House of Lords

Thursday 6th December 2012 Lords Chamber

Thursday, 6 December 2012.

11:00

Prayers—read by the Lord Bishop of Guildford.

UK-Israel Life Sciences Council

Thursday 6th December 2012 Lords Chamber

Question

11:07

Asked By

[Baroness Deech]

To ask Her Majesty’s Government what assessment they have made of the UK-Israel Life Sciences Council.

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)]

My Lords, the UK-Israel Life Sciences Council is an excellent example of the opportunities for successful collaboration between our two countries. Since its launch in 2011, funding has been raised for five major research projects in regenerative medicine as part of the British-Israel research and academic exchange programme.

[Baroness Deech]

I welcome the Minister’s reply. She is aware, I imagine, that this work could produce great advances in stem cell and regenerative medicine, which may make a major difference in the treatment of diabetes, Parkinson’s and multiple sclerosis. Does she therefore agree that this sort of work, and the search for cures, should rise above politics? Will she condemn the politicisation of academic exchange—for example, boycotts of scientific work—which could have so much potential for cures in this country?

[Baroness Warsi]

My Lords, regenerative medicine, such as stem cell treatments, has the potential to play an increasingly vital role in delivering the next generation of healthcare, offering treatments or possible cures for areas of unmet medical need. Where there are areas of expertise, both in this country and in Israel—or in any other country around the world—it is important for that collaborative work to continue. When we are collaborating with countries that we consider to be friends and there are disagreements, we still have those discussions, for it is important that this work continues.

[Lord Anderson of Swansea]

My Lords, does not the pre-eminence of Israel in this and so many other fields, and also the academic freedom enjoyed by universities in Israel, make nonsense of any attempts by our academics to boycott their counterparts in Israel? Will the Minister, as the noble Baroness suggested, roundly condemn any such attempts at a boycott?

[Baroness Warsi]

My Lords, the UK Government have made their position on boycotts clear. We do not hesitate to express disagreement with Israel whenever we feel it is necessary, but we also enjoy a close and productive relationship with Israel. It is this very relationship that allows us to have the frank discussions that are often necessary between friends. We believe that imposing boycotts would lessen that influence, not increase it.

[Lord Palmer of Childs Hill]

My Lords, does my noble friend the Minister agree that joint business initiatives between Palestinians and Israelis could play a valuable role in encouraging diplomatic engagement between both peoples? What role does the Minister consider that the Government can play in supporting such efforts, very much within what the noble Baroness, Lady Deech, has said about the UK-Israel Life Sciences Council’s work?

[Baroness Warsi]

As the noble Lord will be aware, the UK-Israel Life Sciences Council is a group of top scientists from both countries and includes Members of your Lordships’ House as well as, I think, four Nobel Prize winners. I think that all noble Lords would agree that we are at a very delicate stage in the Middle East peace process. As I have said from this Dispatch Box on many occasions in the past few weeks, 2013 will be a critical year. It is therefore important that we use whatever avenues we have to strengthen those diplomatic relations to achieve a peaceful resolution to a two-state solution in the Middle East.

[Lord Hannay of Chiswick]

My Lords, does the Minister accept that I would have no difficulty in answering my noble friend’s Question? I oppose fundamentally any boycotting of co-operation between academics and researchers in this country and those in Israel. However, does she not also agree that when the Government of Israel pay absolutely no respect to the views of the British Government on crucial issues of international policy, such as the legality of settlements, that is bound to have an effect on government-to-government relations, even if it should not have an effect on co-operation between scientists and academics?

[Baroness Warsi]

I am a firm believer that when matters are most difficult to discuss, that is the time to strengthen relationships further. We have never managed to resolve any matter by walking away from relationships. It is because we have strong relationships with Israel on a variety of issues that we can be so robust in our engagement. I hope noble Lords will agree that we have been robust in that engagement in the past week. Noble Lords will be aware that on Monday the Israeli ambassador was called in by the Minister for the Middle East to express our grave concerns about illegal settlements and the comments made by the Israeli Government.

[Lord Turnberg]

My Lords, the medical field is a rich source of interaction not only between the UK and Israel but also, and perhaps more importantly, between Israel and the Palestinians. When I go round hospitals in Israel I see many Palestinian patients from both Gaza and the West Bank. Is the Minister aware of this?

[Baroness Warsi]

It is not something that I am directly aware of, but I am grateful for the noble Lord’s information.

[Lord Howarth of Newport]

If academic effort ought to be collaborative across international frontiers, and that is surely right, why do Education Ministers so frequently speak of British universities being in competition with universities elsewhere in the world?

[Baroness Warsi]

I am sure that noble Lords will agree that British universities are some of the best in the world. We therefore have to praise our competitiveness and competitive edge. Whenever I and my ministerial colleagues are in places around the world we say that we are in direct competition with other academic institutions, because we are trying to encourage citizens of those countries to choose Britain as a destination for study.

[Lord Kilclooney]

My Lords, the Minister said that the Israeli ambassador was called in to the Foreign Office about the seizure of Palestinian land by Israel. What was his response?

[Baroness Warsi]

My Lords, that is probably slightly beyond the Question on the Order Paper. However, I can inform the noble Lord that the Minister made very clear to the Israeli ambassador Britain’s real concerns about the comments made about further settlements. I think that the ambassador was left with no doubt about the British Government’s strength of feeling on this matter.

[Lord Dykes]

Further to the question from the noble Lord, Lord Hannay, does my noble friend the Minister agree that one of the main reasons why the Israeli Government—much to the disappointment of many Israeli citizens—repeatedly ignore the representations made by the UK and other western Governments on their action in the Occupied Territories is that the United States has exercised more than 30 vetoes since 1967 to stop Israel following international law? What do the UK Government think of American veto-itis in this matter?

[Baroness Warsi]

The Government have made it clear that real progress has to be made next year, and that progress cannot be made without the US taking a lead. It has to get behind the initiative for next year. As I have said before from this Dispatch Box, this is a president in his second term, where it is right that he should prioritise these matters.

Department of Health: Budget

Thursday 6th December 2012 Lords Chamber

Question

11:15

Asked By

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what proportion of the Department of Health’s budget for the 2010-11 and 2011-12 financial years was unspent.

[Lord Hunt of Kings Heath]

My Lords, in asking the Question standing in my name on the Order Paper, I remind the House of my health interests.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, the department underspent against its budget by 1.7% in 2010-11 and by 1.3% in 2011-12, or by 1.5% combined across the two years.

[Lord Hunt of Kings Heath]

My Lords, I think that is about £3 billion; perhaps the noble Earl will confirm that. This Government promised to protect the NHS and to cut the deficit. In fact, they are cutting the NHS and the deficit is rising. How can the department justify handing back so much money to the Treasury when large parts of the NHS are under great financial pressure at the moment?

[Earl Howe]

My Lords, the deficit is not rising. The Government are putting £12.5 billion extra into the NHS over the course of the spending review. The noble Lord, Lord Hunt, will know from his ministerial experience that government departments have an absolute requirement to manage expenditure within the financial controls that are set by Her Majesty’s Treasury and voted on by Parliament. For the Department of Health that means that the net expenditure outturn, which incidentally stems from around 400 organisations, all of whose accounts have to be consolidated, must be contained within the revenue and capital expenditure limits. Given those circumstances, it is sensible to plan for a modest underspend to mitigate against unexpected cost pressures.

[Lord Mawhinney]

My Lords, why does my noble friend believe that he will be able to tell your Lordships’ House that all the PFI hospital projects undertaken under the previous Administration, some of which are in a serious financial mess, will be deemed to be financially sustainable? How many of them are likely to require extra expenditure from his budget to achieve that desired end?

[Earl Howe]

My noble friend raises a very important issue. The analysis that we have done on hospitals financed by private finance initiative has indicated that there are seven trusts that are basically unsustainable as a result of their PFI commitments. The Department of Health has therefore undertaken to support those trusts to enable them to make up the shortfall which is beyond their control. It would be wrong to suggest that PFI was a solution that did not deliver benefits. Clearly it did, but I am afraid that some of the sums that were done initially were sadly wanting.

[Lord Warner]

My Lords, what consideration was given by the Government before they repatriated, as my noble friend said, £3 billion to the Treasury? What consideration was given to using some of that money to buttress social care, which makes great demands on the NHS and which has suffered on average a 7% cut in each of the past two years?

[Earl Howe]

My Lords, we did, as the noble Lord would expect, look at the anticipated surplus this time last year and we channelled an extra £150 million into social care then in the near-certain knowledge that the department would generate a surplus during the year. However, as he will know, it is an inexact science to predict in December what the outturn will be in April, and one has to be prudent at that stage.

[Lord Alderdice]

My Lords, my noble friend gave a reassuring Answer a week or two ago about the balancing of expenditure and resources between mental health services and physical health services within the NHS. Is it possible for my noble friend’s department to look to the possibility of any surpluses in the future being used to achieve greater parity between mental health services and the rest of the NHS, given the decisions made in your Lordships’ House regarding the Health and Social Care Act 2012 and the mandate for the NHS Commissioning Board that has flown from it?

[Earl Howe]

My noble friend makes an extremely important point. He will know that the Government have made it clear that mental health problems should be treated as seriously as physical health problems. That commitment has now been made explicit in the Health and Social Care Act 2012. As he mentioned, the Government’s mandate to the NHS Commissioning Board explicitly recognises the importance of putting mental health on a par with physical health. It tasks the NHS Commissioning Board with developing a collaborative programme of action to achieve that and it will be held to account accordingly.

[Lord Laming]

My Lords, does the Department of Health and its Ministers monitor the number of people who today are in hospital and whose treatment is being completed, but who are there because alternative arrangements have not been made for them?

[Earl Howe]

Yes, my Lords. As the noble Lord will know, the problem of delayed transfers of care is not new. We have seen a drop in delayed transfers in terms of the number of days but there has been a levelling off in recent years. However, it is up to the NHS and social care services to collaborate to ensure that proper and appropriate community services are available to patients when they are discharged from hospital. That planning process begins the moment the patient enters hospital.

[Baroness Farrington of Ribbleton]

My Lords, the Minister very unusually failed to answer my noble friend Lord Warner’s question as to why the money that has gone back to the Treasury could not have been used to meet the needs of the patients to whom the noble Lord, Lord Laming, referred.

[Earl Howe]

My Lords, I apologise. I addressed part of the noble Lord’s question in relation to the issue around social care. The important point to make about the surplus is that none of the underspend is lost to the NHS. Under Treasury rules, the NHS is allowed to carry forward all underspends to the next year. It is not a case of the NHS having to give up any money and thereby depriving patients of treatment.

[Lord Flight]

My Lords, will the Minister say how much NHS spending has risen in the past 20 years in cash and real terms? I believe that in cash terms it is of the order of about £11 billion to well over £100 billion.

[Earl Howe]

My Lords, I would be happy to write to my noble friend. I do not have the figures for the past 20 years in front of me but I can tell him that, unlike the party opposite which promised to cut NHS expenditure had it been re-elected last time, we are protecting the NHS budget. It is now well over £100 billion. As I said earlier, it will be increased by £12.5 billion over the course of this Parliament.

NHS: Hospital Services

Thursday 6th December 2012 Lords Chamber

Question

11:23

Asked By

[Lord Warner]

To ask Her Majesty’s Government what progress they are making with the reconfiguration of NHS hospital services.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, the Government’s policy is that front-line NHS reconfigurations should be locally led and clinically driven. Changes to services should be led by those who know their patients’ needs best. That is why we are empowering clinical commissioners to design the services that will make the greatest difference to improving healthcare and improving people’s lives.

[Lord Warner]

I am grateful to the Minister for that reply so far as it goes. In the light of yesterday’s Autumn Statement, will the Minister and his colleagues study carefully the recent Nuffield Trust report, which cogently suggested that we are facing a decade of austerity within the NHS with the need to secure 4% efficiency savings on a yearly basis, not just to 2015 but up to 2021-22? Will Health Ministers engage in a serious dialogue with the Academy of Medical Royal Colleges whose new chairman, Professor Terence Stephenson, suggested in July that we had far too many acute centres trying to provide 24/7 services across too wide a range of medical specialities? Will he accept, particularly in the light of the Answer that he gave to the previous Question, that we should be doing more to take money out of acute hospitals that are performing indifferently and putting it into community-based services?

[Earl Howe]

My Lords, I think it is common ground between the noble Lord and the Government that we need to see care delivered more in the community and less in acute settings; that was a policy that his Government espoused. I agree with the noble Lord and with Terence Stephenson that we need to deploy clinical leadership, evidence and insight as a driving force behind service change. Service change is not new; it has happened all the time throughout the NHS’s history. Clinical commissioning groups on the ground will be the driving force for this, but the NHS Commissioning Board will be there in support and the wisdom of the royal colleges will clearly need to be tapped to provide the board with expert clinical advice. Indeed, that is the theme behind the board’s aim to establish clinical networks and senates to help build the clinical evidence for change.

[Lord Walton of Detchant]

My Lords, is the Minister aware that too many patients are still being admitted to hospital solely to undergo investigations and tests that could perfectly well be carried out on an out-patient basis? Is it not therefore time to reconfigure out-patient services so that individuals will be in a position to attend hospital in order to have a clinical consultation and all the relevant tests on a single visit? That would avoid a great number of unnecessary hospital admissions.

[Earl Howe]

My Lords, I agree with the noble Lord. He is right to say that many hospital admissions prove to be unnecessary, wasteful and expensive and we need to ensure that those who do not need to go to hospital can be appropriately looked after in the community. We also need to reduce the level of unplanned, emergency admissions to hospital. There is huge scope to do this. Many trusts are already succeeding in bringing more services into the community, but we need to accelerate the process.

[Baroness Williams of Crosby]

Does my noble friend agree that one thing that emerges very clearly is that real difficulties arise from not having a 24/7 primary care service, which means that figures for weekends and holidays are of course much worse than they are for the normal level of health service provision? Does he agree that it is well worth looking at bringing into the work of CCGs the contribution that can be made by ancillary services to medicine, in order to move towards a 24/7 primary care service?

[Earl Howe]

I agree with my noble friend and that is why work is currently being done under the leadership of Sir Bruce Keogh in the Department of Health to examine the scope for greater 24/7 working. She is right that this is important, not just for the benefit of patients but also to make the NHS more efficient and effective in deploying its staff and assets.

[Lord Campbell-Savours]

If services are carried forward as the noble Earl suggested, how does that influence estimates?

[Earl Howe]

We have reverted to the previous Question, if I am not mistaken. The departmental expenditure limit is set by the Treasury. My own department is in the fortunate position of knowing that it has real-terms increases every year of this Parliament; however, if the department has an underspend that cannot be carried forward, yes, some money has to be returned to the Treasury.

[Lord Hamilton of Epsom]

Does my noble friend accept that if he takes the advice of the noble Lord, Lord Warner, and moves resources from acute services to other services in the NHS, that will lead to the closure of many general hospitals that were built under the previous Government under PFIs, and even more of them will get into financial trouble than there are already?

[Earl Howe]

I do not anticipate that there will be widespread closures of hospitals, and it is important to reassure people about that. The NHS has always had to respond to patients’ changing needs and advances in medical technology. Reconfiguration that ensues from that is about modernising the delivery of care and facilities with a view to improving patient outcomes and developing services, as I have mentioned, in a way that makes them available closer to people’s homes. While we will see changes in service configuration, I trust and hope that we will not see widespread hospital closures, although the possibility of a hospital having to downsize can never be eliminated.

NHS: Hospital Beds

Thursday 6th December 2012 Lords Chamber

Question

11:30

Asked By

[Lord Turnberg]

To ask Her Majesty’s Government what assessment they have made of the analysis of hospital bed availability in the report Dr Foster’s 2012 Hospital Guide.

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, Department of Health data show that the average bed occupancy rate for all beds open overnight has remained stable, at between 84% and 87% since 2000. Rather than being a cause of concern, this indicates that hospitals are making efficient use of beds. NHS hospitals need to manage beds effectively in order to cope with peaks in demand. We expect to see higher occupancy rates in winter, when these demands are at their highest.

[Lord Turnberg]

My Lords, in thanking the Minister for his response and his endurance, I believe that we owe a debt of gratitude to Dr Foster for the report, which shows so clearly how severe the stress is that our hospitals are suffering under. With bed occupancies of 95% to 100% for much of the year for many of the hospitals, there are too often no beds available, staff are rushed off their feet, patients are not cared for properly, infection rates rise and mistakes occur. Given that almost one-third of the patients now in hospital do not need to be there and would be better off cared for in the community, and given that the community services cannot provide that care because they are so underfunded, where are we to get the money from? Simply saying that we can close a hospital or two and slide the money across from a cash-strapped NHS before those services are available will just exacerbate the problem. Would it not be better to use those end-of-year surpluses that we have been hearing about instead of returning them to the Treasury?

[Earl Howe]

My Lords, as I mentioned earlier, NHS underspends are not lost to the NHS—they can be carried forward from year to year. But on his central point, I should make it clear that we are struggling to reconcile the Dr Foster bed occupancy figures with those that we have. Dr Foster has stated that bed occupancy is at a dangerous level, at over 90% for 48 weeks of the year. We are looking closely at that analysis and methodology, but we cannot agree with those conclusions at the moment, given that the department monitors the position on a daily basis during the winter and on a quarterly basis at other times. However, I agree with the noble Lord that there are too many people in hospital. We need to ensure that we move more care into the community. I do not see this as insuperable within the current budgetary expenditure limits.

[The Earl of Listowel]

My Lords, I want to ask about community midwifery services and avoiding bed use by that means. Is the Minister aware of the great value to children in terms of outcomes of promoting a good relationship between midwives and parents, increasing the rate of breast-feeding and reducing episiotomies? In his reconfiguration, when he is thinking about not using so many bed spaces, will he recognise the value of local community midwifery services?

[Earl Howe]

Yes, my Lords. That is the precise reason why there are currently 5,000 midwives in training, which is a record number. The noble Earl is absolutely right to identify the midwifery service as key to enabling children to get a healthy start in life and parents to ensure that children get into good eating and exercise habits.

[Baroness Barker]

My Lords, the Dr Foster report identifies those hospitals which have a high level of inappropriate referrals of older people. Will the department do further research in those areas to see whether there is a correlation between out-of-hours GP services, and the work that they do, and a high level of inappropriate referrals of older people to acute hospitals?

[Earl Howe]

My Lords, it is questions of that kind that we expect the clinical commissioning groups to examine because they will become responsible for out-of-hours primary care. Therefore, it is incumbent on them to ensure that that service not only is a good one but does not lead to unwanted consequences in terms of unplanned admissions to hospital.

[Lord Tomlinson]

My Lords, does the Minister accept that his usual clarity has deserted him somewhat today as he has indicated that money which is underspent is returned to the Treasury but on the other hand he has said that it is not lost to the National Health Service? Does he agree that this gives a completely new meaning to double-entry bookkeeping?

[Earl Howe]

I shall be happy to write to the noble Lord to explain why my answers have been absolutely correct and the situation that I have described is nothing new. However, we are in a new situation in the sense that it appears that the supplementary questions can be extended at will over any other Question on the Order Paper, but I am happy to take questions from the noble Lord at any time.

[Baroness Finlay of Llandaff]

Given the report’s figure that 6% of beds are occupied by patients who are readmitted within a week, costing almost £8 million per annum, what guidance is the department giving to clinical commissioning groups to ensure that support is available in the community so that patients discharged from hospital with multiple comorbidities and frailty do not tumble back into the admissions system?

[Earl Howe]

The noble Baroness has identified a very important issue. The causes of emergency readmissions are, of course, several. Some of them are not the fault of the provider but some are. Therefore, we have given an instruction to commissioners to build into the contracts that they have with those providing services that penalties may be applied to the provider should emergency readmissions occur which are the fault of the provider. I would be happy to write to the noble Baroness with further details.

Police (Complaints and Conduct) Bill

Thursday 6th December 2012 Lords Chamber

First Reading

11:38

The Bill was brought from the Commons, read a first time and ordered to be printed.

Business of the House

Thursday 6th December 2012 Lords Chamber

Timing of Debates

11:38

Moved By

[Lord Strathclyde]

That the debate on the Motion in the name of Lord Howell of Guildford set down for today shall be limited to three hours and that in the name of Lord Popat to two hours.

Motion agreed.

Scotland Act 1998 (Modification of Schedule 5) (No. 2) Order 2013

Thursday 6th December 2012 Lords Chamber

Public Bodies (Water Supply and Water Quality Fees) Order 2012

Motions to Refer to Grand Committee

11:39

Moved By

[Lord Strathclyde]

That the draft orders be referred to a Grand Committee.

