugs are an important factor in a quarter of road deaths. Along with the Department for Transport, the company that produces a drug swipe test carried out the world’s largest trial at the roadside. Almost 100% of the 5,000 drivers stopped agreed to partake in the testing and most saw no problem with being screened in the future. A report was made but the press office at the DfT denied its existence to inquisitive journalists for some years. Why did it do that? I have no idea. Any legislation in this area needs to address those who cause the most harm. At the same time, it should ensure that its provisions can be enforced effectively by efficient use of existing resources and by guaranteeing that it does not become overbureaucratic and overburdensome on officers and the CPS.

Many types of drugs could impair driving ability and care must be given to those that need to be included in any analysis and to determining the appropriate reading for driving legally. It should be remembered that a road vehicle is a lethal weapon and that alcohol or drugs can impair a driver’s reaction. The law does not recognise that when a driver kills someone, and that needs to be changed.

When the Serious Organised Crime and Police Act 2005 was passing through this House, one of my amendments was agreed. It enabled an evidential breath test for alcohol to be taken at the roadside and used in court, rather than the driver being taken to a police station where the reading might fall due to the time that has elapsed prior to getting the official reading. The kit for this test has still not been officially approved, despite it already being available to officers. I hope that the drug testing apparatus will be approved immediately; after all, it is being used very successfully in many other countries. To put the problem into perspective, in 2010 the number of drug-driver prosecutions in the UK, which has just been released by the Department of Justice, was 34. During the same period, the number of drivers losing their licences in Germany, where the drug swipe test was used, was 34,000.

Lots of people think that roads policing officers, who used to be called traffic officers until the name was adopted by the Highways Agency, purely give out tickets for exceeding the speed limit, but that is not the case. They are officers at the front line of crime fighting and their specialist skills and knowledge enable them to deter, hunt down and arrest serious criminals. I always think of these officers as police officers first and roads policing officers second, as their arrest rate for non-traffic offences is quite exceptional. Bearing that in mind, with budgets being reduced I wonder whether the proposed training will lead to a reduction in standards. As an aside, although it is somewhat relevant to this, a few years ago I was invited to a police driving school to sit in on the testing of three officers as response drivers and not—I repeat not—as roads policing officers. All three officers passed. I subsequently told the inspector that I would have failed one of them and gave my reasons. He said that I was probably right but that the course had been reduced from three weeks to two.

Training has been reduced on quite a large scale and it is not only the public who might become involved in this reduction. Should something go wrong, the officers might become the subject of investigation. I recall a police pursuit being stopped recently for health and safety reasons purely because the person being chased was not wearing a helmet, and if an accident had occurred the officers could have been temporarily removed from their specialist duties.

When departments are reduced, it is imperative that roads policing skills are not lost and that continual training is maintained in order that officers can deal with fast-roads policing. About 10 years ago, I passed the police’s fast roads course, since when driving conditions have changed. Perhaps I should declare that I am qualified in roads policing. Driving behaviour has changed and visible patrols are vital to maintain the confidence and discipline that led to a reduction in casualties over the past 10 years. However, with the number of roads policing officers and marked police vehicles decreasing, I would not be surprised if those statistics showed an increase in casualties in the near future. It is acknowledged that the threat of being caught is an effective deterrent, whether it be by breathalysers, drug swipe tests or speeding, but they all require trained and experienced officers.

It is interesting that partnership enforcement operations exist to target coaches and heavy goods vehicles. I have attended three of these operations where not only very highly qualified roads policing officers but people from Customs and Excise and VOSA are present. They are very efficient and I just hope that, with the financial cuts, they will be allowed to continue.

We have seen proposals to raise the speed limit from 70 mph to 80 mph and to decrease it from 30 mph to 20 mph in certain areas. Average speed cameras are very effective but they are not everywhere, just as roads policing officers are not everywhere. So how will these changes be enforced? Numerous research and common sense shows that a speed limit raised to 80 mph would result in more collisions and, because of the increased speed, more road deaths and serious injuries. After all, while vehicle design may change the human body does not. This, of course, flies in the face of the DfT’s long-standing commitment to reducing collisions and casualties.

The Ministry of Justice consultation document, Getting it Right for Victims and Witnesses, fails to make any proposals to improve the services offered to victims and witnesses of road deaths. Paragraph 56 says that more needs to be done but fails to make any recommendations. It is proposed that responsibility for the funding of victims’ services will soon be handled by appointed police and crime commissioners, but that will not be underpinned by a set of minimum standards that would ensure a consistent approach across the country. The Road Victims Trust, of which I am a patron, is concerned that the already patchy approach to support victims and witnesses of road deaths will simply be made worse. With pursuits being closely monitored and health and safety at the forefront of senior officers’ minds, will officers, within the bounds of the law, be allowed to follow and stop those who are driving dangerously?

Finally, road casualties and deaths are a national issue that requires a joined-up and co-ordinated response. The Government have a duty to ensure that, with the advent of police commissioners later this year, suitable methods are employed to encourage greater co-operation between government departments, the Department for Transport, the Home Office, the justice department and individual forces to continue to drive down the blight of deaths and injuries on our roads for years to come.

18:09

[Baroness Randerson]

My Lords, we cannot legislate our way out of debt, although I seem to recall that Gordon Brown tried to do so when he was Prime Minister. However, we can use legislation to encourage enterprise, stabilise the banking system, encourage businesses to create more jobs and stimulate green investment. All those key issues were tackled in the gracious Speech, which outlined measures that reinforce the coalition’s policies for promoting growth by emphasising regional growth, rebalancing the economy away from the disastrous over-reliance on the finance sector under the previous Government. Then there is the policy of encouraging the growth of SMEs, emphasising the importance of manufacturing and developing skills.

I want to draw out two measures announced in the Queen’s Speech. The first is the Groceries Code Adjudicator Bill, which is all about the small producers being empowered to stand up to the big retailers to get a fair deal, not just for the small producers but for the consumers as well. The noble Lord, Lord Myners, who is not in his place, mocked the Bill earlier this afternoon. I fear that he might regret that, because the farming unions and consumer organisations are probably even now penning letters and e-mails to him to put him right on the importance of the Bill. It has been a very long time in coming; the first record that I found of the debate on it was in 1998 when Colin Breed, a Liberal Democrat Member in the other place, produced a report on supermarkets and competition, which led to the Competition Commission producing a voluntary code of practice in 2000. Like so many voluntary codes, it was ineffective because suppliers were afraid to make complaints. The issue was discussed very many times in the new Welsh Assembly; in the 12 years I was there I heard the debate year after year about the power of the supermarkets and the complaints of the farming unions about that power.

Another report came in 2008, and in 2010 the Competition Commission produced the groceries supply code of practice. Andrew George MP has said that the problem with that is that it is like having the rules of rugby without the referee. We need the adjudicator—we need the referee. During the passage of the Bill, I look forward to having the time to debate the place of financial penalties and the need for a third-party complaints process. I am glad that the Bill encompasses both of those.

Unlike the noble Baroness, Lady Noakes, the second Bill that I wish to welcome is the one that includes provision to establish a green investment bank. Indeed, the bank is already up and running in skeletal form, and loaning money. Globalisation of the economy has led to such fierce worldwide competition that it is sometimes difficult to see where we can have the edge as a nation in competition. We clearly cannot sell ourselves as a low-wage economy throughout the world, so we must choose sectors where we have the technical advantage. The green economy should be one such sector. It has the advantage of being good for the planet as well.

Over the last two decades, I have been increasingly frustrated at the number of cutting edge initiatives on renewable energy that have been developed in my own home country of Wales and have been rejected for development funding—either commercial funding or government grants and loans—on the grounds that they are too risky and an unknown quantity. Hey presto, a couple of years later those same initiatives have been adapted and adopted in other countries in Europe, usually in Scandinavia, where they have taken the initiative and are now at the head of the field. This is an example of how the finance sector in Britain does not look sufficiently long term at investment issues. I believe that the green investment bank will help to change that outlook and provide that vital funding.

It is customary in debates such as this to regret desirable proposals that have been omitted from the Queen’s Speech, but I welcome one omission. I was very pleased that there was no reference to the introduction of regional pay. I have not been able to follow the logic that argues that higher public sector pay crowds out private sector jobs, especially at a time of high unemployment. I do not believe that the evidence has been correctly interpreted. I accept that the UK is not economically homogenous and I know that the previous Labour Government introduced local pay in the courts system, apparently successfully, so I await the outcome of the Government’s consultation on this but am very pleased that there is nothing in this Session.

Finally, I want to express my regret that there was nothing in the Queen’s Speech on the reform of the Barnett formula. There is now wide agreement that reform is overdue; indeed, there are ongoing talks between Governments on the issue and I hope that they will soon bear fruit. I know that there is irrefutable evidence that the formula short-changes Wales and I believe that the Government accept that. I understand with the upcoming referendum in Scotland that this is not an easy time to change the formula. I understand that in the middle of an economic crisis it is not an easy time to change the formula. But there is a short-term solution that would not impact on Scotland and not cause massive financial implications for the Government —that is, the introduction of a so-called Barnett floor mechanism that prevented any further convergence in funding between Wales and England. I remind the Minister that Wales is officially the poorest part of the UK. In order to be true to the Government’s aim to stimulate regional growth, it needs special attention.

18:16

[Lord Low of Dalston]

My Lords, I, too, congratulate our two maiden speakers, and have pleasure in adding my word of welcome to the House. I was astonished still to see a House of Lords reform Bill in the gracious Speech after the local election results. As the noble Lord, Lord Bilimoria, said earlier, a clearer case of fiddling while Rome burns it would be hard to imagine.

But to Rome burning, which is the matter in hand. It is hard to say anything that has not been said many times over here, but as there is little sign that the Government are listening it might just be worth saying again. We have heard about the enormity of the challenge facing the Government on taking office, and that is not denied, although there might be dispute about the reason for it. What is at issue is the right way of going about dealing with it. To begin with the unpalatable but ineluctable facts, the Government’s policy is not working. I am not just saying that as some kind of parti pris politician or economist; I am just saying what any fool knows.

After gathering momentum out of recession under the last Government, the economy has essentially seen no growth at all since the autumn of 2010. Output is still more than 4% below its peak in 2008 and probably will not regain that level until some time in 2014. This is a far longer period of depressed output even than the great depression. The official forecast at the time of the emergency Budget of June 2010 was that we would now be growing at over 2.5%, with unemployment falling sharply. Instead we see not just low growth but continued high deficits as well. Indeed, in the past year, the deficit on current spending hardly changed, with almost all reduction in the total deficit coming from cuts in investment spending. While the deficit may have edged down, however, net debt has risen from 43.5% of GDP in 2008-09 to 66% in 2011-12, and is set to reach 76% in 2015-16.

We have debated the Government’s economic policy on a number of occasions in this House over the last couple of years, and a number of your Lordships have been concerned to argue that it was unlikely to work, but they were forced to admit that they just did not know. Now, however, with the advent of double-dip recession, we do. I do not know whether the Minister will try to pretend otherwise this evening. However, if he does, we will know that he is just whistling in the dark for we have the advantage of a sort of controlled experiment on which to draw. While Europe has been following the path of fiscal contraction—most notably, of course, in the UK, with the recessionary consequences that we all know about—the USA has been applying a fiscal stimulus, with startlingly different results. People argue about the extent of the stimulus and just how startling the difference is, but that there has been a stimulus leading to growth of around 2% per annum is undeniable. Therefore, we have a clear correlation here: with contraction goes recession; with stimulus goes growth.

Last October, at Question Time, I put it to the noble Baroness, Lady Wilcox, that the Government had got their policies in the wrong order, and asked:

“Instead of pursuing deficit reduction in the short term and growth in the medium to longer term, should they not be pursuing growth in the short term and deficit reduction in the medium to longer term?”.—[Official Report, 11/10/2011; col. 1526.]

With different emphasis, everyone recognises this now and is calling for a greater degree of flexibility. Business is calling for it. Even the markets—the Government’s cover for doing nothing—are calling for it. In truth, the Government recognise it: hence the various plans for growth with which we have been regaled over the months, which have all come to naught and which are bound to come to naught while the Government go on pursuing their self-defeating policy—what the noble Lord, Lord Skidelsky, dubbed their insane policy a couple of Queen’s Speeches ago—of retrenchment and austerity, which is essentially antithetical to growth.

Indeed, the Chancellor has had to extend the horizon for reaching his deficit reduction target by two years and allow debt to rise by £150 billion: hence we now have the ultimate irony of the ratings agencies putting the UK on negative alert. Clearly, the Prime Minister has learnt nothing from his time as special adviser to the noble Lord, Lord Lamont, who, in his recovery budget of 1993, explicitly postponed fiscal retrenchment until growth had been given a chance to take hold. In fact, the Government did not start cutting the structural deficit at all until 1994-95, by which time the economy had been growing for 18 months—by then at a very healthy pace of over 3%.

The Government say that you cannot borrow and spend your way out of recession. It is usually said that you cannot do so at an individual level but that you can do so macroeconomically; actually, you might be able to at an individual level if you happened to strike lucky on the 3.30 or the lottery. However, at the macroeconomic level you can borrow to invest in jobs and growth—for some people, this is counterintuitive—thus creating a virtuous circle rather than the vicious one that we are in at the moment, with the bulk of the cuts still to bite and incalculable damage already being done to the fabric of our society. The National Institute of Economic and Social Research has calculated that at current very low rates of interest you could finance extremely cheaply—for example, with the revenue raised by the “pasty tax”—a £30 billion programme of infrastructure investment on things such as roads, schools and hospitals, which have been cut by half over the past three years and will be cut still further over the next two. What you cannot do is cut, tax and save your way out of recession.

I asked an economist friend why he thought that the Government kept pursuing this insane policy, and he replied, “Well, they like cutting, don’t they?”. This was rather confirmed by the noble Lord, Lord Sassoon, on 22 March, when he said:

“As the Government, we have to continue to reduce the burden of the state. If we do that, the economy will flourish”.—[Official Report, 22/3/12; col. 1031.]

So what takes the place of the state? Is it the big society? But that is being cut too and we should remember that it was the state that had to step in to remedy the inadequacy of the big society. The other possibility is that the PM and Chancellor have just painted themselves into a corner with their rhetoric about not spending your way out of recession. However, as we have seen, the markets are now calling for a more flexible approach and the agencies have put the UK on negative alert.

One thing that the Government are good at is fixing Labour with responsibility for the crisis, and we have heard more of that this afternoon. However, that debases the currency of debate. If the eurozone crisis has a part to play today, the global crash must be accorded a role in 2008. What is sauce for the goose is sauce for the gander, and the Government should admit that they would have had to do much the same as Labour or else we would all have gone under. It is disappointing that Labour has not made a more convincing fist of pointing the way to an alternative. Until it can, disillusion with the political process will grow and Mr Galloway will continue to find a ready ear for his message that what we are witnessing is a crisis of capitalism in which the poor are expected to carry the can for the greed and mismanagement of the capitalist class. The Greeks are indicating that they have had enough. Other countries will not be far behind. The zeitgeist is shifting as between austerity and growth.

I end with three predictions. First, the first quarter figures will be revised upwards to show that we are not in a double-dip recession. Secondly, the next three quarters will show zero growth, give or take. Thirdly, unless the Government change course pretty soon, they will be swept from power at the next election.

18:25

[The Lord Bishop of Hereford]

My Lords, like others, I pay tribute to the eloquence, insight and wisdom of the two maiden speeches that we have heard. Like the noble Baroness, Lady Randerson, I wish to focus for a moment on the groceries adjudicator and welcome the statement in the gracious Speech that there will be,

“legislation to establish an independent adjudicator to ensure supermarkets deal fairly and lawfully with suppliers”.

That, surely, is good news, and is certainly welcomed by the church, by many other organisations and, of course, by farmers and suppliers.

The church has been pressing successive Governments since 2007 to put protection of farmers and other suppliers on a legislative footing. Our landmark report, Fairtrade Begins at Home, produced by our Ethical Investment Advisory Group, highlighted the sometimes pernicious practices of supermarkets, which farmers and suppliers have, alas, to accept as a fait accompli of doing business with them. The revised Groceries Supply Code of Practice has been a move in the right direction but needs the adjudicator if it is to work effectively and give the protection which, sadly, is still needed. However, we do not need just any adjudicator. We need one who will have sufficient powers to ensure compliance with the code, including powers to fine at a realistic level if the code is breached and correction is not achieved by other means. It is also vital that the adjudicator is able to initiate investigations where they are needed and indicated by reliable evidence from different sources, including third parties such as trade associations and whistleblowers. All supermarkets that behave ethically and deal appropriately with their farmers and other suppliers will have nothing to fear from this welcome piece of legislation.

Although the announcement is welcome, there is much more that can and needs to be done to continue to support farming and rural communities in a wide range of areas, to which there was, sadly, little reference in the gracious Speech, but where I continue to hope that action will nevertheless be taken. Let me mention some of them. Over the past few weeks, dairy farmers have seen the price of a litre of milk fall by 2p. I am told that in some cases this now means that the price they receive is 3p or even 4p below the actual cost of producing the milk. This is clearly unsustainable and hugely worrying, not just for the farmers and their families but for us all since we have already seen a large number of dairy farmers go out of business, and, I regret to say, are poised to see many more do the same. That does not help us achieve food security or protect such a key area of the industry. Government action on unfair milk contracts, and the breaching of contracts, would be welcome, and would surely help this vital area of our farming.

It is good that slightly more young people are training to enter farming. I say this against a background of farming creating 2.2% more jobs last year and becoming more profitable and productive over the past five years. Yet there is an urgent need to do more to arrest the decline in the number of young people in farming, as well as in the countryside more widely. There is, of course, a complicated web of factors that influences an issue such as this. Among those factors is a paucity of university and higher education posts, an associated lack of research-based work opportunities and, linked to that, continuing slow broadband speeds, affordable housing, a lack of rural public transport, fuel costs and struggling rural services—all the things with which we are very familiar but which still need urgent attention. Constructive steps can be taken in many of those areas. For example, the reintroduction of a rural housing enabler would help a good deal, as would assistance with fuel poverty and revisiting the vexed issue of post offices, not least when we hear about more bank branches closing.

The announcement of proposals to reform the electricity market is welcomed by the church as a supporter of community energy. In relation to that and to the energy Bill, I would add that I hope that, in considering what I think is referred to as the nuclear option, the Government will give real and serious consideration to investing in the use of thorium, which, like others, I see as a far safer and genuinely greener alternative to uranium.

Not surprisingly, I am compelled to point out that the proposal to charge VAT on repairs to listed places of worship is utterly misguided. It is a policy which, if carried through, will cause huge damage and, I think, outrage across the country, especially in small rural communities. Some 45% of the nation’s grade 1 buildings are churches.

I also feel compelled to register the continuing urgent need for the vexed and hugely damaging matter of bovine TB to be properly addressed. The industry and most vets remain committed to a badger cull as one of the necessary measures to control the spread of the disease, while also supporting further work and research on vaccinations as a critical piece of the picture. Unless the primary wild vector is tackled, there will be no chance of eradicating this dreadful disease, even if everything else possible is done.

In conclusion, I hope that the Minister will not only register the serious issues referred to but ensure that the right kind of groceries adjudicator is put in place, that action to support dairy farmers and eradicate bovine TB takes place, that further work is done on a whole raft of other pressing rural issues, and that there is a restoration of zero VAT rating for our listed places of worship.

18:32

[Lord Patten]

My Lords, certainly in my part of the south-western dairying country, what the right reverend Prelate has just said will go down very well—“Bishop calls for speedy badger cull”. They will like that very much in my part of Somerset.

In declaring my current business and financial interests, I wish to concentrate on four paragraphs only in the gracious Speech: paragraph 2 on the deficit; paragraphs 3 and 7 together on regulation; and, finally, the last paragraph, which prefigures other measures that might be laid before your Lordships’ House.

Turning, first, to the deficit in paragraph 2, I strongly support the Government’s policies. That is a rather unfashionable position to take in the debate this afternoon in the face of the newly fashionable anti-austerity, pro-growth-at-any-cost consensus that seems to be sweeping across Europe and its political community. So far as concerns the deficit, I believe that we must stay the course. We have not yet really begun to deal with the effects of cutting Labour’s increase in public expenditure of more than a half in real terms when it was in office. To start swerving before the rubber has even begun to hit the road would be a self-inflicted political, as well as economic, act, waving goodbye to our AAA rating and saying hello and welcome to the bond market barbarians who are at our gates at the moment watching for the first sign of exactly this sort of capitulation by the United Kingdom.

If we need our deficit-reducing backbone stiffening, we need look no further than France, where meeting the deficit target of 3% of GDP by the end of 2013 is going to demand an extra €24 billion or €25 billion in terms of changes to be found via expenditure cuts and/or tax increases. I am afraid that even in France there are not enough bankers’ bonuses to go round to meet that sum. Therefore, we need to look to our own devices in our own businesses to help with faster deficit reduction and to help to fight our way out of the current double-dip recession. One of those ways is through regulatory reform. Often this can be done through a set of minor measures but they lead to great help for our businesses.

That leads me to paragraphs 3 and 7 in the gracious Speech. I know that the coalition realises that businesses, both large and small, are its friends—or should be—for they have in place much to help us grow again. Many corporates have healthy balance sheets, healthy cash piles and considerable confidence in their own businesses —at least, the businesses that they run. They work hard, as Ministers do. I sometimes worry that both business men and women and Ministers work too hard over too long hours and do not leave themselves enough thinking time. At the same time, those in the business world welcome the encouragement that coalition Ministers give them through, for example, leading export promotion delegations abroad, when Ministers and businesses work very hard together. It is just that at the moment those same businesspeople do not necessarily feel confident enough to pull the investment trigger, particularly those with exposure to Europe and the problems faced there, and particularly also those faced with recession at home and what some would argue is a sclerotic banking lending system, with a shrinking money supply and so on, to which little list businesses would add regulation.

Therefore, on the plus side of the measures in paragraphs 3 and 7 in the gracious Speech are the excellent proposals to overhaul employment tribunals here, as well as repealing some unnecessary regulations there. That is good. On the minus side are some potentially burdensome new rules, such as rights to flexible employment, extending time off via shared parental leave and so on. There is no doubt that this is great news for the beneficiaries but it is less great news for employers, as it will put heavier burdens on job creators.

Just as my hard-working and incisive right honourable friend Mr Francis Maude is busy reducing the number of quangos, lo and behold up pops in paragraph 7 of the gracious Speech the man or woman who is to be the groceries code adjudicator—something that I would certainly recognise as a quango. I do not know whether your Lordships have all received one of these but the Department for Business, Innovation and Skills favoured at least some people, and certainly me, by kindly sending an illustrated booklet about this new quango. The centrefold contains a quite lurid close-up picture, without any explanation of why it is there, of that very staple of the lunchboxes of working Britons—the imported and very expensive fennel bulb. There is no mention of why the fennel bulb is picked on in this document. We may learn later from the Minister about our Government’s fennel policies. The only thing that is mentioned is that the adjudicator will be protecting suppliers abroad, as well as at home, so there will doubtless be dancing in the fennel-producing fields of Mediterranean Europe tonight when they know that this adjudicator is going to look after their needs.

Do all these measures taken together—a bit less regulation here, more regulation there—equal a carefully balanced package, as I would like to think, or is there some self-contradiction, as I rather suspect? Whatever the answer, the instinct to regulate is still deeply embedded in our governmental genes. Ministers for deregulation are soon outfoxed. Deregulation tsars come and go, make speeches at party conferences and platforms, both parties calling for this and that, and are strangled shortly afterwards. Rising civil servants know that to swim against the regulatory tide is not to guarantee a clear path to becoming a Permanent Secretary. Therefore, I am concerned that we are continuing to have difficulty in getting a balanced approach to regulation.

I turn to the last paragraph of the gracious Speech, which prefigures, through a legislative glass darkly, what might come in due course in terms of new legislation in this Session. Emerging through the legislative gloom, I would still like to see sensible economic measures to promote non-inflationary and non-bond market disturbing growth; for example, measures to bring forward legislation to enable High Speed 2 to be built soonest in the interests of easing our sclerotic land transport system—it is going to happen so why the delay?—and measures to build a third runway at Heathrow soonest in the interests of ensuring that our equally sclerotic air transport gateway is relieved of the problems that face it. That is beginning to damage our reputation and, increasingly, to inhibit our economic growth. A few decades ago, we missed the chance to build a third London airport at a site like Cublington. I think we would be deluded to wait decades more for some new estuarine airport down the Thames. It would come too late to have any effect at all in the pressing need for a world-class airport. We should simply build runway 3 soonest.

There is so much that the coalition can do in collaboration with hard-working businesses in areas like this, but I would like to end on a note which sometimes bishops do not trespass on, a spiritual note. I repeat that it is very important that hard-working Ministers, like hard-working businessmen, leave themselves enough time to think and to contemplate. My noble friend Lord Waldegrave of North Hill, who is not in his place today, says that he believes that it is impossible to think consistently about an issue for more than two minutes without resting one’s mental equipment. Thinking time is sometimes just as important as working time.

18:41

[Baroness Worthington]

My Lords, I am honoured to be able to contribute some words to this debate on the humble Address. We are living through difficult times: economic growth eludes us; long-term unemployment, particularly among the young, is rising; the divide between the haves and the have-nots grows ever wider; and the core elements that provide a safety net for those most in need are being eroded. Doctors’ surgeries are closing; morale in the NHS is rock bottom; swingeing cuts are closing front-line services; access to legal aid has been drastically curtailed; policing is being privatised by the back door; welfare reforms make it much more likely that people will fall between the cracks even while philanthropy and charities are being undermined; and, to top it all, the cost of living is rising.

It is sad to say that the contents of the gracious Speech will make matters worse, not better. It seems that the Prime Minister and his Government continue to govern the country for the benefit of the few and to the detriment of the many. This is perhaps not a surprise. The Government have repeatedly shown that they are incapable of empathising with people born into less fortunate circumstances than themselves. They like to tell themselves the lie that we are in this mess because somehow the British public are not working hard enough, quite forgetting that the cause of the recession was brought upon us by the financial elite, who also have become detached from the real world, risking our future on ever more complex and risky financial products in the belief that growth can be magicked out of thin air with clever algorithms and confusing products and not by investing in productive companies and in people.

The only way out of this mess is to begin to rebuild our economy in the real world, reducing our reliance on the financial sector, investing in the things we excel at: high-quality and precision engineering; the digital economy; higher education; tourism; the media and the arts; and, critically, leading the world in tackling climate change and reinventing our energy systems to beat our addiction to expensive fossil fuels.

On this last point, the Government are to bring forward legislation to deliver reform of our electricity markets. But are these reforms in the interests of the many? Will they reduce consumer bills? Do they guarantee that investment will flow into low-carbon technologies? The answer, sadly, on all fronts, is no. The Bill has been written at the behest of the nuclear industry, which, in reality, is represented by just one state-subsidised French company. Those who want to build today’s reactors know that they cannot compete on the open market and have persuaded the Government to offer long-term contracts which guarantee prices. The chosen mechanism of support—contracts for difference—suits large-scale, base load providers but does not suit the development of offshore wind and other renewables. It is not certain whether they will clear state aid rules and they will do nothing to oblige the companies winning the contracts to build anything. We hear that they will be underwritten by the consumer—not the Government—which is a novel legal arrangement that may not give the investors the confidence that they say they need. Just today, six energy companies, including one of the big six, have written to the Government describing the proposals as a potential train wreck. We urge a rethink. It is likely to be a bad Bill because the existing nuclear industry is still the cuckoo in the nest of the UK energy policy, distorting it and robbing resources from the other elements of energy policy.

On top of this, in these difficult times of record energy prices, rather than saving consumers’ money, it will cost them more. The one element that we were promised, which would help to reduce consumer bills, was the creation of a market for reductions in energy demand—so called “negawatts”—but now we hear that this important element of the Bill is unlikely to be included. Why? The answer is because it would serve the interests of the people, not the powerful elite who control our current energy policy and markets.

Another major failing is that the Government are interested only in electricity market reform. What about the two other elements of energy policy: how we heat our homes and how we fuel our vehicles? Here the rising price of oil and gas has had a great impact on the household budgets of millions of people who are still dependent on their gas boilers to heat their homes and the petrol pump to get to work. On these markets the Government have been silent, despite the fact that there is a growing problem that they must face up to: falling tax receipts from fuels. Squeezed by rising prices, people are taking action to insulate themselves by buying smaller and more fuel-efficient cars and turning down the thermostat. However, as the Daily Telegraph mentioned yesterday, it seems that the only answer that the Government have is to increase fuel duty, instead of having a complete rethink and ushering in market reforms that help to provide a smooth transition to a lower carbon future across all energy sectors. They are, after all, all interrelated and we need a thorough and much more imaginative take on how to do this market reform and not simply to focus on electricity.

Rising fossil fuel prices are a huge issue that we must address. However, we do not need all our time to be taken up with considering a nuclear subsidy Bill that masquerades as a market reform Bill because no one is brave enough to be honest that that is what they are doing. For those struggling to pay their gas bills, we need to look again at how to improve the quality of our houses and to encourage greater use of electricity for heating. We need a return to the Economy 7 policies of the 1970s but, this time, with a view to enabling people to benefit from the increased use of energy from wind and solar power when the wind is blowing and the sun is shining. In transport we need to challenge the might of the oil companies and introduce real competition, not just between the oil majors, at every level of the supply chain, but also to enable alternatively fuelled and electric cars to penetrate the market more quickly.

Above all, we need a Government who can empathise with the real difficulties experienced by people around the country. We do not need a group of people detached from the real world governing the country for the benefit of the elite. Sadly, there is little or nothing in this gracious Speech to show that the Government have either the desire or the imagination to do this. This legislative agenda will not lead the country towards a more prosperous and secure future and it is a missed opportunity. I am sorry I cannot be more positive and that, ahead of us, we have three more years of trying to correct and prevent some of the Government’s worst mistakes.

18:48

[Baroness Miller of Chilthorne Domer]

My Lords, before I turn to the main subject of my speech, I must say how surprised I was that the noble Lord, Lord Myners, chose to mock the Groceries Code Adjudicator Bill. Coming as he does from Cornwall, I would have thought that he would be on the side of the small producers who, in the past, have often had such a raw deal. I am very surprised that he did not welcome that. I warmly welcome it as it is long overdue.

The main subject of my speech is the environment. Today we are meant to concentrate equally on the environment and the other subjects but the environment is having a raw deal this afternoon as regards the time devoted to it. Today is also the centenary of the founding of what we now know as the wildlife trusts. They were founded in May 1912 by Charles Rothschild, who held a meeting to discuss his radical idea about saving places for nature. That meeting led to the formation of the Society for the Promotion of Nature Reserves, which would become the Royal Society of Wildlife Trusts and signalled the beginning of UK nature conservation as we know it. There are now 47 wildlife trusts covering the whole of the UK, the Isle of Man and Alderney. Through thick and thin—hard times, recessions and good times—they command tremendous public support.

The wildlife trusts do an amazing job: raising public awareness about wildlife, getting local communities involved and campaigning on local and national issues. They collect scientific evidence and their records of wildlife declines and increases are invaluable. They promote wildlife-friendly methods of farming and land management. I congratulate them on their centenary.

At both a macro and micro level, the environment is critical to the economy. As Nick Clegg said in his speech on 11 April this year, the environment contributes to our economy in a range of ways, many of which we do not always appreciate. He went on to say that lean times can be green times. His comments followed the Government’s review of EU habitats regulations. The review came to the welcome and correct conclusion that habitats regulations are not a burden on development.

It is not just economic contributions that are important. Many people feel uplifted by seeing a cloud of peacock butterflies on a buddleia bush or watching a heron fish, which we can do in central London—and many of us have. There is something equally special about the experience of hearing a lark’s song miles from anywhere after a stiff climb up a mountain, or seeing a herd of red deer grazing. In every case, one species does not stand alone; it is part of an ecosystem, with some at the top of the food chain such as buzzards or stoats—an animal close to your Lordships’ hearts—or moles, which of course are at the top of the in-soil food chain. Instead of swearing at the molehill in the lawn, one should welcome it as a sign of a richly biodiverse soil.

I welcome especially our Government’s initiatives, including the natural capital initiative, in which a leading UK forum will bring together scientists, policy-makers, business, industry and others to discuss how the ecosystem approach might be implemented in practice. Defra has just launched the Ecosystems Knowledge Network, which is a resource for anyone wanting to share knowledge or learn about the practical benefits of the ecosystems approach. These are very important developments towards understanding why it is important not just to save individual species but to join up the networks so that every species can be part of the chain.

In June, we will have the Rio+20 conference. There are no major treaties this time—it will be more about ways of working and sharing knowledge. The ecosystem will be recognised as the foundation of life. There will be moves to monetarise natural capital and realise its value. However, as invaluable and irreplaceable as ecosystems are, they need to be valued for themselves as well. I wish Rio+20 much good luck and look forward to hearing from the Government what our contribution will be to a successful conference.

18:53

[Lord Higgins]

My Lords, this Queen’s Speech has been debated against the background of the recent election results. It is true that all Governments have mid-term problems, but the recent ones seemed to be particularly obscure. Some were due to a degree of mismanagement and some to a high degree of bad luck. They also reflected contempt for Parliament by the Government in a number of respects. It was said that the Budget was bad; that was the general received view. In fact it was a perfectly reasonable Budget. What was true was that it appeared that the details were given to the press the day before—totally contrary to all the traditions of Parliament. Of course, that was the good news, so perhaps it was not surprising that the bad news got all the publicity the day after. I hope that those responsible were demoted or fired, or some other appropriate action was taken. Similar things happened with the Queen’s Speech. We must restore a situation in which important statements are made first to Parliament and not given to the press the day before, creating an anti-climax the day after.

There is also evidence of clear contempt in the programming of legislation in the other place. Perhaps my noble friend would like to speculate about how many Bills in the Queen’s Speech scheduled to be introduced in the other place will be programmed. That is an area where the Government are preventing the House of Commons doing its job. This is to be deplored. It is a fact that we have therefore carried a much heavier burden. This must stop. The practice was introduced by Tony Blair. We gave an assurance that we would not do it; and we are doing it. It must stop because the issues in the Queen’s Speech must be debated properly in both Houses of Parliament.

I will say a word about the amendment tabled by the noble Baroness opposite. It does not take sufficient account of the first six items in the Queen’s Speech, which all relate to what she complained about. It is also the case that the overall effect of the Government’s inheritance must be taken into account.

I will say a word or two about the fashionable item of the moment: growth, or stimulus. We should revert to the old-fashioned idea of demand management, with a clear statement by the Government on how they intend to proceed in stimulating demand so that we mop up excess capacity and, once we have got close to the limit we can reasonably achieve, increase demand in line with what we expect productive potential to be.

There is an intrinsic problem in stimulating growth by cutting the deficit and using fiscal means to stimulate that growth. The burden has been placed much more on monetary policy, which concerns me. Gordon Brown was criticised on many fronts, but not for the fact that monetary policy was handed over to the Bank of England. In fact, it was not monetary policy for many years, but an interest-rate policy. Certainly we have now virtually exhausted the possibilities of using lower interest rates to stimulate growth.

I am also concerned that more and more of the burden of economic policy has been placed on the Bank of England. There is a case here. In the course of introducing its monetary measures, the Bank must take into account the overall situation on unemployment, growth and everything else. The Treasury has very nearly abdicated the day-to-day running—and perhaps the longer-term running—of the economy to the Bank. We must consider, particularly given the additional burdens that we are now going to place on the Bank, whether that is the right way of proceeding. Perhaps the Treasury should reassert its authority.

Having said that, and given that we have to rely on monetary rather than fiscal measures to support growth, I welcome the introduction of quantitative easing. It has been a help to stimulating growth in the economy. However, the method employed is open to increasing doubt. My noble friend Lord MacGregor admirably set out the effect that it has had on companies’ private insurance and pension schemes. It is a very serious matter, which he spelt out very lucidly. Should we adopt other means of increasing the money supply? We could abandon the traditional fully funded rule by not funding the whole of the deficit. Part of the problem with the present system is that money goes to the banks, which hang on to a great deal of it instead of lending it to people who then invest it. We should perhaps consider other more direct means of stimulating growth by means of the money supply. Indeed, since we are clearly printing money, we could simply print the money and give it to whatever suitably investment-prone institution is likely to use it.

I turn finally to the question of the eurozone and in particular Greece. We have a situation where Greece has a debt problem and an exchange rate problem. The eurozone authorities are concentrating on the debt problem. They can go on bailing out Greece with the debt problem until Kingdom come, German generosity runs out or alternatively the streets of Athens go up in flames. This is an immensely depressing situation. But they have to face the fact that no amount of bailout in the foreseeable future will restore Greece to a competitive situation. The only way to cure the exchange rate problem is for the exchange rate to change by Greece leaving the eurozone.

One particular point has only become apparent in the light of various statements made by the different multi-political parties in Greece and the argument, “Oh well. Don't let’s bother with austerity: the eurozone will bail us out just the same”. The left wing parties are putting that forward and it may turn out to be right. But we also have to take into account the real dangers to the banking system as far as this is concerned. I will conclude in one moment. Paradoxically, the right answer in this respect may be to bail out Greece on the condition that it leaves the eurozone, because that will mitigate the otherwise disastrous effects on the international banking system. Again, we have underestimated the technical problems of all this. They are very great indeed but alas I do not have time to spell them out.

19:02

[Lord Young of Norwood Green]

My Lords, first, I congratulate the right reverend Prelate the Bishop of Durham and the noble Lord, Lord Ashton of Hyde, on their maiden speeches, which were stimulating and interesting. I do not want to say too much about the economy because that has been amply covered by my noble friend Lady Royall in her contribution and the noble Lord, Lord Low, in his analysis. I want to concentrate on the failure to stimulate the economy to produce growth and the impact that that is having on youth unemployment. I will also speak about apprenticeships, which will not surprise anybody I am sure.

On Monday, my noble friend Lord Kennedy asked a Question about youth unemployment and said that there were more than 1 million young people unemployed. The response of the noble Lord, Lord Freud, was that if you took away the students, the figure was only 719,000. He did conclude that that was perhaps a little too high. There is certainly no room for complacency in this area. Students will eventually leave the world of acquiring knowledge and will require jobs. Like thousands of young people, they will be faced with the reality of making hundreds of job applications only to find that they are lucky if they get any response at all to those applications.

Yesterday, I listened to the noble Lord, Lord Ramsbotham, speak eloquently about young people being locked up for hours in cells in institutions. He said how debilitating that was because they were not learning anything. But what about when they leave young offender institutions and fail to find a job? If there is any bigger challenge in dealing with youth unemployment I cannot think of one.

I do not want in any way to denigrate the Government’s attempts to deal with this problem, apart from their economic policy. Their approach to apprenticeships has been good. It has been enthusiastic. If you look at the overall figures, they look like good news. We are told that there are something like 450,000 apprenticeship starts. But if you start to disaggregate those figures, you find that there are large numbers of adult apprenticeships. I do not question the fact that we should have adult apprenticeships, but we need to look at quality not just quantity in terms of apprenticeships, and there is some disturbing news coming through about the quality. I raised in another debate in the Moses Room the recent “Panorama” programme which showed what purported to be apprenticeships were delivering very little training at all and certainly no job at the end of them.

We were criticised when we were in government for having programme-led apprenticeships, and we started to phase those out. We said it was not an apprenticeship unless there was a job at the end. The Government need to focus carefully on this. There is a place for adult apprenticeships. It is an opportunity for people to re-skill, but some of the experiences that we are getting these days in relation to large companies employing large numbers of adult apprentices gives us cause for concern.

There are areas where I believe the Government have an opportunity to ramp up the number of apprenticeships and there are some practical things that they should be doing. If we think that we have solved the problem because numbers are increasing I remind noble Lords of two statistics that should worry us. Only something like 4% to 8% of companies employ an apprentice and only a third of FTSE 100 companies have an apprentice. We have not created a culture of apprenticeships by any means, even though the situation has significantly improved.

What can we do to improve it further? The Government should lead by example. I have said that on a number of occasions and I make no apologies for repeating it. I do not understand why they do not heed that advice. They should demand that wherever they have government or public contracts there should be a commitment for apprenticeships. We did it for the Olympics and we got well over 300 apprentices. We got Crossrail to commit to 400 apprentices. I do not understand why the Government somehow believe that the marketplace will do it. That is not the right way forward and it is something they could demonstrate by leading by example.

If you want to involve more SMEs, giving them £1,500 will not crack the problem. It is a help, but creating more group training associations, where there is a hub that deals with the basic training and administration of apprentices, is a tried and trusted formula. I went on the National Apprenticeship Service website today looking for progress on GTAs. As I read it, I thought that it looked familiar. That is hardly surprising because it is dated October 2009. I know that work is being done, but it is not enough. We need to be driving it harder and further. The same can be said of apprenticeship training associations.

It is a shame that the right reverend Prelate the Bishop of Durham is not in his place. He said that skills are not just learnt in the classroom but they are learnt in the workplace. We need to ensure that things like the green investment bank and regional growth funds start to deliver. He gave a good example when he talked about “shovel-ready” jobs in the construction industry. We should be worrying about the fact that we still have a downturn in the construction industry. I also concur with the other right reverend Prelate who talked about the fact that VAT is to be put on the cost of repairing listed buildings, which seems to be a totally self-defeating policy. I hope that the Government are listening and that they recognise the scale and size of the problem of youth unemployment, and will do much more to create more apprenticeships.

19:10

[Baroness O'Cathain]

My Lords, as has already been said, it is an honour to take part in a debate on the gracious Speech. Like so many others, I was tempted to take part in the debate on constitutional matters, but on a self-denying ordinance I took a vow not to on the basis that everything that should be said or could be said on the reform of the House of Lords had been said. I am not sure I was totally right about that because there were one or two nuggets during all those hours of debate—and we should not forget that we also had a full day of debate a short time before that debate. Frankly, I do not think we should publicise the fact that we spent two full debating days on 17 words in the Queen’s Speech, because that is what it amounted to. It would be difficult to justify, particularly as they came, as I have said, hard on the heels of a full day’s debate. There is also, I am afraid to say, overwhelming evidence that, outside the precincts of Westminster, very few people are even remotely interested.

I believe that there are many thousands, indeed many millions, outside the precincts of Westminster who are intensely interested in the issues being considered in today’s debate: agriculture, business, the economy, energy, the environment, local government and transport. Many of the contributors to this debate have commented on some or all of them. Each one of these issues is of huge importance to all the citizens of our country, whether they are really aware of it or not, and we should keep our minds and eyes firmly fixed on those instead of on our little local difficulty. Our responsibility is to ensure that all Bills related to the areas we are considering today are carefully scrutinised, debated and improved through the legislative process in this House, using all our experience and expertise—and thus negating, it is hoped, the statement of the Deputy Prime Minister that in the House of Lords we have only a “veneer of expertise”.

Many of the excellent attributes of our House have been described fairly fully in recent debates, but sadly we are frequently subjected to negative pronouncements which in common parlance are described, I believe, as “bad mouthing”. The economy, particularly the debt and deficit situations—too many confuse these—the sorry state of a large number of pensioners—we know where that stems from—and the truly worrying situation of unemployment are not collectively joyous and are constantly thrown at us from the Benches opposite. When I point out, as I shall again, that all of these issues are to a large extent part of the legacy of the previous Government, the orchestrated groans become full-throated. I hear no response.

The noble Baroness who is the Leader of Her Majesty’s Loyal Opposition in the House of Lords and who I definitely number among my personal courageous friends, told us on 9 May that the “real record” of this Government is,

“of businesses and shops closing; of people being put out of work”.—[Official Report, 9/5/12; col. 12.]

The wording of the Motion of Regret tabled today includes regret about the,

“one million young people out of work”.

One needs to have a very short memory indeed not to make an instant link between that wording and the statement made by the Governor of the Bank of England in the past two weeks to the effect that the previous Government were directly responsible for the loss of—yes—1 million jobs. The noble Lord, Lord Myners, who sadly is not in his place, put up two blacks today. He certainly put up a black about the grocery adjudicator, but he also put one up about the Governor of the Bank of England. But, after all, was the noble Lord not actually part of the process that reconfirmed the Governor of the Bank of England’s reappointment during the period of office of the previous Labour Government?

Happily, something is being done about those 1 million jobs, as we have seen in today’s figures, but, sadly, we can expect yet another twisting of that news by the BBC. In the past few days, a presenter on Radio 4’s “Today” programme said that there was no mention of growth in the Queen’s Speech. No mention of it? Let me read out the first sentence of the speech:

“My Lords and Members of the House of Commons, my Government’s legislative programme will focus on economic growth, justice and constitutional reform”.

Episodes like that make me warm even more towards the re-elected Mayor of London. He has stated that,

“the prevailing view of Beeb newsrooms is, with honourable exceptions, statist, corporatist, defeatist, anti-business, Europhile and, above all, overwhelmingly biased to the Left”.

I could not agree more. Contrary to what is a fast-developing tendency in this House to score points, to increase the number of “blame statements” and rubbish this Government’s efforts to remedy as solidly, quickly, fairly and permanently as possible the legacy of 13 years of economic mismanagement, I believe that we must stop talking down our country and our economy, and in particular the heroic efforts being made in many sectors to build up what has been so damaged in the past.

The Opposition constantly accuse the Conservatives of destroying British manufacturing industry. I suggest that the doom-mongers should take a good look at what has happened to the British motor industry since 2010, and in doing so dispel that accusation. The statistics and information I am about to impart come from the Society of Motor Manufacturers and Traders. They show that during the last five years of the Labour Government, jobs in the motor industry steadily declined year on year from 868,000 to 736,000. That inexorable decline stopped in 2010 when there was a slight increase of 1,000 jobs. In 2011, some 9,900 new jobs were created, and just as important, more than 12,000 jobs were safeguarded. Net investment during those last five years of the Labour Government—

[Lord Whitty]

My Lords, this is the third time that someone from the Benches opposite has claimed credit for the very welcome revival of the motor industry. Does the noble Baroness not accept that the reasons for that revival, after a disastrous prior record, were threefold? The first was the intervention by my noble friend Lord Mandelson on the motor scrappage scheme and other incentives to the industry. The second was the better relations that were established between management and trade unions in the industry, and the third was very substantial investment by Japanese firms, nearly all of which occurred prior to the election in 2010.

[Baroness O'Cathain]

I absolutely refute all of that, but we can talk about it afterwards because the noble Lord is taking time out of my speech, and I will not have that. In passing, has anyone in this House mentioned the fact that the Corus plant which was mothballed by the said noble Lord, Lord Mandelson, in February 2010 was reopened a few months back and, since last Friday, is exporting steel?

I understand that I shall get bad marks if I carry on. All I want to say is that I think it is time that we understood that good things are happening in this country. We should stop peddling gloom and doom and get down to supporting the measures in the Queen’s Speech.

19:19

[Lord Haskel]

Like the noble Baroness, Lady O’Cathain, I welcomed the words in the gracious Speech that the Government would concentrate on economic growth and restore economic stability—amen to that. Those are fine words but how are we going to put them into action?

I agree with the noble Lord, Lord Low: surely the place to start is for the Government to realise that their policies are not working. When quantitative easing was introduced, its purpose was to increase the quantity of money to encourage more spending. We now know that the money has got stuck in the banks. It is not working, as the noble Lord, Lord Higgins, just explained. Austerity is not working. Many feel that the double-dip recession means that the medicine is killing the patient, as many noble Lords have explained.

Job cuts in the public sector were meant to be replaced by jobs in the private sector. It is not working, as the noble Baroness, Lady Royall, explained. As a bright sixth-former said to me on a school outreach visit the week before last, “Until the private sector can absorb them, would it not be more sensible to keep people employed in the public sector where they would be doing something useful? After all, working or not, the taxpayer is paying them anyway”. Perhaps the Minister should try a few school visits.

All this gives the Government an air of incompetence and it does not do any of us any good. It is not only sixth-formers who feel this way. We have had similar views from our major business organisations and, on Monday, the Prime Minister’s own Business Advisory Group. All hoped that the gracious Speech would show an understanding that changes need to be made.

What was in the business section of the gracious Speech? There were a number of piecemeal Bills whose common theme seems to be fairness. The gracious Speech speaks about supermarkets that deal fairly, electricity prices that are fair, state pensions that are fair and markets that are fair. Are the Government speaking in some sort of code here? Are they trying to make up for the lack of fairness to women, the disabled, minorities and the elderly in the legislation on health, legal aid and tax that they rushed through? The recent report from the Equality and Human Rights Commission makes this very point.

What would I have liked to have seen in the Queen’s Speech? How can the Government show the leadership that the noble Lord, Lord Bilimoria, called for? First, they should show that the lesson has been learned: that they are prepared to show flexibility where the policy is not working. There should be more balance between growth and austerity, with the pace of austerity being slowed. I would have liked to have seen a modification of our attitude towards the financial markets. The National Institute of Economic and Social Research said last month:

“It remains our view that fiscal policy could be used to raise aggregate demand in the economy with little to no loss of fiscal credibility”.

With the cost of government borrowing the cheapest in living memory, and many unemployed people, plenty of spare capacity, a chronic lack of housing and a creaking infrastructure, surely there should have been something about construction, as my noble friend Lord Myners suggested.