Motions agreed.

Foreign Affairs: Global Role, Emerging Powers and New Markets

Thursday 6th December 2012 Lords Chamber

Motion to Take Note

11:39

Moved By

[Lord Howell of Guildford]

That this House takes note of the United Kingdom’s new global role, emerging powers and new markets.

[Lord Howell of Guildford]

My Lords, it is an honour to open this debate, and I am particularly delighted that our energetic Trade Minister, my noble friend Lord Green, will respond to it.

After 11 years of dealing with foreign affairs issues from the Front Bench in this House, and the past two-and-a-half years as Minister, this is my first chance to thank your Lordships most warmly and properly for tolerating so generously my often inadequate and, I fear, repetitious answers to your Lordships’ penetrating questions. In fact, my wife claims that more than once she has heard me murmuring in my sleep and sitting up in bed, saying, “We are deeply disturbed by the deteriorating situation in Wonderland. We urge all parties to enter into constructive dialogue”. However, that period is past and I would now like to use my time to put forward a few propositions about our situation in this nation, which I hope will gain your Lordships’ support.

My first proposition is that in the past few years the international landscape has totally and utterly changed. Huge new markets have emerged, and new economic powers and new centres of political power have arisen. The ongoing task has been to reposition Britain in this transformed milieu. It is in these new markets that our economic destiny lies—and I was very glad to have a small part in helping this repositioning process. Of course, in this new scene are some familiar old elements. The United States remains our close ally, although possibly more as a partner than as a leader and lone superpower. Europe remains our location, in which we must find a settled position in a reformed and modernised European Union. We will be debating that more fully in 10 days’ time, although it will no doubt come up in this debate. Meanwhile, most of the world’s economic growth in the next decade will be outside the West and the north Atlantic area, with the exception of the very dynamic Canada, which I have just visited.

I do not want to exaggerate the shift to Asia and Africa, which a lot of people talk about. Most of the emerging powers, while growing at envy-making rates, are of course starting from extremely low levels. While sections of the Chinese population, particularly in the coastal cities, are as rich as anywhere in Europe, the average per capita income in China is still less than $5,000—miles behind the comparable figures of $48,000 dollars in America and $38,000 here. A lot of the fashionable talk about the so-called BRICs is highly misleading, because Russia and Brazil have little in common with India and China, or South Africa. Anyway, a new wave of fast-growing economies is overtaking them—countries such as Mexico, Turkey, Korea, Vietnam, Thailand, Indonesia, Malaysia, Bangladesh, Azerbaijan and the Caspian powers, and a new wave of African states whose prospects have been immeasurably enriched by the third energy revolution now unfolding, due to horizontal drilling and hydraulic fracturing. The UK must adjust if we are to survive, let alone prosper. Most of this was obvious anyway 20 years ago, but the commentariat, having been pathetically slow to grasp what was happening, has now just about cottoned on. Better late than never, I suppose.

My second contention is that these new markets are going to be conquered by, as much as anything, networking and soft power, as my right honourable friend the Secretary of State, William Hague, has repeatedly reminded us in his speeches from when he first took office. By soft power, I do not mean just the British Council and the BBC World Service, although they are of course extremely important. I mean the whole network of relationships that we luckily possess, but hopelessly underuse, with the Commonwealth countries, which now contain many of the world’s fastest-growing states. Foreign direct investment into the Commonwealth nations, which cover a third of the world’s population, has quadrupled in the past decade.

More than that, several of them are generating the sovereign wealth fund that we need to finance our own infrastructure improvements. That is a complete reversal of what we were taught in our school books and what history tells us—that we provided the capital to the developing world. It is now the other way round. Many of the access links that we have into the Commonwealth network—which, incidentally, in turn provides a gateway to even bigger markets beyond—lie below and outside government-to-government relations. By that I mean not just a common language but an amazing criss-crossed web and flow of common practices and standards in everything from the law and judicial administration to accountancy, medicine, education, the arts, architecture, museums, science, chartered surveying, local government systems, school links and, of course, growing business flows between Commonwealth countries.

I think that there is a great longing in this country, as in other leading Commonwealth countries such as Australia and Canada, as well as in the smaller island states, especially in the Caribbean, to make much more of these common Commonwealth soft-power links. At one stage, I called this the “necessary network” of the 21st century, by which I meant that it was necessary for such a thing to emerge in the new internet age. I am very grateful to my right honourable friend the Secretary of State for giving me the chance to contribute to its strengthening and development. Of course, it is not the only route into the emerging markets but it is certainly one which ought to give us a major advantage, as our competitors keep enviously noting from time to time.

My third contention is that here at home we have to adjust our institutions and practices to these new conditions still further. For a start, we have to upgrade our trade and export machinery. Later this evening, your Lordships will hear from my noble friend Lord Heseltine on his proposals for reform in this area. He points out—and I strongly agree—that we need a far stronger system of chambers of commerce in this country with enhanced legal status as a basis for a far stronger overseas impact, particularly for small and medium-sized businesses. The typical German chamber of commerce has 30,000 members; our biggest ones have 5,000. The German branch chamber in India has 6,000 contacts; we, as the report of my noble friend Lord Heseltine says, have no chamber in India at all. As for Whitehall adjustment, I can testify to your Lordships that the Foreign and Commonwealth Office is a fine machine, where, for me, it was a privilege to work and where there have recently been great changes. However, it, too, needs to move further forward. I think it is wrong that our Commonwealth connections, which are so vital to us, are bundled in with other international institutions in the Foreign and Commonwealth Office. There should be a separate Commonwealth division and, of course, a separate Minister, as there used to be.

A month ago in New York, Commonwealth Foreign Ministers signed a kind of new Magna Carta—I call it a “Maxima Carta”—reasserting the commitment of member nations to human rights, the rule of law and democratic principles in all their varied and developing forms. It is a new type of commitment in the internet and cyber age. I believe that this charter, once endorsed by Heads of State, should be validated in both Houses of Parliament. I shall certainly do my best to see that the values in this new charter thrive and are reflected in practical actions and pressures by and on the Commonwealth nations—all 54 of them—as well as on those aspiring other states, of which, interestingly, there are quite a few, which want to join the new Commonwealth. For them, the magnet equation—the obvious beckoning, if you like—is that the Commonwealth badge equals, and leads to, jobs, investment and prosperity, and that is increasingly obvious.

Finally on the institutional front, dare I suggest that your Lordships’ House might do a bit of adjustment as well? There are huge new areas on the international scene which the Commons Foreign Affairs Committee, which I had the privilege of chairing for 10 years, does not have the time either to get round to or to follow up. I have in mind aspects such as the rise of Chinese investment and political activity across the globe, especially around the Indian Ocean, or the detailed reinforcement or latticework of Commonwealth connections, which I have already referred to and on which the Foreign Affairs Committee in the Commons has just reported. We badly need an international affairs committee in your Lordships’ House to make our contribution to this new scene effectively.

My fourth contention is that a new international pattern has also led to and created a new Middle East. Regional powers such as Turkey, Saudi Arabia and Egypt, if it can stabilise itself internally, and maybe eventually Iraq—the same—have arisen, are struggling to arise or are already playing a central role as new partners in addressing the intractable issues of the area, such as the Syrian horror, the continuing deadlock on the Middle East peace plan, the Islamic civil war raging across the whole area and how to contain Iran. A point much missed is that the bulk of hydrocarbons exports from the Middle East and the Gulf in fact go east to the rising powers of Asia, not to the West at all. This means that China, Japan and others in the Asian-Pacific area have just as much of a stake in preventing Middle East chaos as have the western powers, perhaps even more so. They will have to be involved constructively in seeing that the whole Arab spring does not turn sour or spread further instability, and in ensuring that Iran is diverted from its mad nuclear path. Their interests are at stake just as much as those of the West, and we need to remember that.

Energy factors are playing a huge part in transforming the Middle East and global politics. The Levant basin, with trillions of cubic metres of gas, is promising Israel a new energy resource and it may yet benefit Cyprus and even hard-pressed Lebanon as well.

My fifth and final point is that the latest energy revolution, driven by already mentioned shale technologies and the approaching self-sufficiency in gas of the US leading to it becoming an exporter before long, looks set to bring benefits all around the world and the prospect of enrichment to a stream of countries from Ukraine to Indonesia, Poland, Greece, Mozambique and Tanzania—both Commonwealth states—and even to Argentina and Japan, which has found some shale gas offshore. In short, vast new energy-related markets are opening up, all of which we can help to develop with our own immense oil and North Sea gas experience. We are uniquely well placed as a good customer for gas supplies, both piped and shipped. Norway wants to sell us much more. Russia would like to pipe gas directly to us, although we have to be careful about the volumes. Numerous new suppliers of frozen LNG lie ahead all round the world in addition to the ones we have already. We also have our own North Sea supply, which is by no means finished, quite aside from whether we decide to develop our own onshore shale gas.

All this gives us a valuable stepping stone to low carbon—gas being cleaner than coal in CO₂ terms—as well as a path to lower and not higher energy bills, which we need to compete and to create more competitive industries and exports, and therefore more jobs. As we were reminded in yesterday’s Autumn Statement, we cannot afford to be left behind and ignore tumbling energy costs and rising competitiveness on the other side of the Atlantic. In the long run, nuclear power and, we hope, cheaper renewables are the only ways to decarbonisation and improving on the weakness of the present low-carbon strategies, which are not working very well, plus vastly increased energy efficiency. Japan’s and Hitachi’s support for our own nuclear programme is very welcome but we can also play a global role in new nuclear-power building, working, for example, with South Korea, which I have just visited and which is tooling up to build a string of new nuclear stations round the world. It is already building one of the world’s largest in the UAE.

Our nation is talented and it is innovative. In some surprising areas we are doing increasingly well—for example, as part of the global motor manufacturing supply chain. Our exports to the growth economies have doubled in the past two and a half years. But overall, frankly, we are not doing well enough. Europe is our neighbourhood, with which we must work and make the single market prosper; America is our ally and our friend; but the Commonwealth is our family and where our best economic hope lies. I conclude that we should spend more time with our family.

11:54

[Lord Anderson of Swansea]

My Lords, I begin by formally proposing the noble Lord as chairman of the possible international affairs committee. I had the privilege of following him as chairman of the Foreign Affairs Committee. I have enormous respect for him and the work that he did on the Front Bench, when he was always courteous and on top of the subject. He always answered questions, which is not always the case with those on the Front Bench. I fondly welcome him to the Back Benches.

Lest this should appear to be an obituary, I detected at least one blind spot in the noble Lord’s analysis, on which I shall focus. I agree with him that we need to seek markets for our goods and services worldwide and to be ever ready to respond to global trends. However, I stress that our core area is our own region here in Europe, which accounts for 50% of our trade. It is manifestly not a case of either/or. Recent surveys predict a slower growth of our exports into the European market. Clearly the dominance of the City of London—which can, I hope, look after itself—has recently been challenged by the governor of the Bank of France, which is the penalty of our choosing to be outside the euro. Of course we need to increase our exports to the BRICs and elsewhere but there is evidence of slower growth in those markets. For example, the projected growth for Brazil this year is just under 1%; the projection for India in the financial year 2012-13 is 5.5%—the lowest for a decade; and in the third quarter, growth in Russia fell to 2.9% and in China to 7.4%.

Our starting point is surely the wisdom of the Oracle at Delphi: know thyself. We need a realistic, not a nostalgic, analysis of our strengths and weaknesses and the global environment in which we trade—know thyself. Of course, as the noble Lord said, we emerged with many advantages from our history, not least of which is the English language, our centres of excellence, our military, our diplomacy and our universities. However, the Government should be worried about the self-imposed threat to our economic prospects posed by the sharp decline in student applications from India.

Our history has made us members of key international organisations: the UN Security Council, NATO, the EU and the Commonwealth. The last, in my judgment, is surely the blind spot of the noble Lord's presentation. I consider myself a Commonwealth man, having chaired the UK branch of the Commonwealth Parliamentary Association for four years, but I do not recognise the picture painted by the noble Lord. Recent CHOGMs have raised hopes of deep institutional change, but Commonwealth institutions are now in some considerable disarray. Successive Governments in the UK have worked hard to develop relations with India, a key emerging market. Frankly, however, India has little interest in the Commonwealth and is very hard-nosed on commercial matters, as we have seen on the Typhoon purchase.

In a lecture on 19 June 2007, the then Commonwealth Secretary-General, Don McKinnon, gently but effectively undermined much of the thesis of the noble Lord. I certainly do not accuse the noble Lord of this, but some in his party use Commonwealth enthusiasm as a cover for their anti-Europeanism. The Commonwealth that they favour is mainly the old dominions. That leads to symbolic and often silly gestures such as the recent agreement on the co-location of embassies with Canada at a time when our foreign policy formulation is increasingly based on close working relationships with our European partners. This is on a par with the threat by former Defence Secretary Liam Fox to leave the European Defence Agency, with its pooling and sharing—happily, the Government now appear to be rethinking this—as well as with the severing of relations with their natural allies in Europe, the European People’s Party.

An audit of relations with the EU has been ordered by the Foreign Secretary in an effort to placate anti-Europeans. I understand that the Foreign Office recently met Professor Sejersted of Norway to discuss the methodology and conclusions of his similar audit in Norway. He concluded that Norway’s relationship amounted to integration without representation—hardly a model for others.

Of course the EU may now develop a tighter inner core. We are likely to find ourselves, albeit with variable geometry, on the exterior. However, our policies seem designed to lose good friends such as Poland. Surely the Government should recognise that to leave the EU or to seek unrealistic objectives would be a major blow to our trade, not only with the EU but with third countries. I cite the recent reply in the European Parliament given by Commissioner De Gucht, who said:

“The Commission takes the view that if a Member State were to leave the European Union it would no longer benefit from preferential arrangements included in EU trade agreements. In such circumstances, a Member State would not be subject to the Union’s common commercial policy and could no longer benefit from agreements negotiated on that basis. Moreover, a third country offers concessions to the EU on a reciprocal basis, expecting market access to the Union as a whole. Third countries would be unlikely to offer as generous concessions to a Member State which has activated Article 50 that could only offer access to its own market”.

We should quite properly look at a free trade agreement with the US. There will be better prospects for that after the likely failure of the Doha round. We should remember that it is the European Union which will negotiate on our behalf as I hope we move step by step towards a free trade agreement. If any state were to leave the European Union, it would lose bargaining power and would receive less generous concessions from third parties.

My conclusion is that we should seek to boost trade throughout the world, both in the Commonwealth and elsewhere. In the debate on the future of the EU we have natural allies, but currently the Government seem to be doing their best to irritate them. Even very strong Anglophiles such as Mario Monti publicly state their exasperation and despair at UK policies. He says, in effect: “Make up your minds. Do not marginalise yourselves by your actions, which will make planning more difficult for us”. In short, we should know ourselves and avoid ideological illusions.

12:03

[Lord Alderdice]

My Lords, I, too, thank my noble friend for securing this debate, and for the great service that he gave to your Lordships’ House, to the Government and to the country during his time in government. His answers were always thoughtful and conscientious. They were a service to your Lordships’ House and we all appreciated them. He continues that service not only by securing this debate but by pointing us to the kind of strategic thinking to which your Lordships’ House is particularly suited. I am privileged to participate in the debate and to follow him and the noble Lord, Lord Anderson.

My noble friend pointed to the fact that we are experiencing an extraordinary period of global change. We discussed this briefly in a debate earlier this week. He is absolutely right. The enormity of the change has scarcely been understood, partly because the implications are so great that people are panicking in their response to it rather than thinking reflectively. This is an opportunity for us to do so.

We are moving into a series of centenaries over the next few years, including the centenary of the commencement of the First World War. The changes that we are undergoing now, while of a very different type, are of a similar order to those that took place in the early part of the previous century, where empires that had been profoundly significant and powerful subsequently dribbled away over a period of years. Indeed, the role, power and significance of our own country in that regard, moving from being the centre of the largest empire that the world had ever seen, which is still the case, gradually found that empire being unzipped over a period of years. Some of us in Ireland think that that started with the partition of Ireland.

During that period there was a great struggle for our country to come to understand what its new possibilities and opportunities were. Many other countries that in the past had been the centre of great empires simply had a long period of subsequent decline over many decades, and sometimes centuries. Some people have taken a similar view in respect of the United Kingdom, which is misguided and unnecessary. I will explain why.

During that first period of time there was the remarkable development of the Commonwealth. That so many countries that had been colonies wanted to remain in relationship with the United Kingdom is remarkable and largely unprecedented—I will come on to talk about the Francophonie later. My noble friend has referred to this extraordinary development, and perhaps we could have made rather more of it over the years.

Then we came to the period after the Second World War and the European Union moved into the field. It was a peace process; it was an attempt to ensure that Europe did not again return to the terrible disasters of the First and Second World Wars. Now, though, we have a generation arising—my generation and certainly those coming after me—who do not really think of the European Union in that way. They think of it in economic and political terms. Indeed, most of the political leaders of Europe do not see the European Union in terms of ensuring that there is no war: they see it as a platform for themselves, their parties and their countries to play a global role.

That is a serious mistake. I do not think that that is what the population of the European Union think is the function of the European Union. The population do not particularly want to rival China, the United States and other powers; they want to get on with having a productive, peaceful, stable and prosperous life. That is what our people want.

That has led to disenchantment—a big split between the elite of Europe and its populations. It is not what the European Union was for or about. Instead, our world has begun to change further, with extraordinary developments in technology. There are some who think that the key things for us to aim for are size—to be part of somewhere that is big—and resources—that is, to have access to commodities. If we look around, though, the evidence shows that mere population size, market size or access to commodities do not by themselves provide power, influence and significance.

Last night I listened to a Member of your Lordships’ House, as I know some other colleagues did, talking about how size mattered. Of course that is true, but it is not the only thing that matters and it is not even the decisive thing. Many countries are much larger in population and in geographical terms than this country, and have greater access to resources that this country. The continent of Africa has an extraordinary resource base, but that has not made it politically powerful, significant or a leading place.

It seems to me that it is much more about our culture. I do not mean the expressions of our culture in terms of art, drama and so forth, although they are important, but the way of being that we have as a country and a community. I mean the values, principles, the things that drive us and give us a sense of confidence, our history and background, our language, our educational system and the way that we encourage our young people to think for themselves and search out the truth of the way that things are, rather than merely totting up the number of degrees that happen to be passed at universities.

That culture is something that is appreciated by every other country in the world when they look at us. We did not become powerful in the past because of size but because we looked at what we needed to do in the context of the time. Now we have a new context and we can play a significant role. Just look at how well we did with the Olympic Games—not only in organising them but in competing in them—not because we were big but because we focused and had confidence. We should be able to have that confidence because this country is not frightened by a global world. It does not feel intimidated by the fact that we have to have relationships, not just in our local area in the European Union, but right across the world. That is what we have always done, not just in trading but in relationships. Our language is a global language.

As we look to the future, we should not be saying to our young people, “Let’s look at the inevitable decline of our country”, but rather saying with confidence, “Let us look at what we and our country can contribute in a leading way to our new world order”.

12:11

[Lord Thomas of Swynnerton]

My Lords, I, too, express my regret at the passing of the noble Lord, Lord Howell of Guildford, who has given a good example to us all; of passing from power, that is to say. I think I first met him 50 years ago in Washington at the time of the missile crisis. I cannot now remember whether it was before or after 13 October, but it was certainly at that time.

I sometimes think that we would all be served if the Government were obliged to make an annual statement on foreign policy, along the lines of the command papers characterising our defence, which for many years we looked forward to receiving. The Foreign Office would have to consider carefully exactly what it was doing and why. The statement would point out, perhaps, that Britain’s foreign policy is the experience of someone who has membership of about six clubs. No other country in the world, not even France, has such a diversity of loyalty.

We are members of the UN and of course of the Security Council. We are the essential brooch in the chain of the Commonwealth countries. We are a member of NATO, whose charter was drafted by British public servants. Fourthly, we are a member—if now a rather reluctant member in many cases—of the European Union, which promises to turn eventually into something like a federal state; a new Holy Roman Empire. As the noble Lord, Lord Owen, pointed out in a fine speech in October, that likely development demands careful consideration as to our right course by both sceptics and by enthusiasts such as myself. Fifthly, we have separate, deep friendships with a number of countries: the United States of course, France, Portugal and many countries of Latin America, which very often glow with enthusiasm at the thought of us, because of the assistance we gave them during the 19th century. It is true that we fought Argentina in the late 20th century, but it remains in most people’s minds as:

“The purple land that England lost”,

in the words of the great writer WH Hudson. That we have to balance so many commitments partly explains our occasional difficulties. There are moments when that balance seems impossible, such as when Mr Blair decided to support the United States in the war in Iraq.