What else? I repeat the appeal I made in the Budget debate for the Government to lead a crusade on technology, particularly digitalisation, which would be inspirational to the young people about whom my noble friend Lord Young was concerned. Yes, BT and others are improving broadband services but it is the use of technology to improve productivity, introduce new services, start new businesses and create new ways of manufacturing such as additive manufacturing that will help to produce growth.

There are other ways that the Government can show leadership; for example, bringing businesses back home. Offshoring has been a common strategy for the past 30 years, but that seems to have run its course. Cost, variety, speed, proximity, quality control and stock reduction are all now moving in favour of onshoring. President Obama makes a point of visiting companies that have brought employment back to America. Perhaps Ministers could show support for job creation and take a leaf out of his book; the BBC has. Did the Minister see the programme about the young man who is enlarging his factory in Britain to bring the manufacture of cushions back from China? If it makes sense for cushions, for how many other things would it make sense?

The Minister will say that there are all kinds of government schemes to encourage these activities, and he is right. If you go to the website, click on “manufacturing” and inquire what assistance there is for starting and running all aspects of a manufacturing business—I clicked on Barnet because it asked for a location—the number of schemes that comes up is 137. I am sure that some work and some do not; some are accessible and some are not. My point is that these are mainly gestures. What we need are initiatives with which people can identify, by which they can be inspired, and that mean something to them in their lives.

The Minister will be happy to know that I am not calling for more expenditure, but I am calling for leadership. The Government should recognise that their policies are not working and demonstrate their determination to lead us out of this recession with an industrial policy committed to technical progress and jobs, a policy that we can all identify with, and action that creates the confidence about which the right reverend Prelate the Bishop of Durham spoke in his excellent maiden speech. This is the sort of thing that the Minister’s colleague Vince Cable calls a “compelling vision”. This is what I would like to have seen in the gracious Speech.

19:19

[Lord Brougham and Vaux]

My Lords, it is always a privilege to follow my noble friend Lord Haskel; I say noble friend because we share duties on the Woolsack. Your Lordships will be pleased to hear that I am not going to speak about economics as I cannot run my own financial affairs. I declare my interest as chairman of an associate parliamentary group, the European Secure Vehicle Alliance, which aims to reduce vehicle-related crime and disorder. I welcome the Government’s proposal to introduce legislation to deter the incidence of driving under the influence of drugs, but would like to highlight three other areas that warrant further consideration.

The core theme of my speech is to highlight the virtue of designing products, systems and indeed legislation that get it right first time, as such innovative approaches invariably win public support and deliver considerable savings. One recent such innovation which has got it right first time is average speed camera systems, which have reduced casualties and improved journey times on the stretches of our roads where they have been operating, while issuing very few speeding tickets to motorists. The overwhelming majority of motorists grasp immediately the purpose of the innovation and willingly observe its intention.

Over the past year it has become increasingly apparent that we are now in happy possession of another innovation, namely the use of telematic data systems, which by assessing driver performance can reduce not only the costs of insurance but road casualties. The collection, transmission and interpretation of data that are generated continuously while a car is being driven by a known driver can now be shared in an easy-to-comprehend format between the driver, their parents if appropriate and their insurance company. The driver’s premium can be reduced, or indeed increased when justified, and early indications from a growing number of insurers developing such policies with related telematic data transmission devices are most encouraging. Moreover, such systems offer further financial savings by reducing the incidence of fraudulent claims for personal injury or vehicle damage by affording detailed examination of vehicle and driver data at the time of such incidents.

Fortunately, this innovation should not require specific legislation, but it would undoubtedly be welcome should the Government offer their encouragement and support. In addition, it should be regarded as an opportunity to reward the observant who welcome the challenge to drive responsibly and to be seen to drive responsibly; it should not be subverted by being positioned as a device to monitor irresponsible drivers. It should be seen as the Big Friendly Giant and not Big Brother.

The second innovation to which I would like to draw your Lordships’ attention is the growth of automatic number plate recognition—ANPR—and its relatedness to the vehicle number plate manufacturing and distribution regime that exists in the United Kingdom. I have recently been in correspondence with the Department for Transport Minister responsible for this matter, Parliamentary Under-Secretary of State Mike Penning, and ask for your Lordships’ support in encouraging him to take timely and appropriate action to remedy the shortcomings in the UK’s vehicle number plate regime.

The United Kingdom leads the world in terms of its police’s ability to both detect and prevent crime through its ANPR camera network, yet its value is compromised by having to read the number plates produced by approximately 30,000 to 40,000 number plate suppliers. Such a regime offers little capacity to ensure that appropriate quality standards are maintained and the high readability of a number plate on a correctly designated vehicle. Furthermore, it has recently come to my attention that one of the UK’s leading suppliers of vehicle number plates has manufactured and distributed hundreds of thousands of plates that present significant challenges to the UK’s ANPR camera manufacturers. That is clearly an area where we are failing to get it right first time.

The police first made representations to Government in 1994, recommending a radical change to the UK’s number plate regime that encompassed innovations in manufacture, distribution, security and systems management which would all lead to safer roads and a greater ability for the police to both detect and prevent number plate crime. Should the method of manufacture and supply be rationalised, the significant economies of scale would result in lower number plate prices to motorists while enhancing the potential value of the cherished number plate scheme to Government.

I conclude by making brief reference to a third area of interest; namely, the operating methods of an ill defined number of private parking companies which use CCTV and ANPR technology to identify motorists who have fallen foul of their often poorly signposted car parks. Recent legislation has focused on the cessation of wheel clamping and the establishment of an appeals procedure for “transgressors”, but we are missing the point by not planning to get it right first time. Our primary emphasis should be on developing approaches which help ensure that all parking regimes are designed to maximise observance, and measures should be developed to restrict operations that are unduly focused on capturing the non-observant parking motorist.

Legislation to deal with people driving with handheld cameras has been talked about. This situation is getting worse by the minute. The Department for Transport should crack down on it, because it is becoming very dangerous.

19:34

[Baroness Parminter]

My Lords, for Liberal Democrats, there is much to be welcomed in the gracious Speech. The proposals for a green investment bank and an energy Bill will help us meet legally binding carbon reduction targets to reduce our emissions by 80% by 2050. Beyond that—here, I fear that I will diverge from the views of my noble friend Lady Noakes, who is sadly not in her place—they are welcome because they will help secure investment in low-carbon power generation, create green jobs and deliver lower consumer energy bills in the face of escalating world oil and gas prices.

However, I shall focus on another welcome green proposal in the speech, which has not had much mention in the House today: a commitment to a draft water Bill. One of the many challenges that we face in the UK and across Europe is protecting the health of our rivers and lakes while keeping water available and affordable. Water resources are under pressure from current unsustainable levels of abstraction, with the Environment Agency calculating that only one-quarter of our rivers and lakes are fully functioning ecosystems.

The water abstraction system was set up more than 40 years ago, in the decade I was born. Given the damage already done to ecosystems, maintaining such a system is untenable, particularly as the effects of climate change and the extreme weather it brings us, combined with population growth in the UK, all take hold. The Government’s water White Paper suggested that legislation to change the abstraction regime would not take effect until the mid-to-late 2020s. I endorse the conclusions of the report by the House of Lords EU Sub-Committee D on EU freshwater policy, published just two weeks ago, which says that delaying this reform for at least 15 years fails to respond to the urgency of the situation.

That urgency is further highlighted when one considers the planned shift to low-carbon energy generation over the coming years. The electricity supply industry is already responsible for 43% of water abstraction, more than the amount abstracted for public use. Do the Government have the research to inform the draft Bill about the possible water abstraction demands of differing electricity supply models over the next 20 years? Just how water-intensive is nuclear energy as opposed to electricity supplied by wind farms? Given the pressures that differing supply scenarios may put on the water supply, undertaking such analysis and making it publicly available would seem essential.

I recognise that changes to the abstraction licensing regime will be complex, with more than 30,000 licences in existence—although, to be blunt, it cannot be as complex as reorganising the National Health Service. However, we must act now to fundamentally reform the regime so that it takes into account the environmental realities that we face. Can the Minister therefore explain why the Government feel that they can produce a draft water Bill in 2012 but intend to wait until beyond the lifetime of this Parliament to deal comprehensively with overabstraction?

Tackling water pollution is also a priority. Defra estimates the cost of treatment technology to tackle certain pharmaceutical substances alone in wastewater to be around £27 billion. It is essential that the Government work with our European partners to acquire more knowledge of the risks posed principally by pharmaceutical substances entering wastewater and the methods of reducing this risk before effluent containing the substances requires wastewater treatment. As a Liberal Democrat committed to the “polluter pays” principle, I hope that this would include consideration of the contribution that pharmaceutical manufacturers could be asked to make to mitigating those risks.

As my noble friend Lady Miller pointed out, this draft Bill is an important opportunity to engender recognition of the ecosystem services that water provides. The announcement of the members of the Natural Capital Committee last Friday was a welcome sign of the Government’s commitment to embedding the value of natural capital and its potential to support growth into decision-making, as is the Government’s commitment to further reform of the CAP to promote the farming industry’s role as custodians of the natural environment. Businesses which rely on water as part of their industrial and creative processes need to factor water supply into their decision-making, and this draft Bill could help by introducing a requirement for businesses to measure their water impacts and develop specific water strategies to ensure security of their water supply. In this draft Bill, will the Government help companies ensure such water resilience?

Businesses need to review their use of water and seek to minimise wastage, but so do we need to keep bills low. We will therefore have to do more to help people value and save water. Smart water metering, combined with advice on how to reduce water usage, and social tariffs which minimise affordability issues for disadvantaged heavy-use households, give consumers greater control over their water consumption. In France, water meters are compulsory, and by 2015 over half the homes in England and Wales will be on water meters. Liberal Democrats support compulsory smart water metering in water-stressed areas and I hope the draft Bill will propose this measure for England and Wales.

Keeping water bills affordable—at present the average household bill is about £1 a day for water and sewerage—is important. However, in these challenging economic times, if people have to pay more for this crucial resource we must ensure that they fully understand what they are paying for. They must feel connected to their local areas and know the benefits that freshwater lakes, rivers and streams provide for their local wildlife and ecosystems. To that end, the recently launched “Love Your River” campaign, supported by Defra, along with the National Trust, the Wildlife Trusts, Keep Britain Tidy, Waterwise and the water companies, is to be applauded.

If, however, we are to get individuals to start being more responsible with their water usage, it is critical that it is seen that the water companies tackle leakages with renewed vigour. The Environment Agency estimates that the current rate of leakages from our water supply is 20 to 25%. That seems a remarkably high figure to regard as acceptable. Ofwat should focus far more on the environmental impacts when setting future leakage targets for water companies.

The draft water Bill has the potential to deliver much to conserve this vital resource for both the public and our economy. The opportunity must not be squandered in the expectation that the privatised market will alone deliver the scale and pace of change that is urgently required.

19:42

[Lord Crickhowell]

My Lords, I intend to talk only about energy policy. During the last Session, I was a member of the Select Committee on Science and Technology. Our report, Nuclear Research and Development Capabilities, was published last November. The focus of our inquiry was not on the arguments for and against nuclear energy, but on whether or not the Government are doing enough to maintain and develop nuclear research and development —R&D—capabilities and the associated expertise to ensure that nuclear energy is a viable option for the future.

The report said:

“During our inquiry, we were struck by the extraordinary discrepancy between the view, on the one hand, of some senior government officials and the Secretary of State”—

we were referring to the last Secretary of State—

“and on the other, those of independent experts from academia, industry, nuclear agencies, the regulator and the Government’s own advisers. A fundamental change in the Government’s approach to nuclear R&D is needed now to address the complacency which permeates their vision of how the UK’s energy needs will be met in the future”.

Those were strong words and they seem to have detonated like a nuclear explosion within DECC. The Government’s response, accepting almost all our recommendations, appears to represent the fundamental change in approach to R&D that we demanded. It also acknowledges,

“that nuclear power stations have a vital part in our energy strategy”.

It goes on to say:

“The UK civil nuclear industry is an important sector in the UK economy given its current, as well as potential, contribution to jobs, growth and high value exports”.

That is a welcome change, but I remain acutely concerned about the Government’s wider approach and I fear the growing possibility of an energy security crisis.

The energy Bill, we are told, is designed to provide investors with long-term certainty and incentives to invest in low carbon. Far too much emphasis is still placed, and money spent, on onshore wind farms, which at best can only provide a very small proportion of the energy needs of this country and make a minuscule contribution to the worldwide reduction of carbon emissions.

At the same time, the start of the nuclear programme is proceeding far too slowly, if it is proceeding at all. Were it not for the rapid growth of a competitive worldwide market in gas, as LNG facilities grow and shale gas exploitation develops, we would be in deep trouble. The experiments in carbon capture and storage seem unlikely to produce results that will make any contribution to our needs for a good many years. Nor can we rely on energy efficiency and conservation. Even the rather modest nuclear ambitions of Ministers are now under serious threat. RWE/E.ON has withdrawn from nuclear building in the UK. Both companies in the consortium have incurred losses of billions of euros and run out of money because of the decision of Chancellor Merkel to pull Germany out of the nuclear business. That represents a major setback as new owners are sought for the sites at Wylfa and Oldbury, possibly from China or Japan.

We are left with EDF Centrica. The French EDF may have to adjust its plans in the face of the new French President’s pledge to cut the French nuclear programme by a third. Already, that company has, if the report in the Times on 7 May is correct, increased the price of its two planned reactors at Hinkley Point by 40% to £7 billion each. The Times report says:

“EDF energy will decide by the end of the year whether to proceed with the £14 billion plan, but experts said that the rising costs—and its parent company’s deteriorating financial position—made this less likely”.

Speculation has also mounted that Centrica will pull out of the joint venture. EDF energy has promised to complete the first Hinkley Point reactor by 2017, but the plan is already well behind schedule—though a pessimistic report in the Guardian has been denied. The company is quoted as saying:

“We remain committed to delivering the first new nuclear plants in the UK for 20 years at Hinkley Point. The decision depends on having the correct market framework that will allow an appropriate return on the massive investment required”.

EDF is in a strong bargaining position and that places the responsibility for what happens next firmly on Ministers, who are faced with uncomfortable choices. We face the further uncertainty that the Government’s plans have to jump EU hurdles and are dependent on the examination to be made of a draft Bill and the subsequent passage of a Bill that may be carried over into the next Session. It is absolutely crucial that the Government come forward very soon with a clear statement of policy and firm measures to provide the foundations on which the industry can build with confidence.

I have just a few more words about wind farms. In Wales, a very large expansion of onshore wind farms is going ahead on the back of the Welsh Assembly Government’s TAN8 document, which sets out the location of wind farm concentrations in Wales. Already, there is great local anger about the concentration above Neath in the south. In mid-Wales, the local community is outraged by the planned concentrations in some of the most beautiful, unspoiled parts of Powys —concentrations that are to be joined by a network of pylons and cables and then carried down one of the most glorious valleys in Wales by a massive transmission line into and across Shropshire. Scottish Power is pressing ahead, eager to get its hands on the subsidies.

If I thought that this desecration of the natural environment would make a significant difference at a reasonable cost to meeting the nation’s essential energy requirements or to saving the world from global warming damage, I might regretfully conclude that it was a necessary evil. I do not believe either of those things. It is an odd irony that the flooding of Welsh valleys to provide water for English cities provoked the understandable outrage of a previous generation. Now, however, a Welsh Assembly Government cheerfully give the go-ahead to this desecration in order that electricity should flow across the border to English cities. Greater benefits would be provided by turning off the multitude of lights that illuminate towns, villages and roads between midnight and dawn. I believe that one county council has already given a welcome lead in that direction; I hope that others will follow that example.

19:49

[Viscount Hanworth]

My Lords, within the past few weeks we have had to face the reality of a double-dip recession. Britain is facing prolonged economic woes. The Governor of the Bank of England has expressed his certainty that the UK economy will eventually emerge from its recession, but it is notable that he has been unwilling to give a timescale for this forecast. Others have foreseen the prospect of a decade of economic misery, and the experience of Japan comes to mind.

The lost decades of Japan, running from 1991 virtually to the present, followed the bursting of a Japanese asset bubble. The parallels between Japan’s experience and the current circumstances of the UK economy are close and very discomforting. Despite the quantitative easing that occurred in Japan under the guise of a zero-interest rate regime, its economy stubbornly failed to revive. There was a prolonged weakness in domestic demand, which was partly the consequence of the traditionally frugal habits of Japanese consumers, and there was a failure among Japanese export industries to provide a necessary stimulus. This failure could be attributed to the rise of the manufacturing industries of the competing south-east Asian economies and to the maintenance of the high value of the Japanese yen in international currency markets.

All of these features are characteristic of the British economy at present. Nevertheless, the British experience differs from that of Japan in some crucial respects. The lost decades of Japan followed years of post-war economic success in which its export industries led the way. British industry, by contrast, has suffered years of senescent decline. The withering of British industry has meant that we have had to make our way in the world by other means. For years, we have experienced a balance of payments deficit in our exports and imports of manufactured goods—and even in the overall current account, which includes exports and imports of both goods and services. The deficit has been made good by a surplus on the capital account. There have been large inwards capital investments, mediated by the City of London.

There has been a remarkable sale of British assets to foreign owners, in the process of which the City financiers have reaped some remarkable benefits and personal rewards. They have ensured that British companies can be taken over more easily than companies anywhere else in the world. The foreign ownership of our rail franchises, of our power industry, of our water utilities and of much else besides implies that we have ceded our strategic control over investment decisions in vital areas of the economy. While these massive inward investments enable us to sustain financial deficits, they also serve to exacerbate our fundamental problems. Inward flows of capital equate to a demand for sterling on the international currency markets, which enhances the value of the pound. Such a high value relative to other currencies means that our exports are expensive and face a limited demand. The decline in the earnings of our export industries increases the need for the inward flow of capital. The cycle cannot continue indefinitely. When it is broken, which will happen sooner rather than later, we shall face a very harsh economic climate.

The manner in which capital flows have come to displace exports is well illustrated by the Government’s recent efforts to find ways of stimulating the British economy. In January, George Osborne took a trip to China. His primary aim, so it was declared, was to encourage the Chinese to increase their imports of British goods. A secondary aim, which Mr Osborne pursued in his meetings with senior figures in China’s financial sector, was to encourage investment in British manufacture. The primary aim was quickly relinquished; instead, Osborne succeeded in convincing China’s sovereign wealth fund to purchase an 8.6% stake in Thames Water, which is London’s water company. There have since been further Chinese acquisitions, including a manufacturer of one of Britain’s favourite breakfast cereals. More significantly, there has been strong encouragement by the Government for China to assume a major role in regenerating the UK’s nuclear power-generating industry.

The Government’s attitude to the emerging crisis in the UK power industry serves to illustrate their basic economic philosophy and to highlight its dangers. The Government’s economic philosophy is dominated by an atavistic notion of free-market enterprise. Britain, they say, is open for business and any willing provider of goods and services is welcome to participate. According to this philosophy, the Government should relinquish any responsibility for making industrial investment decisions and, by relinquishing responsibility, they imagine that they will conveniently avoid the blame for mistaken decisions. For example, it is believed that if a previous Government had adopted this stance, they would not have been blamed for encouraging the UK nuclear industry to pursue the development of advanced gas-cooled reactors when the rest of the world was opting for pressurised water reactors. Yet by avoiding making strategic decisions about the future of such industries, the Government are abrogating their essential responsibilities.

What should a responsible and imaginative Government do when faced with Britain’s economic problems? The answer is that they should do many things that are not even in the nature of the present Government to consider. In the first place, they should instruct the Bank of England to pursue an active exchange-rate policy aimed at lowering the value of the pound vis-à-vis the currencies of our economic competitors. At the same time, the Bank should seek to reduce the volatility in the exchange rate which, by common consent, has a negative impact on our export industries.

However, there are some far more demanding requirements that we should make of the Government. They should look to the infrastructure of our national economy and ensure that some fundamental needs are met in a timely manner. This would entail support for emerging technologies and the fostering of Britain’s neglected scientific and engineering skills. The renewal of our power industry is perhaps the most urgent requirement at present. It offers possibilities for technological innovation that it would be appropriate to discuss in detail on another occasion. For the present, it should be observed that none of these things will materialise without a commitment from the Government to provide the substantial support that is necessary.

19:50

[The Earl of Selborne]

My Lords, I want to confine my remarks to environmental issues and I start with the case for the green investment bank. The gracious Speech refers to the introduction of,

“legislation to establish a Green Investment Bank”,

perhaps more accurately called a green investment fund. It is not universally welcome on our Benches. My noble friend Lady Noakes said that she certainly thought that was £3 billion wasted. I recognise that if we are to justify the green investment bank, it has to stand up to exactly the same resilience tests of value for money and doing a job with government funds that market failure might otherwise fail to deliver.

If we wish to move towards a green economy, at the moment we are clearly hopelessly over-reliant on policy interventions by government, which are usually very expensive. We have to define quite clearly what we mean by a green economy. I think we all recognise that we mean: moving towards low-carbon technology for greenhouse gas reasons; more sustainable use of natural resources; reduced environmental damage, which simply means that later generations or neighbours pick up the bills for what has not been adequately captured by the market; improved resource efficiency; resilience to climate change; and energy security from diverse low-carbon sources. My noble friend Lord Crickhowell referred to that and, I say again, he was absolutely right to point out that to deliver this green economy you must ensure that those definitions will deliver maximised growth and create high-value employment.

Environmental security, as my noble friend Lord Crickhowell pointed out, is simply getting less and less probable after Fukushima. The Germans have made the disastrous decision, as far as I am concerned, to remove support for their nuclear industry. In the United Kingdom, we have therefore lost a possible six nuclear reactors while, as my noble friend also pointed out, the French company EDF’s project to build two reactors is at risk. That is because of the record that they have in France at the moment for delay, being behind schedule and with double the budget costs. We may get some nuclear capacity, but clearly, because of the terrible neglect over 20 years of our nuclear heritage and its skills, which my noble friend again referred to, we are simply a long way behind the curve. We are going to be desperately short of non-fossil fuel energy, whichever way you look at it, so we need new approaches for green investment to make a critical contribution to energy security.

I will give one example where there is a market failure at the moment. It is a modest proposal; it is not going to resolve our issues of energy security or anything like it, but it is a contribution that should be looked at: energy from waste. It is a mixture of mature technologies such as anaerobic digestion, which we know a lot about, and incineration, together with new technologies such as pyrolysis, gasification and plasma arc heating. There is clearly a great lack of confidence in the investment community with these new technologies. I can certainly see that a kick start from the green investment bank might be extremely productive, and in the long run establish new industries and certainly contribute towards these heroic non-fossil-fuel energy targets that we have set ourselves. It is a double win, because the current amount of biodegradable waste from the catering trade, shops and food manufacturers that ends up in landfill is scandalous—and landfill, of course, contributes to greenhouse gases. It is a resource. We talk about maintaining and using our natural resources sensibly. You simply would not allow waste to be put in a hole in the ground. If it can act as a fuel or as feedstock for energy, that is clearly what it should do.

Public perception is the reason why we in this country are so inefficient at putting in energy from waste. We have a horror of incineration. Perhaps this dates back to a time when we did indeed deal rather less efficiently with emissions of toxic materials, such as dioxins and ultra-fine particles. That is not the case any more; incinerators must now abide by much higher European Union standards than fossil fuel power stations anyway, so we need to ask carefully of any planning committee that rejects either anaerobic digestion, which still seems to happen quite regularly for reasons that are obscure to me, or certainly incineration with modern technology, on what basis they come to this perverse decision. These are the sorts of issues which Switzerland and Holland, for example, have never had any difficulty with. Switzerland, which we would consider to be a clean country in many ways, finds itself with an overcapacity to burn waste and imports it from Italy. Likewise, Holland is importing waste, so we need to change our attitude towards incineration and the new, advanced thermal treatments such as gasification. We need to invest in them, and if there is difficulty in attracting the funding we must ensure that the green investment bank provides the start.

We cannot possibly meet these targets for non-fossil fuels without carbon capture and storage. Again, as my noble friend Lord Crickhowell pointed out, it is quite a long way away. It will need massive investment, not just by us but by many other countries. America, Norway and many other countries are spending a lot at the moment. We simply have to be in there. If we do not get carbon capture and storage right, we can dismiss for ever the prospects of meeting these heroic targets. We need to recognise that an investment in this sort of technology is absolutely the only hope we have of achieving these targets.

20:03

[Baroness Turner of Camden]

My Lords, there are some items in the Queen’s Speech to be welcomed, and others about which many of us will feel concerned. There is at least an acknowledgement that the public’s major concern is about austerity and all that that means for the working people who the Prime Minister now claims to care about. Anyone who has been involved in the recent election campaigns knows that people are worried about job loss, insecurity, wage stagnation, housing and welfare problems: all aspects of the Government’s policy on the economy. There now seems to be a growing opposition, not only in this country but throughout Europe, to austerity programmes and their impact on ordinary families, and an increasing pressure for programmes involving growth. This seems sensible. Dealing with deficits is important, but how to do it if economies are stagnant? Things will only get worse. There is already concern that austerity policies are impacting most heavily on those least able to cope.

Recent unemployment figures show that those impacts are highest in the north-east and the Midlands, where the decline in manufacturing industry, about which my own union Unite has campaigned for many years, has left many areas with no job prospects, even for skilled people. Many of us believe that this decline was first started by a previous Conservative Administration way back in the 1980s. In certain areas, public sector employment made up for these changes, but now, with present government cuts, declines in public sector employment will add to that unemployment, much of it among women and often where no alternative work exists. I am glad that at last the apprenticeship schemes are being reinstituted. This should at least assist where there are large numbers of unemployed young people. However, my noble friend Lord Young made a spirited plea for there to be far more done in that direction. I hope that his recommendations will be taken seriously.

For all these reasons, the Government need a rethink. We need, of course, to go for growth. There is to be an enterprise Bill, but the Government are going the wrong way about it. Apparently, it is felt that removing employment rights from employees will result in more jobs. Long-standing employment rights for workers are to be removed. This will add to the sense of insecurity that already exists. Why should it be made easier for employers to sack workers? So that they can employ cheaper ones? Many of us have fought for years for workers to be treated decently and not like serfs. We will not accept lightly a change in government policy. Why should it be deemed necessary to provide more assistance to low-paying employers? We already have low pay in this country. The Government know this. Their welfare policies attempt to subsidise low pay through the welfare system to make sure that jobseekers are better off in work than on benefits. In other words, the taxpayer already subsidises employers who pay low wages.

Further changes to the law on arbitration would make it more difficult for a worker who claims unfair dismissal to make a claim. Charges are to be made before he or she can get to a tribunal. Then the tribunal itself will consist not of lay people representing each side of industry or commerce but of only a judge sitting alone. It is a more legal process but, of course, there will be no legal assistance.

My advice to employees is to join your union. You are going to need all the protection you can get. The Government, of course, like to act as though unions do not exist. Unions are mentioned only in the context of a possible strike—and then, of course, the strike is all the workers’ fault. There is now talk of making strikes more difficult, when we already have legislation that requires ballots, and probably tougher legislation than exists in other developed countries. Many government supporters—I emphasise “supporters”, not necessarily the Government—clearly think that workers should put up and shut up. That really does seem unlikely to me.

Unions play an enormous role in other areas, which is hardly ever mentioned. Unionlearn, the education section of the TUC, helps 230,000 working people back into education every year. Through its support for Ruskin College, Oxford, it has assisted many to acquire degrees. Many members of your Lordships’ House have benefited from further education at Ruskin College. Unions play a vital role in health and safety provision in the workplace through their training of safety representatives and in other ways. Despite this, the Government do their best to discourage this traditional and important organisation of the employees themselves.

I hope that the recent election results will cause the Government to re-examine their policies. If they do not do so, more people are likely to suffer as a result of economic policies that have already begun to impact unfairly on employment, welfare and other matters of great concern to everyone.

During the previous Session in this House, every time we sought to deal with the problems caused by the cuts we were told by government spokespersons that “there is no alternative”. I and many others do not accept that, and many people who are worried about declining living standards do not accept it either. We need to go for growth. We need policies—not words, but policies—for growth. The Queen’s Speech does not have such policies.

20:10

[Baroness Byford]

My Lords, there has been criticism that the gracious Speech lacked an agenda for growth, jobs and a stimulus for the economy. That is clearly not true, though, as others have said. The Government are indeed taking steps to free up businesses to allow them to grow and employ other people. I wholeheartedly endorse the stated priority of cutting the deficit and approve the reduction in the number of civil servants. Most of all, I support the measures being taken to reduce the regulatory burden on entrepreneurs to clean up the IT systems with which so many of the departments have been saddled, particularly those in Defra.

I wish success to the negotiations on reducing the pension burden. The previous Government, during their tenure, increased the pension burdens from 7.2% to 14.1% on local government salaries and centrally by over five percentage points to a range of 16.7% up to 25.8% at the most recent elections. These are additional burdens that have to be met, and they are the fault of the previous Government. In the circumstances, I took great exception to the comments by the noble Baroness, Lady Royall, at State Opening, when she asserted that the coalition was unfair, incompetent and out of touch.

There is much to be welcomed in the gracious Speech. I cannot touch on everything but I am particularly glad to see a draft water Bill, an energy Bill, the reduction of regulation and in particular the Groceries Code Adjudicator Bill, which has its Second Reading on Tuesday. That cannot come quickly enough. I am watching the death of market towns, caused mainly by the rapacious advance of supermarkets and aided and abetted, sadly, by local councils that still cannot see the damage that they do to the rural economy. I am aware that so much of the success of these mammoths is due to the stranglehold over those who grow, produce and manufacture items for sale.

Last week we were told of a further fall in the milk price, which the right reverend Prelate the Bishop of Hereford referred to earlier. That is iniquitous. The prices of fuel, fertilisers, grass seeds, animal feed and machinery all continue to rise, some of them rapidly. Supermarkets, on the other hand, are making profits. In the face of recession, those profits have held up very well, and we know that the salaries of those who run the supermarkets are generous. That is what is unfair. Farmers and processors are being openly robbed and they desperately need the support of an adjudicator. We shall deal with this in greater detail on Tuesday.

I am particularly concerned about the fresh milk supply. Will the Minister carry out an exercise to reveal exactly how well supermarkets do? They sell in four-pint, two-pint and one-pint cartons. The price comparisons are all based on the four-pint model, which considerably understates the average return per pint to the supermarket. It also minimises the insult to the farmer. A single pint sells for 49p, which is almost exactly the four times the price that he gets, but the official figures are based on the four-pint model—39p to 42p per pint. We shall debate this further.

The contribution that charities and voluntary workers give to the life of this country is incalculable. It would be wrong to reduce their impact through the side effects of measures taken to deal with the control of the deficit or developments in the commercial sector. In this Christian Aid week, I am pleased that pressure to reduce our international contribution has been resisted and that there are clear intentions to encourage further volunteering and to maximise the value of charitable giving. As an aside, I understand that DfID has agreed to match-fund the first £5 million that Christian Aid achieves this week.

There is no doubt that volunteering can assist individuals into employment, which is good for them and good for the economy. The major benefit, however, must be the application of donations, large and small, to improving the quality of life for people throughout the country—and abroad, as I have indicated—regardless of colour, creed, age or financial circumstances. I hope that the charities Bill may look at ways in which gift-aiding can be simplified and the burdens there reduced.

It does not necessarily need a Queen’s Speech to reflect the importance that I believe farming and agriculture play in our community today. Their role is the driving force behind so much economic activity. Between them, farming and food have 3.5 million jobs. The headline is that the total farming and food sector is worth some £85 billion, the equivalent of 6.9% of GVA. Farming is more than that, though: it is important for jobs both on and off the farm. In all, farming and food production provides 3.5 million jobs, but technology means that employment on the farm may fall. Other areas are growing, however, and in that I particularly include research and development. They will play an important role in our food security in future.

The departments have given some stimulus and help to particular areas. I am best known for my connection with rural areas. In March and April this year, a £160 million package of measures was announced to support rural communities, mostly through the rural economic growth review. Of that, £100 million is to grow rural businesses through the rural development programme for England, some £20 million of grants will extend superfast broadband to remoter areas, some £25 million will promote rural tourism and support its businesses and there will be loans totalling more than £20 million for community-owned renewable energy schemes. In addition, £2 million will help women in rural businesses to develop those businesses. Those do not feature in the gracious Speech but they make a huge difference. It is seed-corn money that makes a difference to enable businesses to start. The Government need to see ways in which they can lighten the load of regulation and red tape so that that seed corn can grow and a business can become one, two and then 10 and perhaps 20. I support the Government in the measures that they have taken in the gracious Speech.

20:17

[Lord Borrie]

My Lords, when I first put my name down to speak in this debate on the gracious Speech, I thought that I would talk about two items: the groceries code adjudicator and the changes in the competition policy regime, which feature in the Speech. I then learnt that the Groceries Code Adjudicator Bill will be before us for Second Reading on Tuesday, and I have little doubt that the competition regime changes will be in a Bill that will come before us soon. With more time available in Second Reading debates than in the sort of debate that we are having today, I decided to latch on to the remarks made by my noble friend the Leader of the Opposition on youth unemployment, which to some extent has also been commented on by my noble friend Lord Young of Norwood Green.

I am delighted to congratulate a Member of the Conservative Benches who is in her place right now, the noble Baroness, Lady Stedman-Scott, who spoke on this subject yesterday and described the terrible expense to the public finances and the lost-opportunity costs of youth unemployment. She made the point that some 16%, probably more than that, are NEETs and causing a great deal of personal, social and financial problems. That is a very serious matter, a terrible waste in economic terms and a very severe social and personal loss and detriment to the young people themselves. In addition to those fairly obvious points, I think that we ought to accept that many young people are alienated, disaffected and are often engaged in criminal or anti-social activity.

Many people have solutions and have their favourite ideas. I dare say that there is no one idea that is worthy of promotion; there are many that are worthy of promotion. One idea that deserves further consideration and is timely to consider now is some sort of non-military national service or citizens’ service of one year or more and applicable to young men and young women. When I did military national service way back in the 1950s, it applied only to men, so I naturally think of any modern development as covering both.

This idea was recently advocated—I mention this specifically for my noble friends in the Labour Party—in an article by Robert Williams that appeared in the March 2012 edition of the Labour magazine Progress. Twenty years ago, it was one of the proposals of the commission on social justice that was set up by the late John Smith, then the leader of the Labour Party, with me as chairman and several other present Members of this House on the commission. One of our proposals was for a citizens’ service, a community service scheme designed to enable young people to develop personal, social and learning skills and a work ethic through a variety of activities which, no doubt, would have to be looked at and modified and so on as the years go by. They would engage in work that improves the environment by cleaning and improving public spaces and engaging in caring activities in hospitals, care homes and people’s own homes, and, importantly, they would have the opportunity to make up for the gaps in their education that so many young people have.

It would probably have to be a voluntary scheme, which is what my commission proposed 20 years ago, because in peacetime—and I exclude the immediate post-war years in Britain—it would politically be very difficult to make it compulsory. Yet I have to admit that a weakness of a voluntary scheme is that some of the very people who would benefit most from a citizens’ service would be excluded.

There would be many gains from a citizens’ service in educational terms, in breaking down social barriers and in enabling people to improve their personal standing and so on. I believe that it is timely now to revive interest in this proposal. I have not attempted the important matter of cost. A parliamentary committee or inquiry would be needed to establish costs and feasibility and to estimate what I suggest would be, but I have no figures to back this up, a very considerable payback in economic and social gains to the community.

20:24

[Lord Skidelsky]

My Lords, Sigmund Freud identified a defence mechanism that he called denial, in which a person faced with a fact that is too uncomfortable to accept insists that it is not true, despite overwhelming evidence. A good example of denial is the Chancellor’s belief that austerity is a growth policy, despite the fact that the British economy is shrinking. Somewhat better than a state of denial is one that psychologists call cognitive dissonance, a condition of holding two contradictory beliefs at the same time. People in such a condition have a strong need to reduce the importance of one of the dissonant elements. This is more hopeful. If the Chancellor has moved from denial to cognitive dissonance, he may soon move from cognitive dissonance to the honest realisation that his policies have completely failed to revive the British economy.

He may also recognise that they are failing to solve the debt problem. Since the collateral for a country’s sovereign debt is the Government’s potential tax revenue, any policy which produces recession and unemployment automatically increases the deficit and thus adds to the debt. The national debt is projected to rise from 71% of GDP in 2010 to 84% in 2012 according to the IMF, and the deficit elimination programme stretches ever further into the future. That is the fruit of austerity. Earlier in the debate, the noble Lord, Lord Razzall, denied that austerity could be responsible for stagnation because most of the cuts are still to come. That is to miss the point. The real impact of austerity so far lies not in the actual money cuts but in the failure to uprate public spending in line with public sector salaries, which inevitably leads to job losses.

The Government still claim that the main blockage to British recovery is the eurozone financial crisis. We are being buffeted by the euro crisis, but the eurozone crisis is the inevitable result of the very policies championed by the British Chancellor at home. The only reason that austerity has not so far produced a financial crisis in this country is that behind our fiscal policy stands a central bank licensed to print money. This has been the main factor keeping the cost of British government borrowing so low. However, there is a limit to how much the central bank can do to maintain confidence if the debt continues to grow while the economy continues to shrink.

Beyond the cloisters of Whitehall, there has been a welcome change of mood music. More and more people—captains of industry no less, and not just Keynesian heretics like me—are saying that austerity is not enough. EU Commission President José Manuel Barroso talks of the need to relaunch growth in Europe. He and the new French President have endorsed a proposal to add €10 billion to the capital of the European Investment Bank. Growth is back on the agenda in Europe, but is it back on the agenda in this country despite the opening remark in the Queen’s Speech?

What would a growth policy need to be? Conventional wisdom has it that the only way to get growth is to cut taxes and red tape and get the unemployed on their bikes. I am all in favour of good supply side policies, but what the Government fail to grasp is that we have a massive problem of insufficient demand. The actual output of the economy is well below its potential output. Recovery from a slump is not just a matter of making better use of existing resources; it is about bringing into use potential resources which stand idle for lack of demand. This was the great lesson taught by Lord Keynes, a lesson which seems to have been entirely forgotten by the first-class brains in the Treasury.

If we see the problem in this way, the question of government borrowing assumes a different aspect. At present, the Government are borrowing billions of pounds a year to keep people idle. Would it not be far better to use that borrowed money to put them to work building homes, repairing creaking infrastructure and promoting the low-carbon energy economy we all want? After all, if the Government have to borrow vast sums of money—and they have to because they allowed the economy to shrink so much—why not at least borrow to create assets rather than borrow to destroy them? The longer you allow workers and plants to stay idle, the more potential output you are destroying day by day, week by week, until, in the end, the potential output of the economy will shrink to the level of its actual output. I have a question for the Minister. Does he really believe that if the public sector sheds 50% of its jobs, those dismissed workers will straight away find employment in the private sector? If not, the austerity policy is simply adding to the dole queues. That is the charge that he must face and refute if he can.

Even in Whitehall, things are stirring. The Queen’s Speech promises a Bill to set up a green investment bank to invest in the low-carbon economy. I congratulate the Business Secretary Vince Cable on his persistence in pressing the case for the green bank against Treasury objections. However, I wish Ministers would think along bolder lines. The bank’s capitalisation is too small—only £3 billion—and it will not be allowed to borrow until April 2015, subject to public sector net debt falling as a percentage of GDP, a prospect that currently looks extremely unlikely.

A practical man would ask what such a bank would invest in, and why, if there are so many investment opportunities around, they are going begging. There are two answers to the second question. First, there are large-scale projects in which the private sector will never invest on its own because the private rate of return is too distant, too modest and too uncertain. That means that, however great the social benefits, the investments will not be made except by the Government or with a government guarantee or subsidy. Most of a country’s transport infrastructure falls into this category. Secondly, there is an additional motive for an active investment policy when business confidence is shattered, as it now is. The corporate sector is sitting on almost £800 billion of cash—more than 50% of GDP. This is because when confidence in the future is low, almost all investment seems riskier for both lenders and borrowers.

Finally, what would a green investment bank invest in? It would obviously invest in carbon-reduction activities. Incidentally, the mandate of the European Investment Bank is wider than this because it includes among its objects the promotion of growth and employment potential. Whatever the bank’s scope, it is crucial that it gets a clear mandate, so that the private sector can plan its investment against a stable policy environment.

Many of us will have pet schemes to bring to the table. For example, there is the proposal of the Institute of Civil Engineers to establish regional water-transfer networks via new and existing canal systems. The Scottish Federation of Housing Associations has argued for preventive spending on social housing. Will not the Chancellor understand that we need preventive spending rather than spending prevention? The sooner that the Prime Minister and the Chancellor start investing in Britain, the better. If they continue in the spirit of denial, they will be swept from the seats of power, as Governments have been all over Europe—and they will deserve to be.

20:33

[Lord Tugendhat]

My Lords, my big disappointment in the Queen’s Speech is the absence of a Bill to deal with top executive pay. Mr Cable appeared to promise one and it is long overdue. In the previous Parliament, the noble Lord, Lord Gavron, introduced such a Bill, which I supported, as did the noble Lord, Lord Taverne, and several other noble Lords from both sides of the House. I am pleased to see that he has reintroduced a similar Bill, so if the Government do not come forward with a measure, it at least lies in the hands of the House of Lords to push this proposition along. I hope it will enjoy the all-party support that it deserves.

The fact that shareholders are at last exercising some muscle over excessive pay linked to poor performance is encouraging. I refer here to the recent revolts at Aviva, AstraZeneca, Barclays, Trinity Mirror and Xstrata, to name only a few companies. We have seen similar phenomena in the United States and Switzerland. However, the fact that shareholders are now exercising some muscle does not mean that the Government can sit back and do nothing. The examples to which I have referred are egregious. We need a framework and a set of criteria within which shareholders can act and the rest of society can assess their effectiveness.

“Society” is a key word here. As Niall FitzGerald, the former chairman of Unilever, has pointed out:

“Business is part of society, not outside it”.

The rate at which top executive pay has increased in recent years puts those who receive it beyond the range of normal society. Here, I do not refer to just the banks by any means. Between 1999 and 2009, the total earnings of FTSE 100 CEOs jumped from 47 times UK median full-time earnings to 88 times. In 2010, the increase in CEO remuneration was 43%, while other top executives achieved even more. Last year’s increase looks likely to be more modest but still way beyond that of most other—probably all—sections of society.

Richard Lambert, the former director-general of the CBI, made two very important points about this phenomenon in an article in the Financial Times last November. One was that this is a “big company” issue, involving a small group of individuals. Those in SMEs are in nothing like the same category. The other was that it,

“is damaging the interests of British business in political, economic and reputational terms”.

Two months ago, Simon Walker, the current—I emphasise “current”—director-general of the Institute of Directors was more blunt. He wrote in the Financial Times that,

“executive remuneration at our biggest companies is at the wrong level”.

Therefore, let us hear no more nonsense about politicians criticising or seeking to act on top executive pay being anti-business. To the contrary, it is necessary to save business from itself.

Against this background I should like to set out some points and principles that should inform the Government’s approach. The first is to subject to severe scrutiny arguments about an international market in executive talent and the UK being in danger of losing out. There is indeed such a market, there are such individuals and we must ensure that the United Kingdom does not lose out. However, this market is very much smaller and the number of individuals much fewer than most of this theory’s proponents tend to put forward. They account for a very small proportion. Most senior executives do not fall into this category and are neither willing nor able to move internationally. What happens is that the enormous packages sometimes—quite often properly—awarded to the internationally mobile, whether British or foreign, pull up other people’s packages behind them. You then have the phenomenon whereby because someone—whether British or foreign—who has been recruited from outside earns an astronomical amount of money, his or her colleagues therefore need to be within the same range. Of course, that does not follow at all.

That is one reason why it is very important to make senior executive contracts simpler and more transparent. In recent years they have become ever more complex and opaque, and designed to make it hard for outsiders to comprehend the level of benefits. It is vital that shareholders should be able to understand exactly what senior executives stand to get in return for meeting what objectives, and what their severance terms are. The Dodd-Frank reforms in the United States require the publication of a single aggregate figure for the total annual compensation of each board member and we should have the same.

Linked to that, the time has come to look carefully at so-called incentivisation schemes. Too often in recent years these have led to corporate strategies being distorted by the desire of executives to earn bonuses linked to short-term growth in profits or share price rather than taking a long view.

Finally, under this head, Richard Lambert makes a good point when he suggests that companies should be required to produce a budget for the pay of their top executives so that if one executive gets more for some exceptional reasons, others would share in a smaller pot. This budget in turn should be linked to the company’s strategy.

As I said a few moments ago, business is part of society. By that, I mean that it also comprises not only those who run it but those who own it—shareholders, directly or indirectly—and those who work in it. The ultimate decision on senior executive pay must rest with shareholders. But I believe that we should also strive to find a way of ensuring that those who work for an enterprise are able to make an input into what senior executives are paid. The senior executives should have to explain and justify their remuneration to those who work for them. Finding the right way to do that will be extremely difficult but I think that that is one element that also needs to be looked into and to which we need to find an answer.

20:41

[Lord Desai]

My Lords, it is a great pleasure to follow the noble Lord, Lord Tugendhat. Before I get to what I want to say, I offer one suggestion to his excellent proposal. I have thought for a long time that, in order to curb high salaries, we should consider adding the wage bill of top executives to the profits and putting corporate tax on all that. Perhaps I may use old-fashioned terminology: let us consider production workers and non-production workers. The wages of production workers are outside this but the salaries of non-production workers are added to profits, and tax is put on both of them. I have always believed that moral exhortation is neither here nor there. It is when it hits the pocketbook that companies will behave themselves.

I want to take up the challenge before us all; namely, what is happening and how we can make things better. In the week since the gracious Speech, the situation in the eurozone has worsened more than we ever thought would be possible. I presume that in the next week or so we may see a serious crisis in it. I start with a proposition which reflects on the speech made by the noble Lord, Lord Skidelsky. Yes, it is possible that there is denial and cognitive dissonance. But if a lot of countries simultaneously are in denial and in cognitive dissonance, it behoves us to ask whether there is another explanation than wilful obstinacy for doing what has to be done.

No Governments want to be unpopular or to have austerity. If a Government choose austerity, there may be a reason behind that. After all, over many years, we have all been brought up on Keynesian economics. Why have we suddenly gone off Keynesian economics, not only in this country but across Europe? Even in the United States, often cited as an example to the contrary, there has not been a major boost to the economy since the first year of the Obama presidency.

I have always thought that there is another explanation for why Governments do not adopt more borrowing and spending to get growth now and to get themselves out of the problem. I believe that this crisis is not like other crises of the past. It does not come from a lack of effective demand. Keynes was always worried about oversaving. This is a crisis of undersaving and we have been in it for many years. In one way, this crisis started in the 1970s when we began to lose manufacturing industry across most OECD countries. There were few exceptions. A lot of the manufacturing industry, especially the low and medium-technology manufacturing industry, moved east or south to where it was wanted. That led to a huge hollowing out of the job market for unskilled or semi-skilled manual workers.

Countries which had a good welfare state put all those people into long-term unemployment and have sustained them. Countries which did not have a good welfare state, such as the United States, let the wages of those people drop to a very low level. In America, we have seen stagnation in the average wage. People who cannot be in manufacturing are in very low paid service-sector jobs. Across Europe, we have maintained long-term unemployment and those who are in employment have been able, for a while, to increase their wages. However, even there, there is a lot of inequality because in the service sector you have either very highly paid jobs—for example, financial services—or very low paid jobs in the retail or restaurant trades and so on.

We have had an economic transformation. For a while, we have filled the gap of manufacturing employment with service sector employment and borrowing. Personal borrowing fuelled demand for us for a long time. Corresponding to our undersaving—savings practically disappeared from western society—there was always saving in Asia. Basically, all that saving in Asia was used by us to perpetuate employment, but it was not a sustainable model. If government borrowing had been self-liquidating, and every time the Government borrowed money there was a sufficient multiplier effect and the debt retired itself, we would never have been in this situation. The point is that even European Governments, including France and Germany, were borrowing and running deficits at full employment level, because that was the only way in which they could sustain their welfare states. If that model is not feasible, we have to do something.

I am sorry to be so gloomy, but I do not believe that we will get out of this any time soon. A lot of people think that there is some magic potion that will get us growth. There is a lot of micro-thinking on cutting red tape and this and that. But all those things, even if you did them, would not increase the growth rate immediately, and when they did they would increase the growth rate by no more than one-quarter of 1 percentage point. It is worth doing, but it is not enough.

The issue that we face is whether we can spend our way out. As the noble Lord, Lord Skidelsky, said, we have a problem. The corporate sector is sitting on surpluses and not investing, and the government sector has decided—the noble Lord rightly disagreed, as a lot of other people have—that the Government should borrow more money and get out of it that way. This is the central problem to which the Government have not yet seen a solution. Just as once upon a time we used to believe in crowding out, we now want there to be crowding in, which is not happening. Just because Governments do not spend does not mean that business spends, so I think that there is a missing link in between.