We know that our membership of all these great clubs assists us in selling our products but there is one aim in foreign policy that is probably more important than anything else, as the noble Baroness, Lady Williams, has pointed out on several occasions. That is to control the proliferation of nuclear weapons and, if we fail to secure that, at least ensure that they are not used. What we are currently seeing in respect of the civil war in Syria perhaps gives some lessons as to how we should conduct ourselves. The use of nuclear, not chemical, weapons—horrible though the latter undoubtedly are also—would lead to a catastrophe of unprecedented dimensions, and there is no more important aim facing humanity than to prevent such a thing at all costs.

A third preoccupation, naturally, is to prevent local problems such as might occur at any time in the near East or Middle East from becoming a war that could draw us in, either by the extension of terrorism or by some ramification of it.

Fourthly, we should promote the emulation of our democratic political system, as opposed to the oriental despotism that still characterises so much of Asia and Africa, although the experience of Germany in 1933 shows that the rule of law is just as important as the right to vote.

Fifthly, we should tell the world that the only economic system that works well, in our opinion, is one where the state leaves a lot of economics to itself. That is what Hernando de Soto, the brilliant Peruvian, preaches in his famous book, The Other Path, as well as what was done by the noble Baroness, Lady Thatcher, all her life.

Sixthly, we should recall—and not be shy about it—that our literature is overall our greatest export, especially, I think, our poetry. Once the governor of Oaxaca in Mexico asked for my approval in advance for a speech that he was about to make at a lunch in honour of the noble Lord, Lord Carrington. The governor wanted to say, “We admire England for two reasons: Portland Cement and John Milton”. “Yes,” I said, “but put it the other way around”. “You are right,” said the governor, and he did so.

12:16

[The Lord Bishop of Worcester]

My Lords, I am grateful to the noble Lord, Lord Howell of Guildford, for securing this debate. I will concentrate my remarks on an aspect of Britain’s role in the emerging world order, which I believe to be extremely important.

In July, the Foreign Office Minister, Jeremy Browne, gave a speech to Chatham House on how Britain should respond to the rise of emerging powers. He spoke powerfully about what had enabled Britain to become great, pointing out how remarkable it is that a nation with less than 1% of the world's population should have such continuing influence. What was implied in his speech but was not articulated is that it is not just our wealth that has made us great in the past; it is our values, as the noble Lord, Lord Alderdice, has reminded us. In looking to the future, it is important, it seems to me, that we should of course look towards becoming more effective in our trade and have an eye to our prosperity. However, we should not neglect that other side of what made this country great.

The noble Lord, Lord Sacks, has written that we have at our disposal a resource of unparalleled power with which to confront the problems of a new age, and that resource, neither mysterious nor difficult to understand, is morality—specifically, the Judaeo-Christian tradition. That is not to underestimate the importance of other faiths, but it is to say that the values that derive from the Judaeo-Christian tradition are the bedrock on which our wonderful culture is built. At the centre of that tradition is the belief that all are created equal in the image of God, with inherent dignity and infinite worth. That tenet, I suggest, should continue to be at the centre of what informs our actions on the world stage.

We live in a world of unprecedented wealth, and yet, despite all our technological advances and the vast resources at our disposal, the scourge of extreme poverty remains humanity’s most pressing challenge. Today 1.4 billion people suffer from the injustice of extreme poverty. During the course of this year I have visited diocesan links in Peru and Tanzania and met just a few of those suffering terribly. I witnessed, too, the magnificent work of the Anglican Church to address their suffering. Poverty robs people of their dignity and denies them access to their rights of shelter, food, healthcare, education, safety and a life of fulfilment. It renders them powerless, unrepresented, oppressed and vulnerable to harm and abuse. In his excellent book Good Value the noble Lord, Lord Green, has reminded us that as long as we are involved in injustice, exclusion and exploitation we are under judgment. I am delighted that the Chancellor yesterday recommitted Her Majesty’s Government to the 0.7% proportion of GDP to be directed towards aid, but for the sake of the poor we need to address the following key challenges as well.

First, we need to listen to the voice of the poor. As economic and political power shifts from the US and Europe to the nations of the east and south, and as the shift in power from the G8 to the G20 goes on, it represents a broadening and diffusion of power. The addition of South Africa, Mexico, Brazil and India to the G20, in theory at least, brings the voices of millions of the poorest to the table. While there remain serious questions about the legitimacy of such self-appointed bodies, I suggest that the UK should look to exploit the opportunities of new political and economic configurations to champion a pro-poor discourse in new global interactions, identifying progressive allies and seeking greater inclusion of the voices of the poor.

Secondly, there is inequality. Almost all societies are becoming much more unequal as the world economy expands. Simplistic talk of the rich north and the poor south no longer makes any kind of sense. The majority of people living in poverty today are in middle-income countries such as Brazil and India; it is in such countries that we are also seeing the greatest increase in inequality. As we confront the new age, we should confront also long-standing forms of inequality and discrimination that continue to blight the lives and opportunities of billions.

Thirdly, there is caring for the environment. With the World Bank predicting progress towards more than 3 degrees of global warming on current global policy, levels of climate unpredictability, constraints on water resources and increased extreme weather are inevitable and,

“tilted against many of the world’s poorest regions”.

At the centre of what we do should be an argument for and an insistence upon sustainability, resilience to climate change and fair rights over resources. Those things should underpin our nation’s engagement in global affairs.

Fourthly, we need to pay attention to the effects of global connectivity. That can create new and wonderful opportunities for people all around the world but it can also squeeze cultural diversity, with an individualistic consumer ethic taking the place of traditional collective values. Many of these changes potentially threaten the ability of vulnerable communities to claim their rights while, at the same time, many can be exploited to help in the battle against poverty. Technology is transforming the way we interact, trade, create communities and build political movements. Geography matters less; online access more. We need to pay attention to the serious divide opening up between digital haves and digital have-nots.

All global actors are seeking to adapt to this changing environment but we are very well placed to do so by virtue of our traditions and culture, and the values that underpin them. The continued impact of the UK’s development co-operation will rely on tackling the above challenges and seizing the opportunities presented. Success will depend on building a wide range of partnerships that have the leverage to make a major impact on the scandal of mass poverty in the rich world, as well as in the poor world. Only if we do so will we continue to have that soft power—that moral authority—for which this country is rightly celebrated.

12:24

[Baroness Morris of Bolton]

My Lords, with the fast-moving world of political and economic change in which we live, there is a great need for the United Kingdom’s experience, not least our well developed soft powers, as my noble friend Lord Howell so powerfully observed. Soft power was the subject of an excellent debate in your Lordships’ House last year, led by my footballing friend, the noble Baroness, Lady Taylor of Bolton, and answered by my noble friend Lord Howell of Guildford. Then, as today, my noble friend Lord Howell demonstrated why he is such an effective advocate of the role the UK must play in an ever more complex and competitive world. I, too, thank him for all he has done in the service of this House and our country and, in particular, for this important debate today.

It is clearly true, to pick up on the point made by my noble friend Lord Alderdice and the right reverend Prelate the Bishop of Worcester on size, that as a country, we punch above our weight across a range of diverse areas—from language and education to culture and arts. As has already been mentioned, the roles of the BBC World Service, the British Council and other organisations are rightly credited for the part they play in our international prominence.

This soft power, however, is becoming increasingly hard in its impact. The continuing growth of English as an international language has not only cultural significance but real value for British companies. The standing of British universities in the top rank of worldwide higher education league tables and their excellence in research and teaching have real value that can provide competitive advantage to British companies. I declare an interest as chancellor of the University of Bolton, which is one of the world’s leaders in teaching and research in advanced materials. In fact, if you fly anywhere in the world on any aircraft that has a seat made of cloth, the fire-retardant property of that cloth is the intellectual property of the University of Bolton.

The global popularity of our culture and the arts has a realisable value. British films are now not only critical and artistic successes but worldwide commercial successes as well, as we have seen from the latest James Bond film, “Skyfall”. In another branch of entertainment, another quintessentially British product—“Doctor Who”, which is 50 years old next year—has become a growing commercial success for the BBC. It has been sold around the world and last year topped the American iTunes chart for the most downloaded TV series.

Our heritage, rich countryside, diverse cities and unique visitor attractions, including the one that accommodates your Lordships’ House, are iconic symbols of Britishness that draw in visitors who contribute to a tourist economy worth more than £100 billion a year. In seeking to illustrate the monetary value of these things, some may think I am fulfilling Oscar Wilde’s definition of a cynic. The point I am making, however, is this: the things that make the UK such a great place to live and to visit are also the things that help us strengthen our international role and take advantage of new markets.

I was honoured last month, along with other parliamentarians from across the political divide, to be appointed one of the Prime Minister’s trade envoys. My responsibilities are Jordan, Kuwait and the Palestinian territories—countries with which we have strong links and long-standing friendships but where the changes they are undergoing present great opportunities for British businesses. I am looking forward greatly to working with my noble friends Lord Green and Lord Marland, UKTI and the Foreign and Commonwealth Office to help promote the UK and our commercial sector.

I also see it as our job, however, to promote the virtues of trade itself. Promoting trade is a British tradition. As an island nation, our prosperity and global influence were built on commerce and exploration. That prosperity has never been limited just to us. Opening up economic relations benefits both sides of the transaction; many countries have benefitted hugely from opening themselves up to new markets. Free trade also serves as one of the most effective ways to build trust and co-operation between countries and underpins the development of civilised, peaceful relations between them. Since markets require fairness and the rule of law to function properly, the existence of significant trading relationships provides a powerful incentive to root out corruption. The pacifying and benevolent effects of trade have been espoused by many in this Chamber and in the other place over the past two centuries, with the anti-protectionist Richard Cobden among the most prominent. He once observed:

“The progress of freedom depends more upon the maintenance of peace and the spread of commerce and the diffusion of education than upon the labour of Cabinets or Foreign Offices”.

In truth, the efforts of government should advance those aims and in doing so, we can make a lasting difference, securing the benefits we all want to see for British companies while supporting the development of peace and good will with and between our friends overseas.

12:30

[Lord Judd]

I join noble Lords who have paid tribute to the noble Lord, Lord Howell, not only for having introduced this debate so well but for the terrific contribution he has made on international relations throughout his political life. Forty years ago, I was working with him and with young politicians from the United States on facing up to the issues that then faced us in the global context, particularly the fears about Africa and the Middle East. I formed a very high regard for the noble Lord, Lord Howell, which has stayed throughout my political career. There have been big differences between us, irreconcilable differences sometimes, but there has always been respect for his wisdom and his approach.

The noble Lord, Lord Howell, was right to start by challenging us to face up to the realities of change over recent years and the situation that we now face. He is right that one of the biggest challenges is that the centre of economic and political power is increasingly moving to Asia, in particular to south-east Asia and China. That is a terrific challenge which we must meet. He was also right to emphasise, as he always does, interdependence. I always put it that the first reality of life is that we are born into a situation in which we are totally interdependent with people right across the world. As I have said before and will say again, I am convinced that we as a generation of politicians will be judged by history by the success we make of belonging to that international community, contributing to its strength and understanding the challenges of being part of an international community. Neurotic insularity will do us no service whatever. We must engage and we must belong, and by being seen to engage and to belong, we will bring our influence to bear. Of course we want efficiency and cost-effectiveness in all the institutions, not just in Europe, but in the UN and elsewhere, but we bring greatest influence in achieving that if we cannot be questioned in our commitment to international co-operation and in our belonging to those institutions. The trouble is that we too often play to a short-term populist gallery in trying to suggest that somehow we are battling for little England—little “England”, too, very often—against the real awful world out there instead of realising that it is by making a success of international work that we will look to the long-term interests of the British people. I thank the noble Lord for having introduced this theme and I apologise if I have expanded it a little emotionally in a way that he might not have done.

I know the Commonwealth is dear to the heart of the noble Lord, Lord Howell, and it has a part to play. It is a family in the best sense. It has evolved. When it meets, it is usually a meeting of friends, but in this context my noble friend Lord Anderson is right that we have to face up to the fact that the Commonwealth has been overtaken in a lot of the real cut and thrust of making a success of international relations and global security.

I always listen with fascination to the noble Lord, Lord Alderdice. He is right to have reminded us of the value of the underlying psychological dimensions of our part in the world. They are crucial. We have to face the fact that when you have been an imperial power, it is difficult to adjust. We have to play the game of influence. It is no good playing a power game. Our game is a game of influence, and that relates to my point about being seen to belong and to engage.

This affects the work of the Foreign Office. I am getting a bit worried that when I go anywhere, one of the first things in an introductory talk from the ambassador or the high commissioner is a long, rather defensive speech about all they are doing on trade. In the economic realities we face, trade is, of course, vital and our missions have a part to play on trade, but in this highly complex world, we should not throw away the baby with the bath water. We need expertise, insight and analysis to understand the situation in which we are operating and advice to inform the quality of our decision-making. Sometimes it may get a bit marginalised in the constant pressure to put trade first. It is not either/or. We must treasure that traditional role of the Foreign Office and make sure that it is nurtured.

I feel strongly that soft diplomacy, as it is sometimes called, is crucial. That is where we cannot emphasise often enough the role of the BBC and its Overseas Service. We must not let that become diluted. When changes take place, I sometime worry. The quality of news in this country is improving because we are getting more international input into ordinary news broadcasts. That is good for British people to understand the issues, but it must not be at the expense of the expertise, depth of knowledge and analysis that used to be in the old Overseas Services. Sometimes what we are beaming to a country with a very small audience may have disproportionate significance because that small audience will be crucial in the future building of that country and its stability and well-being. We have to keep that role of the BBC in mind.

I have time for two more observations. First, in our debates about universities and overseas students, I get exasperated at the way we talk about them in terms of what they mean to the British economy now and in the future. What matters is the quality they bring to the higher education experience. I do not understand how you can have a relevant, world-class university if it is not a thriving, vibrating international community. You need that international mix in the quality of the education that is taking place. That matters in every discipline. We have not been taking that point seriously enough. The other issues are, of course, very important—I declare an interest as someone involved in education—but that essence is the crucial quality.

Finally, as we go into the year ahead, we should all make a resolution that we are going to lead the country in understanding interdependence and in determining that this country is to be second to none in constructive internationalism instead of insularity.

12:30

[Lord Maclennan of Rogart]

My Lords, it is a privilege to follow the noble Lord, Lord Judd, with whose views, not unusually, I find myself in complete agreement. I, too, express admiration and gratitude to the noble Lord, Lord Howell, for the work he has done over decades in promoting international communication. His wisdom has assisted this country. I do not entirely agree with him in giving primacy to the Commonwealth in the time we are living in.

My first experience of politics when I was elected to the House of Commons was as the Parliamentary Private Secretary to the last Commonwealth Secretary, Lord Thomson of Monifieth. Consequently, I am much more familiar with Commonwealth countries than I might have been. The late Lord Thomson later became one of our first European Union commissioners. That was not in any sense a demotion. He was a most enlightened man who promoted development within the European Union and saw from the beginning that Britain could play a more effective and powerful international role if we were closely integrated with that body of countries that are not just neighbours but have shared our history through hundreds of years—a history we should not forget.

I know that there is wisdom in my noble friend Lord Alderdice’s view that the public are more aware of the present demands than they are of the history of warfare. I do not dissent from that but we have to recognise that mankind does not change entirely. The political situation may change but the impulse to use force to promote a country’s interests is still a danger. In my humble judgment this country has a global role, which can best be exercised by playing a constructive part in the work of the European Union. That was manifestly missing in the World Trade Organisation discussions at Doha and the climate change discussions in Copenhagen. I believe that we did not act as a union on those two occasions, and as a result we have seen great delay and inadequate responses to these very big challenges.

We also have a second role to promote the values that this country holds and which it has translated into a way of life. In that respect, we should particularly regard our history of adherence to public international law as something of which to be proud. I was somewhat dismayed the other day when the noble Baroness, Lady Warsi, would not disclose her view about the public international law situation with respect to a pre-emptive strike against Iran. If we are to expect others to follow the rule of international law, we must animadvert to it in the context of international disputes.

Our other attractive values, mentioned a great deal in this debate, include education, the development of science and technology and our adherence to human rights. I must say again that I find it appalling that there has not been an instinctive positive response to the judgment of the European Court of Human Rights on the right of prisoners to vote in our elections. If prison is to be seen as a reformatory, being instructed in citizenship and the purpose of voting must be helpful to that end.

We have had remarkable cultural achievements, and many in our country have recognised this, in promoting our wide global view of culture. The British Council is probably a more effective organisation in promoting Britain’s interests than those who control immigration. That is something that we should certainly build on. I would like to see the budget of the British Council strengthened and increased.

Our identity is clear, and is not put at risk by being members of European Union. It is now time that Members of Parliament and members of the Government began the task of explaining the crucial importance of the integration of the European Union and why that is not inconsistent with our identity and with playing a global role, and that indeed the two are absolutely tied to each other.

12:46

[Lord Bilimoria]

My Lords, at the outset, I apologise to the noble Lord, Lord Howell, as I was not in the Chamber when he started this debate. It is such a pity that he is no longer a Minister because he did such a brilliant job at the Foreign and Commonwealth Office and it is the Government’s loss and ours that he is no longer there.

Just over six decades ago Britain had the largest empire the world has ever known. Today, that empire has gone and yet this tiny country of just 60 million people, making up not even 1% of the world’s population, is still one of the 10 largest economies in the world. It still sits at the top table of the world and still holds great influence. All this is despite the dramatic rise over the past three decades of countries such as China, and more recently India as an emerging global economic superpower. There, at the other extreme, we have two countries that together make up one-third of humanity.

Looking ahead, we will not be able to compete with these countries head on. We can only compete on our strengths, many of which are historic. We have amazing institutions in every field, whether it is in the City of London, cultural institutions such as the British Academy and the Royal Society of Arts or the traditions that are part of this nation’s fabric. There are the traditions of our Armed Forces expressed through the esprit de corps—which is amazing—and the traditions of the Royal Family, shown so marvellously in Her Majesty’s Diamond Jubilee this year, and in the traditions of this Parliament and in our very Chamber here, which is the only self-regulating Chamber in the world.

Then there are institutions such as Lloyd’s of London and our great universities, with Oxford and Cambridge being more than 800 years old. The noble Baroness, Lady Morris, spoke about our creative industries. Our design firms are the best. The designer of Apple, the most valuable company in the world, Sir Jonathan Ive, is British. Our law firms are the best of the best, as are our courts and, although only 7% of our children attend them, our private schools are the best in the world. The BBC for all its recent problems is, as the noble Lord, Lord Judd, said, a source of soft power, in particular the World Service.

The noble Lord, Lord Howell, spoke powerfully about the Commonwealth. It is such a huge asset and we are at the centre of it. There is even the possibility of a free trade zone within the Commonwealth, from the tiny islands at one extreme to a 1 billion population country such as India at the other. The Commonwealth has done so much with so little money. Just imagine how much more it could do if it had a proper budget. Can the Minister say that he will encourage this to happen?

The City of London is still the world’s leading financial centre. We still have a flexible and open economy that welcomes foreign investors such as the Tata Group. It is an economy where we will now have a Canadian as the governor of our central bank. Despite the awful cuts that have been made to our Armed Forces, where we temporarily lack aircraft carriers and the number of our troops has fallen to critically low figures, we still have one of the highest levels of defence spending in absolute terms in the world. We talk about soft power but soft power cannot exist without the hard power to back it up.

In tourism, we have one of the most attractive destinations in the world, with London being the greatest of the world’s great cities despite our awful weather, particularly this year. However, it dismays me when we talk about trade. As founding chairman of the UK-India Business Council, I regularly speak to business audiences around the country and I ask them how many of them do business with India. To this day, among hundreds of people, only a few hands go up.

I am delighted to hear that the Government have increased funding to UK Trade & Investment. We need constantly to encourage businesses to look abroad because the potential of emerging markets is phenomenal and we are just scratching the surface. However, while we talk about emerging markets, we must recognise that our principal international partner will be, and always has been, the United States. It always will be one of the most powerful nations in the world and we have stood side by side for more than a century, and that will not change.

Partnering with countries means working together not just on a business level but within our civil services, the Armed Forces carrying out exercises together, and in research and development. I chaired the Cambridge University India Partnership Advisory Board and we are working more closely with India. The UK-India Education and Research Initiative has been so successful, with hundreds of research interactions between the UK and India. We need to encourage this and to do a lot more of it. Importantly, to maintain our influence we must maintain our competitive edge. I do not think that we are investing anywhere near enough in research and development. We invest a fraction of a country such as the United States as a proportion of our GDP.