I suggested when we discussed the Budget that there was a way out for the Government, and I know that the Minister will pooh-pooh my suggestion as he did once before. But if there is a windfall gain from an asset sale, such as the Government had from selling Royal Mail for £28 billion, you could say that you cannot spend that money because there is a big liability, yet money is fungible. If you get £28 billion when you did not expect it, there must be £28 billion somewhere else that you can release. The Government should decide on the very low rate of growth that we have achieved. The negative numbers may be slightly more positive and we may not be in a double-dip recession, but that does not matter—we are now counting growth in basis points, not even percentages. What is true and what the OBR has said is that this is going to be a very difficult year. Given that asset sale, or any other asset sale that the Government might plan—I hope they do—we should allow ourselves a little bit of slack. Perhaps they could spend the money not on infrastructure investment but in immediate vouchers to those poor grannies whose tax they have increased. Give the grannies £1,000 per granny and you will see a revival in the economy.

20:51

[Lord Addington]

My Lords, when I put my name down to speak in this debate, it was inspired not so much by what we were discussing today but by the subjects discussed yesterday. Primarily, I am going to talk about the apprenticeship system and the developments in it. The noble Baroness, Lady Wilcox, may wish that she had taken a few more moments over her break, because I have discussed this subject with her far too often; neither of us particularly wanted to, but we felt we had to. We are missing the noble Lord, Lord Young, who talked about apprenticeships.

On this subject, the cock-up school of history is proved right in Whitehall. The training programme for business has not paid attention to what is going on in the education sector. We have a new approach on SEN. Perhaps the Minister could give us an assurance that in future when there is a training scheme we will not make the series of mistakes that we made over the introduction of the apprenticeship scheme. We designed it so that the biggest disability group in the country, dyslexics, or at least those at the severe end—I think that my interests are pretty well known in this House—were excluded from taking the qualification, because it asked for a written English test. You could not use the normal ways around to cope with that test that were available in all other parts of the education sector. I do not think that it was malicious. People said that we must raise standards and have good written skills, so we should have this very tough qualification. When the previous Government brought it in and the problem was pointed out to them, they said, “Yes, we will change it”. But we then had something rather inconvenient called the general election. There are lots of sporting analogies you can make about dropping the ball and bad passes; all I know is that we are now scrambling back to recover from the damage. The last 18 months of my life, which have impinged on the noble Baroness and many other Ministers, have been spent trying to correct this, because we have a series of regulations that make it incredibly difficult to change.

Are we going to ensure that we look more across the board? If you have been in this House as long as I have, you can make a series of set speeches on almost any occasion. For example, you can speak about the Chinese walls that exist between departments, which means that they do not talk to each other. There is a massive example of that happening in the area which I am discussing. Indeed, there are Chinese walls within departments, which means that people in different segments of the same department do not talk to each other. If you are dyslexic, you can take a degree with assistive technology. I declare another interest in that I am chairman of a company which provides such technology. You cannot use that technology when undertaking an apprenticeship or for a course that trains you to develop a skill, usually a manual skill, which involves you not being based in an office with a computer. However, you can use it to take a degree in English, which might help you to find such work. A drunken logic is crawling through my remarks.

I hope that the Government will act quickly to correct the mistakes that have been made in this area. The noble Baroness and I are wonderful friends but I do not wish to keep discussing this subject with her. Therefore, I hope that it will be addressed more effectively than has been the case. I thank the noble Baroness as progress seems to have been made in this area. However, I will not celebrate as I thought that I had dealt with this matter on three previous occasions. Perhaps it is a case of fourth time lucky. The previous Government acted in good faith in this regard but we should remember that their attempts to rectify the situation went wrong. The current Government should remember that and try to adopt a culture of cross-departmental oversight. We must not allow the mistakes to which I have referred to recur. If departments look more carefully at what other departments are doing, we will save ourselves a great deal of time.

If you want to help those disabled people for whom it is most difficult to obtain employment, particularly high-value employment—people with dyslexia may comprise the biggest single group of people in these circumstances but they are not the only ones by a long way—and who are most commonly either unemployed or underemployed, you must make training more accessible. Unless you have the culture in place that I have described, you will not achieve this. Please will the Government reconsider this issue and ensure that the mistakes which have been made do not recur and that training is accessible at all times? If that is not done, irrespective of anything else that you might do, you will end up taking two steps forward, one back and then usually one sideways. Life is too short; let us not make the same mistakes again.

20:56

[Lord Lucas]

My Lords, I cannot help my noble friend on the question of which economist has the best recipe for growing the economy—growing hair, yes, but not the economy. Therefore, I shall concentrate instead on fairness, regulation and votes in this House.

It seems to me that we are going to experience tough times for some while. Under those circumstances, fairness is terribly important. We have to be sure that particular groups do not manage to feather their own nests while the rest of us are having a hard time of it. Therefore, I entirely support what my noble friend Lord Tugendhat said about executive pay. There are structural reasons why executive pay has escaped reality in the way that it has and we need to make structural changes to bring it back into balance. I am grateful to my right honourable friend the Chancellor for the steps that he took in the direction of fairness in his Budget, particularly as regards the payment of stamp duty on the part of people who were dodging paying it by means of measures connected with overseas companies.

I am also grateful to my noble friend the Minister and his colleagues for their help on low-value consignment relief, a nice little dodge that enabled pirates in the Channel Islands to make off with a couple of hundred million quid of our money every year. However, he should know that he has scotched that snake but not killed it. The likes of The Hut, which was one of the companies involved, now ships out of Chicago, sending stuff marked as “a gift”. Others bulk ship into Europe and then treat their merchandise as if it was a postal packet coming in, shipping it round Europe in the European mail systems in contravention of postal regulations and VAT regulations. However, with open borders, it is hard to see ways of stopping that. Therefore, I very much hope that my noble friend and his colleagues will remain in close contact with Richard Allen and will use all his understanding and expertise to deal with the remnants of that abuse.

We also need to deal with big companies that are getting away with not paying tax. Goldman was in the news again the other day. That will not do. It is not fair and something has to be done about it. My favourite bogeyman is Amazon, which has £7 billion of sales but pays no corporation tax. That is just taking the mick. The Government have plenty of ways of pressurising Amazon. It is running a most unprincipled monopsony. I cannot find a major book publisher who will come to tea in this House and talk to me about what Amazon does. I have to find out what is happening from the little boys, who are less frightened. If you sell through the Amazon marketplace, you are not allowed to sell anywhere else in the world at a lower price. Amazon makes you keep your prices up elsewhere at the level at which you sell on Amazon, and it appears to be allowed to do that. There does not seem to be any thought of a referral to the Competition Commission. Amazon encourages people who use its marketplace to evade VAT. It was also extremely slow in complying with regulations that require it to produce information about who people are buying from in its marketplace, and it is still not acting satisfactorily in that regard.

There are lots of ways in which the Government can bring pressure to bear on Amazon. They are dealing with the supermarkets in a very similar situation; it is time that they dealt with Amazon. Having these major corporations destroying jobs and tax-paying businesses while paying no tax themselves absolutely will not do.

I want to speak about the benefits of regulation. I am looking forward to our changes in financial regulation. Investor protection has been a positive thing in this country, although it has sometimes been overenacted. I encourage my noble friend to consider extending investor protection because, once people get used to the idea of it, they assume that investments offered in newspapers have some level of protection. However, a few weeks ago the Guardian, which ought to know better, had a supplement carrying pages and pages of advertisements for investments in tropical forestry, offering 18% compound for 15 years. These are total scams, and the people who will make money out of them are the promoters. The uncertainties are enormously played down and the track records do not bear out the projections. A moment of proper financial regulation would see these scams swept away, yet the Government allow them because technically they are not collective investment schemes. In any ordinary sense of the word, they are collective investment schemes in that a lot of people are being herded into one investment. However, because each investor nominally owns a tree or two separately, they are not seen as collective investments and are not regulated. A lot of people are going to get hurt by such schemes and the Government really ought to tackle them. We have got used to protection and we deserve it.

The other area where regulation will do some good is in disintermediation. A number of companies, such as Zoopla, disintermediate basic banking. You can borrow from them and lend to them but you do not; you lend to the borrower and the borrower borrows from you directly. If you are a lender and a borrower, you can get much better rates from them than from a high street bank because you are cutting out all the intermediary functions and, in particular, you are cutting out all the costs that come from banks having to carry capital. You are doing away with one of those comfortable lies, which is that it is possible for banks to borrow short and lend long without carrying undue risk. You are taking that risk straight through from borrower to investor and are therefore able to offer much better rates. However, businesses such as Zoopla do not grow very fast and they are not very big, one of the principal reasons being that they are outside investor protection. People do not know how these businesses are run. They are not subject to any overt regulation. However, people have got used to safety and they want it. These businesses are basically good, worth while, sensible, money-saving and growth-generating, and they ought to be brought within the ambit of financial regulation so that people can trust them and use them as part of their ordinary range of investments. The same applies to venture capital.

Earlier, one of my noble friends talked about the price of annuities. If older people want income and young people want capital, matching the two can be done through disintermediation. One does not need to go through the horrible arrangements that have to be gone through at the moment based on gilt rates. If we could extend disintermediation to collective investments, that would be a real attack on executive pay. I am sorry; I am too old to be frightened by the Whips.

When it comes to votes in this House, we like to tell ourselves that we are a House of expertise, experience and independence. If change comes, that situation will degenerate and we shall become a House of politics. We are letting that happen. On all sides in this House, we are becoming more and more subject to the Whips; we are voting according to politics rather than according to our expertise. However, we are being freed from this by the Government because the Government have decided that they have no loyalty to us. They are prepared to sell us down the river for their own political ambitions. Therefore, we do not have to show loyalty to them for a while. We can vote on the basis of our expertise and our understanding. I think that that would improve the politics in this House. If what we sent back to the other end were not the product of political pressure, but the product of our own wise judgment, that would improve the performance of this House. I hope that we shall do that more in the coming year.

21:05

[Lord Lexden]

My Lords, perhaps I may turn your Lordships’ attention briefly to Northern Ireland and to Ireland more generally. Ninety-one years ago, famous words of great poignancy were spoken by King George V. He exhorted the divided peoples of Ireland,

“to stretch the hand of forbearance and conciliation, to forgive and forget, and to join in making for the land which they love a new era of peace, contentment, and good will”.

Exactly 90 years later, Her Majesty, acting on behalf of us all, stretched out the hand of reconciliation to the Republic of Ireland. She, too, used poignant words. She said that we can all think of things that might have been done differently or not at all, and she urged us to remember that, although we must respect history, we are not bound by it. Who can doubt that her historic visit to the Irish Republic in May 2011 ranks as one of the most conspicuous of all the multifarious services that she has rendered us over 60 years? It is surely appropriate that we should acknowledge its immense significance and thank her for it in the course of our debate on the humble Address in this Diamond Jubilee year.

After long years of direct rule from Westminster, Northern Ireland, once again, has its own system of devolved government, as it did at the time of Her Majesty's accession. However, it is a very different system. Power-sharing has replaced majority rule. As a result, more people in the Province today identify themselves with the institutions under which they are governed than was possible under the old Stormont system. That will lend added significance to Her Majesty's forthcoming visit to Northern Ireland as part of her Jubilee tour.

As regards the economy, the best known fact about Northern Ireland is that it is unduly dependent on the state. Public spending in the Province is equivalent to more than two-thirds of GDP; some put it closer to three-quarters. Grave disquiet has long been expressed about this state of affairs. With the recreation of political stability, it became imperative to set a new course in economic policy. Only substantial private sector growth can provide a basis for the enduring prosperity that our fellow countrymen and women in the Province have a right to expect. In this, as in so much else, my noble friend Lord Trimble and his courageous Ulster Unionist colleagues pointed the way.

Today, no one seriously dissents from the proposition that the Northern Ireland economy must be rebalanced in order to stimulate private sector business and jobs. The coalition Government at Westminster committed themselves firmly to the task in their agreed programme two years ago. My right honourable friend the Secretary of State for Northern Ireland has recently underlined its importance. Rebalancing the economy, he said in Dublin last month,

“is probably the biggest single contribution that the UK Government could make to sustaining peace”.

He also said:

“Just think of the impact that greater prosperity and jobs could have in parts of Northern Ireland where worklessness and generational unemployment are endemic”.

To remove what has become endemic will take time. My right honourable friend frequently refers to the need for sustained action over 25 years. In this he is at one with the coalition Executive at Stormont. It has recently produced an extremely ambitious strategy document, packed with detailed proposals and plans, all designed, in its words, to create,

“a prosperous local economy over the short, medium and longer term to 2030”.

If success is achieved, Northern Ireland will recover its long-lost prosperity. The document states:

“Our economic vision for 2030 is … an economy characterised by a sustainable and growing private sector, where a greater number of firms compete in global markets and there is growing employment and prosperity for all”.

There is a widespread but by no means universal view in Northern Ireland that a bold, unconventional initiative should now be taken to give the process of change powerful momentum. It would involve the transfer of responsibility for corporation tax to the Stormont coalition Executive, with a consequent reduction in the block grant that currently finances their work. This would enable them to cut corporation tax in Northern Ireland decisively. The case for such a dramatic change was discussed at length in the consultation document, Rebalancing the Northern Ireland Economy, published by the Treasury in March last year. It noted that,

“Northern Ireland has its own unique set of circumstances, not least a land border with the Republic of Ireland with one of the world’s lowest corporation tax regimes … Reducing the corporation tax rate in Northern Ireland would have a positive impact on both domestic investment and FDI”—

foreign direct investment—

“which could lead to increased economic growth and a stronger private sector”.

A corporation tax rate of 12.5%, matching that of the Irish Republic, would be in prospect if this unprecedented initiative were to be undertaken. A ministerial working group set up last October to examine the complex and technical issues that may arise is expected to report this summer. My noble friend the Minister may be able to comment on the progress that is being made.

Unsurprisingly, the issue has dominated all recent discussion of economic affairs in Northern Ireland. There is a danger that it could come to be regarded as a panacea for all the Province’s principal economic ills. The Northern Ireland Executive’s new economic strategy document helps most usefully to counter that danger by expounding the wide range of other measures that are needed, such as increased investment in research and development, and expansion of higher-level skills among young people.

Northern Ireland could also gain greatly from a profoundly important Thatcherite idea: the economic enterprise zone, whose time seems to have come again. It occupies no prominent place in the Executive’s economic strategy, but that is where it should be.

The gracious Speech states that the Government,

“will continue to work constructively and co-operatively with the devolved institutions”.

Nowhere is this more important than in Northern Ireland.

21:12

[Baroness Drake]

My Lords, the focus in the Government’s programme on fair markets and the regulation of the financial services sector is to be welcomed. With auto-enrolment into pensions, millions more people will save through capital markets. Confidence in those markets has been worn down by mistrust, scandals, charges, complexities and conflicts of interest. Fiduciary duties exist to ensure that intermediaries—those who exercise discretion over other people’s money—act in the best interests of those whose money they look after. However, interpretations of this vital legal principle are dysfunctional, which undermines outcomes for savers, holds back effective shareholder oversight and allows conflicts of interest to prevail.

Those saving in trust-based occupational pensions should be protected by trustees who are legally obliged to act in their best interests. Those saving with an insurance company are subject to the consumer responsibility principle. As FairPensions points out, most savers are unaware of this legal divide. With auto-enrolment, the employer chooses the pension provider and the power of inertia increases saving. The inadequacy of the caveat emptor principle in that situation is evident. However, depending on the type of scheme their employer chooses, savers will find themselves subject to one of two opposing principles: fiduciary duty or caveat emptor. The law should be clarified to overcome the misperception that investors’ duties begin and end with maximising quarterly returns. The Government must provide better understanding and enforcement of investors’ true fiduciary duties.

The Work and Pensions Select Committee concluded in its recent report on auto-enrolment that,

“the Financial Services Bill … offers the opportunity for the Financial Conduct Authority … to look at approaches such as that of introducing something akin to a fiduciary duty for those running contract-based schemes”.

The Joint Committee on the draft Bill recommended that the Bill,

“place a clear responsibility on firms to act honestly, fairly and professionally in the best interests of their customers”.

The Government have responded with a new principle that firms must,

“provide consumers with a level of care that is appropriate”.

I fear that that will prove inadequate.

The issue of rewards for failure is the litmus test of how well fiduciary investors are protecting these savers’ interest in well governed companies delivering sustainable returns. As Professor Kay observed in the interim report of his review of UK equity markets, the purpose of equity markets is to improve the performance of companies that are ultimately the only thing that generates value for savers. They drive growth and create jobs. There is a fundamental alignment between the success of companies and the returns to savers. Equity markets exist to serve companies and savers, not to enrich intermediaries.

By this standard, the pensions industry is weak. From 2000-07, real returns to savers averaged just 1.1% per year, and pension fund payments to intermediaries rose by an estimated 50%. Fiduciary standards of care are an essential part of building a financial system that serves savers and the economy. I agree that it was surprising that the Queen’s Speech made no direct mention of executive pay and shareholder rights. Mean FTSE 100 executive pay rose by 49% from 2010-11. Austerity has clearly passed them by.

The shareholders’ spring has seen the flexing of voting power on remuneration reports, but this will not be sustained without addressing the conflicts of interest and behaviours of institutional investors responsible for casting votes on behalf of funds, many holding the savings of millions of people. Take, for example, regulation of the 25 million with-profits policies worth £330 billion. There is no explicit fiduciary duty to protect the best interest of policyholders. Consumer groups such as Which? have criticised the regulatory framework for with-profits policies and failure to control conflicts of interest. The Prudential Regulation Authority will assume responsibility for systemically important insurance companies, but it will not have the remit to protect proactively consumers who hold with-profits policies.

The Bill must provide for the PRA to consult the FCA and consumer groups on the consumer interest. The Government want transparent regulators, but consumer groups and the Joint Committee on the Bill expressed concerns that Section 348 of the Financial Services and Markets Act gold-plates single market directive limitations on the use of confidential information and will prevent the FCA from using the new powers that the Bill gives to it. The Financial Secretary to the Treasury, Mark Hoban, has confirmed that the Treasury will undertake a review of Section 348 with its recommendations made available through the passage of the Bill. I dearly hope that those recommendations will support disclosure.

Finally, figures from the Community Development Foundation show that about 4% of lending to SMEs goes into businesses in the most deprived communities. I recently read an article about the payday loans company Wonga.com launching a service for small firms. Its founder, Mr Damelin, is quoted as saying:

“All our research … tells us that small-business lending is broken and we intend to use our platform to offer a real alternative”.

Banks are failing to extend credit to small companies, but this reveals a worrying development in the credit market that exposes small firms, particularly small firms in deprived areas, to exponentially high rates.

The culture of the financial services industry must change and it must behave, in the words of the business Secretary, Vince Cable, as the servant of the economy, not its master.

21:19

[Lord Bradshaw]

My Lords, I am going to talk about railway freight electrification, and in doing so I hope to cover six of the seven subjects that are featured on the screens. The economy of the country would benefit from a 10-year programme to electrify the bulk of our freight railways. Heavy lorries are at present dependent on diesel engines and there is no prospect of changing that in the immediate future. If our ports, factories and distribution centres were linked by an electric railway, this would be a means by which the logistics industry would use fewer heavy lorries for trunk haulage, thereby reducing pollution, congestion and accident rates. Of course, final distribution would require lorries, but they would probably be smaller ones.

The Government have made a brave start in providing an electric railway. The last Government produced nine miles of electric railway in 13 years. Since the coalition came to office, we have committed to 800 single-track miles of electrification, and I hope that we will add another 130 miles to that target very shortly. Most of this increase is focused on the passenger business. I would argue that the focus of electrification should embrace the potential for freight use and that the forthcoming review of the railway budget and plans, which must shortly be approved for the five years from 2015, should address this subject.

Railway electrification creates jobs in Britain. It cannot be imported. It is a long-term investment in the future. Strategically, it makes us less dependent on imported oil. Efficiency, the prosperity of the regions and strategy have not, up to the present, been reflected in the appraisal systems for new infrastructure investment used by government. These systems are excessively dominated by the practice of adding together a very large number of small time savings made by road users, many so small that they cannot usefully be taken into account by those who are deemed to benefit. This is changing because of the Government. I was told this afternoon that the system had its genesis in Barbara Castle’s day and continued to be used by the previous Government, despite my going to countless meetings at the Department for Transport.

The prospect of freight electrification has been brought a good deal closer by the development in Europe of an electric locomotive. It has a superior load capacity and, most importantly, it has a “donkey” diesel engine so that it can operate away from the main electric railway into depots, distribution centres and sidings where one does not want overhead electrification anyway. Locomotives would be purchased by freight companies provided that the Government paid attention to the diversionary routes and longer loops needed to accommodate heavier trains as well as electrifying the main lines. As this policy is developed by the Government, which I hope it will be, and the prospects of the rail freight industry are kept to the fore, we will be able to look forward within 10 years to having a prosperous, efficient freight railway that would create jobs in its building and that is not dependent on fossil fuels. It will bring benefits for many decades.

Later this year the Government will make a statement of the funds available—the so-called SOFA—after which the Rail Regulator will determine the improvements to our railways that will be made in the five years from 2015. I hope that the Government will take the opportunity presented to bring forward bold plans for the electrification of our freight railway, and I have every reason to suppose that they will. I am sorry to be a bit optimistic in a thoroughly pessimistic House, but I believe there is a real winner here.

21:25

[The Earl of Caithness]

My Lords, the fact that we have spent four of the past six sitting days navel-gazing is a disgrace, considering the other matters that surround us. The fact that two of the days of debate on the gracious Speech were devoted to the constitution when we have had to condense all the other important issues into fewer days has done the House no good.

Turning to the economy, we should all be grateful for the measures enacted by the coalition Government when they were elected to power in 2010—exactly the action and leadership that the right reverent Prelate the Bishop of Durham called for in his excellent maiden speech. The Government started in a good fashion to clear up the mess left by the previous Government. They positioned the UK well for what was to come and inspired confidence.

It is extraordinary that sterling and the UK are considered a safe haven at present. UK bond yields are at a record low of 1.9%, with inflation at 3.5%. That brings money and people to the UK, and we need more of that. Although the level of sterling is a challenge, it is also an incentive for us to become much more competitive. It is not something for politicians to weaken in order to avoid taking more challenging decisions. As my noble friend Lord Ashton of Hyde said in his wise maiden speech, gold-plated regulation is a severe brake on business. My noble friend Lord Sassoon needs to address that, as does every Minister in every department.

In Europe we have been incredibly spoilt for the past 50 years. Yes, there have been occasional difficulties —we had to go to the IMF on one occasion—but by and large we have had good and continuous growth. However, imprudent management, a corrupt banking system and an increasing reliance on debt have led us to believe that the cloud-cuckoo-land we were in would never cease. “The end of boom and bust”, crowed Gordon Brown as he led us deeper into the mire, but now we are facing the truth; the eurozone is in complete crisis, as the UK Government warned it would be in the late 1980s and early 1990s, but sadly political will overrode rational thought and argument. The Governor of the Bank of England calls it the “coming storm”. As the euro train heads for disaster, too many people are still trying to preserve their seats in the first-class compartment rather than to stop the train and change its course.

I believe that in the near future our debates on the economy will be of a very different intensity from that of today. I hope that happens before the vote for separation in Scotland, as in today’s world the one thing that Scotland would not be is independent, either politically or economically.

I welcome the Bill to implement the recommendations of the Independent Commission on Banking, but it is too little, too late. The Bill signifies a substantial change of thinking. I tried to do much the same thing in 2008 with my Safety Deposit Current Accounts Bill. I went further than the projected Bill, and if my Bill had been enacted we would not see many of the problems that we face today. However, I was derided by my now noble friend Lord Razzall, who called my Bill “volcanic”, and the noble Lord, Lord Davies of Oldham, termed it “explosive”. My noble friend hardly mentioned that Bill today, and I await with anticipation the comments of the noble Lord, Lord Davies of Oldham.

Our banking system is based on judicial decisions made in the 1800s, which legalised the theft of deposits by the banks and allowed bankers to print money and behave imprudently. On the one side, we have the EU; on the other, we have the USA. In his short time in office, President Obama has accumulated national debt more than 27 times as fast as in the rest of its entire history. That train, too, is heading for the buffers at speed.

The two speeches that I appreciated most on days 1 and 2 of our debate on the gracious Speech were those of the noble Lords, Lord Owen and Lord Giddens. We are not masters of our own destiny in today’s age, but the Government need to position us correctly for what will emerge from the current crisis. In that context, the amendment of the noble Baroness, Lady Royall, is irrelevant, as she had nothing new to offer us today. Part of that repositioning must include a complete revision of our banking system.

I was hugely disappointed that my noble friend Lady Wilcox made no mention of tidal or wave power in what she said about the electricity market. If the Government want electricity prices to be fair, the considerable subsidy given to inefficient wind turbines should be scrapped.