Most importantly, as a country, we must always be seen to be fair and just. Historically, as a nation, we have never followed the herd. We have always led our own way and done our own thing. Even in Europe, where we are, whatever anyone says, one of the most prominent members of the EU, we sensibly stayed out of the euro. Despite everything that is going on, we are still seen by many businesses around the world to be the gateway to Europe.

Again, importantly, our role in the world will be based on respect and trust. We have to continue to earn that respect among nations today. Despite all our economic woes, we need to be ahead of the game. We need to be best friends and partners to countries such as India, Indonesia, Brazil, South Africa and Turkey, quite apart from our longstanding partners such as the United States, which I have mentioned, Canada, Australia, New Zealand and Singapore. These emerging markets cannot switch on in an instant, or even in a few decades, the competitive edge that this country has built up, as well as its institutions, over the centuries.

As the noble Lord, Lord Alderdice, said, our foreign policy must be based on the confidence that we can maintain this competitive edge with integrity through mutual trust and respect. In that way, we will be able to bring mutual benefit and security to our economies as countries partner together. To conclude, our foreign policy, our global role and our global influence go hand in hand with our competitiveness. We cannot have one without the other.

12:52

[Lord Bates]

My Lords, it is a privilege to take part in this debate and I join many others in paying tribute to my noble friend Lord Howell for securing it. Many years ago, I had to complete an essay question which was to explain the difference between a politician and a statesman, and to give examples. I often think that had I known the noble Lord at that point, my answer would have been so much better illustrated. Undoubtedly, he is one of our great statesmen and it is a privilege to continue to hear him dispense his wisdom from the Back Benches.

Another thing I learnt from essays was that you are supposed to look at the question before answering it. I note that the noble Lord has been very careful in choosing the title for this debate. He has used the word “new” twice and the word “emerging” once, thereby suggesting that there is a passage from an old order, an old world view, to something new. I very much share the view of my noble friend Lady Morris of Bolton and the noble Lord, Lord Bilimoria, that in going into that new world we should have great self-confidence and self-belief.

We are very much in a global race, as the Prime Minister illustrated and set out in his speech to the CBI last month. I would contend that we are not so much in a single global race but that we are in a number of global races for key markets and that we are engaging with key powers. In my time today, I shall focus on one of those new markets—China—and will make the argument that we need to engage in some fresh, new thinking and to shift from an old paradigm view of Chinese conduct in the world to a new view. I do so with some trepidation, knowing that one of the foremost authorities on these matters, my noble friend Lord Green, will respond to the debate. I look forward to hearing his response.

The scale of the Chinese miracle has been well rehearsed but it bears repeating for a few moments. First, China has not gone through a period of boom and bust, as some countries have. In fact, it has delivered 30 years of uninterrupted growth, averaging 10% per annum. When people talk about the Chinese miracle perhaps beginning to slow, they are talking about it slowing to 7.5% per annum for the next decade. It is the second largest economy in the world. By the end of this decade, it will be the largest economy in the world.

What is more interesting is what China has used that new wealth for. It has invested in infrastructure. Before 1988, it had no motorways whatever. By 2010, it had 74,000 kilometres of motorway. China has more kilometres of high-speed rail lines than the rest of the world put together. In the three years that it has taken us to debate whether we should have another 200 kilometres of HS2 in this country to be completed by 2026, China has added 8,000 kilometres of high-speed rail lines. Sometimes, we need to have a little sense of humility as to what people are doing and how they are going about it.

Secondly, we should look at what China has done for its people. It has lifted more people out of poverty than any country in history. According to the World Bank, 600 million were lifted out of poverty between 1981 and 2005. A new self-confident middle class is emerging, the numbers of which are open to some debate but roughly settle around the figure of 200 million people. There are 400 million internet users and 700 million mobile phone users in China. The Chinese savings rate is one of the highest in the world at 38%, compared to 7% in this country.

China’s foreign currency reserves dwarf anything in the world at $3 trillion. They are the largest in the world and amount to three times those held by Japan. In that sense, China is keeping the global ship afloat. China has 20% of the world’s population but only 7% of the land mass. Therefore, it is heavily dependent on importing commodities from around the world. That has led it to have a—some would say paranoid but others would say very natural—national interest in developments around the energy-rich waters of the South China Sea. Its defence budget is growing dramatically. It is already the second largest in the world and will overtake the United States in another 20 years.

However, our approach to China has often been characterised by a degree of suspicion and perhaps even a little distrust. When we look at some of the agreements that we have had, such as the transfer of powers over Hong Kong, most people would recognise that those undertakings given in 1997 have largely been honoured and adhered to. Hong Kong retains a distinctive and vibrant economy and a large degree of autonomy. Of course it is right to raise human rights concerns but I would argue that that should be done in proportion.

How do we respond to China? We need to respond by recognising that there is a great market out there. When Wen Jiabao visited this country last year a target was set to increase bilateral trade to $100 billion by 2015. When Wen Jiabao went on to visit Germany, he and Chancellor Merkel announced that they were going to increase their trade to $284 billion. If we are engaged in a global race, let us start racing with our friends in Germany to tap into that market in China. Yes, we are in a global race, but it is one not only with China but also for China, so we need to engage in some fresh thinking.

The current policy document which underlies the UK’s approach to China was published in January 2009 under the previous Government. Perhaps it is time that we looked at that again. When we approach China and try to encourage it to take a new and constructive role as a major global superpower, let us recognise that we need to engage with it not only with a new policy but with a new mindset and, more importantly, with a new relationship.

13:00

[Lord Parekh]

My Lords, I thank the noble Lord, Lord Howell of Guildford, for securing this debate. It was really nice to see him shed the constraints of office and reflect creatively and independently on some of the larger issues of the world today. As he rightly pointed out, the international landscape is undergoing profound changes. It is undergoing profound changes at a superficial level in the sense that there are more economic, political and military players than there used to be—China, India, Brazil, possibly Indonesia and Turkey, and a few others. I would suggest that, although this is an important change, it is not a decisive one. A really decisive change is taking place at a different level; not just increasing the number of players in the game of international politics, but the way in which the game is going to be played. In other words, the real change is taking place not simply in terms of how many players there are, but how power is acquired and maintained and what is the nature of that power. I want to say something about it because the subject has been largely neglected.

All over the world there is a very profound change taking place in the sense that people are extremely suspicious of the political class and the way it has dominated and tried to monopolise political life. People want to make their own decisions and to assert themselves. The Arab spring is only a tiny footnote to history; there are lots of things like this, even in China. Through the Communist Party and through independent sources, hundreds of protests are taking place every week in China, with people wanting to assert themselves and questioning the official line on a number of issues. All this seems to indicate a groundswell of enormous, popular, raw political energy, wanting to take control of the world. They do not trust the political class, they are tired of the way in which the political class has made a complete mess of the world around them, they want to form their own opinions and, having formed their opinions, they want to make their impact felt. They have formed these opinions on the basis of a variety of sources, thanks to the internet, thanks to global connectedness, thanks to the fact that they are able to link up with powerful forces all over the world and form a global opinion within a local context. That is a profound change.

This means that if we really want to acquire power, we will have to influence how people think and how their opinions are formed. In other words, political power today does not lie in military weaponry, although that is important in times of crisis. If it were that important, Syria would not have got out of control and Iraq would have been brought under control a long time ago. Economic strength by itself does not take us very far either. I suggest that power is changing in a profound way because, once people begin to want to take control of themselves, power really consists in our ability to shape their thinking.

This is sometimes called soft power. The inventor of soft power, Joseph Nye, is a friend and I have debated this concept with him. I told him that I think it is a hazy concept. Soft power is simply a softer version of hard power and that is how it has sometimes been understood, the assumption being that what military weaponry has obtained, we will now obtain by softer means. Soft power is no longer soft, because once you are able to grip people’s imagination and shape their thinking, your hold is far firmer than military weaponry would give you. I would rather talk in the language of moral authority.

A country is able to shape other people’s thinking if it carries a measure of moral authority in the eyes of the world. Moral authority comes from two sources: the belief on the part of others that this country is forming its views independently; and that it is a country which is worth emulating and admiring. In other words, moral authority comes from intellectual and moral sources and that is what our foreign policy should be aiming at. Unfortunately, if we look at all the documents from the Foreign and Commonwealth Office, the emphasis is almost entirely on commerce and trade. Important as these are, I do not think that the Foreign Secretary was right to say that he should turn the FCO into “a commercially focused” organisation. I think the Economist rightly called it a form of zealous mercantilism. We should rather be thinking in terms of acquiring the kind of moral authority that I am talking about. We once had it, but we lost it—or at least weakened it—partly because of the second war on Iraq, partly because of the way we behaved in Libya, saying one thing and misrepresenting what the UN resolution was about, and partly because of actions such as abstention in the recent United Nations vote on the Palestinian demand for observer status.

If we really want to acquire moral authority and influence the way the world thinks about us we will need to do a number of things. I want to mention, in the minute I have left, four important points. First, our foreign policy will have to be principled and value driven. I am not talking about an “ethical foreign policy”—we know how we got into trouble—I am talking about a foreign policy which is seen by the world as giving voice to sanity and justice and representing independence and impartiality. Secondly, we need to be more hospitable to students coming from the rest of the world. These are the people who will go back to their country and shape their part of the world. Remember, this is how the United States acquires its power. It is very striking that 73 current and former prime ministers and presidents in the rest of the world were educated in American universities.

Thirdly, we will have to think of the BBC as a central vehicle through which our views are circulated. Although cuts might have been necessary, we need to be careful that it is not required to cut down its audience or its programmes. Finally, we need to play to our strength. We have succeeded in this country in building a fairly cohesive multicultural society. The rest of the world is moving in that direction and we have something to tell it. We appear to be very resentful about our multicultural society. We appear to be carping in our criticism. It is very important that we present a profile to the world such that we are seen as a society at ease with itself. This will mean more senior diplomatic staff drawn from ethnic minorities. As of now, I do not think that this numbers more than 1.5% to 2%. It also means that we should be saying more about how different religious and cultural groups can live together and what lessons can be drawn from our experience.

13:08

[Lord Dykes]

My Lords, it is always a great pleasure to follow the very wise words of the noble Lord, Lord Parekh, and his enlightened expression of the need for countries, particularly those going through very severe periods of austerity, as we are and as are other countries in Europe and elsewhere, to maintain civilised values in their external links with the outside world. It is also a pleasure to follow the equally wise words of my noble friend Lord Bates and his justified idealism about the need for a proper definition of politician and statesman. He did not have time to elaborate but I hope that he will not mind that I mention a rather cynical definition of a politician. Fifty years ago, a former US Defence Secretary, whose name I have forgotten, said to one of his friends, “Listen, honey, I’m a politician. That means that when I’m not kissing babies I’m stealing their lollipops. Never forget it”. I thought that rather harsh working definition of a politician should have been overtaken by events—and indeed that has proved to be the case in certain countries, and in Britain, too, which unlike the United States has a gentler view of the important requirements of a capitalist economy, but a modern, welfare capitalist economy, as the Germans have been so adept in creating, and the French in their own way.

I declare an interest, as I live in France. It does not mean that you have to be emotional and bombastic about your own country. We are all European countries, and we can be proud of every single level of our attachment, down from the individual street to the village and town, the county, zone, region and country. I am intensely patriotic about Britain, but I see plenty of faults here as well, as one does in other countries. But I am even keener that we resume our place as a legitimate and modern member of the European Union. I thank particularly the noble Lord, Lord Anderson, at the beginning of the debate, and the noble Lord, Lord Judd, who also referred to this in very strong terms. There is a need for this country to resume and reattach itself to its political maturity, of which we were very proud for many decades. Why have we become so insecure and immature about our European link, a very precious thing that we negotiated with great pain and difficulty over many years? We took 12 years to get in because of two French vetoes, then two years afterwards the then Labour Government decided that they wanted to renegotiate a substantial portion of the terms. No wonder our colleagues, patient as they are, begin to get very exasperated sometimes with our EU membership, particularly with the antics of what is admittedly still quite a small minority of Conservative MPs in the other place. They are going through a charade, partly because of UKIP but also for other reasons, of attachment to a pretend sovereignty that no longer exists in any country—not even in the United States, in the end, a country that is regarded by some people as being in decline.

I thank warmly the noble Lord, Lord Howell, as others have done, for launching this debate. It is always a great problem when you are talking about the whole world, but he did it very effectively, because he focused quite rightly on a number of things, particularly the Commonwealth. You can sound like one of those terrible travelogue films from the cinemas in the 1950s, which would say at the beginning, “As the sun pulls away from the jetty and the ship sinks in the east, we say goodbye to such and such a territory”. He did not do that; he focused on some of the modern requirements in this country in the sense of the Commonwealth, which is a very important body in every way. It is developing, as someone said, with an inadequate budget—but I hope that that will be changed in future. I appreciate, and have always been glad about, the attachment of the Commonwealth entity into the Foreign Office, as it is a more modern position and configuration for the modern world.

I, too, praise, as the noble Lord, Lord Howell, and others have done, the Foreign Office for the work that it has done over the years. I have always been distressed at the demoralisation of the Foreign Office by what is coming up to 15 years of cutbacks in expenditure, budgets and so on, in two or three phases. Yet another phase is now threatened by the Treasury, which is not so keen so often to cut back its own establishment in physical terms, as it lectures other departments on cutting back theirs. The Foreign Office has put up with this for many years. It does dent morale if people constantly say to diplomats, representing this country overseas with great pride, that they must just think about trade and commerce and nothing else. That is not the job of a diplomat; it is an important component, but it is not the exclusive job of a diplomat, and I think that other noble Lords have alluded to that.

I endorse the views expressed on the role that Britain can play in the Middle East, as a particular example of where we need to exert ourselves more. There was an incipient sign of this recently, but then it became rather gentle again, with the usual obfuscations that personally I find very depressing and unnecessary. This country needs to assert itself, with others, including Germany, which has always had that problem after the nightmare of the Third Reich, in dealing positively vis-à-vis the Palestinians in the search for a proper, genuine and just settlement between Israel and Palestine. It is a most important issue. The present Israeli Government are not a particularly attractive Government—and I am sad to say that, because I am a great admirer of Israel. It is a wonderful country, with many outstanding achievements. But to some extent the geopolitical wisdom of yesteryear, as with the United States, has left it a bit at the moment, and I regret that. Israel needs to understand that it cannot be defiant all the time, so that in the end the Palestinian territory is the only one in the world without civic and voting rights as a genuine entity and country. The UN charter cannot allow that. Therefore, that would mean the end of the Zionist state as we know it. I personally would prefer there to be two states, side by side, including a Zionist state with perhaps not too much religion—because a lot of Israelis are a bit worried about that as well—but an adequate, normal or normative amount. Then they could reach that solution with Palestine that would mean shaking hands and getting on. I was an official observer for the EU Commission in the South African elections, and the day after you saw the scales fall away from people’s eyes as the nonsense of apartheid was demolished and destroyed—although not immediately. It takes time. But it has happened, and it can happen between Israel and Palestine. If any two countries can work together in future, it is those two, and it is up to Netanyahu and Lieberman to see that, I hope with the advice in future of the British Government, who have been a little too hesitant.

If the United States is in decline and ceasing to be a leader of the western world, it must at least in this coming period, working on the global basis that the noble Lord, Lord Howell, has advocated for this country, make sure that it reaches the solution necessary in the Middle East. It would be the greatest tribute that there could be to Barack Obama. He was given the Nobel Peace Prize in advance of this achievement. I hope that that prize was justified.

13:16

[Lord Hannay of Chiswick]

My Lords, I very much welcome today’s debate, and the initiative of the noble Lord, Lord Howell, in securing it, not just because it is the first occasion that the House has had to conduct a wide-ranging discussion of foreign policy issues since the debate on the Address in May but because it offers an opportunity for me to continue a dialogue with the noble Lord about some aspects of the Government’s external policies, which was cut short on that occasion through lack of time—even if his own position has changed, to my regret.

I have to say, and I hope that the noble Lord will forgive me, that I will remain completely baffled as to the significance of the phrase “network world”. In the interim, I have reflected a bit and am reminded of the character in the Molière play who said that he had some difficulty in distinguishing between poetry and prose, but who was assured that prose was what he had been talking all his life. I think that I have been doing networks all my life; it is not something that has been discovered in the past three or four years.

If the debate also reminds us of the lacuna that exists as a result of our not having a foreign affairs committee, or an international affairs committee, in this House, which could periodically report to the House on key issues, it will have served a genuinely useful purpose. Before addressing a few general issues, I just wish to say how deeply I regret the Government’s decision to abstain on the UN resolution giving the Palestinians a modestly enhanced status at the UN. It was the noble Lord, Lord Carrington, who in 1980 first persuaded the European Community, followed some years later by the United States, to back a two-state solution. I believe that we should have followed that logic in voting for the resolution, not have pursued some non-negotiable conditions to give ourselves a quasi-alibi for an abstention. It may have seemed ingenious, but it was certainly not principled.

The general criticism that I would make of the Government’s external policies are that they are a little too narrowly focused on the cultivation of bilateral relationships and are a little too mercantilist in their approach to trade policy. The Foreign Secretary’s actions to strengthen and extend our bilateral diplomatic network and, in particular, to build up our representation in the main emerging powers, is to be applauded. However the objective should not be exclusively to promote British exports and inward investment, but every bit as much to influence the policy decisions of countries whose increasing role in the major multilateral organisations will make them essential partners in shaping a rules-based set of solutions to the global challenges that we all face, whether in trade policy, climate change, development, nuclear disarmament and non-proliferation or in nurturing peace and security more generally. That second part of the narrative often seems to be missing.

Then there is the mantra du jour that we are in a “global race”. There is some sense in this as a means of galvanising the energies of business and of bringing home the fact that we live in a highly competitive world where we have fallen some way behind our main competitors, but it misses out totally the concept of international co-operation which is every bit as important a dimension of a world in which Britain, a middle-ranking power which needs partners and allies to achieve its objectives, can hope to thrive. There is a real risk that the aftershocks from the great financial and economic crisis of 2008 will undermine the gains made since the end of the Cold War in international co-operation, and that the major multilateral organisations such as the UN, the IMF, the WTO, the G20, NATO and the EU will lose political backing, be underresourced and decrease in relevance. If that were to happen, I believe Britain would be one of the main losers. So by all means let us pursue strong bilateral relationships but not at the expense of those multilateral, rules-based organisations in which we have hitherto invested so much effort with some considerable success.

Nothing is more difficult than achieving coherence in a Government’s external policies and in one important sector I believe the UK is currently falling far short of that. I do not imagine anyone will dispute that the higher education sector in this country is a world leader and that over recent years it has been a rapidly growing source of invisible exports of great benefit to our universities and to the country as a whole. Incidentally, it is also a hugely growing source of employment in many parts of this country where that is lacking. The potential for even greater benefit in both ways in the years ahead is there but the Government’s own immigration policies are putting all that at risk. Last week we had the Minister for Immigration at the Home Office, Mr Mark Harper, rejoicing at the latest immigration statistics, which showed a sharp drop in net migration, the lion’s share of which was attributable to a substantial reduction in the number of students coming here. These are not people coming to take jobs but people coming with ready cash to purchase services which our colleges and universities can provide, people who in future years, when their studies are completed, will often become a part of that worldwide network of bilateral contacts which the Government are trying so hard to build up. What on earth is going on? What are the Department for Business, Innovation and Skills, the Foreign and Commonwealth Office and the Treasury doing about this truly aberrant state of affairs? I hope that the Minister, whose work in encouraging British exports, both visible and invisible, I very much admire and support will have something to say on this when he replies to the debate.

I have one final point. A debate on this subject would not be complete without a word on the European Union and the European dimension of Britain’s external policies, although we will have an opportunity to discuss that more fully before the Recess. If Britain’s influence in Brussels becomes marginal—even more so if we were to withdraw from the European Union—our influence worldwide in Washington, Beijing, Delhi, Brasilia and elsewhere would suffer too. We should have no illusions about that. Nor would our exports or our inward investment benefit—quite the contrary. It is, after all, not membership of the EU which can explain why our exports to China in recent years have developed so much less buoyantly than those of Germany. So we need to take a more imaginative, constructive approach to that European dimension than we have done recently, and to regard it as an essential and integral part of our external policies, not something that dare not speak its name.

13:23

[Lord Naseby]

My Lords, I concur in congratulating my noble friend on the initiative of holding this debate. I do not want to embarrass him but, frankly, he is the best Foreign Secretary that we never had. I couple that with the role that the noble Lord, Lord Marland, plays as part of the team with the noble Lord, Lord Green. He is probably the most energetic ambassador for British trade and commerce overseas that I have ever witnessed. I saw him in action in Sri Lanka in April and that visit was a whirlwind success. I do not know how many other countries he visited on that occasion but I congratulate him and the team behind him.

Forty-five years ago I wrote a pamphlet for the Bow Group entitled Helping the Exporter. I was one of three authors, all of whom had worked overseas for two or three years prior to writing that pamphlet. It was based on the fact that in the previous 10 years this country’s percentage of world trade had dropped from 20% to 13.5%. That is what prompted us, as young men aged around 30, to take an initiative and try to move the then Government to think creatively about how we should export and how we could improve our exports. We looked particularly at what the Government of the day did and at the agencies that were quasi-government at that time. One of the areas that we looked at was the Plowden committee report, which was basically about part of the structure of the Foreign Office at that time. I venture to suggest to my noble friend Lord Green that he should dust down that report and have another look at its conclusions. I had a look at them and many of them are very valid today, as they were then.

I shall pick out two of the 28 recommendations in the pamphlet. One concerned the Queen’s Award. If I am absolutely frank, I think that it is pretty tired at the moment. Here in this jubilee year we have a wonderful opportunity to relaunch that award, and I venture to suggest that we might look at that creatively. Secondly, the personnel within the Foreign Office that I meet overseas are, frankly, too young in terms of trade and business. They are too inexperienced and do not have the relevant knowledge, depth or contacts. That needs to be looked at.

I turn to the other half of the Motion: the United Kingdom’s new global role. We should be realistic: we do not really have a global role. We do not have enough of a defence facility and we do not have enough stretch in terms of contact on the ground. Therefore, we have to prioritise and select. We have to be brave enough occasionally to say no to certain ventures that we might morally think we should be involved in but do not have the resources to do properly. With regard to the Arab spring, north Africa and that area, we thought that Tunisia had undergone a relatively easy transition. However, demonstrations are now bubbling up, mirroring what is happening elsewhere. The recent murder of the US ambassador in Libya brings into question whether we were right to intervene there. I thought from the beginning that we were not, and I question whether the £1 billion or thereabouts that we spent on that venture was good value for money.

It has taken the Muslim Brotherhood some 84 years to get power in Egypt. Those of us who know Egypt a bit need to reflect on that. Are we confident that we backed the right side in getting rid of Mubarak if we end up with the Muslim Brotherhood? I am not at all sure. Jordan, you could say, is another country, but we are very silent on Jordan. As for Syria, I ask myself why we are backing anyone. It never was our sphere of influence; it was a French one. Why did we not leave it to the French? Who are we really backing? We have formally recognised a group but the stretch of the power base of that group is pretty illusory and does not seem to have too much basis as far as I can see. I ask myself: is the real risk that we are going to change from the Ba’ath Party autocracy to the Islamic jihadist movement? Certainly, we need to reflect on that. That is why two weeks ago I wrote to the Prime Minister, which I rarely do, saying that in my judgment there was absolutely no case for the British military to go in on humanitarian grounds; that is the role of the international Red Cross. Those of us who work in and know those areas should not forget that there is also the Red Crescent, which is as powerful and objective as the Red Cross, and it is a facility for some, but not all, of the UN agencies.

I turn lastly to an area that I know well, south and south-east Asia. I have lived and worked in three of the countries there: India, Pakistan and Sri Lanka. I think that I have visited every other country in that region with the exception of Burma. Today, apart from in India, the infrastructure and influence in that region is Japanese and Chinese—and now we have the Obama vision moving into that part of the world. As the noble Lord, Lord Bilimoria, said, that part of the world used to be very close to us but, whether we like it or not, over time we have alienated many of the countries there for all sorts of reasons. Even today we sometimes show little understanding of them.

When the then Foreign Secretary, Mr Miliband, went to India in 2009, he drew the allusion that the problem of Mumbai terrorism was associated with Kashmir. Not only was that wrong—in fact it was categorised as a diplomatic disaster—but so were the nuances that went with it. I shall quote from the Independent, which said:

“To make matters worse, he”—

Mr Miliband—

“kept addressing India’s septuagenarian Foreign Minister by his first name and putting his arm around him”.

There are certain traditions and methods of greeting and understanding people in that part of the world that are very different from what we do in the United Kingdom, and it is no credit to any of us if we forget that.

With the Commonwealth conference coming up next September in that part of the world, in Sri Lanka, which is greatly welcomed by the rest of the Commonwealth countries, we should remember Kipling’s epitaph, which states:

“A Fool lies here who tried to hustle the East”.

13:32

[Lord Soley]

In endorsing the comments about the contribution of the noble Lord, Lord Howell, to this House, I would simply add that he is a great loss to the Government’s Front Bench. I also thank him for the way that he introduced the debate. However, following his description of the “repositioning”, as he called it, of the world, I have had to reposition my speech very slightly and adjust it accordingly. The essence of what he said is that whereas we used to live in a unipolar world, and prior to that a bipolar world, we now live in a multipolar world—and that will last for a long time. He linked that to the emerging powers and new markets. It is about that issue that I want to say a few words.

When the phrase “British Empire” is used—it has been used only a couple of times today—we then talk, quite rightly and with some pride, about the Commonwealth. However, I sometimes think that the phrase “British Commonwealth” holds up a distorting mirror to Britain’s past. It was of course an empire but it was actually the world’s first power that, because of the industrial revolution, had a global reach. It is that which makes the difference. It was that global reach that resulted in the English language being the world’s premier language. It is that, together with a whole range of other things—including education, rule of law and the BBC; I could name them all—that forms the basis of our influence today. Notwithstanding the insightful comments of the noble Lord, Lord Parekh, about the nature of soft power and how it trips over into hard power, we have to build on what we have here, because it is important.

I want to talk about how we link up these things in relation to the “new markets”, which is the other phrase that the noble Lord, Lord Howell, used in introducing this debate. It is an area in which I have recent personal experience. I had great help from the noble Lord when he was a Minister, and I continue to get such help. I hope that I will continue to get it, not only from his successor in the department but from the Minister who will answer this debate, because it relates to this issue. I felt some time ago that Britain had an enormous contribution to make in terms of soft power. It was not just the BBC, education and so on; it was also that this country is seen as important in terms of the rule of law and good governance.

I must declare an interest because I set up the Good Governance Foundation, a not-for-profit organisation—which is just as well because it does not look like it will make a profit at any time soon—which is designed to use our experience and knowledge with emerging countries, which is the other issue that the noble Lord, Lord Howell, put in the title of his debate. As the result of an argument that I had with the authorities in Abu Dhabi about the treatment of a Palestinian family in 2010, I said to those authorities, “If you do not do something about the rule of law you will have big problems”. To my surprise and, I must say, my pleasure, they asked whether we could help in some way. The result, as some noble Lords know—the noble Lord, Lord Howell, certainly knows of my work there—is probably the first postgraduate course of law at Zayed University in Abu Dhabi. I was over there the other weekend and was introduced to probably the first two female judges in the Middle East. I was suitably impressed by their confidence, ability and training. I have yet to check whether any other Middle Eastern country has a female judge, but I have not heard of any yet.

In May this year I gave the first annual Sheikh Zayed Memorial Lecture on the rule of law. Initially I proposed setting up the annual lectures to promote the idea of the rule of law but I was then also asked to give the lecture, and I did. We hope that, as a result, the late Lord Bingham’s book on the rule of law will be published in Arabic. It is in this sort of area where we are able to do far more. I have now talked to about half a dozen other countries about this sort of approach.

The Minister may know—the noble Lord, Lord Howell, certainly knows, because he has been helpful on this—of the work that I am currently doing with Burma, which is sometimes known as Myanmar. There is an argument within Burma as to which name to use, but I will use Burma for the moment. We are now talking to Burma about similar options on the rule of law. The opportunities are therefore great. We in this House underestimate our strength which we can use in conjunction with such efforts. I am currently trying to arrange for people with suitable experience to go to Burma to help form good governance because, too often, that country receives visits from people from all over the world who will look at what the Burmese need and then go back to their own country and talk to other people there. We need a more in-depth and continuing involvement.

We have in this House people who have run the Civil Service, others who know about the relationship between a Secretary of State for Defence and the armed forces and police force, and, above all, people who know about the rule of law. We have many ex-Lord Chancellors in this House and, indeed, more lawyers than I can count. I hasten to add that I am not a lawyer. However, the depth of the contribution that we can make is far greater than we envisage, and we should have a structure to do it. That is what I am trying to do, particularly in Burma. Zayed University in Abu Dhabi is already involving us in more areas, and I want to continue and expand that process. We rightly talk of our use of soft power, but many of the emerging nations mentioned in the title of the debate also represent a vast opportunity as new markets—because the new market is for good governance. However you dress it up, good governance is a very wide phrase. It is not just the law or the relationship between the armed forces and a government; it is also education, health and a host of other areas where people are willing to learn from what we have done. It is not a case, nor should it be a case, of us telling them what to do. It is a matter of us working with them to deliver that change. I hope the Minister will address that in his comments.

13:39

[Lord Kerr of Kinlochard]

My Lords, I thank the noble Lord, Lord Howell, for securing this debate. I also congratulate him on the style and stamina that he showed on the Front Bench, sometimes under grave provocation—sometimes from me. I thank him very warmly.

I had intended to say a word about China but my fox has been elegantly shot—it could not have been better shot—by the noble Lord, Lord Bates. I shall therefore say a word about Korea and make one general point.

Korea is the world’s 12th largest economy—larger than the whole of ASEAN. Last year, it grew faster than any other OECD country and it has the greenest growth strategy in the OECD. It is a major inward investor here. It is a country that the Minister knows very well and, as he knows, Korean markets are now more open to British exports than ever, thanks to the free trade agreement that has come into force.

I need to declare an interest. I am the UK president of the UK/Korea Forum for the Future—a role I inherited from the noble Lord, Lord Richard, when I came to this place. I had inveigled him into doing it when I was Permanent Secretary at the Foreign Office, and the moment I arrived here he passed the role to me with all the dexterity of a Welsh fly-half. In that semi-official capacity, I congratulate the Minister on the Opportunity Korea initiative, in connection with which events will take place in Birmingham, Manchester, Edinburgh, London and Bristol in February. Creating greater interest in this country in the Korean market and in Korean culture is an extremely good idea.

In that context, I hope that the Minister can persuade his colleague, the Foreign Secretary, that it is high time that a British Foreign Secretary visited Seoul. The last British Foreign Secretary to visit Seoul was Douglas Hurd—now the noble Lord, Lord Hurd of Westwell—who did so 20 years ago. Frankly, that is not good enough when we are talking about a relationship with a country which takes us as seriously as the Koreans do, which has such a difficult political environment in its immediate neighbourhood and which is such an important market for us.

People in Korea have a real respect and affection for this country. The foundations of that are partly historical, with the valour of British forces 60 years ago, and partly due to recent partnerships, such as the fact that in Brussels the British were the most powerful supporters of the Commission in securing the free trade agreement. The Koreans know that. They would be delighted if we took more interest in them but they would be disillusioned if we took less interest in Brussels and therefore were able to exert less influence on behalf of the interests that we have in common. Therefore, the last point that my noble friend Lord Hannay made today was very important. I know that Koreans are puzzled at our present stance on the European Union.

I was in Australia last week. Friends there also expressed some puzzlement about our stance on Europe but I was not able to provide an explanation. They asked me why, alone with the Czechs, we chose from the outset to play no part in new EU mechanisms to reinforce the very fiscal discipline which the Chancellor was again preaching yesterday, even though no intra-EU fiscal transfers were envisaged. They have noted that this time we alone—without even the Czechs—chose from the outset to stand aloof from proposed arrangements for improved banking supervision in Europe, arguing that they were relevant only for eurozone member states, even though all other non-eurozone member states will be arguing this week in the European Council for arrangements that will permit them to join and even though our self-exclusion is causing real concern in the City. Noble Lords will have noted the important article by Gerry Grimstone, chairman of Standard Life and TheCityUK, in this week’s FT. I quote:

“British practitioners, politicians and officials need to engage more at the European level and to do so at an earlier stage—building alliances, and proactively informing and shaping the EU … agenda. Whether it is on banking union or on particular markets directives, we need to be at the table with an open, constructive and thoughtful approach. The UK voice needs to be firmly but constructively heard”.

That is the authentic voice of the City, unlike what the mayor was telling us this week, although his motives may be slightly different. He may have personal ambitions rather than the ambitions of the City at heart, and I do not want to go into any piffle.

I now want to make a half point and will then make my final point. My half point is about our global role and the fact that rhetoric is no substitute for resources. What one needs for a global diplomacy is diplomatic boots on the ground: local knowledge, linguistic skills, a real understanding of local markets, and sensitivity to national customs and history. It would be an illusion to pretend that one can be global on the cheap, yet I fear that that is what the Foreign Secretary is being asked to do. If the noble Lord, Lord Howell, were ever to bump into the Chancellor of the Exchequer—as I suppose is conceivable—this is a point that he might want to make to him.

My bigger point about our global role is as follows. When I was a young member of the Diplomatic Service, I witnessed daily battles between the advocates of a blue water diplomacy based on the United States and the Commonwealth and the advocates of being at the heart of Europe. By the time I became head of the service, the battle was long over. All had recognised that the dichotomy was false. It was accepted—not least because our American and Commonwealth friends had gently and persistently reminded us—that we best advance the interests that we have in common with them when we exert maximum influence in the EU. The obverse, by the way, is also true. When in Washington, I discovered that we are heard with greater attention there when it is thought likely that we will be able to deliver EU support for deals that we strike with the Americans.

We do not have to choose—indeed, we must not choose—between a blue water and a continental strategy. They are mutually reinforcing and we need both. If we punch above our weight—in the uncharacteristically belligerent words of the noble Lord, Lord Hurd of Westwell—it is not because of any innate diplomatic skills but precisely because our foreign policy is woven from the twin, mutually reinforcing strands of worldwide reach and continental heft. That is why I can give only two cheers for talk of a new global role. It will deliver among emerging powers and new markets only if they perceive that we are at the heart of all key Brussels debates, building alliances in support of common, and Commonwealth interests, and that we are set to remain their natural influential and permanent point of entry into the 500 million-strong EU market. If we lose influence in Europe, we shall find it hard not to lose influence with them; and if we lose interest in Europe, we may find that they lose interest in us.

13:47

[Lord Selsdon]

My Lords, I have always had great respect for my noble friend Lord Howell because he was head boy at my prep school, where he exercised a certain amount of soft power when we stepped out of line, as the noble Lord, Lord Fellowes, whom I see in his seat, may well remember. Apart from that, as I have listened to him, he has taught me many things over time. He has a quiet approach, behind which lies greater knowledge than I could ever wish to have.

In preparation for speaking to your Lordships today, I have taken advantage of my position as a member of the Information Committee by asking the Library to produce a really good note on this debate, and it has done so. If your Lordships are going home for the weekend and cannot find a suitable newspaper, the report that it has provided is quite remarkable, although I shall not quote from it today.

I was always in trade and I sat below the salt, as I have pointed out. I love the Pink Book and I love the balance of payments. I look at the £100 billion deficit that we have on visibles and at the fact that with every country of the EU we have a deficit that grows and grows. We have a surplus of £6 billion or so with the United States and a surplus with Ireland, much of which is in trans-shipments. Therefore, in visible trade we are failing dismally, whereas in invisible trade or services there is a balance of about £200 billion on each side. However, it is our role in the world that we need to think about.

I was brought up in the Navy as a navigator. I was very junior and therefore I always had the middle watch. I would look at the stars and try to study and learn. I found that as you look at the world, you ask, “What is it?”. I think of it geographically. One of my heroes is Harrison, with his connection to chronometers, Greenwich, 0 degrees and the centre of the Earth. With a globe, it is quite difficult to look laterally, so you need Mr Mercator, who produced the Mercator projection and the flat chart, so wherever I have been in all my time dealing with trade, I have put the United Kingdom right in the middle and looked to the left or the right.

Some 70% of the earth is water. Is that blue-water policy? The remaining 30% is land. What has this got to do with trade? Well, our trade was always maritime and 20% of all vessels floating on the surface of the earth have a Commonwealth flag. Everyone these days is nervous about piracy but the Navy will say that 80% of all our trade comes by sea. These statistics may not seem relevant but they have a relevance to me. It is all about the water. Take the economic exclusion zones, where each territory has a 200-mile limit around it. That makes the UK pretty big. In fact, with the Commonwealth it is enormous—36 million square kilometres. That constitutes more of the sea than the area round the whole of the United States, the rest of our NATO allies and the next biggest zone, France.

Does that matter, though? Looking over land and sea, we see natural, or God-given, resources and we forget that most of our own development involved the exploitation, if that is not an unacceptable word, of those natural resources through fishing, mining and agriculture. The Sudan was to be the bread basket of the Middle East and still could be. It is in this field of soft power and knowledge that the United Kingdom can play a great role. I think of the term “common wealth” not so much politically but as describing the combined natural resources of these countries and any skills that they may have which can be applied elsewhere—for example, the mining skills of Australia and the fishing skills of some of the smaller territories. Look at how the world has begun to become global in thought and concerned about energy, power and natural resources.

I have always been a great friend of the Commonwealth. One of the things that I was made to do in earlier days was to be able to recognise the flags of the world. The only value that has given me is as secretary and treasurer of the House of Lords Yacht Club, which of course carries a certain influence. Your Lordships will be aware that every vessel floating on the face of this earth that has a British flag has the right to the protection of Her Majesty’s plenipotentiaries—ambassadors’ ships or whatever they may be. We are a maritime nation; we are also British.

I have a feeling that the debate today will have done a bit of good, but I now turn to the noble Lord, Lord Green. After the last debate I wrote him a nice letter and gave him the history of the Board of Trade, which I had rewritten. He did not reply because he was busy on his travels and his footfall was extending everywhere from Everest down to the Antarctic, but his officials swiftly rang me up and said, “What about the other three volumes?”. I said, “Could we get rid of this word ‘BIS’, which is what my dog does?”—although I must not mention dogs’ business. Anyway, I got no reply. Then I thought I would go on in the same vein and say, “Let us look at the priorities”. I thought I would see if I could have soft power.

I was not going to mention this but I am obliged to because I have to declare an interest. I have pointed out before to your Lordships rather light-heartedly that if no one else would do it, I would launch my own satellites for surveillance. I have done that twice and declared it in the House. The company has now been formed. It is a limited company and I am told that I have to point out that I am the sole director. It is called Evening Star; it has the greatest satellite technology the world has ever seen; and it was all started by the university of the city where my noble friend Lord Howell was a Member of Parliament.

13:53

[Baroness Warwick of Undercliffe]

My Lords, I congratulate the noble Lord, Lord Howell, on the timeliness of this debate. Yesterday’s Autumn Statement sets a powerful context for it. There is no question that we have to develop a strategy for growth for the short term in the light of disappointing economic prospects, but the longer-term challenges are far more profound, as the wise and comprehensive introduction to this debate by noble Lord, Lord Howell, underlined.

In a recent speech, referred to earlier by the right reverend prelate the Bishop of Worcester, Jeremy Brown MP talked about the revolution taking place in the world order and of the scale of the task facing the UK if we are to preserve anything like our current level of influence in the world. I am grateful to the Library for drawing this speech to my attention. It had several interesting themes and I enjoyed it. He pointed out that we have a very strong position on which to build. Our history of openness and the strength of our cultural, diplomatic and educational ties go towards giving us a great advantage in emerging economies. But he also pointed out the dangers of complacency. Just because the UK has been in the lead in the past two revolutions—the industrial and the information revolutions—that is no reason to assume we will remain in the forefront of the next. He said:

“Britain needs a big wake up call. We have no pre-ordained right to be wealthier, more successful and more influential than other countries. We earned that status in the past through invention, adventure and enterprise, and we need to earn it again for the future”.

In describing this competitive advantage, he said,

“No part of our Government or public life should be exempt from this national task”.

I will restrict my comments to one issue that I see as a real competitive advantage. We are a major force in the provision of international higher education. I declare an interest as a member of the council of UCL. The Government should be congratulated on identifying higher education as a key strand within its industrial strategy. Doing so recognises that universities play an increasingly important role in the UK’s export success. This role is both direct and indirect. In direct terms, as this House is well aware, universities earn the UK £8 billion a year as a result of their recruitment of EU and non-EU students and the number of globally mobile students is growing rapidly, so projections suggest the UK’s export earnings in this sphere could rise to £17 billion by 2025.

But universities also support other aspects of UK international trade. Their international character contributes to the education of UK-domiciled students who have the opportunity to learn alongside students from the countries which will, in future, be of the greatest economic importance to the UK. International graduates clearly make an important contribution to UK business, through language skills and contacts as well as their professional competencies. Our own Science and Technology Committee, chaired by the noble Lord, Lord Willis, has drawn attention to the importance of international students in STEM disciplines, but it is important to point out that the links we are building are important across the whole range of subjects.