I turn to the draft water Bill. At first, I thought that it was sad that it was a draft Bill, but having sat on EU Sub-Committee D, which has just looked at the EU blueprint for fresh water and the revision of the European water framework directive, I think that a draft Bill to be studied by a committee of both Houses is an excellent way forward. It needs to take our report into account. The whole subject of water is much more complex and intricate than many of us who sat on that committee realised.

The future of agriculture depends very much on the reform of the common agricultural policy. Again, Sub-Committee D has fed its thoughts into Europe, many of which have been accepted. However, I fear that there is a marked reluctance among many people in Europe to realise that, with the current crisis, the whole CAP system could collapse at very short notice and that the European grant structure for our farmers could be an anachronism within a short time.

It is hugely important that the Government encourage innovation in farming. Farmers have a very difficult job. There is huge competition for what can be done on the land and there are increasing restrictions. No more land is being created. Producing enough food to feed a growing population will need a whole lot more innovation and encouragement.

On the common fisheries policy, I hope that the European Commission will persevere with the suggestions that it put forward, which were also based largely on Sub-Committee D’s proposals—that was before I was a member of it. If our fishing stocks are to be preserved for future generations, substantial changes such as those proposed by the Commission have to be enacted.

21:33

[Lord Broers]

My Lords, it is an honour to speak in the debate on the Queen’s Speech. I wish to speak on an issue of major importance to the economy. I spent the bulk of my professional career, about 30 years, working in industrial research and development, and this is the only subject that I wish to address today. Research and development is the seed corn for manufacturing and is essential if we are to rebalance our economy and restore our manufacturing output, which has fallen catastrophically from 20% of GDP in 1988 to 11% now, leaving us in ninth place in the world. We were fourth in 1988. Recovery will depend on the excellence of our R&D. R&D expenditure is the best indicator of the likelihood of recovery.

Thankfully, there are signs that the coalition is aware of this and it has supported several initiatives that will help. I will discuss just two of these, though I noted that the noble Lord, Lord Haskel, mentioned the 130 initiatives for manufacturing. I want to talk about the Catapults that are being organised and partly funded by the Technology Strategy Board and the Queen Elizabeth Prize for Engineering, which is privately funded but strongly supported by our leaders. The Catapults came about as a result of Dr Hermann Hauser and his report that recommended the setting up of institutes similar to the German Fraunhofer Gesellshaft Institutes. Industry and academia will work together in the Catapults under the leadership of industry to harness the output of our strong science base for commercial advantage. There are to be seven of these centres, organised by the TSB and funded roughly in thirds by the TSB, by industry and through publicly funded research programmes. I hope that these will include the Framework Programmes, funded by the European Commission. The aim is to have each of these centres receive about £30 million a year total. The seven centres will therefore represent about a £200 million increase in R&D.

These Catapults should make an important contribution provided they are allowed to be independent and driven by the needs of industry and not strangled by the imposition of government-driven regulation and assessment. It will be a mammoth task, however, to scale them up to match the contribution of the Fraunhofers to German industry. There are 60 Fraunhofer Institutes, funded with €1.8 billion annually. Of this, 70% comes from contracts with industry and from publicly financed research contracts and 30% comes from the German federal and länder Governments. We made a good start but there is a long way to go. I urge the Government to set these institutes free and not harness them with unnecessary bureaucracy.

Overall, we need to increase our annual R&D spend by about 0.8% of GDP to match Germany and the USA, or about 1.4% to equal Japan. To compete with Germany and the USA, therefore, we would need to spend roughly an additional £10 billion annually on R&D over and above what we spend today. This places in context the £200 million for the Catapults. Sir Alan Rudge, who has been working with the Electrical Research Association Foundation on these crucial matters, has pointed out that our shortfall is in part due to the reduction in the size of our industrial sector. Many of our companies have excellent R&D, but there are not enough of them; there are others that are failing to invest in the development of the new products that will be essential to their survival.

The only way we are going to meet this challenge is for the Government to take on board the magnitude of the problem and introduce appropriately strong incentives for industrial companies of all sizes—not just SMEs, although they are incredibly important—to increase their R&D spend and find ways of transferring more of their own funds to innovation and development. We have the talent and the research base to compete on the world manufacturing stage, but without increasing our R&D spend we will continue to sink down the performance table.

Finally, to finish on a positive note, I would like to praise all three political parties for the strong support they have given to the Queen Elizabeth Prize for Engineering—an initiative designed to inspire young people to take up the challenge of being creative engineers. This magnificent prize, to which the Queen has given her name, was funded generously by forward-looking industry. It was launched last November by the Prime Minister, accompanied by the leaders of the Liberal Democrats and the Labour Party, in the Science Museum in a unique moment of political consensus. Like the Nobel prizes, it is an international prize and at £1 million, it is 50% larger than the Nobel prizes. It will be awarded for ground-breaking innovation in engineering that has been of global benefit to humanity. The prize is directed by a board of trustees chaired by Lord Browne of Madingley. I declare my interest as chairman of the international panel of judges.

The prize has been greeted with enthusiasm from all around the world. It is especially pleasing that engineers everywhere have thought it appropriate that the UK should take the lead on this new prize because of the high regard in which British engineers are held. Nowhere is the prize of more importance than in the UK, where it should help to inspire a new generation of creative engineers who will go on to reinvigorate our industrial R&D and thereby ensure a better balance in our economy. It is very encouraging that it has received such strong support from our political leaders.

21:40

[Baroness Wheatcroft]

My Lords, Governments cannot legislate for growth, we have been reminded today. Nevertheless, Governments can remove some of the obstacles to growth. The regulatory reform Bill announced in the gracious Speech does that with changes to employment law, reductions in red tape and with the inspection regime. I welcome those changes almost as much as the noble Baroness, Lady Turner of Camden, regrets them. The changes have been particularly welcomed by small businesses, which are also being encouraged with a new loan guarantee scheme and even the possibility of rent-free office space in empty government buildings. However, for significant growth in the economy, it is to bigger business that we must look. The majority of small businesses stay small. That may be because of the nature of the business or because of a lifestyle decision. There are many founders who do not even like the idea of having to manage hundreds of employees.

It is the big companies that will help to do away with some of the unemployment that now dogs this country. The latest figures are encouraging but there is still a long way to go. Big business must be encouraged to expand but, as pointed out by the right reverend Prelate the Bishop of Durham and others, big business is sitting on cash rather than investing. The right reverend Prelate referred to the survey from the ITEM Club. This showed that at the end of last year, the holdings of currency and bank deposits by the UK’s non-financial companies had reached an astonishing £754 billion. That is half the country’s GDP—maybe they should have bailed out the banks. Why are these companies not investing? We have just heard my noble friend Lord Broers call for more expenditure on research and development. How right he is: failure to invest in the future consigns businesses to the past.

Nervousness about the prevailing economic climate is understandable but it is not holding back companies in China and India from investing. Our companies have to compete with them if they are to survive. I believe that they are fearful of the reactions of their shareholders. A recent survey asked chief executives how they would react to a potential investment proposition that would be for the long-term good of the company but would have a short-term dampening effect on financial performance. The vast majority, under the comforting cloak of anonymity, admitted that they would not make the investment. As my noble friend Lord Tugendhat suggested, some of them may well have been influenced by pay structures, but those structures are moving more towards long-term incentives. I suspect the major part of the problem is that they do not have owners interested in the long-term good of those businesses.

The ownership of the UK’s quoted companies is fickle, often fleeting. The term investor flatters many who are little more than traders. It is the same as the ironic misnomer “investment bank” for organisations which do just the opposite. The insurance companies and pension funds which, as recently as 1993, held over half the stock in UK quoted companies had, according to the Office for National Statistics, fallen to holding below 14 per cent by the end of 2010. Individuals, who had accounted for 54 per cent of shareholdings in 1963, were down to holding 11.5 per cent at the end of 2010. The shareholder spring has certainly shocked one or two people and been achieved by a few active investors, but there are not nearly enough of them. This is an area where a little bit of government help might make a difference. More could and should be done to encourage employee share ownership. Who better to take a long-term view of their company than those who work in it? Research, including some by Oxera, has shown that companies with significant employee shareholdings are more productive than those without.

Now, I am clear about the Government’s need to keep tight limits on spending. Those who would encourage them to spend, spend, spend, believing that Keynes has the solution, forget that Keynes would not have started from here. He would have used the good times to husband the cash and pay down the debt. Sadly, the previous Government just kept borrowing, so this Administration are very limited in what they can do. However, they have taken the view that reducing corporate taxes will enhance long-term growth and have moved strongly to lower those rates. I suggest that employee share schemes should be expanded, the tax relief involved being an investment in growing a stable shareholder base.

Today, the monthly maximum for a save-as-you-earn scheme is £250, and the annual limit on a share incentive plan is just £1,500. These limits have not moved since 2000. Companies that operate the schemes are convinced that, if the limits were raised, more money would flow into the schemes and their employee shareholding would grow. This has to be a desirable outcome.

With my time running out, there is only one other point that I would like to make. It concerns the comment of the Foreign Secretary, who urged business not to get on its bike but to jump on board planes. Would that it could. Our airports do not have direct flights to the potentially lucrative markets that we need to reach. Germany and France do not disadvantage their businesses in this way. We need increased airport capacity. If we cannot have a third runway at Heathrow then let us have “Boris Island”, but let us not vacillate any longer. Let us take the decision, and do it.

21:47

[Lord Touhig]

My Lords, soon after I was elected to the other place I was successful in the ballot to introduce a Private Member’s Bill and I promoted whistleblower protection. Unfortunately, my attempt to enact into law a Bill to protect whistleblowers was unsuccessful in 1996, but I was glad that the Bill was later taken up by Richard Shepherd, MP, and in 1998 the Public Interest Disclosure Act became law.

The Act gave protection to individuals who make certain disclosures of information in the public interest and it allowed such individuals to bring action in respect of victimisation. At that time, this country was the first to offer whistleblower protection to workers in all sectors, but over the years a number of legal loopholes have come to the fore and now the Act is ripe for review. I understand that the Government, rather than do this, intend to bring forward legislation this Session to remove just one of the loopholes by which workers complaining about their private employment rights can be protected.

While I support the premise of such an amendment, I worry that it will fail to address the underlying problem. I fear that it will be viewed as an obstacle to genuine and honest whistleblowers who will have to show that their concern is in the public interest. More than that, the amendment does not address the issue of private employment rights and will instead result in a field day for lawyers. In my view, the proposed amendment should form the basis of a wider consultation of business groups, trades unions and others to make sure that this law is fit for purpose.

That leads me to my main concern: that this is a missed opportunity to consult more widely on whether the Public Interest Disclosure Act 1998 is achieving its aim of protecting workers who raise concerns in the public interest. It will also deny us the chance to look more closely at workplace cultures that we might wish to promote in the future. Robert Francis, in his first report of the Mid Staffordshire NHS Foundation inquiry, highlighted the real difficulties that whistleblowers face when he said:

“It must not be forgotten what pressures can be applied to deter staff from coming forward, and how little it can take to dissuade nervous individuals from pursuing matters”.

A report by the Select Committee on Culture, Media and Sport in the other place into News International and phone hacking highlights the need to make sure that whistleblower protection in the UK is effective. If there is a poor corporate culture, real and effective protection needs to be offered to workers so that the alarm can be raised and the issued addressed before there is a public outcry.

I would like to draw attention to the areas within the legislation that could do with a closer look and a thorough public consultation. The first is that of vicarious liability. Two years ago, three nurses from a walk-in clinic raised concerns about a fellow nurse lying about their qualifications. However, the nurses were subject to bullying and harassment from co-workers. One of the nurses received a telephone call threatening to harm her daughter and to burn down her home. The case proceeded as far as the Court of Appeal, which found that vicarious liability does not exist in the Public Interest Disclosure Act, as it specifically does in discrimination law.

From the experience on the whistleblowing advice line run by Public Concern at Work, harassment and bullying by co-workers is not uncommon, and for protection to be lacking in this area is extremely problematic, as it means that whistleblowers could think that they are protected when they are not. One way of overcoming this would be to examine the framework of the Equality Act 2010.

The second issue relates to the scope of protection offered. Loopholes have been allowed to develop whereby student nurses, doctors, healthcare professionals and student social workers are not protected by the Public Interest Disclosure Act. These loopholes have meant that those who are new to the workplace will not speak up without being safe in the knowledge that they will be protected for raising their concerns. Instead they risk damaging their careers, and as a result we risk creating a culture of silence among the workers of tomorrow. I argue that the list of those covered needs to be revised to include non-executive directors, including public appointments, volunteers and job applicants.

Thirdly, there is the issue of gagging clauses found in compromise agreements and contracts. These prevent individuals from speaking up about wrongdoing. There are stories of increasing secrecy in particular sectors and heavy-handed lawyers giving the impression that individuals have signed a confidentiality agreement that prevents them speaking up about wrongdoing. This in itself is wrong in law, and the Government need to review how they might address this conundrum.

One high-profile example is the case of Dr Kim Holt, a doctor at Great Ormond Street, who was victimised after she and three other doctors wrote to management warning that staff shortages and poor record-keeping would lead to a tragedy. Six months later, her worst fears became reality when an inexperienced doctor who had replaced her at the clinic failed to spot that Baby Peter was the victim of serious physical abuse.

More needs to be done to promote the principles behind the Public Interest Disclosure Act and to prevent our public bodies giving the impression that those who leave their employment are never meant to raise these issues again. The Act needs a great deal more discussion and there needs to be more consultation on it. It is unsatisfactory if the Government wish to change the law without allowing for the widest possible consultation.

If we are to foster strong cultures of corporate accountability in the United Kingdom, it is only right that we ensure that we protect workers who raise concerns in the public interest and promote this protection so that raising concerns effectively becomes second nature for all those who work in Britain.

21:54

[Baroness Scott of Needham Market]

My Lords, I am not an economist and therefore have no intention whatever of venturing into the debate on the deficit, its causes and how it might be tackled. However, I want to reflect on the fact that in this House and beyond there would be consensus that growth, when it comes, will to a large extent be dependent on infrastructure investment, particularly on transport. That point was very well made by the Association of British Chambers of Commerce in its briefing for this debate.

It is often said that transport plays a fundamental role in the economic, social and environmental well-being of our country. Everybody says that, and to an extent they understand it, yet this sector is bedevilled by lack of coherence. Interaction between levels and tiers of government and with industry and finance is haphazard and leads to poor and often random outcomes. A key constraint is the uncertainty of delivery of large publicly funded infrastructure schemes. Current mechanisms often work in total isolation from the development planning process and from financing.

As an honorary fellow of the Chartered Institution of Highways & Transportation, whose members are drawn widely from across the sector, I can commend to the Government the work that it has done to see how this situation can be improved. Its work has shown that there is potential for generating private sector capital through planning gain and the uplift in land values through investment in transport. This is the ethos that underpins the Government’s community infrastructure levy, but much more needs to be done to ensure that government at all levels enter into true partnership with the private sector which needs encouragement to look at profit sharing and collaborative arrangements regarding land acquisition.

The majority of road schemes are and will remain local. With the localism agenda firmly in place, the mechanisms we use to deliver local infrastructure are urgently in need of review. The newly created local enterprise partnerships could take the lead in creating local infrastructure funds, a hybrid public and private sector vehicle for delivering local schemes and giving modest capital returns on private investment. Perhaps the Government could look at how such schemes could work and could pilot some because that would enable local businesses and local citizens to work with local government to invest in their own area. These municipal bonds could include provision for investment from local authorities’ own pension funds. If the Government were prepared to prime them by providing some forward funding, it would enable these projects to get off the ground. Their investment would be repaid afterwards by capturing the economic benefit of such schemes. It is often the case that cash flow prevents the private sector funding such infrastructure, but there will be provision to make profit later, so this would be a low risk and relatively low cost mechanism by which the Government could stimulate delivery, particularly of road infrastructure.

Other schemes are worth while but are not quite viable without some level of public support. Here the Government should provide grants to fill the gap and should prioritise those areas that deliver growth. Both gap funding and forward funding will bring forward additional private sector investment in several forms: infrastructure, development and business and employment investment. It is estimated that infrastructure investment can result in a multiplying effect on the economy of between three and six times the initial investment. The challenge is not so much funding it as bringing together planning, funding and delivery. If local government in particular could engage with businesses at an earlier stage, it would increase the chances of coming up with schemes that meet the objectives of both sides, giving each the incentive to make progress. It would also focus the minds of local authorities on schemes that are deliverable rather than on the lists of aspirations that lurk in local transport plans for years with no realistic chance of being delivered.

To bring back market confidence and to encourage parties to engage and investment to flow, we need new mechanisms that would reduce the initial costs of scheme development because at the moment this presents a considerable risk and a large, potentially abortive, cost to investors. This needs all parties to rethink their approach to planning and delivery and their respective roles in them. If the Government are serious about private sector investment in transport, they need to recognise that decision-making and funding decisions have to be streamlined and a more certain environment has to be created. This applies whether you are talking about local or national schemes.

The Government should also consider creating a national hybrid public/private investment funding scheme for large transport schemes. In such a scheme, private investors could pool the risk across a portfolio of transport investments. Decoupling investment from the success or failure of any individual scheme is a standard risk elsewhere and could be attractive in the transport sector.

The Government are looking at new models of managing our highway network, in which roads would become owned and managed by the private sector, regulated by central and local government. Funding would come through the existing system of allocating money or—whisper it quietly—could evolve into road-user charging for funding improvements and new schemes. There is considerable consensus throughout the transport industry that road-user charging could revolutionise the way we use transport by enabling tariffs to reflect the location of the road and the time when it is used. It remains as politically unacceptable today as it was a decade ago, when the Commission for Integrated Transport put its weight behind it. Unless there is an outbreak of political consensus to match the professional one, we will make no moves in the direction of road-user charging.

In the mean time, I suggest that the Government take a look at the work of the chartered institute and some of the models that I have suggested this evening. If they do not, they will simply fail to get private sector investment in transport and to deliver the role that new transport plays in developing growth.

22:00

[Lord Rowe-Beddoe]

My Lords, there is much in the gracious Speech on which I would wish to comment. However, I shall reserve myself to two topics from today’s box of liquorice all-sorts.

First, unlike the noble Lords, Lord Patten and Lord Myners, and maybe others, I warmly welcome the introduction of legislation to establish an independent adjudicator to ensure that supermarkets deal fairly and lawfully with suppliers. As your Lordships have been informed, the creation of such an adjudicator or ombudsman appeared in the 2010 general election manifestos of five parties—Conservative, Labour, Liberal Democrat, Plaid Cymru and the Green Party. Many of your Lordships will have heard of instances of the purchasing power of some major food retailers having a most deleterious effect on both direct and indirect suppliers. We talk of farmers, food growers and food manufacturers. A fair deal is a laudable objective. It would also impact favourably on small grocery outlets, which are in great decline—not terminal, we hope—in many of our villages, small towns and even cities. The Department for Business, Innovation and Skills informs us that five retailers now own some 75% of the UK’s £146 billion grocery market.

Many of your Lordships have witnessed, as the noble Baroness, Lady Byford, so aptly described, the ongoing destruction of village and town high streets as shops—certainly not just groceries—are put out of business, by both out-of-town supermarkets and their smaller in-town offspring. The price benefit to the consumer can be demonstrable, but if the supplier is protected the differential between the giant and the minnow outlet can be greatly reduced. I hope that the legislation will succeed in so doing.

I turn now to the energy Bill. The Energy and Climate Change Committee in another place will shortly receive it for pre-legislative scrutiny, with a view to reporting, I believe, before the summer Recess. The gracious Speech refers to delivering,

“secure, clean and affordable electricity”.

To my great dismay, I find no reference whatever in published documentation to the Severn barrage, the latest proposals for which demonstrate it to be the single most important low-carbon, renewable energy project in the whole of Europe. I crave your Lordships’ indulgence as I am moved, now for the fourth time in some six years, to say a little about the potential and benefits of this grand projet, as our Gallic neighbours would have it. In fact, the ground-breaking—or should I say water-breaking—barrage at La Rance is almost 50 years old and has been demonstrating for all its life the multiple benefits which have been accruing.

Today, just 101 years after the first reference to the potential of harnessing the power of the second largest daily rise and fall of tide in the world—it must never be said that Governments in this country move with undue haste—we are now aware of the latest proposal to turn these waters into an extraordinary, exciting, once-in-a-lifetime economic stimulus of such magnitude that I cannot understand the Government’s silence. It will produce 5% of the UK’s electricity requirement. During construction, it will create some 35,000 jobs in south Wales and in the south-west of England, with at least 10,000 permanent jobs in both regions on both sides of the estuary thereafter. There will be new rail and road links between the two regions. It will make a significant impact on the UK’s renewable energy targets. Latest designs and much-improved technology have largely met previous environmental concerns, and the La Rance results in fauna and biodiversity should well satisfy investment environmentalists.

A major difference between the current project and that of 1988 is that the proposers have stated that no government funding is required for the £30 billion-plus development. What is required is a clear message from the Government of support in principle, backing through the planning process and agreement to support and allocate appropriate parliamentary time for the passage of a private Bill. I feel absolutely sure that there is a financial appetite to realise this extraordinary project once the green lights are clearly lit in Westminster and Cardiff.

22:07

[Lord Bates]

My Lords, I rise to attempt to give an optimistic speech, in the present environment, on the economy. In doing so, I feel a little bit like my comic hero and fellow north-easterner, Rowan Atkinson. He used to do a sketch where he came on stage dressed in a track suit and would play the part of a Geordie football manager. He would walk on clasping a football and, looking at the assembled dejected faces in his dressing room, would say, “37-0—but don’t worry, lads, we’ve got everything to play for in the second half. But before we do that, we have got to get back to some basics”. Holding up the ball he would say, “Kev, what’s this? And where’s it meant to go?”. The answer was, “The goal”. Then Rowan Atkinson, the Geordie football manager, would say, “But whose goal?”. That experience of trying to get back to the basics of what we are about seems pretty fundamental.

In that element of grasping for the basics, I thought about what we should be saying about the economy. What is the role of government in the present environment? There are four points on which I want to focus. First, we need to be quite frank about the limits of government. What can we actually do?

The amendment presented to this debate refers to,

“the failure of Your Majesty’s Government properly to address economic recovery”.

Yet, on looking at the gracious Speech, the whole first page is packed full of references. It states that,

“my Government’s legislative programme will focus on economic growth”.

The next sentence refers to measures to “restore economic stability”. That is followed by references,

“to reduce burdens on business …. to promote enterprise … to establish a Green Investment Bank”,

for fair energy markets, and so on.

There is a profound misunderstanding in some parts of the House as to the role of government. We hear a clarion cry for there to be a greater increase in public expenditure. What do they think is going on? We inherited a situation in 2010 when public expenditure was £669 billion; the figure last year was £730 billion in absolute terms, and it will go on rising year on year for as far as the forecasts go out. Added to that, they speak almost as if we were having a slash and burn austerity drive whereby we reduce every penny of borrowing. Yet we inherited a deficit and a level of government borrowing which was just a shade over £1 trillion and over the next four years we will not repay one penny of that. In fact, we will add 40% to that Bill, which people will have to address in future generations. So the notion that somehow this Government are embarking on some one-sided approach to attempt to lift us out of this present situation is fanciful and misleading. It discourages the many people in this country who are working hard in public service jobs and who fail to understand that the Government are taking their position very seriously and value the contribution that they make to the economy. We are taking a balanced approach between different types of investment and efficiency savings in other parts, as we should.

The point that we need to realise is that Governments do not create jobs. They create the environment in which jobs can be created by entrepreneurs and businesses and their employees. That is what we are trying to do, just as in an Olympic year our responsibility is to put on the Games to make sure that they are safe and secure and that the rules and infrastructure are in place. But the real show is what the individual athletes and Olympians actually do with that opportunity, and that requires some encouragement and inspiration. So telling things as they are in terms of what is actually happening in the economy and what the Government are actually doing, which is being passionate about economic growth and trying to delicately lift ourselves out of the situation, is something that is very important to communicate.

There is quite a big trend at present in banker-bashing and attacking the City of London in every way. Banks played a major part in getting us into this problem by irresponsible lending, but Governments undertook irresponsible borrowing and consumers undertook irresponsible borrowing. In that sense, we all have a part in this. Bankers may have got us into this problem, but they must also be the people who help us get out of this problem, so we have to look to restoring health in that environment.

Then there is the importance of Europe. We sometimes sit on the sidelines and look smugly at what is happening there, without realising that it is our biggest customer. Two-thirds of our exports go to Europe. No wonder that the Foreign Secretary, speaking today, said:

“No single event would provide a bigger boost to the British economy in the short term than the resolution of the eurozone crisis”.