The creative industries are one of the sectors of the economy where we have the strongest potential for future growth. Our cultural and creative output is one of the great draws for talent to this county—one of the reasons good people will move here to work, and therefore one of the reasons major multinational companies will locate here. It is likely to be the foundation of many of our export successes in the future. I think there is an argument that our strength in these areas flows from our inter-connectedness, our openness to new influences and ideas, the exchange of cultures and histories which takes place in all our major cities, and our intellectual culture of challenge and criticism, which is not innate in all cultures. So I would argue that, although there may be particular issues about our dependence on international postgraduates in certain STEM disciplines to maintain the viability of these areas, there is no doubt that we should look to encourage the international character of all our higher education. This will be obvious to those in this House who have been involved in international diplomacy, and I warmly endorse the contribution of the noble Lord, Lord Hannay, in this respect.

As others have said, the UK occupies an enviable position in terms of its soft power. An annual survey recently published by Monocle magazine put the UK first, ahead of the US, based on a methodology which includes the UK’s attractiveness to business. The international links our universities help us to build are, I believe, critical to our future success in emerging markets where we have traditionally performed poorly. It is not surprising, then, that a couple of weeks ago CBI supremo John Cridland joined a growing chorus of business leaders in saying that Britain was losing a massive business opportunity with a policy that was turning away the brightest foreign students. Four Select Committees have recommended that the Government change their policy on student visas. The noble Lord, Lord Hannay, is also leading an inquiry which has touched on this issue. All the serious newspapers have supported the call for international students to be removed from the Government's net migration target.

The Prime Minister has said:

“We must support all sectors of the economy where we have a comparative advantage”.

I believe that the Government, in many ways, have done that in respect of higher education, except, that is, in their immigration policy. Here, there is a fundamental inconsistency between the Government's desire for short-term and long-term economic growth, and a policy that few outside the Home Office support.

In conclusion, I ask the Minister what steps he is taking to advance the cause of international students in his discussions with colleagues. Will he personally ask the Prime Minister, on behalf of the many of us in this House who feel strongly on this issue, to reconsider their policy on net migration to exclude explicitly international university students and support growth in this hugely important area?

14:00

[Lord Williams of Baglan]

My Lords, like others, I thank the noble Lord, Lord Howell, for his initiative in calling this debate. I also pay tribute to his contribution to discussions on international affairs in this House, in the House of Commons and in other institutions over many years. Just over a month ago, we were together at one such institution—Wilton Park, in Sussex—for a conference looking at the enormous changes now taking place in Burma. One thing that we discussed, and that I hope we can see in the future, was that Burma might take its place in the Commonwealth. After all, it is one of only two former British colonies—I think the other is South Yemen or Aden—which did not join the Commonwealth on its independence.

The noble Lord, Lord Howell, spoke of the reform of the EU. I think we all wish to see a more efficient and modernised EU, but I caution that we need to take care. Many foreign companies from the United States, Japan, China, Korea and India have invested in the United Kingdom because they see the UK as one of the most liberal countries in Europe and as a gateway to Europe. We can ill afford to lose their investments, economically and politically. We also need to take care in talking about reform of the EU in the wider sense of reform of international institutions. This country has a great stake in the United Nations, in the IMF and in the World Bank. After all, we are one of only five countries in the world with a permanent seat on the Security Council, despite the fact that we are a nation of 60 million souls, whereas India is a country of more than 1 billion. Talk of reform needs to be taken forward with great caution as regards discussion of international institutions.

To my mind, the heart of change with regard to global affairs lies very much with the rise of Asia, China, Japan, Korea, India and Indonesia, whose president, Bambang Susilo Yudhoyono, was here as a state guest only a month ago. We have to recognise these realities and think whether we would do better to deal with them in the EU or decoupled from the EU. President Obama has made it clear where he thinks the United States’ future direction should be. Just over a year ago, he spoke of the US’s pivot towards Asia and we need to be mindful of endeavouring to intensify further our relations with such an important part of the globe. If the US saw a UK decoupled from the EU, and France and Germany more dominant in the EU, I believe that that would accelerate US involvement and commitment to Asia at the expense of its longstanding commitment towards Europe.

In the debate, much talk has been made of soft and moral power, concepts with which I always feel a little uncomfortable. However, there is no doubt that such things have been critical over the years, over the decades and perhaps over the centuries to Britain's international role. Here I declare an interest as a trustee of the BBC and as a trustee responsible for the World Service. I appreciate the concerns expressed in the debate about the World Service. Like the rest of the BBC and like all British institutions, the World Service has suffered from diminished budgets in recent years but I can assure noble Lords—

[Baroness Northover]

I apologise for interrupting the noble Lord but I would like to remind him that those who are given permission to speak in the gap have, at most, four minutes, so he might wish to conclude his speech.

[Lord Williams of Baglan]

I can conclude by assuring noble Lords of the robust and rude health of the World Service. We broadcast in an array of languages, from Azeri and Burmese to Persian and Uzbek. In all those countries we still have an impact and a reach that is much greater than anyone else.

14:05

[Lord Liddle]

My Lords, in speaking for the Opposition in response to the debate, it is a pleasure to welcome the noble Lord, Lord Green of Hurstpierpoint, to the Dispatch Box for one of his relatively rare appearances here. I do not say that in any spirit of criticism; all sides of the House appreciate the huge amount of work that the noble Lord does on behalf of UK trade promotion around the world. He brings to mind a conversation I had with Chris Patten, as he was then, when he was in Brussels. I asked him what life was like as a European Commissioner and he said, “I spend all my life expensively circulating the globe”. I am sure that the noble Lord, Lord Green, does a lot of circulating but I hope that, in the age of austerity, he does not do it too expensively, although I am confident that he does it productively. It is good to welcome him to the debate.

I also thank the noble Lord, Lord Howell, for introducing the debate. I will not join in the obituaries because there is plenty of life left in the noble Lord yet. However, I regret that he is no longer on the Front Bench. As a new boy to this place, I found him one of the most reflective of our Ministers, who always tried to deal very conscientiously and carefully with points made to him. In that sense, he is a loss.

I agreed with the vast majority of what the noble Lord said in his introduction. He told us about the great transformation in the world, which the noble Lord, Lord Bates, illustrated very well in his speech when he spoke about China and its huge pace of transformation, which is something that we all neglect. I agree with the noble Lord that we should make the most of our networks. I am rather more with the noble Lord, Lord Howell, than I am with the noble Lord, Lord Hannay; I think that networks matter in this world, and the UK is fortunate and well positioned in that. I only wish that the Government paid more attention to the higher education network, about which the noble Baroness, Lady Warwick, spoke, because it is key to our future. I also agree with him about the chambers of commerce, as recommended in the excellent Heseltine review. I agree that the Lords should do more in international affairs; I would love the Lords to have a proper foreign affairs or international committee.

The points that he made about the Middle East and energy are very valid. I also agree about the strengthening of Commonwealth ties. I support what my noble friends Lord Judd and Lord Anderson, and the noble Lord, Lord Maclennan, have said. I think that the soft-power ties of the Commonwealth are very important but that it will not act as one as a political and diplomatic force—at least, I do not see that happening very much—still less as a single economic unit. I know that the noble Lord, Lord Bilimoria, was not talking about going back to a world of imperial preference but I see very little prospect of a kind of free trade arrangement within the Commonwealth. The interesting thing about the Commonwealth is the way in which its economic interests have moved away from those of the United Kingdom. One of the most striking things about the emerging world is the growth of south/south trade, as opposed to south/north, between Commonwealth countries.

The fundamentals of what the noble Lord, Lord Howell, said, were right. Trade with the emerging world is crucial to our success in what the Prime Minister and Chancellor rather irritatingly refer to as the “global race”. However, the danger in such talk is that we convince ourselves that there is some great choice to be made between the rest of the world and Europe. As my noble friend Lord Anderson said, it is not a case of either/or—and as the noble Lord, Lord Kerr, said, it is not a case of a blue-water strategy or a continental one. There was a lot of hullabaloo recently about the fact that for the first time we were trading more with the rest of the world than with the European single market. That is a perfectly natural development, given the pace of growth in the rest of the world. It should not become a political point.

Membership of the single market remains crucial to our ability to compete with the rest of the world because of its size, its proximity and its relative stability. It is highly integrated. The noble Lord, Lord Alderdice, and I were at a dinner last night where a Foreign Office official made the very good point on the subject of exports to China that France includes Airbus exports in its figures but 17% of each Airbus is made in the UK. We benefit from our partners’ success as well as our own.

Size matters. Being part of the EU single market gives us clout. On trade with China we worry about intellectual property challenges or the dumping of solar panels, but we try to secure fair competition and open up markets. Having that clout behind us is much better than being the United Kingdom on our own because—I think that I am right in saying this—the UK is smaller than the smallest Chinese province.

Europe matters a lot—and it matters in another sense. When the rest of the world thinks about us, it thinks about us not as Britain but as part of Europe. It thinks of Europe as an entity in the world. Britain has great strengths of its own—many noble Lords talked about them—such as the BBC, the World Service and the British Council. However, Europe, too, has strengths in this emerging world. It is regarded highly for its culture, civilisation, science and engineering. The European model is greatly respected as one in which we have achieved democracy and the rule of law, and a model of capitalism that combines innovation and dynamism with social justice. The European model is a strength for us, and in this multipolar world it will matter even more.

[Lord Spicer]

How long can we go on trading at a loss with Europe?

[Lord Liddle]

The question about our competitiveness applies not just to Europe but to the whole world. The House will debate later the excellent report of the noble Lord, Lord Heseltine, which addresses these issues. The problem is not with Europe but with UK competitiveness.

In the new world, Europe matters more, not less. Trade policy matters. There is a very ambitious EU trade agenda, as well as a transatlantic agenda and an agenda for trade with the Mercosur countries, with India and now with Japan. I would like to hear from the Minister about these possibilities. There seems to be a tremendous route to opening up more growth potential.

If we want to be an effective force, we have to put more emphasis on our European commitment. We should look at how the Chinese are buying up Africa; at how Europe has been ineffective in dealing with Russia on energy questions; at how as a continent we do not seem to be taking advantage of the opportunities of the Arab spring. Together, the European Union could do so much in these areas that it is not doing.

The biggest risk that this country faces is that we give in to the pressures for a pared-down Europe—the kind of pressures that Boris Johnson talked about this week—and end up sleepwalking towards our exit from the European Union when it is our membership of the EU that will be our strength in this emerging world.

14:16

[The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Green of Hurstpierpoint)]

My Lords, I thank my noble friend Lord Howell of Guildford for initiating an extremely important debate that has attracted a great deal of interest. My sense is that we have covered an enormously broad range of issues. I assure the noble Lord, Lord Liddle, that although I travel a lot around the world, I hope I travel economically. I turn right, not left when I get on a plane. I do not know what the travel policy is in Brussels.

Many issues have been raised. I hope noble Lords will appreciate that if I do not succeed in responding to every one of them, I will write in respect of the issues that I do not cover. I start with the point laid out by my noble friend Lord Howell that we are in a new era. The context is worth rehearsing briefly. One could argue that there have been only two periods in human history when there was a single global superpower. One was between 1815 and 1871; the other was between 1989 and about now. We are entering a phase where there is no longer one global superpower —or indeed two—but a series of actors on the world stage.

We are also moving out of a period of history that was unusual in the wider context of human experience. For most of human history, a country’s share of global output roughly equalled its share of the world’s population. In 1800 the second largest and largest economies were those of China and India. We are moving towards a situation where that sort of balance of economic output on the world stage will be true again. We all know what happened in the mean time. The industrial revolution enabled Britain, then other European countries, then America and—after the war—Japan to move ahead and take up a far larger share of world output than their populations would support in terms of their share of the world market. That time is now receding and we have to get used to a position in the world where a number of actors on the world stage are competing with us. In that sense there is indeed a global race.

Over the past 20 years or so we have seen the opening up of China, with the extraordinary consequences that my noble friend Lord Bates sketched out for us, and substantial reform in India. It does not always seem that India’s economy is very open, but the reforms introduced in 1992 by the present Prime Minister launched it on what is now, by its earlier standards, a significant growth path. We have also seen the collapse of the Soviet Union. These three major changes brought some 3 billion people into open markets and more into the financial and economic mainstream of the world. That has now spread through other continents as well. We have seen the emergence of powerful economies in Latin America, the Middle East of course, as the supplier of hydrocarbons to so many of those emerging powers, and now Africa. It is worth reminding ourselves that six of the 10 fastest growing economies in the world over the past five years are African. Ghana, Nigeria, Ethiopia and Mozambique are all growing at more than 8% a year.

The G20 is a key sign of this change. Global institutions are evolving in response. The G7/G8 has a role to play, but its central role in determining the economic issues of importance to the world as a whole has essentially now been taken over by the G20, which is a much better balanced grouping of nations to reflect the state of the world’s economy in the 21st century. This reflects the macroeconomic reality of today, which is that the global centre of gravity has shifted from west to east and from north to south, and that change is irrevocable.

The growth performance of China is remarkable. The numbers are extraordinary: anything times 1.3 billion looks like a very large number. It can be compared to the performance of Japan in the 1950s, 1960s and 1970s. If we look at Japanese growth rates at that time, they were not dissimilar to the extraordinary performance that we have seen in China in the past 20 years. That tells us that as countries go through the process of urbanisation, growth rates take off at a remarkable rate. This is a reminder that this transformation is only halfway through, or thereabouts. China's level of urbanisation now is at about 50%. India's is at about 30%. It will probably move up in both cases to something like 80% over the next generation.

The year 2008 marked the point at which more than half the world's population lived in cities. By 2050, that will be at least three-quarters, maybe 80%. Never before have the two largest nations of the world been urbanising at the same time and at such a pace.

All of this poses substantial challenges for us in this relatively small country. I am not sure whether we are indeed smaller than all the provinces in China, but I am sure that we are smaller than most of them. I am not sure whether “punch above our weight” is the right phrase, but at the moment we certainly have a larger share of output than our population would support. We are at about 3% to 3.5% of world output and our population is slightly less than 1% of world output. We must reconcile ourselves to the inevitable implications of that for market share over time.

We also face many other challenges, which indeed the world faces collectively. The implications of all the development that we have been referring to and the urbanisation that I have alluded to for such matters as climate change, environmental impact and claims on water resources, food and energy are all profound. Greater prosperity and a burgeoning middle class in so many of these countries do not translate straightforwardly into greater peace and harmony on the world stage.

However, this rebalancing neither can nor should be reversed. We must recognise that in the energy markets of the world we will be competing for sources of energy that are reliable, affordable and sustainable. We will have as a country to mobilise significant investment to deliver energy to the economy and to our consumers. We will have to play our part in ensuring that the world’s institutions of governance evolve in a way that makes sense in this new era that we have been talking about. But I want to focus most of my remarks on the direct commercial challenge for the UK. I want to persuade the House that I see the commercial challenge as extremely important to us, but as one that goes inevitably and inextricably with a positive cultural engagement.

I begin with the raw matter of trade. We have had some rather disappointing statistics this morning on the trade account for last month. Overall, the Office for Budget Responsibility report yesterday showed that trade was a drag on growth in the first three quarters of this year. This is a disappointment to us and a reminder of how far we have to go. What is absolutely clear is that, as we work to rebalance our economy, trade has to play a central role. It is not in my view a matter of mercantilism: it is a matter of understanding where growth will come from on a sustainable basis in this economy.

We must engage effectively with the international markets if we are to pay our way in the 21st century and find sustainable growth. That growth has to be based, as the noble Lord, Lord Bilimoria, reminded us very importantly, on competitiveness. We have a lot of work to do on that and I believe that trade itself is an important driver of competitiveness. There is ample evidence that particularly smaller companies that get into the international markets become not marginally but quite significantly more efficient, and quite quickly too. The more that we are successful in engaging more companies in the international markets, the more we will strengthen the backbone of our own economy.

We should recognise the importance of the European Union. A number of noble Lords drew attention to the importance of the single market. It is an affluent market of 500 million people. It may not be growing significantly at the moment, but half of our exports go to the European Union. We need to remind ourselves that, if you look at incremental import demand over the next few years, Europe will produce as much incremental demand as China. I could put that point around the other way of course: China will produce as much incremental demand as will Europe over the next few years. The real point is that, as a number noble Lords stressed, this is not an either/or issue between the EU and the rest of the world or between the EU and the Commonwealth. This has to be both/and. We cannot afford to turn our backs on any of the important markets, whether the rich ones on our doorstep across the channel or the Atlantic, or the fast-growing ones further afield in Asia, the Middle East, Africa and Latin America.

We need to recognise that the emerging markets will be the main drivers of growth for the next generation. This is not a flash in the pan. People talk about the slowing down of some of the key emerging markets in the past year or so, in Brazil, India and China. But, first, the slowdown is clearly relative. Slowing down to 7.5% in the case of China is a growth rate that anyone in Europe would rejoice to have. Secondly, we should certainly not see this as an implosion. The best central forecast is that they will continue to grow significantly for the next generation because there is quite a long way to go in the transformation, urbanisation and social transformation underway there.

This is important to us for all sorts of reasons. One is that their growth paths will not be automatic. It is very clear that as these countries grow and as their middle classes develop in number and spending power, we discover that they want the same things that everyone else wants. They want air conditioners, fridges and mopeds first and then cars, fashion, overseas travel and good healthcare. The opportunities from the emergence of these countries with significant purchasing power are tremendous for international suppliers. The opportunities are there for Britain as they are there for all our obvious competitors.

As I mentioned, in terms of our own economic needs, we have no choice but to engage internationally and to do so competitively and energetically. That is why we set a challenge last year of getting 100,000 more companies into the international markets over the next few years and focusing more on the non-traditional markets for British business. The fact is that our current market share in these newer markets is disappointing. We have lost market share in virtually all of them. We have not merely lost market share to newer competitors such as China and Korea; we have lost market share to our more obvious competitors just across the Channel in the shape of Germany, France and Italy.

Specifically, we have a minimal market share in many of the 19 priority emerging markets for UK Trade and Investment—that is to say less than 2% in 12 of them. We are behind Germany, France and Italy in 12 of them and we have lost market share in 18 out of the 19. We have work to do in order to encourage and support British business into these markets.

The good news is that we have the underlying capability. I think I have mentioned this to the House before, but I repeat it because I go on rediscovering it. I travel not only around the world but around this country. In every region of the country and in every sector of the economy, you find businesses of all shapes and sizes—traditional and high-tech, old and new—that are taking on the world. They are aggressive, entrepreneurial, dynamic, growing and engaging internationally. The second piece of good news is that our brand, if I can use that phrase, stands in very high regard around the world, not only for our reputation for integrity in the way business is done—the Bribery Act is widely admired—but for the quality of the products and services that we offer. The boost provided by the Olympics to that brand is of incalculable value.

The Government need to do the best possible job of promoting this endeavour. We need to do it through active work on trade liberalisation, which takes me directly to the very constructive engagement with the Trade Commissioner in Brussels, as the Commission has the competence for the negotiation of free trade agreements. As the noble Lord, Lord Liddle, mentioned, the agreement to start discussions with Japan is important. We should not be naive about how smoothly those discussions will go or how quickly we will reach a conclusion but the obvious point is that a serious opening up of the Japanese markets, not merely in terms of tariff barriers but, almost more importantly, of non-tariff barriers, will have a huge and healthy impact on Europe as a whole and on the UK in particular. The US and the EU pushing forward next year, if we can, on the negotiation of a transatlantic partnership will be even more significant. There is a large agenda, quite apart from the existing work on an Indian free trade agreement and with Canada, Singapore and now Morocco. In terms of looking at the impact, and showcasing, I thank the noble Lord, Lord Kerr, for drawing attention to the importance of the Korean free trade agreement.

We will keep at this. The importance of the trade agenda in Brussels cannot be overestimated; nor, as an aside, can the importance of the single market. One of the things that we have to achieve as a major member of the European Union is a full-blooded implementation of the single market, and there is clearly work to be done on that. Out of 12 dossiers currently on the table under the Single Market Act I, only one has been fully implemented. In particular, with the services directive, digital broadband and the digital single market, there is a huge terrain of activity that will bring significant benefits to the whole of the European Union, including Britain.

However, trade liberalisation, crucial though it is, is only one prong of any meaningful strategy. Trade promotion, through UK Trade & Investment, UK Export Finance and posts around the world, is critical. I note that some noble Lords have reminded us not to throw the baby out with the bathwater and that our posts have other roles to play, but I believe that nothing they do is more important than promoting British commerce in their respective markets. We need to ensure that they are trained and equipped with the right kind of people, with energy, competence and experience. We will continue to work on that.