It is absolutely fundamental to our success that we see Europe advance.

Over the past year, having travelled extensively through Europe, I have had the opportunity to meet on many occasions the diplomats and officials who are out there selling Britain. They are absolutely passionate about selling Britain; UKTI does an outstanding job. I have seen the passion that they have for the greatness of this country and our educational institutions and businesses. This is a fantastic country; it is a competitive international country; it is the sixth-largest country in the world. When the Chinese are looking to place their Renminbi fund somewhere in the world—and they have the choice of everywhere—they have come to the City of London. When the Japanese want to develop a new motor vehicle, they come to Sunderland and the north-east. That is something that we ought to be proud of. Therefore, I urge noble Lords and my noble friends to remember that and get out there and sell what this country is doing, recognising that the Government are doing as much as they can.

22:14

[Lord Whitty]

My Lords, my main theme tonight concerns economic strategy and the fact that the eurozone authorities and our own coalition Government got diagnosis and prescription profoundly and damagingly wrong, for the reasons that were spelt out so brilliantly by the noble Lord, Lord Skidelsky. First, I have some good news for the Government. Unlike my noble friend Lord Myners, but like another noble Lord who has just spoken, I strongly support the groceries code adjudicator. I champion the consumer, as does the noble Baroness, Lady Wilcox, but we both recognise that it is not in the interests of the consumer for the supermarkets to be able to wipe out farmers and other small producers who are part of the food chain in this country. Therefore, she will have my support on the Groceries Code Adjudicator Bill, although it needs a bit of strengthening.

I welcome other Bills in part. Some of the electricity market reforms proposed in the energy Bill are desirable but it will fail to tackle the problem of investment in nuclear and renewable energy and the problems associated with decarbonising our energy use and of fuel poverty. I had hoped that we would have a fully fledged water Bill. However, as the noble Baroness, Lady Parminter, said, pre-legislative scrutiny may give us a chance to sort out the abstractions regime. That is desperately needed in the light of the pressures imposed on our water resources by climate change and population increase. Therefore, I welcome the commitment with regard to a pre-legislative Bill.

I may also support a few parts of the enterprise and regulatory reform Bill. The rationalisation of the competition structure is sensible. I welcome the green investment bank although I think that it could go significantly further. However, I also fear that better regulation will lead to a substantial attack on environmental regulation and employment protection, which I do not wish to see.

As regards the Financial Services Bill, I welcome the implementation of much of the Vickers report, particularly in relation to the ring-fencing of bank activities. However, I am afraid that the rest of the Bill is mostly about the location, labelling and institutional structure of the regulators. Frankly, changing location from the FSA to the Bank of England or changing names on doors does not give much comfort to small businesses that cannot get capital from the banks, to those seeking first-time mortgages or to those who are excluded from conventional credit and are falling prey to legal or illegal loan sharks. Above all, I do not think that the Financial Services Bill goes very far to tackle the turmoil in the money markets and the failings of the banking system across Europe and much of the world. That is the backdrop against which we are discussing this matter.

Like the noble Lord, Lord Bates, I do not share the schadenfreude that is felt in relation to the problems of the eurozone. I also fear that the coalition is believing its own propaganda and adopting the wrong policies partly as a result. The only real success that the Government have gained from their statements on economic policy is that they have managed to convince a fair proportion of the press and the public that the crisis is all the fault of the Labour Government, despite its global nature. Frankly, the Labour Party has not been all that good at defending its record. We have heard that mantra repeated today. There was a Labour Government failure: namely, the failure of banking regulation, which was far too light touch. However, it was not as light touch as the present Chancellor then said; he wanted it to be considerably stronger. Nevertheless, it was not a failure of macroeconomic policy. Up until 2008, the UK debt to GDP ratio was lower than that of most OECD countries and lower than it had been for much of our history. Indeed, that applies also to other countries in the eurozone.

With the exception of Greece, this crisis is not primarily one of public finances; it is a problem with the banks. That was true in Ireland four years ago and it is true in Spain this week. By putting all the burden of resolving it on public finances, the symptom but not the cause of the problem is being tackled. We have the money markets behaving like packs of feral dogs trying to find the weakest link and Governments who are more afraid of the ratings agencies than they are of their own electorates. When their electorates pronounce, what happens? The Greeks are told to vote again until they get it right, and no doubt if the Irish vote no in the referendum, they will be told the same. However, they will not get it right on that basis because it is the wrong strategy.

I speak as a long-standing pro-European and indeed as a supporter of the euro, and I say this with a heavy heart. I think that what has happened in Europe, reflected here too, is that the decent instincts of post-war social democracy and Christian democracy in Europe have been replaced by a combination of the revival of the understandable German terror of hyperinflation and by ideological neo-liberalism, and lying behind the austerity strategy is the belief that you can win the battle against this crisis only by reducing the size of the state. That is what is behind the strategy in Europe and it is true here in Westminster. Who is paying for this? It is not the bankers, who caused it, but the poorest regions of Europe and of Britain, the youth of Europe and the most vulnerable workers, with inequality growing between regions, between rich and poor, between genders and between the generations.

I recognise that of course there has to be discipline in relation to public spending and the management of our debt, but that discipline has to take into account the profundity of this economic cycle and, if the financial stability pact is so inflexible that it cannot do so, then it is not only Greece that is likely to be the victim.

In the UK we have adopted much of the same approach. At the moment, it looks milder than it does in Greece and Spain but that may be a matter of time. We have only just had a Budget that rewarded the rich and penalised pensioners and pasty eaters, and of course 90% of the cuts have yet to come. We have now had a Queen’s Speech that does even less to tackle this economic problem. It has not done very much for small businesses; it has done nothing at all to stimulate the housing market, despite the total dysfunction of that market; it has done almost nothing for green investment, although we could build on the green investment bank; it has done nothing for the regions, infrastructure or manufacturing—there is no investment bank, for example—and nothing for employment, except, bizarrely, to make it easier to sack people.

All our leaders can do is to repeat the mantras of the austerity strategy. The noble Lord, Lord Skidelsky, calls that denial. To me, it is a bit reminiscent of the dreadful twilight days of the Soviet Union, with leaders reasserting failed nostrums and phoney statistics in provincial tractor factories. The country deserves better, Europe deserves better and the Government need to do better.

22:22

[Lord Shipley]

My Lords, on a wide range of measures the Government’s legislative programme is very welcome, not least on banking—particularly the green investment bank—on pensions, on support for children, on competition policy and on constitutional reform. I welcome in particular the decision to consult further on adult care through a draft Bill, because an agreed policy direction is urgently needed.

There has been some criticism in this debate that more should have been said about economic growth in the gracious Speech. However, we should remember that driving growth and rebalancing the economy is the day-to-day work of government, not least through the Budget process. I find the amendment moved by the Opposition today disingenuous because they fail to acknowledge that their own plan for recovery could never have been delivered.

I should like to raise specifically issues arising from impact assessments of Bills and, in particular, the cumulative impact of different Bills passing at the same time. My reason for doing this will become apparent in a moment. We need to understand better that cumulative impact of Bills—for example, the Welfare Reform Bill, the legal aid Bill and the Localism Bill, particularly its housing elements. Each had provisions which impacted on the others. Therefore, individuals and households on low incomes, women, children, single parents, part-time workers and those in rented accommodation, among others, may have found themselves affected by several Bills and not just one. Sometimes, as with universal credit, they might gain; in other cases, the impact might be negative. However, the overall position can be opaque. It is not clear to me that the overall direction in terms of impact is properly and fully assessed across Whitehall, and it seems to be left to third parties to do this.

Take child poverty. In October last year, the Joseph Rowntree Foundation reported:

“Relative child poverty will rise from 20 per cent currently to 24 per cent by 2020/21, the highest rate since 1999/2000 and considerably higher than the 10 per cent target in the Child Poverty Act (2010)”.

The foundation has pointed out that universal credit should reduce poverty substantially, but that poverty-increasing effects of other government changes to personal taxes and state benefits will more than offset that. Another source, the Institute for Fiscal Studies, said in January this year that relative child poverty is set to increase by around 400,000 between 2010 and 2015 and absolute child poverty by a further 100,000. Yet the Queen’s Speech specifically says that the Government,

“will strive to improve the lives of children and families”.

So I hope that, in the coming year, we will see real outcomes to this clearly expressed intention. Perhaps a start could be made with the Local Government Finance Bill, which will devolve council tax benefit to local authorities to manage, along with a 10% cut in funding worth some £500 million. Why 10% and who will pay this? Local authorities will be empowered to increase charges on empty properties and second homes but, if a council does not have many second homes or empty properties, the cost will fall either on individuals in receipt of council tax benefit now—by definition the people least able to pay—or on council taxpayers generally by increasing the level of council tax, which is, in practice, cost shunting from central to local government. As pensioners will be excluded from any benefit loss, it means that those on low incomes—many of them families with children—will have to pay the full cost unless it is spread across council taxpayers generally. I find it odd that this is not explained in the summary impact assessment, nor is there an explanation about the impact on child poverty. No doubt we can debate this further at Second Reading and throughout the passage of the Bill.

I pay tribute to the right reverend Prelate the Bishop of Durham for his contribution in his maiden speech on the state of the economy and sources of investment and in particular for his realistic, and in some cases optimistic, assessment of the opportunities, successes and problems of the region that we both live in. I concur with his comments. He drew out in the debate the skills deficit, which is not unique to the north-east of England. Exactly the same issue would apply in other regions; most notably, I attended a recent meeting in the West Midlands, where employers said that in manufacturing, processing and engineering, around 25% of employers are having difficulty recruiting staff at the correct levels. I was quite astonished by the fact that, despite the millions of pounds that have been spent in recent years on the skills agenda, we have, particularly at levels 3 and 4, a clear skills deficit.

I believe that the problems of the construction industry need to be addressed urgently. The contraction that is now happening may be alleviated by some extra demand arising from the announcements, particularly in housing, in recent months but overall I think further stimulation will be needed, not least in social housing. Hence the need for more thought to be given to increasing councils’ powers and flexibilities to borrow and the need for greater use of their capital receipts from the right-to-buy scheme to be permitted at the very least.

Today’s employment figures show a chink of light. The need for investment in infrastructure seems to be well understood and I hope that the next 12 months will see the underlying rebalancing of our economy set firmly on its course. Meanwhile, inequalities in the face of our financial problems simply must be minimised and fairness maximised to ensure that everyone is in this together.

22:29

[Lord Freeman]

My Lords, I will concentrate my remarks concerning the gracious Speech on the proposals put forward on energy. Together with the noble Lords, Lord Whitty and Lord Rowe-Beddoe, I helped produce a report on renewable energy. The single point that I make with great emphasis, and address through my noble friend on the Front Bench to the Department of Energy, is that policy has been developed over the past two years in this Parliament, and now is the time to implement it. There should be no more changes, because the financing of our new energy policy in the coming years will require very significant sums of money as well as certainty for the private sector.

I very much welcome the proposals for the green investment bank and the reforms to the electricity market included in the gracious Speech. The past two years have been very productive for the development of policy in the Department of Energy on low-carbon energy, cutting emissions and facilitating investment; but now is the time to send a message to the private sector—I will come to this in a moment—that there will be no more changes or developments in policy. Time is running out. We need an embargo on further policy initiatives.

I very much welcome the feed-in tariff and the guaranteeing of the price for low-carbon technology—the investment costs of producing electricity. The initiatives taken by the department for building new capacity in both nuclear and renewable energy provide fair incentives.

I will say a word about wind power, and in particular offshore wind. I very much welcome the developments that have occurred over the past few years and the significant investment. Compared with the investment in offshore wind that the Germans and the French have achieved, we have a good record so far. The intermittence in the supply of electricity coming from offshore wind is a problem. I hope that the private sector can develop the technology to take excess power generated by prevailing winds that the Central Electricity Generating Board does not need and store and use that electricity, perhaps using new technologies such as electrolysis to convert and store hydrogen for use in transport, particularly delivery vehicles, buses and so on.

The costs entailed in the delivery of this new energy strategy are very substantial. Estimates for the next five years in this country alone exceed £100 billion. When one considers that policies in France and Germany have brought a fall in central government financing, one can understand that we face a very significant challenge in raising the money. Most of it must come from non-government sources. Obviously there will be subsidies for low-carbon technology that the Government will provide, but the bulk of the investment will have to come from the private sector. UK institutions such as pension funds will not be able to supply a large proportion of that money. Sovereign wealth funds will probably be a better source of finance. The green investment bank is likely to have only something like £3 billion, whereas £100 billion will be required over the next three to five years.

We can also export some of our technology—particularly to China, India and Brazil—for cash receipts. Whether the Government or the private sector facilitate that, it could be a source of funding. The EU Project Bond Initiative, aimed at raising money for energy projects and guaranteed by the European Union, holds some promise. I once again emphasise the importance of certainty for the private sector that no more policy initiatives will proceed. Policies completed: implementation now.

22:35

[Lord Northbrook]

My Lords, I fully support the coalition's plan to cut the budget deficit as being its most important economic aim. If the coalition had not tackled this we could have been in the same state as Greece. Much progress has been made on this front. When the Government came to power, the outturn for that year of net borrowing stood at £156 billion. The final 2011-12 figures showed that it had gone down to £126 billion as per the Government's target.

The success of the conventional gilts auctions so far this month, which have already raised £9 billion at a most favourable rate of interest, shows that the markets have faith in our debt reduction policy, which is so important. The CBI has given its seal of approval to the Government’s economic policies. Its economist has stated that there will be a small recovery this year of 0.6% and a much better improvement in 2013, when the figure will be 2%. The CBI is also confident that inflation will continue on a downward trend and come close to hitting the Government's target of 2% in the spring of 2013. It believes that consumer spending will recover as inflation falls further and disposable incomes begin to recover.

John Cridland, the director-general, also said at the start of May:

“Despite the disappointing GDP estimate for the first quarter from the ONS, we still think the UK economy will grow in 2012, with faster growth next year. Optimism among businesses has been increasing since the turn of the year, with manufacturing demand holding up. And that is beginning to translate into more jobs and investment”.

The IMF is also fairly upbeat. In April it upgraded its economic forecast for 2012 growth to 0.8%. It cited the colossal efforts in February to avert eurozone meltdown by the European Central Bank when it extended cheap lending to banks. As other noble Lords have stated, we had two bits of very good news today on the employment front and on motor sales. But this can be built on to help business at this critical stage, particularly when things in Europe are bound to get a lot worse.

On Monday, the Prime Minister played host to his Business Advisory Group. Key players such as Justin King of Sainsbury’s have urged the Government to implement in full the schemes that they had and were given.

According to the Sunday Times on 13 May, a report on reforming employment law was drawn up by Apax Partners but was buried on the grounds that it was too controversial. A bonfire of regulations has also been promised, but few businesses report any relaxation in red tape. Indeed, the Government in their own Regulatory Policy Committee 2011 annual report state that the,

“number of regulatory proposals deemed ‘Not fit for purpose’ remains unsatisfactory”.

The report goes on to state that over a quarter of impact assessments failed to pass the RPC test.

The next problem area is the banks. They have two conflicts. First, the Government want them to increase their lending. However, that clashes with their need to build up capital. The Independent Banking Commission requires them to hold much more capital than their foreign rivals. The Bank of England’s new Financial Policy Committee said recently that banks should,

“give serious consideration to raising external capital in the coming months”,

and,

“improve the resilience of their balance sheets”.

Much more needs to be done to sort out this dichotomy so that the UK economy is not placed at a competitive disadvantage to other countries’ banks. Yet this does not excuse the attitude of some banks with regard to lending to smaller companies. The £20 billion national loan guarantee scheme began in March. It enables government-subsidised cheaper loans to companies but apparently the major bank, Santander, has yet to offer this lifeline to its customers, and Lloyds is offering discounts only on loans above £25,000. The Forum of Private Business is unhappy with this situation. Its spokesman said yesterday that:

“This is massively disappointing. We said all along that we had serious doubts whether the smallest firms most in need of cheaper credit would benefit from this scheme”.

Could the Minister please assure the House that more pressure should be put on the likes of Santander and Lloyds, and let me know how much of the £20 billion of the scheme has been taken up?

The banks also have to face in the background the problems of the eurozone. We do not know whether the Greek political parties may be able to form a Government after the election that can put through the necessary measures to meet the requirements of the EU and IMF loans. The European Union has to decide whether to give in yet again and come up with another compromise, or that there has to be an early exit of Greece from the euro. It would be much better if an early exit of Greece from the euro were to be organised quickly and in confidence, up to the point when the necessary announcements must be made.

I move on next to the subject of quantitative easing. I am not an economist, but it has been suggested that the QE scheme is not being used fully for what it was designed for. When it was set up, the Bank of England said it would be used for corporate bond purchases as well as gilts. That has not happened. Would it not help the economy much more if QE was switched more towards corporate bond purchases, and what are the risks of so doing? The operation seems designed to help more with debt management issues rather than corporations.

The Government need to cut taxes further. Corporation tax remains high in the UK compared with other countries in the G20. We still rank behind Canada, Mexico, China and Turkey in terms of business taxes. I welcome the Chancellor’s decision to cut corporation tax in the Budget, but we are still only in the middle of the G20 pack, according to the CBI. If we are to encourage manufacturing, why not increase the rate of capital allowances? Also, the top rate of personal tax should be reduced to 40% as soon as possible.

Employee measures contained in the Queen’s Speech are unhelpful to industry. The proposed well-meaning sharing of maternity leave will cause a bureaucratic nightmare and certainly discourage any employment of a husband and partner in a business. Anecdotally, I hear that small business employers are less keen to employ a woman of child-bearing age due to not having the infrastructure to cope.

In summary, the coalition are making all the right moves with regard to the most important issue of deficit reduction, but much more needs to be done to stimulate the economy without resorting to a Keynesian stimulus which could endanger our credit status and make it so much more difficult to get rid of the terrible debt burden that we inherited from the last Government.

22:42

[Lord Monks]

My Lords, Members of the House may have noticed that two members of the Cabinet have had rather difficult speaking engagements today. The Home Secretary has been to the Police Federation, always a frosty audience when there is a dispute on, and the Foreign Secretary has been at the CBI dinner. For him that would normally be a pretty straightforward engagement, but I wonder how the CBI reacted to his weekend speech and remarks exhorting British business to work harder and stop whinging. Several Members have criticised him for those remarks, but in one area —he may not know that he is going to be congratulated on this; I am sure he does not—that of the deregulation of employment protection law, I think he is dead right. A large number of employer lobbyists have certainly been whinging about that and pressing the Government to weaken employment protection legislation. The gracious Speech serves notice of an intention to take this work forward. That is one of the few ideas that is linked to spurring growth in the current depressed economy.

This view, which I accept is commonplace among many employers—it is the staple diet of conversations in the lounge bar—is not borne out by the evidence. The Labour Force Survey shows that the effects of employment protection legislation on both spurring and protecting employment are neutral over the cycle. All the surveys that have been done in various countries, apart from those with really excessive regulation, show that to be the case.

We have already debated the rise in the qualifying period for unfair dismissal to two years and the removal of lay members from employment tribunals. I will not go over all that again because there are new proposals now being consulted on, proposals to introduce a fee of over £300 to seek redress at a tribunal and for no-fault dismissals in firms employing 10 or fewer people. That is simply paying them off with the equivalent of a redundancy payment, regardless of the justice of their position or what the employer may have done. We have heard tributes paid to this country and its creativity and I agree with some of that, but for this country to take such an abject route to growth or think it is going to find a way to growth is a counsel of despair. Saying the UK can only compete if our people are cheaper, work longer and are less protected is a counsel of despair, and a low road to growth if ever there was one.

Since the economic crisis hit us, there has been a clear need for more British companies to be able to move up the value chain to be more innovative, more creative and more highly skilled on a wider range of products and services than we have at the moment. That should be the Government’s strategy, not simply a cheapening process, which seems to be the aim at the moment. That would be the high road to growth rather than the low one, and would involve us doing things well and doing new things on a continual basis.

This process should also involve us thinking about what companies and workplaces should be like in the future. How does executive pay fit in? Should workers be on the remuneration committees? Should we develop a more Germanic system of worker engagement, pulling people together for the good of the firm and the good of the country? That is what the company of the future should embrace and that should be our agenda in this area. That is why, on the other side of the North Sea, people in companies embrace the things that I am talking about. For us to get from where we are now to where they are would inevitably mean more law, not less.

Not all employers are whinging about the employment legislation. The Chartered Institute of Personnel and Development said:

“Businesses have far more to lose in lost productivity from a de-motivated and disengaged workforce than they stand to gain from the ability to hire and fire at will”.

I ask the Minister and his colleagues to listen to that wise voice and pay less heed to the whingers.

22:48

[Lord Tope]

My Lords, I intend to speak primarily about local government so must start by declaring my interest, as I always do, as a councillor in the London Borough of Sutton and a member of its executive, if only for the next five days. On Monday, Sutton Council will use one of the many opportunities afforded by the Localism Act, on which we spent so many happy hours last year, to abolish its executive/scrutiny split and establish a committee system that will reflect local government in the 21st century and not be simply a reversion to the service-based committee systems of the previous century.

The subjects for today’s debate are agriculture, business, the economy, energy, environment, local government and transport. Earlier, my noble friend Lord Bradshaw said that he would cover six of the seven in his speech. I can probably claim that I am going to cover all seven of them because all seven are of real importance to local government, and perhaps even more importantly local government has a vital role to play in the success of each of these issues.

Inevitably, much of today’s debate has concentrated on the economy. The days when business and local government regarded each other from a distance with mutual mistrust and misunderstanding are long gone. Each has learnt from the other, each has come to appreciate the better points of the other, and all over the country there are now strong and successful partnerships delivering real benefits for their local communities.

This is a success story on which we need to build. Our next opportunity to do so will be the Local Government Finance Bill, which will be with us in a few weeks’ time. Like the Localism Bill, it comes to us with some room for improvement, not least in that part of the Bill to which my noble friend Lord Shipley referred so eloquently. The other part of the Bill, dealing with the so-called repatriation of business rates, offers the prospect of local authorities providing incentives for real economic growth and working with their local business community to achieve that but to mutual benefit.

If we are really to build on this success, central government must demonstrate that it really trusts local government. It must show that it recognises that elected councillors have their own democratic mandate and are themselves accountable to the people who have elected them, which has usually been done in a far more direct and audible way than elsewhere in government.

The Localism Act made a good start, but it will not implement itself. It provided opportunities for local government, and local government needs to create the space and time to make the most of these opportunities. That would be a challenge at the best of times, and these are hardly the best of times.

Local government is living through a period of unprecedented change and challenge. Those challenges include: the rapid growth in the number of academies and in pupil numbers, particularly in London; local authorities’ imminent and very welcome acquisition of responsibility for public health; the coming of police and crime commissioners, which will inevitably affect the relationship between police and local authorities, which again has improved dramatically in the past 20 years; the changes to welfare and the cuts in benefit; and the huge demands placed on adult social care, to which many have referred today; and so on. My noble friend Lord Shipley referred to the cumulative impact of legislation on local authorities, which is huge.

All this change and challenge is happening at a time of cuts in council budgets of unprecedented size and speed. Budgets are reducing dramatically, staffing is reducing dramatically, but the demands on both are increasing at least as dramatically. Doing more for less demands innovation and ingenuity. That is not easily achieved when the greatest demand is to maintain morale among staff worried most about their own jobs and futures. If ever there was a time for those in the public sector to be working together to ensure the most efficient use of its budgets, surely this is it, yet progress on community budgeting, known by the previous Government as Total Place, seems to have ground to a halt—indeed, if it ever really started.

It may be understandable that, in times such as these, organisations become even more protective of their own budgets, but that is manifestly not in the public interest. All central government departments should take the lead in this and require their local bodies, where appropriate, to do the same. It is the responsibility of Ministers individually and collectively to make this happen.

As I have said, councils already do a lot to promote economic growth, working in partnership with business, the third sector and other parts of the public sector, but they are ambitious to do more. City deals with the core cities are very welcome, even if distractions such as elections and referendums have made slower progress than some of us would wish, but we need to do more and to do it faster so as to establish “local growth deals” in areas beyond just the core cities.

I referred earlier to some of the challenges facing local government, yet I take heart that, throughout history, it has been the times of greatest challenge that have produced the greatest change and innovation. I remain optimistic.

22:54

[Lord Gardiner of Kimble]

My Lords, it has been suggested adversely that the Queen’s Speech was light in its number of Bills. I take a contrary view. Over the years, Parliament has legislated too often and too much; yet I am persuaded that the Groceries Code Adjudicator Bill has now become necessary so that suppliers and primary producers are treated fairly and the long-term interests of consumers are safeguarded. It cannot be in the public interest for our dairy farming sector to decline in the way that it has. In saying so, I declare my farming interest, my membership of the National Farmers’ Union and my executive directorship of the Countryside Alliance.