Furthermore, trade is a major driver of economic development. Turning to the comments of the right reverend Prelate the Bishop of Worcester, I am pleased to be able to report that we have reaffirmed the 0.7% of GNP target and indeed have committed ourselves to getting there next year—the first G8 country to do so. Within the commitment on development finance, I draw particular attention to trade facilitation, in which we now invest about £1 billion a year. The gains from effective trade facilitation, particularly in the continent of Africa, will be very significant indeed to the Africans—which is of course a great good in its own right—but also have resonances for opportunities for British businesses. We will continue to be very active in trade facilitation through the work of the Department for International Development.

There is one other crucial point. However well the Government do trade facilitation and trade promotion work among British businesses, and however well we prosecute the case in Brussels for open trading relationships between the EU and the rest of the world, it is very important that there is lively, active support for businesses both here and overseas. The House will be having a short debate later, introduced by the noble Lord, Lord Heseltine, on his report. I am working with chambers of commerce around the international markets to upgrade the support that we provide for businesses, particularly incoming smaller businesses into these markets. There is also a good deal of work to do domestically. As we would all recognise, the quality of business support for business is very varied around the country, and is certainly very varied around the world. This is a major agenda item for the next number of months.

Finally—I apologise that I am coming under some time pressure—I stress the importance not only of trade but, in that context also, of what we have variously called moral authority or soft power. A number of noble Lords have drawn attention in particular to the importance of education. I strongly believe in the importance of education, both as a significant earner in its own right but, equally importantly, as an indirect supporter of British relationships for generations. If you get that right, at the right stage of people’s lives, you build relationships that last a lifetime with people who become the leaders in their societies. We have a great story to tell in many respects with strong universities—and a strong higher education sector in general—many of which are actively engaging around the world. I note, as one example, the work of the Open University in Vietnam and also fully endorse the comments made by more than one noble Lord about the importance to British students of the internationalisation of our domestic higher education offering. That is a strength that is very hard to put any meaningful value on.

The whole House will be aware that student visas are part of a wider issue where there is a difficult circle to square. We have a commitment to reduce the amount of net migration into the country but we want to remain open for business. I believe we have a good story to tell on inter-company transfers and entrepreneurial visas. It is worth noting that there is no limit on student visas for those that pass the tests, including the English-language test, and where the institution is a sponsoring institution. We are looking at the way student numbers, and ins and outs, are monitored. If I may, I will write to noble Lords with more details on that.

I stress that we have a warm welcome around the world. Soft power is very much about education, the role of the British Council and the role of the BBC. It is also about well recognised brands and is, as I mentioned earlier, about the Olympics. Which other country in the world could have made fun of itself, in a gentle way, on the opening night ceremony by having Rowan Atkinson send up “Chariots of Fire” and by having Her Majesty the Queen accompanied into the Olympic Stadium by James Bond? I can promise the House that this was noted and appreciated all around the world. We have a great brand to build on but have a lot of work to do. Finally, I thank my noble friend Lord Howell for such an important and interesting debate.

14:38

[Lord Howell of Guildford]

My Lords, it remains for me to thank your Lordships for your kind remarks and my noble friend Lord Green for his excellent and realistic summing up. We have had one Kipling quotation so I will just end with another:

“Let us admit it fairly, as a business people should”,

that over the past five years of financial crisis,

“We have had no end of a lesson”.

Let us hope that over the next few years,

“it will do us no end of good”.

Motion agreed.

Ugandan Asians

Thursday 6th December 2012 Lords Chamber

Motion to Take Note

14:40

Moved By

[Lord Popat]

That this House takes note of the contribution made by the Ugandan Asian community in the United Kingdom on the occasion of the 40th anniversary of their expulsion from Uganda.

[Lord Popat]

My Lords, it is an honour and a privilege to move the Motion standing in my name on the Order Paper. This debate means a great deal to me and my fellow Ugandan Asians, and I am very grateful to the powers that be for granting government time for this debate.

In 1997, on the 25th anniversary of the expulsion, the great businessman Manubhai Madhvani—sadly now departed—said of the Ugandan Asians:

“We came here 25 years ago full of anxiety to an unknown land. The British people extended a welcoming hand enabling us to make this country our home. Very few people tend to say thank you. We intend to be different”.

This debate gives me a chance, on behalf of so many, to say thank you.

This story begins long before the expulsion in 1972. Indians started moving to east Africa in large numbers in the 18th and 19th centuries to build railways on behalf of the British, and others followed. Some of them became very successful entrepreneurs and established themselves among the business elite. One company alone, the Madhvani Group, accounted for 12% of Uganda’s national output, and many other firms excelled. Uganda was granted independence in 1962, and the Ugandan Asians set about working with the Government to build the economy further, including constructing schools and hospitals. Yet, as we all know, things did not progress smoothly.

I remember the rise of Idi Amin particularly well. On 25 January 1971, I was at Entebbe International Airport as my sister was due to travel to Britain for her studies. At the stroke of midnight, confusion spread as the army moved in and seized control of the airport. The flight was cancelled, and at three in the morning we were asked to vacate the airport. The 21-mile journey from Entebbe to Kampala was the longest of my life. The radio told us of the coup, and I will never forget the harrowing sight of bodies scattered along the roads. Relations between the Ugandan Asians and the new regime continued to sour. Many of us, including myself, knew that our time was up and left before we were pushed.

During Uganda’s independence, Ugandan Asians had been given British protected passports, and in May 1971 my father sent me here to Britain as a student. Others who stayed were not so lucky. On 4 August 1972, Idi Amin announced that he had had a dream in which God had told him to expel the Asians, and he issued a decree ordering almost all Asians—some 60,000 of them—to leave. At the hands of this brutal dictator, who murdered and tortured hundreds of thousands of people, these 60,000 people were forced to leave behind everything but the clothes on their backs. They were brutally evicted and given only three months to leave.

The expulsion led to a global game of political football. India made it clear that the 60,000 were Britain’s responsibility. Kenya closed its borders to them. Advertisements in Leicester warned us not to go there as there was no housing and no jobs. Friends and family ended up far afield in Canada, India, the US and many other places. Yet the then Conservative Prime Minister, Edward Heath, and his Government rose above the rhetoric of Enoch Powell and others and demonstrated the compassion that I have come to associate with Britain. He ruled that Britain had a legal and moral responsibility to take in those with British passports.

Over 28,000 homeless and scared refugees arrived between August and November at Stansted Airport. In an age when flights are now so regular, it is difficult to appreciate how organised the British were to ferry 28,000 people across two continents in 90 days. It was a great testament to those involved and to British organisation that the operation went so smoothly. Those arriving were greeted at Stansted by a large number of charitable and voluntary organisations, which gave them food and shelter. The then Home Secretary, Robert Carr, established the Uganda Resettlement Board, and 16 temporary camps were set up across the country on old military bases. The resettlement committee did fantastic work and we are very grateful to them, including Praful Patel, who was the sole Asian member of the board.

It was a very difficult time for those who came across. Many of us encountered racial tensions, jobs were not always plentiful, and life was very difficult initially. My great friend and colleague in the other place and fellow Ugandan Asian, Shailesh Vara, has said in the past of the Ugandan Asians:

“Rather than looking at their expulsion as life-destroying, they saw it as a setback. They didn’t stay downcast, got up, and started over again”;

and start over again we did. The Ugandan Asians have helped to transform the fabric of British society, and the children and grandchildren of those who came across are now excelling in so many fields. Today in Britain, Ugandan Asians play a sizeable role in the national economy. While exact figures are not easily available for the impact of this one community, Britons with south Asian roots today make up 2.5% of the population but account for 10% of our national output. The number of Ugandan Asians on the rich list is also sizeable. The influence of the Ugandan Asians has also spread to British politics. Within this House we have four Ugandan Asians—the noble Baroness, Lady Vadera, the noble Lord, Lord Sheikh, and myself, as well as the most reverend Primate the Archbishop of York; and in the other place we also have Shailesh Vara.

Perhaps our most notable achievement has been to come to the nation of shopkeepers and transform the shopping experience for British consumers. When we arrived, shops shut at 5pm on weekdays and were closed on weekends. It was the Ugandan Asians who introduced late night shopping and Sunday openings. Within the Ugandan Asian community, and east African Asians in general, we have a large number of eminent doctors and surgeons, and I am proud to say that members of our community are serving today in the Armed Forces and the police.

Our community is often at the top of the education league tables, and we have a new generation of British-born children who are excelling. A large percentage of our children study at Russell Group universities, and many of our British-born youngsters are now reaching the higher tiers of their professions, perhaps most notably in the City.

The Ugandan Asians in Britain are philanthropic; always giving back to the society that has given so much to them. I was very proud this year to see our community celebrating Her Majesty the Queen's Diamond Jubilee and to hear of so many Ugandan Asians giving up time to volunteer for the Olympic and Paralympic Games.

In a moment, I wish to reflect on why I feel we have been so successful in Britain. First I want to reflect on, and praise Uganda for, the journey that she has been on since we left. I returned to Uganda earlier this year as a member of our delegation for the Inter-Parliamentary Union assembly in Kampala. I was staggered by the progress made in 40 years in so many fields. It is remarkable that a country Winston Churchill once referred to as the “Pearl of Africa”, that went through Idi Amin's dictatorship and a brutal civil war in its first 25 years of independence, is now such a friendly and outward-facing country.

Unfortunately, the Ugandan economy under Idi Amin fell apart; yet Britain and Uganda now do almost £150 million of bilateral trade every year—a number that I am confident can grow substantially. I am delighted that the Ugandan high commissioner has been able to join us today. Her Majesty the Queen, who is and always will remain a great inspiration to the Ugandan Asians, visited Uganda in 2007, and organisations such as the Commonwealth Parliamentary Association and the Inter-Parliamentary Union continue to support the building of democracy there.

So much of this improvement is down to President Museveni, who in 1997, to commemorate the 25th anniversary of our expulsion, came to Neasden Temple and invited back those who had been forced to leave in 1972. This brought closure to so many of my friends, and a small few even chose to return. Today in Uganda, the Madhvani Group is once again the largest private sector enterprise, showing how time really can be a great healer.

So why have the Ugandan Asians been so successful in Britain? The answer, I believe, lies in our values. Ugandan Asians have always believed in aspiration, enterprise and the importance of family—three of the values that Britain holds most dear. We have also come to understand the importance of hard work and education, which are things that we have learnt here rather than imported with us. We believe in self-reliance yet understand, perhaps because of our ordeals, the need for a strong community and to support those most in need. Yet we are also fiercely patriotic. We believe in Britain: its values, its tradition and its ability to act as a beacon on the international stage. We are proud to be British; we are the embodiment of people who have found a home that we love and where we belong.

Our values mirror those of the society around us. We have integrated into British society and adopted many new customs along the way, but we have managed to combine the maintaining of elements of our roots and heritage while ensuring that we are British through and through. As a community, we owe a great deal to the Jewish population and to the Board of Deputies of British Jews for helping us to develop. In researching for this debate, I came across an article from the Chief Rabbi, the noble Lord, Lord Sacks, in which he said:

“Many Jews of my parents’ generation owed their lives to this country. It took them in when they faced persecution elsewhere. They loved Britain and deeply internalized its values”.

The parallels with my own community are, to me, obvious.

So often, our national debate on immigration comes down to numerical details. I would argue that integration is a more important element. If you are willing to work hard, learn the language and give back to this great nation, most people do not mind about your skin colour or where you come from. My noble friend Lord Tebbit, who sadly could not join us today, wrote to me ahead of this debate. He originally opposed the arrival of the Ugandan Asians but said in his letter:

“It is clear that the Ugandan Asian community has become integrated into Britain and upholds British values and standards”.

They have, he went on,

“made a remarkable contribution to our economy and the Chancellor’s tax revenues and a below average call on his expenditure”.

We do not want a multicultural society in which different communities and religions are encouraged to live separate lives under different social structures. That form of multiculturalism is not how we build a strong and stable nation. In the same article, the Chief Rabbi concludes:

“Without shared values and a sense of collective identity, no society can sustain itself for long”.

I could not agree more. Britain is a different place from the one that I arrived in. It is more tolerant of ethnic minorities and the glass ceiling that prevented their rise in many professions has, I believe, been smashed. It is not difficult to imagine Britain continuing to become a more ethnically diverse place and, as long as we can maintain the values that have made Britain great, this is not a cause for concern.

The tale of Ugandan Asians in Britain is one that makes me proud, particularly when I see how much the new generation of British Indians has excelled. In 40 years, we have come far and I hope that our community continues to pay Britain back for what she has given us. At the launch of the Conservative Friends of India in April of this year, the Prime Minister said:

“The East African Indians have been one of the most successful groups of immigrants to any country anywhere in history”,

and that they,

“give so much to this incredible country”.

The element I am most proud of is how we have integrated into British society and become a values-led community. The expulsion was difficult on so many levels and we cannot forget those who lost their lives, but we are a strong community and better people because of the challenge we had to overcome.

On the 40th anniversary of our expulsion from Uganda, I wish to conclude by saying thank you to everyone who has helped to make Britain our home: to the volunteers who met us at the airport; to Ted Heath and his Cabinet, who took such a courageous political decision; to Her Majesty the Queen, who has been inspirational; and to the hundreds of thousands of people who have helped us to develop as a community. Thank you. We are so incredibly grateful.

14:54

[Lord Parekh]

My Lords, I thank the noble Lord, Lord Popat, for securing this debate. He is himself an excellent example of the subject of our discussion. He came to this country traumatised and penniless, and is now a successful businessman and a member of your Lordships’ House. Over the centuries, Britain has welcomed and given a home to many persecuted minorities. It is striking that Ugandan Asians have come to occupy a special place in our national narrative. Indeed, they have become a term of art for referring to all east African Asians. That has to do with the way in which the Ugandan Asians came and settled, and the way in which British society responded to them.

There were about 75,000 Asians in Uganda, constituting about 1% of the population. Around 35,000 of them had British passports. They became a target of hostility and tribal politics and were subjected to expropriation and brutality. About 8,000 families, numbering about 28,000 people, arrived in Britain over a period of 90 days. It is important to bear in mind that, unlike the way in which we have dithered about responding to Kenyan Asians, Britain welcomed them, honoured their British passports and made provisions for their settlement. Enoch Powell moved a motion at the Conservative Party conference condemning government policy but the Young Conservatives and the Federation of Conservative Students saw to it that the motion was defeated by 1,721 votes to 736.

The Heath Government were unbending; not only that, they gave leadership to British public opinion. It is very striking that this was more or less the first time since the Second World War that ordinary British people had offered their homes and hospitality to people whom they had never seen, as they did with the Ugandan Asians. In the first three months, 2,000 private individuals had offered their homes, and within about a year that figure had risen to 5,000. Among them, several political and religious leaders had offered their homes. I gather that one Member of this House whom I know quite well—the noble Baroness, Lady Bottomley—and her husband Peter Bottomley were among those who offered their home to a Ugandan Asian family.

Of course, there were cases where some local authorities panicked, not being quite sure what was in store for them. The fine city of Leicester was one of them; it put a notice in a Ugandan newspaper saying, “Please do not come here”. To its credit, it must be remembered that that notice—I have a copy of the advertisement—referred to the fact that they should not come, as advised by the Uganda Resettlement Board—in other words, the decision was taken by the URB, not by the city of Leicester on its own. The city acted in that way because it was not quite sure how many of the 75,000 people would be going there or what the central Government’s policy would be. It was only a few months later that central Government introduced Section 11 of the Local Government Act 1966. To its great credit, Leicester—in spite of that advertisement, which in a historical context is fully understandable—welcomed them and provided them with a home where they could flourish. That was Britain at its best, and it goes to show how immigration, if wisely handled, can become a source of great public support and strength.

To their credit, the Ugandan Asians reciprocated in the same spirit of gratitude and self-help. Many of them refused to accept the help that the Government were extending to them, while some who accepted financial help returned it. Within 15 years, all 28,300 of the Ugandan Asians who had come here had settled down. Never before in British history has a persecuted group established itself so well in such a short time, without recourse to public resources. That is a wonderful example to all minorities and that is the Ugandan Asians’ first contribution—one to be measured not in terms of their monetary and professional contribution but in terms of the historical example that they have set to other minorities.

The second contribution is no less important. I hope you will forgive me if I concentrate on non-tangible aspects of their contribution; after all, I am a philosopher by training. This contribution has to do with the fact that in spite of being persecuted and harassed, they did not bear a grudge against the Ugandan Government. They did not become an anti-Ugandan lobby, as they could have easily done. They blamed Amin but not the country and its people. As the noble Lord, Lord Popat said, they took great pride in returning to the country from time to time. That spirit of forgiveness and reconciliation is their second great contribution.

While many Ugandan Asians came to Britain, some of them went to Canada, Australia, the United States and even India. Family members were scattered all over the world and formed a vibrant trans-national network. As a result, there is hardly a Ugandan Asian family that does not have one branch in Canada, one in the United States and one in India. This not only makes them a transnational network; it also gives them a unique global and cosmopolitan consciousness. That is the third great contribution: a way of looking at the world that is grounded in global interconnectedness.

The fourth great contribution of the Ugandan Asians is at the level of culture. They have built temples and community centres. Sadly, not many noble Lords can read or write the language, but many of them have written wonderful short stories and poetry in their language, which also happens to be my language—namely, Guajarati. In fact, they are the only minority I know who have produced a rich, vibrant literature on their experiences in Uganda and in Britain.

They have also profoundly transformed our shopping culture, living on top of the shop, opening until late and serving exotic items, with all family members joining in to look after the shop, ranging from the grandfather to the grandchild of seven. They provide a kind of shelter—a lively, vibrant place—in inner cities.

They have also thrown up a prosperous middle class, giving the utmost importance to the education of their children. It is very striking that their children tend to be high achievers at GCSE and A-level; many of them are finding their way into some of our great universities.

The third generation of Ugandan Asians—and they are what we are now talking about—has continued this trend. Ugandan Asians, in short, are continuing to make an invaluable contribution and to provide a great pool of commercial and professional talent. I join the rest of your Lordships in saluting this country and in welcoming and celebrating the contributions made by Ugandan Asians to this country.

15:08

[Lord Steel of Aikwood]

I congratulate the noble Lord, Lord Popat, on introducing this debate today and warmly thank him. I have to begin with an apology, because when I put my name down, I thought the debate was going to start at 2 pm and I have to attend an engagement in my former constituency this evening over snow-covered roads. I hope the Front Benches will acquit me of discourtesy for not being here at the wind-up and transgressing the Companion in that way.

I did not want to withdraw my name because of my own personal background in this matter. My father was a minister of the Church of Scotland, ministering for eight years to the Scots population in Kenya and Uganda officially, and Tanganyika unofficially. As a boy, I drove with him on his preaching tours during the school holidays throughout those three territories. I have used every excuse and opportunity to go back and visit those places whenever I can, and I will be again during the February Recess.

The problem for the Asians in east Africa started not in Uganda but in Kenya, with the Africanisation programme of the Kenyatta Government. At that point, the Asian population of Kenya was less than 2% of the whole. They had come there from 1895 onwards to build the railway and develop a considerable role in trading in the colony. Sadly, in 1967-68, when they started to come to Britain because of the Africanisation programme, there was a great controversy in this country about what should be done about it—against the wishes of people like Iain Macleod and Hugh Fraser, who had been the Ministers responsible at the time of independence of these territories. They had given the Asian—in fact, the whole expatriate—population two years in which to opt either for local citizenship or to retain British citizenship. Many had retained British citizenship, but the Government of the day decided to introduce the Commonwealth Immigrants Act 1968, which withdrew that fundamental right of entry into this country. It was something to which we in the Liberal Party at that time were very much opposed, and I was very proud of my party that we divided the House of Commons against the Second Reading of that Bill. We only had 10 Members at that time, but we attracted 62 others from the major parties into the Lobby in protest against that decision. Interestingly enough, I looked up what the vote was in this Chamber, and it was much closer. With the influence of the Bishops and other sensible people, the vote in favour of the Bill was carried narrowly by 109 votes to 85, which shows again how this Chamber was perhaps rather more principled than that of the Commons.