Rural-based businesses cannot compete without fast and reliable broadband and mobile coverage. It would be churlish not to congratulate Her Majesty’s Government on their determination to address this by committing to 90% super-fast broadband coverage of the United Kingdom by 2015. I fear the remaining 10% is likely to be in rural areas. To address this, Defra’s £20 million rural community broadband fund is now open for applications from the most remote communities and is most welcome. Many communities are working together to find solutions.

The reasons given for broadband dissatisfaction in rural areas relate to speed, reliability and value. Many rural towns and villages do not benefit from the level of competition in broadband provision that is common in urban areas. In the most remote parts of the country, therefore, the situation is even more acute. The National Farmers’ Union ran a poll on broadband access in rural areas and the results indicated that about 40% of respondents could not get broadband at all, while 90% of those who could get broadband access did not have a reliable connection. There is much more to do.

I also refer to mobile telephone coverage, which is, to say the least, patchy. My own experience in rural Suffolk is that the best reception that I can obtain is if I climb one of the apple trees, which I do during the pruning and picking time of year. To be serious, this lack of coverage hampers rural business opportunities. The creation of small businesses is crucial to our country’s economic prospects, and effective broadband and mobile telephone connections are essential.

The rural economy turns over £300 billion each year and employs 5.5 million people. Farming remains at its core in producing more than half our food domestically and maintaining the outstanding and diverse countryside that underpins tourism, which itself provides business opportunities. We must value the countryside; we expect a great deal from it.

I was brought up in a family where buying British food was a matter of course. Our food here is produced to some of the highest standards in the world. We have set, via regulations, these higher standards for environmental and welfare reasons, but they come at a cost. The burden of regulation has become more cumulative and demanding on British farmers; the Macdonald review into the farming regulation task force established by this Government was not before time. Regulation has imposed higher costs upon the British farmer. In turn, this should mean that the public sector in particular should give a lead.

Despite government buying standards, public institutions are not buying as much British food as they could or should. Each year, the public sector spends close to £1 billion buying food, yet in local education authorities only about 35% know the country of origin of the food they serve school pupils. When it comes to hospitals, only 14% of NHS trusts in Britain know the origins of the food they are serving to patients. I therefore urge decision-makers to look more favourably towards local producers to fulfil their food needs. They will no doubt respond that this will cost more, but if we include in the equation the potential reduction in food miles and carbon emissions, and most importantly the high quality that we require from British produce, it all makes sense.

Only last week, the Prime Minister said that if we care about eating food produced to the highest standards in the world, we need to buy British. That is something that all of us should do more of. Will my noble friend the Minister therefore confirm the importance and value of the British agricultural sector, ensuring that it is recognised and that we have food security at home as a matter of public policy, and that the Government will foster the climate in which small and large businesses, whether in urban or rural areas, can prosper and grow so that our great nation’s economic stability can be restored?

23:01

[Lord Davies of Oldham]

My Lords, this has been a fascinating debate which has been hampered by the fact that although it began with a concentration on the economy—the House will not be surprised that I intend to direct a great deal of my remarks to the advocacy of the amendment moved by my noble friend—and although the economy was bound to dominate the debate, we had six other subjects to consider. Although they were somewhat late in getting under way on the agenda, they did not in any way receive short shrift once addressed by the noble Lords who were concerned with those issues. In response to the debate, therefore, the great danger is that I could make a speech which would take us well past midnight, whereas the Minister is aiming to finish well before.

I must first congratulate the two maiden speakers. The noble Lord, Lord Ashton of Hyde, had to withstand a most stimulating introduction from my noble friend Lord Myners concerning who he was. When he began his maiden speech, his response was of sufficient vigour to show that he is going to enjoy himself in his contributions in this House in the future. We particularly appreciated the points that he had to make about regulatory regimes.

The right reverend Prelate the Bishop of Durham made a most impressive speech. Of course, we all envy him for both the city in which he lives and the cathedral which he has as his major location, but what we admired today was the seriousness of the contribution that he made on the economy. How welcome that was. If there is one obvious criticism of this place which gives rise to the demands for an elected House, it is inevitably that we are geographically limited. We have an overwhelming south-east concentration: a mere smattering of voices is heard from across the United Kingdom as a whole, and the north-east is not excessively represented in our contributions. The noble Lord, Lord Bates, will jump up and correct me in a moment but he knows what I mean when, at times, even he has been a lone voice. It is very welcome therefore that the right reverend Prelate can make a contribution from that dimension.

If the House will forgive me, I will address one or two of the other issues next. My main role for the Opposition is in transport and this debate says that it is about transport. Several contributions were made that were of particular and striking interest on those issues—not least, the significance of transport as the basis for the important infrastructure of the economy. It is also an area in which we could accelerate investment. The case which the Opposition are putting is the necessity for getting people back to work on infrastructure projects, and where those can be accelerated and brought forward, they ought to be. That is an important dimension, which is why I was grateful to the noble Lord, Lord Bradshaw, for his argument about increasing electrification for freight travel. I was grateful to the noble Baroness, Lady Scott of Needham Market, who talked about investment in roads. She is on pretty thin ice—not that the ice is always thin on roads—when she raises the subject of road charging. I see no indication from the Government that their radical thoughts have gone that far as yet. However, she is of course right that we need to look at investment in roads, not least at just keeping the present road structure maintained satisfactorily after the ravages of recent months.

The noble Lord, Lord Patten, said that we should bring forward the HS2 rail project as rapidly as we can. I say to the Government—this is not the first time that I have done so—that we in the Opposition are concerned about aviation policy. With every month that goes by we are losing out on international competitiveness because of our lack of airport capacity. We have said to the Government that we are quite prepared to discuss with them ways in which we can have a joint approach to a solution to this issue because of its great significance to the nation. All I say is that we are now faced with an exceptional degree of prevarication. I am grateful to those voices which have today emphasised that the Government should get a move on. As those voices have come from the Government’s side, that has given me even greater encouragement.

The enormously important issue of energy also had a fair airing in this debate. We have got to get our energy policy right. Of course, there were the inevitable collisions. The noble Lord, Lord Crickhowell, talked about nuclear energy. My noble friend Lady Worthington of course has a great deal to say about nuclear power and how we must ensure that we reduce carbon emissions from our energy sources. However, there are enormous costs involved in nuclear power. We all know that. There have been heavy costs in the past, and we are almost starting from scratch on the next stage.

I was grateful to the noble Lord, Lord Rowe-Beddoe, who introduced the issue of the Severn barrage. He knows that the issue has been tested and costed. That is a real problem, but I am grateful to him for highlighting that we need to look at green energy. It is quite clear that we cannot rely on fossil fuels for the future and then meet our emissions targets.

The main subject of the debate was inevitably the economy. My noble friend Lady Royall, in moving the amendment, indentified what we regard as a clear record of the failure of this Government. The noble Lord, Lord Higgins, even indicated that he did not think much of the process by which crucial Budget decisions had been taken, particularly the extent to which Parliament had not been treated with the respect that it ought to have been in the Budget’s presentation. I agree with him entirely on that. The leaking prior to the Queen’s Speech itself was similarly unfortunate. I hope that we will not have those difficulties again.

Of course the noble Lord, Lord Higgins, did not associate himself with the more fundamental point that we are concerned with. Two years ago the Government set themselves a series of targets that they set out to achieve through various strategies such as Project Merlin and the banks’ position, about which we hear very little these days, and the whole question of being able to reduce the debt within a set period of time, a target from which they are already resiling.

Crucially, the price of the policy that the Government are inflicting on the nation is clearly unacceptable. Austerity is proving to be unacceptable in a range of countries that have given people a chance to have a voice in elections, such as Greece and France. With regard to local government in the UK—the noble Lord, Lord Tope, made a rather late entry into the debate—one aspect is that the cuts already enforced on local authorities have certainly produced a reaction from the electorate.

A short while ago, we ought to have set storm signals for the Government about the programme and policy that they are pursuing. One of the indicators of that in this debate is that, in addition to the trenchant criticism that the Government will have expected from my noble friends Lord Myners, Lord Haskel, Lord Whitty and Lord Hanworth, it came from the Cross Benches too. It was from the noble Lord, Lord Bilimoria, that the first onslaught came, and an extremely cogent and straightforward attack followed from the noble Lord, Lord Low. The analysis of the noble Lord, Lord Skidelsky, identified for the Government the fact that their position is untenable.

I noticed that reference was made to the British motor car industry and how we should be delighted at its recent figures. I take delight in those figures but I have a little difficulty with it being called the “British” motor car industry. I understand that it is a car industry that is in Britain, but of course the industry itself is Japanese. I make this obvious point. In another society, the car industry was saved by government action. If you go anywhere near Detroit or Michigan, you will know that the state can act effectively to safeguard even an industry in the most parlous position. That industry is now making profits and has made a significant recovery. I would be glad if the Minister indicated that the same degree of recovery has been occasioned through successful government support in our society.

The noble Baroness, Lady Noakes, with whom from time to time I crossed swords in our previous incarnations in this House, asked me whether I had addressed myself to the question of the additional borrowing that would be implicit in the strategy that we advocate. The additional borrowing that we would be involved with would be quite limited in comparison to the significant losses of productive capacity represented by the policy pursued by this Government. The fact that we have so many assets underemployed and so many people unemployed is a massive loss. It will take us years to recover. The Government’s own projection—or, more accurately, that of the OBR—indicates that it will be many years before we recover the productive capacity that we had in 2008.

There is one change in the tenor of the Government’s argument now. When they are in difficulty, they are prone now to putting British economic policy in the context of the wider economies. We are faced with the fact that we are not completely in control of our own destinies and we have to take account of the pressures and weaknesses in the eurozone. We all recognise the validity of that argument. It does not quite address with the same force the international context. When the tsunami of the collapse of the international financial system occurred five years ago, according to them, our problems were entirely due to the mismanagement of the British economy and there was no issue of context there.

We are quite confident that all sides except those entirely devoted to the Government’s cause—and there are signs of dissent within their ranks too—and independent opinion, particularly independent opinion as represented in this House by the Cross Benches, are indicating that the terms of trade have turned significantly against this Government. Certainly the wider nation outside these walls has already given a preliminary verdict on just what austerity represents. This debate, if it does nothing else, ought to call out to the Government at least to admit that there are aspects of the promises that they made only two short years ago that they will be totally unable to fulfil.

23:16

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, we have had a wide-ranging and, as ever, insightful debate. I am particularly pleased to have heard the maiden speeches of the right reverend Prelate the Bishop of Durham and my noble friend Lord Ashton of Hyde. I know that the House will look forward to their future contributions if they are anything like as good as their contributions to this debate.

We have an unusual but, we have been reminded, not unprecedented amendment in the name of the noble Baroness, Lady Royall of Blaisdon. While I will respond to as many of the specific points raised in the debate as I can, I will therefore spend the bulk of my time explaining why the House should emphatically reject her somewhat misplaced amendment, which I ask her to withdraw once she has heard what I have to say. Having heard the masterly speech by my noble friend Lord Bates, I rather thought that the noble Baroness might have been minded to withdraw her amendment immediately, but I will have another go.

I welcome this opportunity to reinforce the Government’s commitment to securing our economic recovery and our determination to promote growth, create jobs, and return our country to prosperity. It is not an easy task. It is clear that your Lordships understand the difficult challenge we face to overcome the crippling legacy that was left to us by the previous Government, which included a decade of unbalanced growth that left the UK the most indebted country in the world, resulted in the most highly leveraged financial system of any major economy and meant that the UK entered the crisis with the highest structural deficit in the G7.

All that meant that when we got hit, we got hit the hardest. Our recession was among the deepest and our deficit was among the largest, which means that our challenge to deliver a sustainable recovery is among the greatest. The Government have a strategy to rid the economy of the burden of the debt left by the previous Government and to secure our stability at a time of ongoing European instability, as my noble friend Lord Higgins and other noble Lords reminded us. Our strategy puts private sector enterprise, ambition and innovation at the heart of our recovery. It has delivered over 630,000 new private sector jobs since we came into government, which is one and a half times the number of public sector jobs that have been lost.

Let me remind noble Lords that the Government came to office inheriting the largest peacetime deficit the country has ever faced and the largest forecast deficit in the G20, larger than that of many of those countries mired in the sovereign debt storm in the euro area. Two years ago, UK government bond yields were roughly equal to those in Spain and Italy. Because we took tough decisions to tackle the deficit, our rates have now fallen to near-record lows of less than 2%, while those in Spain and Italy have risen to well over 5%, a point made forcefully by my noble friend Lord MacGregor of Pulham Market. Record low interest rates help businesses to secure affordable loans, families to pay mortgages and the Government to finance the debt mountain with which we have been lumbered.

The solution to debt is not more debt. I do not need to take on the noble Lord, Lord Skidelsky, on this. The noble Lord, Lord Desai, and my noble friend Lady Wheatcroft have already done that for me. However, as my noble friend Lady Noakes pointed out, the Opposition would have us pile on yet more debt, suffer higher interest rates and place a bigger squeeze on families and living standards. Indeed, even this afternoon, the noble Baroness, Lady Royall of Blaisdon, advocated more government borrowing. Let me explain to the House that even a 1% rise in effective mortgage rates would add £12 billion a year to household mortgage payments—around £1,000 on a typical £100,000 mortgage. We should make no mistake: it is the poorest and most disadvantaged, not the wealthiest, who are hit the hardest when a country loses control of its finances.

It is fair that we tackle our debts today so that we do not burden our children tomorrow. We should also ensure that we can continue—which we can—to provide high-quality public services and support to those who need it most, and provide those public services partly though refreshed local government, as my noble friend Lord Tope reminded us a short while ago.

We cannot and will not be complacent about tackling the deficit. We are sticking to our plans. Her Majesty’s gracious Speech reaffirmed that commitment. We will not jeopardise the fiscal credibility that is critical to delivering a sustainable recovery. It is only by securing a sustainable private sector recovery that we can help to restore and improve living standards, support families and get people back into work. That is why this Government have set out ambitious plans to unleash private sector growth right across the UK. Those plans include more than 250 wide-ranging and ambitious economic reforms to lift the dead hand of the previous Government’s legacy from our businesses and entrepreneurs.

We are reducing corporation tax to 22% by 2014; cutting an uncompetitive and ineffective top rate of income tax; slashing the red tape that continues to suffocate our most entrepreneurial start-ups; overhauling our cumbersome planning rules to embed a presumption in favour of sustainable development; and setting out plans for some £250 billion of infrastructure investment, including the new green investment bank with an initial capitalisation of £3 billion. In answer to my noble friend Lady Kramer, I say that we want to get that £3 billion into real investment as soon as the large projects will permit. As my noble friend Lady Randerson said, the green investment bank is already in business; it is actively considering the first 20 proposals. Beyond that, we are helping to tackle underinvestment in renewable energy as a precursor to comprehensive electricity market reform through the energy Bill, and helping to attract the £110 billion of investment that we need in the next decade to deliver secure, low-carbon energy across the UK. That was a point made very clearly by my noble friends Lord Crickhowell, Lord Selborne and Lord Freeman. The noble Lord, Lord Rowe-Beddoe, pointed out one very challenging but potentially significant opportunity in delivering that ambition.

The Government are ensuring that our businesses have access to finance by securing £190 billion of new lending to UK companies in 2011 and providing SMEs with access to cheaper loans through the new national loan guarantee scheme. My noble friend Lord Northbrook questioned whether it was up and running. Indeed it is, as evidenced by the fact that Barclays and Lloyds have already issued bonds linked to the loans in the scheme.

As my noble friend Lord Caithness noted, securing a more resilient and sustainable financial sector through the banking reform Bill is another priority. It is a measure which, as my noble friend Lady Wilcox said earlier, will complete its passage in this Parliament. We also will increase the opportunities for businesses to capitalise on non-bank lending channels.

Across government, we are matching the endeavour of our businesses to restore growth across the UK. Through the enterprise and regulatory reform Bill, we are driving through regulatory reform, streamlining employment tribunals, boosting research and development through the catapult scheme, as the noble Lord, Lord Broers, reminded us, making it easier to do business and giving employers more confidence.

[Lord Skidelsky]

How long does the Minister think that it will be before sustainable recovery happens?

[Lord Sassoon]

My Lords, it is already in progress. The fact that, in the two years that this Government have been in office, the private sector has created twice the number of jobs that have come out of the public sector is clear evidence of that. Today, we have the numbers that show unemployment is at its lowest level in seven months. It is much higher than we would like but it is reducing. These and other evidence which noble Lords have given in the debate shows that, while there is a lot more to do, in the face of these huge headwinds from the eurozone and elsewhere sustainable recovery is under way.

One of the biggest challenges to make sure that that recovery is sustained is regulation. My noble friends Lord Ashton of Hyde, Lord Lucas and Lady Noakes, and the noble Earl, Lord Lytton, all pointed to some big challenges on the regulatory agenda. We will not shy away from them.

In my noble friend Lord Patten’s discussion of regulation, he referred to the fennel on the brochure that the Government put out. I am sorry that I have not been able to determine whether they were British or foreign fennel but, either way, making sure that they are supplied through the supermarkets on proper terms is something which the new grocery adjudicator will bring.

In the enterprise area, I can assure my noble friend Lord Tugendhat that, again, as my noble friend Lady Wilcox explained in her speech, we will introduce provisions on directors’ pay in the enterprise Bill. In another important area of enterprise, I can assure my noble friend Lord Lexden that the ministerial working group on Northern Ireland is making good progress and will report this summer.

On rural affairs, we are supporting growth across all parts of the UK. I can absolutely assure my noble friend Lord Gardiner of Kimble that we take these issues very seriously. We are committing £530 million for rural broadband deployment by 2015 and creating rural growth networks to help overcome barriers to growth, such as poor infrastructure and mobile networks. We are adopting the ecosystems approach, as my noble friend Lady Miller of Chilthorne Domer noted, and will introduce reforms in the water sector, as noted by my noble friend Lady Parminter and the noble Lord, Lord Whitty, although I note that we are urged onwards by my noble friend.

I heard very clearly what the right reverend Prelate the Bishop of Hereford said about the importance and difficulties of the agricultural sector, which was also referred to by my noble friend Lady Byford, who again linked it to the importance of the grocery adjudicator.

On transport, we are introducing a Bill by the end of 2013 to secure powers to construct and operate the next phase of the high-speed rail network from London to the West Midlands. I learnt quite a number of things in areas of transport of which I did not know the fine detail until this evening. My noble friend Lord Brougham and Vaux rightly pointed out the difficulties in motor insurance—and now I understand the role that telematics and number plate issues will have as Ministers work both on the cost of insurance and on driving out uninsured vehicles from our roads.

The noble Viscount, Lord Simon, reminded us about high-speed issues, and that is noted. My noble friend Lord Bradshaw again reminded us of some important issues in the rail freight area. My noble friend Lady Scott of Needham Market talked interestingly about the possibilities for the local enterprise partnerships to promote local roads. She got a little ahead of commitments in some areas that I could give, but she was rightly challenging and reminded us of what can and must be addressed.

The global market is changing. Unlike our predecessors, we will make sure that the UK is not cut adrift. Over the last year alone, the value of UK goods exports to India grew by 40% and to China by over 20%. As my noble friend Lord Razzall pointed out, in the first quarter of this year the UK exported more cars than it imported for the first time since 1976. That was driven by strong demand from the US, Russia and China. The opportunities of course flow in both directions. The UK is now the number one destination for inward investment from some of the world’s largest investors, including countries such as Kuwait and Qatar. The Tata-owned Jaguar Land Rover has already announced 1,000 jobs at Halewood and £1.5 billion of annual investment in new technologies and products. I was sorry to hear the noble Lord, Lord Davies of Oldham, running down the idea of foreign ownership in our car manufacturing and other areas, when we should be immensely grateful and very proud that we can attract this investment.

My noble friend Lady O’Cathain mentioned the revival of the steel industry. Just last month the Redcar steel works on Teesside kick-started steel production for the first time in two years on the back of investment from Thailand. That is what global investment is doing—securing local jobs.

So this is a comprehensive strategy to return the UK to prosperity. It will not be an easy task and I know that for many families these are tough times, an issue to which my noble friend Lord Shipley specifically referred. But we will not let our poorest and most vulnerable families bear the consequences of the Opposition’s failures when in government. That is why we secured the largest ever cash rise in the basic pension and uprated working age benefits by 5.2 %, protecting the real incomes of the poorest, and that is why we are increasing the personal allowance, reducing tax paid by the basic taxpayer by £350, lifting 2 million people out of tax altogether. It is why we are supporting our young people through the recovery. I agree very much with the noble Lord, Lord Borrie, on the importance of this. It is why we are providing more apprenticeship places than any previous Government. Four hundred and fifty thousand apprenticeships were started in 2010-11—a record in modern times. I am grateful to my noble friend Lord Addington for understanding that we are making progress in this area but that we need to address quality issues—it is not merely a numbers game. It is why we are launching a new £1 billion Youth Contract, supporting up to half a million young people into work, learning their trade, and equipping them for their future career. As John Cridland, Director-General of the CBI has said, it is a scheme that strikes at the “scourge of youth unemployment”.

In conclusion, this is a bold programme for economic reform. It is a vision to return the country to prosperity, tackling the crippling legacy of debt, restoring our competitiveness, boosting private sector growth, investing in our infrastructure and supporting families and young and vulnerable people as we recover from Labour’s economic disaster. As we have seen today, the Opposition have no credible response to the economic challenges that the country faces. Indeed, I have heard no response at all today. Whereas they borrowed their way into trouble, under the coalition we will earn our way out of it.

23:36

[Baroness Royall of Blaisdon]

My Lords, we have had an excellent and full debate this evening on a wide range of issues. I am very glad that my Benches tabled the amendment that we did so that we could focus the attention of the debate on what we believe should have been in the Queen’s Speech.

I am very disappointed in the Minister’s reply, as, when he dealt with economic policy, he merely repeated the mantra that he has repeated so many times from that Dispatch Box: that the crisis is all the fault of the Labour Government. However, it is not all the fault of the Labour Government. Yes, when the noble Lord and his colleagues entered government, it was a very difficult time and we were in the middle of a deep financial crisis. However, it was a global financial crisis. In fact, the coalition inherited an economy that was on the path to recovery. It was growing at 2 per cent a year with a deficit plan in place that would have halved the deficit in four years. Instead of that we have unemployment, so the unemployed are not paying their taxes, there is no growth in the economy and the deficit is getting bigger. We now have a double-dip recession and the Minister and his colleagues blame it all on the eurozone. It is strange that they blame the current crisis on the eurozone. However, when they came into government, they said that the problem did not result from the global financial crisis but was our fault. That is all very strange.

I have to take issue with the Minister when he says that high-quality public services are among the big successes of this Government. The postcode lottery in social care is getting worse. Youth services up and down the country have been decimated. Libraries have been closed. School buildings are falling into disrepair and waiting lists are growing. The responsibilities of the state are being rolled back and the burdens are being placed on charities, which want to cope but are finding it more and more difficult to do so because they have so much on their shoulders. Therefore, I think it is a bit rich for the Minister to say that that is a priority.

The Minister also says that this Government will not cut the UK adrift. I am glad if the level of exports is getting better in some areas, and, as the noble Baroness, Lady O’Cathain, asked me to do, I celebrate the success of the motor industry. Clearly, it is very good for the people of the north-east and I hope that it will secure the future of the people in employment in Ellesmere Port. However, while we may not be cut adrift in our exports to India, I would say that we are cut adrift in our isolation in the European Union, and that saddens these Benches. The differences of opinion are clear. We believe that it is the young, the poorest and the most vulnerable in our society who are suffering, and most of the cuts have still not started to bite, as the noble Lord, Lord Razzall, pointed out.

There have been some very important speeches today, including of course that of the noble Lord, Lord Skidelsky, with whom I agree. In his wise contribution he said that it is better to put people and plant to work rather than to destroy them. I certainly agree with that. I also certainly agreed with the right reverend Prelate the Bishop of Durham, who said that confidence in the economy comes from action, not exhortation, and that it comes from cranes and scaffolding. Where are the cranes, where is the scaffolding, where is the infrastructure investment and where are the jobs?

I am very conscious of the late hour. I am very glad to have tabled the amendment because it focuses on the priorities that we believe should have been in the Government’s legislative programme. Looking at the result of the local elections and the polls, it is clear that they are also the priorities of the British people. Like us, they want this Government to change course. As I said, I am conscious of the lateness of the hour, so I shall not press my amendment to a vote. With that, I beg leave to withdraw the amendment.

Amendment withdrawn.

Debate adjourned until tomorrow.

House adjourned at 11.41 pm.