Anyway, I wrote a book about it at the time and that much neglected work I discovered in the Library here cost £2 at the time. I could not find my own copy, so I went on to Amazon and I found that I could get one for £44. I wish that everything I have done had risen at the same rate. That is slightly irrelevant, because the impact of that Act clearly had to be withdrawn when Idi Amin’s Government in Uganda started to expel the British population by force. In 1971, I went on a visit to Kampala to meet a member of Idi Amin’s Government who had been at university with me in Edinburgh; later I had to flee the country. The British high commission was not very happy to have a Member of Parliament on its hands, and insisted that I be driven back to Entebbe Airport for 21 miles—to which the noble Lord, Lord Popat, referred—in the daylight, getting there at 6 pm, when the plane from Nairobi was coming through at midnight. For six hours, I sat in the airport, accompanied by the noble Lord, Lord Kirkwood, who at that time was my assistant. We watched the exodus of the Asians: we watched their baggage being looted and dumped on the tarmac; we watched their jewellery and watches being taken off them. I wrote at the time:

“I have never witnessed such scenes of unbridled abusive power and virtual anarchy”.

It was a terrible episode.

I will be brief because I am not able to stay. Winston Churchill visited the colonies in 1908; he was Under-Secretary of State for the Colonies at the time. He wrote:

“It is the Indian trader who, penetrating and maintaining himself in all sorts of places to which no white man would go, or in which no white man could earn a living, has more than anyone else developed the early beginnings of trade and opened up the first slender means of communication. It was by Indian labour that the one vital railway on which everything else depends was constructed. It is the Indian banker who supplies perhaps the largest part of the capital yet available for business and enterprise, and to whom the white settlers have not hesitated to recur for financial aid”.

That was written in 1908 and it was that spirit of enterprise and adventure that these people brought so commendably to this country, and for which we thank them.

15:08

[Lord Singh of Wimbledon]

It is a pleasure to follow the noble Lord, Lord Steel, who has done so much over the years to assist not only the Ugandan Asians but many others on these shores. I, too, would like to thank the noble Lord, Lord Popat, for securing this important debate celebrating the tremendous contribution of Ugandan Asians to the life of this country following their expulsion from Uganda by Idi Amin 40 years ago.

Looking back to the time of the expulsion, I recall the arrival of disorientated people with little more than the clothes they were wearing. I was struck by both the resilience of the Ugandan Asians and the extraordinary generosity of the British people. There were some noisy, ill informed protests against the decision of Edward Heath’s Government to welcome bewildered refugees who, in some cases, had been thrown out of the land of their birth. Edward Heath rightly earned the lasting gratitude of Ugandan Asians, and his humanitarian stance was, as we have heard, widely supported by many others.

Following the end of the First World War, immigrants from India, mainly Gujarat and Punjab, were encouraged to bring their enterprise and skills to newly developing British east Africa—to Kenya, Uganda and Tanganyika. Life was tough, and they endured many hardships. My father was a medical officer there for some years, and he would tell us about the difficulties the early pioneers had in establishing themselves in a new country. Over the years, they gradually became the industrial and commercial backbone of the country, with their own schools, places of worship, clubs and community centres. Then, suddenly confronted with Idi Amin’s cruel and erratic behaviour, they were forced to leave their settled life behind and seek a new future in Britain.

Well educated and previously reasonably wealthy people had to leave their homes, assets and African friends for the uncertainty of life in a new country. Some spent a brief period in resettlement camps and from there sought cheap, crowded accommodation and worked all hours of the day to feed themselves and their families. However, their extraordinary resilience and spirit of enterprise stayed with them. They worked long hours running corner shops or in low-paid employment. By dint of hard work, some slowly moved into the food and clothing warehouse businesses.

Others, as we know, moved into wider branches of industry and commerce, bringing trade and adding value to the country that had given them refuge in their hour of need. The same spirit of enterprise soon took them and their children into medicine, law and other professions. I remember a young lad in a local corner shop who used to do his homework in between serving customers; today, he is a university professor.

Noble Lords have heard of some of the individual achievements and successes, and I want to focus on another very important achievement that has lessons for us all today. One of the criticisms of immigrant communities is that they are sometimes reluctant to integrate into the life and norms of their adopted country, instead leading parallel lives in what are sometimes termed ghettoes. It is a two-way thing. On the one side, some immigrants tend to fear the hostility of others and therefore keep together. Unfortunately this itself increases suspicion, and sometimes a measure of actual hostility, in the host population. We see a little of this today in some parts of Yorkshire, where even those born here sometimes seem to lead separate lives. None of this applies to those who came here from Uganda 40 years ago. Many in Britain understood and sympathised with their plight, and the new arrivals enthusiastically adapted to their new environment where they have since gone on to reach the highest level in local and national government, including a much valued presence in your Lordships’ House.

As I said, successful integration is a two-way process, and I want to end by paying tribute to the British people for their kindness and generosity in welcoming Asians forced out of Uganda. It is truly a remarkable success story which has important lessons for us today in a world of increasing movement of populations and cultures.

15:14

[Lord Cormack]

My Lords, it is a great pleasure once again to follow the noble Lord, Lord Singh. I did so a few weeks ago. I speak in this debate for two reasons. The first is that towards the end of March last year, I sat by my noble friend Lord Popat shortly before he made his maiden speech. There was an exchange on the Floor of the House on prayers. I shall never forget it because he said to me, “I can’t say anything because I haven’t made my maiden speech”—and, of course, he could not—“Could you let it be known that those of us who are not Christians but are of other faiths attach great importance to the established church in this country and to the ritual of daily prayers in this Chamber?”. I was very moved by that, and I did indeed quote my noble friend and make those points on the Floor of this House. I was moved by it because it was indicative, in a few sentences, of what the noble Lord, Lord Singh, has just said: the way in which this community has become part of Britain in every possible sense. My noble friend, in his admirable opening speech, made that very plain.

My second reason for wanting to say a few words in this debate is that I was elected to the House of Commons in 1970. I was one of the Conservatives who helped to create the majority for Edward Heath by defeating the late Lady Lee—Jennie Lee, as she then was—in the Cannock constituency. I represented a seat that was adjacent to Wolverhampton. I am proud to say that I was until his dying day a great friend of Enoch Powell. Indeed, I had the privilege of giving the address at his funeral. He was not right on everything but then, nor is anyone else.

I was proud to be in the House of Commons when the Conservative Prime Minister said, “This is our duty. There can be no equivocation. These are British subjects with British passports. They are being expelled from their country which in many cases is the land of their birth. They are entitled to come here and they will be welcome here”. I was one of those Conservative Members who was proud to support a Prime Minister who was doing what was right. Although it was not desperately convenient and there was very understandable concern at the numbers of immigrants coming into this country, here was a special category—a group who did not deserve to suffer from that 1968 Bill of which my noble friend Lord Steel of Aikwood spoke so movingly a few moments ago.

They came here and we all know what has happened since. They integrated into our country. They infused a new life into the economy in many parts of the land. They worked. They prospered. They learnt how to adapt to and adopt British ways. They are a remarkable example to which only one other community can perhaps be compared. They have already been referred to—the Jews who came here, not necessarily expelled, but forced to flee the tyranny of Nazi Germany before the war.

As a very young Member of Parliament I was already aware of what it was like to live in a country where, because of your colour or your religion, you were persecuted. In this context I am delighted that I am to be followed in this debate by my friend—and I use the word very advisedly—the noble Lord, Lord Janner of Braunstone. He and I in 1970—another founder member, the noble Lord, Lord Dykes, is also here—helped to found the Campaign for the Release of Soviet Jewry. They were people in Soviet Russia who were not allowed to worship or to live normal lives but for whom there was an opportunity, if they could get a visa, to get out of the country. The noble Lords, Lord Janner and Lord Dykes, and I and others—I think of our friend Sir Ivan Lawrence who was a Member of Parliament at that time and was part of our group—worked very hard to draw attention to their plight.

That was the underlying reason why, in many ways, I felt that it would be utterly inconsistent and totally wrong, working as we were on that front, to do anything other than give the most unequivocal support to Edward Heath in the difficult but principled stand he took when it came to the Ugandan Asians. Although he is far too modest to say this, my noble friend Lord Popat is a living example of the rightness of that decision. He came to this country, put much into it, prospered as a result—I am delighted to say—and is a valued Member of your Lordships’ House. What greater example can there be of progress from exile—a member of a repudiated and expelled community obtaining a position of leadership and influence in his adopted country, of which he is rightly and so movingly proud?

Over the years, all of us in politics make many, many mistakes. We are all guilty of missing opportunities but in this case the British Government of the day held fast to that which was good. They did not render evil for evil but said “Welcome” and, as a result, they have been richly rewarded. I should like to conclude by echoing the words of my noble friend Lord Steel of Aikwood. It is very splendid that my noble friend Lord Popat has said thank you to this country but we owe a big thank you to him and to his community for all they have done.

15:22

[Lord Janner of Braunstone]

My Lords, I thank the noble Lord, Lord Cormack, especially for his kind words about me and about the Jewish community, of which am part. I praise my noble friend Lord Popat on this remarkable and important debate on the occasion of the 40th anniversary of the exile of the Ugandan Asian community from their home by Idi Amin. My noble friend was right that there are similarities between his community and my Jewish family who were immigrants. I also thank the noble Lord, Lord Cormack, for his very kind words. He has long been a friend of mine and I only regret that he sits on the wrong side of the House.

I remember all of this so well and I am delighted to share my memories with the House today and to speak of my experience with the unique and wonderful Ugandan Asian community from 1970, when I had just become an MP for part of Leicester. We could ask why the Ugandan Asian community chose Leicester. The first immigrants went to the city by chance and the rest by recommendation. My Jewish family had fled intolerance and discrimination, and had moved to Britain, as did many Asian families who moved to live with their relations who had already settled in Leicester.

In 1972, in the Ugandan capital of Kampala, an advert in its local newspaper declared that Leicester was full up and that emigrating Asians should look for somewhere else. However, just like all other communities, the Asian immigrants were intelligent people and the families already in Leicester contacted other family members in Uganda to make sure that they hurried up and moved before it was too late. In that year, an even larger influx from Uganda arrived in Leicester.

Sadly, as you would expect, as proud as I was of Leicester—I still am—for welcoming the diverse communities, they were not accepted by everyone. The local National Front and other fascist organisations encouraged more “white” people to join their campaign to fight against the immigration. Thanks to the Leicester Mercury, the local newspaper which is still running today, and the local police, we kept the fascists at bay. In 1977, I won the next election, but I only just made it.

One of my most unique and touching experiences was when I first met the Asian community at a meeting in Leicester. A mix of Ugandan and Indian people attended this meeting. Having spoken to Apa Pant, the Indian High Commissioner at the time, I stood up and declared with passion how I wanted to help their community, and how happy I was that they were bringing diversity and new culture to Leicester.

Immediately, a young man wearing traditional Indian dress stood up. He said: “Mr Janner, you have no right to lecture us on how we should live. You do not understand the problems we face. You have never been spat at because you are a different colour. You have never been cursed on a bus or sworn at because of your accent. Go away, Mr Janner”. He sat down and the room was absolutely silent.

I replied, “You are wrong, sir. I am a Jew and half my family were murdered by racists; destroyed because of their race. Sadly, I am an expert on discrimination. I know far too much about it. We must work together to fight racism. We have the same enemies. We have the same friends. We have many of the same ideas”. From that moment, my relationship with the Asian community blossomed and developed from respect to friendship.

The Ugandan Asian community has brought so much to this country. Its determination to survive and to create a home in Britain is evident. It helped to save Leicester’s economy by bringing in new ideas. It built up wholesale and retail sectors. Today, Leicester is one of the first non-white majority cities in Britain. It is a truly remarkable place where communities of different races and backgrounds work together. I am delighted to have worked for Leicester and I still remain a supporter of that wonderful city.

We can look around this House and see the diverse Asian communities, who are first, second, third, or even fourth generation and who have contributed to our country. We all should praise my noble friend Lord Popat, who moved from Uganda after being exiled because of his own race. At the young age of 17, he put himself through night school. During his career he has worked to advocate community cohesion between different faiths. He became a brilliant businessman and, sadly, he joined the Conservative party—the wrong party. He is the first Gujarati Member of the House of Lords and he stands in this Chamber with many other distinguished Asian Members. It is truly remarkable and so is he.

For me, the key to acceptance and to sensible immigration can be summed up in one word—integration. You retain your pride in your culture, customs, religions and traditions but you adapt to the place where you have chosen to live. Integration takes time. Over the past 40 years, the Ugandan Asian community in Britain has demonstrated how it can keep its individuality but also identify itself as part of our country. Our friend is the leader.

We congratulate here today our Ugandan Asian community on its contribution to our country. Here in Britain, we must always recognise and celebrate our true diversity, and continue to ensure that we work with all minorities in our very fine country to keep Britain a unique place in which to live.

15:29

[Lord Dykes]

My Lords, the fact that I am following the excellent speech of the noble Lord, Lord Janner of Braunstone, gives me the opportunity to say that some years after we had the great dramas which centred not only on Leicester, but on the London Borough of Harrow, where I was a Member of Parliament—in those days in the Conservative cause—we had the great privilege, right in the centre of the borough in Harrow, of celebrating the 50th anniversary of the second and third exodus of the Kindertransport children coming to the railway stations in London. They had been saved and rescued and taken to various parts of the country, and been given good, kind homes where they were welcomed as Jewish children fleeing from Nazi tyranny. I had, of course, to remind them that British Rail had asked me to pass on a message saying that there was still a bill outstanding for 950 scones, 475 cups of tea, 725 cups of coffee and could someone eventually pay the bill, which, with interest would be about £19,000? I did not bother with that.

I was very proud of the fact that Harrow, my borough, where I was the MP for one of the two constituencies, represented the multiethnic, multiracial, multicommunity philosophy that had already begun. We had a very substantial Jewish community of various groups, kinds and origins, as the noble Lord, Lord Janner, will know—he came to Harrow quite often I think. In an informal, colloquial sense I was honorary member of at least four synagogues and I went to synagogue as much as I went to church, which I was very proud of, and I always enjoyed them, even if the service was a bit longer than the Christian one. It was a great joy for us to welcome them and to remember what that meant for people.

Harrow had other groups as well. We had 190 Ismailis centred in a complex of about five different roads, with their pictures of the Aga Khan on the mantelpiece and so on, and I kept in close touch with them. In 1970, when I was first elected, having been very close to Edward Heath as his campaign assistant for the general election in 1964 and a candidate in 1966, he by then having become leader of the party, it was rather difficult for the local Conservative Association to say no to me when I was presented as possible choice of candidate and so I fought Tottenham. The courage he showed was immense. He was not always an easy person to work with—I hasten to add that I worked at a very humble level and he was the famous Prime Minister by then—but when I was elected in Harrow he had not forgotten that Enoch Powell had issued his venomous remarks on several occasions just before that election.

We tried to take action in Harrow because it was such a sensitive subject, with our multiethnic groups and so on. Edward Heath, with his characteristic dark, gothic humour said, “Now that you have become an MP I want to punish you by making you a PPS at the Ministry of Defence, dealing with all the Ministers, but in the mean time we are also going to do something else”—this was slightly later—“we are going to make Harrow a red-star zone for receiving Ugandan Asian refugees”. We therefore promulgated this locally.

Noble Lords can imagine that the scenes were a bit stormy in some of the local political groupings. In my own association there were some indigenous characters from the original community who were not so keen on this, but we insisted and Edward Heath, with great courage, and Alec Douglas-Home as well as other members of the Government ensured that legislation was passed, as referred to by the noble Lord, Lord Cormack. I thank him for his remarks. We insisted on that and we never looked back from the original reception when two sets of families, I think, came in. I am not exaggerating when I say that the borough of Harrow was already a dynamic area, thanks to the local MP—that is exaggerating, of course—and a very successful business area in terms of the people who resided there, but the philosophy, ethics and business acumen of the borough was transformed not only by the original Jewish communities whose members were resident there and sometimes working there, but by the arrival of the Ugandan Asians.

It had an extraordinary, tangible effect over a few years. The borough was transformed; it was electrified into becoming an interesting, riveting place, not only because the local corner shop stayed open until midnight or even 1am, but for all the other contributions that this remarkable community has made. Some time after, doing my rounds as the Conservative MP for Harrow East in our main residential area of Stanmore where we had our most important ward committee, I noticed the arrival of a very distinguished, very courteous, very polite young Ugandan Asian gentleman who slightly later became the ward chairman. I am referring, of course, to Dolar Popat; now the noble Lord, Lord Popat, of Harrow. That has given me, just as a personal example, a wonderful picture of the success of what this community has done for this country and what it meant for them to be saved, along with their families, children of all ages and older people, too. They have made such a contribution, which is unbelievable for a community that is quite small in comparison with other influxes over the decades. So we say thank you to them for what they have done.

As the noble Lord, Lord Popat, said, it is a matter of great delight that a reconciliation subsequently occurred, with Uganda becoming a totally different country. I am glad to see that the Ugandan Government are represented in the public seats today. That, too, means a lot to us. I often feel that historically each continent has its turn. I remember the stark poverty and abject conditions in Asia after the end of the Second World War and the old empires, with the French, the Dutch and so on leaving those territories in great poverty and distress. Good things have been done in the economies of various countries, but Asia was transformed by business acumen—by entrepreneurs, business people and investment. Who is to say that in some decades’ time, with more education and investment, not only will the Chinese come to Africa but other people will, too? Perhaps the British and other colonial powers will come back with their companies and invest more as well, not just in mining and extraction but in other things. They will help to build up Africa, as will the existing and emerging bourgeoisie in Africa—the business community that is in many different African countries, and I am sure in Uganda as well, which I have not had the pleasure of visiting. That reconciliation is important, because we are all in the global village now, and it means that Africa could be the next continent to develop—with more investment in education, and more of the air-conditioning that is needed in very hot climates. As those things gradually come, they will mean a great deal to those who experienced the bitter past and later a glorious future, and arrived here to help this country to become one of greater justice and fairness and multiethnic tolerance.

15:36

[Lord Bilimoria]

My Lords, over the over the centuries communities have had to flee persecution, drop everything they owned and the connections they had built up, and flee. Over 1,000 years ago my own community, the Zoroastrian Parsees, had to flee their homeland of ancient Persia and settle in India. Fast forward to today and I would say that the Parsee community, in terms of per capita achievement, was one of the most successful communities in the world, in spite of the way in which they had to leave their country.

I thank the noble Lord, Lord Popat, for initiating this debate. Forty years ago, as we have heard, Ugandan Asians had to drop everything and flee due to the cruel actions of a brutal dictator, Idi Amin, and came to this country with nothing. Fast forward 40 years and look at what they have achieved. There is the Madhvani family, of whom the noble Lord spoke; Anuj Chande, my friend, who is a member of that family, is a senior partner in Grant Thornton. The noble Lord, Lord Popat, himself has been an enormous success himself, and then there is my friend Shailesh Vara in the other place, and the Jatania family. I could go on with the numerous examples of Ugandan Asian business people who have been successful in this country, all in the space of a few decades.

When I first imported Cobra beer to the UK, I knew that Indian restaurants were going to be my base, but the first case I sold was to my local corner shop, owned by east African Asians. Today I am a senior independent director of Booker, the largest wholesale company in Britain, and we supply over 70,000 independent retailers, many of whom are east African Asians. I have seen first-hand how hard these families work and how every member contributes to the success of their businesses. I know so many stories of children coming home from school to work in their parents’ shop, who then work late into the night on their homework. This embodies for me what it is like to be an Asian in Britain.

When I am asked about Asian values, I say that it is very simple—it is down to the importance of hard work, of family and of education. The noble Lord, Lord Popat, also spoke of these values. Nobody embodies these Asian values more or better than the Ugandan Asian community. I congratulate the noble Lord, Lord Popat, on securing this debate and highlighting the achievements of this wonderful community. However, the success of the Zoroastrian Parsees in India was possible only because the Indians, starting with the Gujaratis on the west cost of India, allowed the Parsees to come in and settle, practise their religion and keep their culture and customs—and not just exist but co-exist with the local Indian community. Similarly, the success of the Ugandan Asian community has been possible only because of the generosity of this great country that took them in and gave them the opportunity to flourish. The noble Lord, Lord Popat, has thanked this country; I always thank it for giving me and the Asians here that opportunity.

Let us put this in perspective. As the noble Lord, Lord Janner, said, in the 1970s this was a country full of prejudice, when the glass ceiling was not just still there but was double-glazed. Even when I came from India as a 19 year-old in the early 1980s, Britain was a very different country from what it is today. Today, we have improved in leaps and bounds as a nation that is not just an opportunity-for-all country but a multicultural country and a meritocracy, where people from any religious or racial background can reach the top in every field. It is a country where entrepreneurship was looked down upon three or four decades ago. Today, entrepreneurship as demonstrated by the Ugandan Asian community is celebrated in this country.

In fact, those corner shops started by this community are the cornerstone of our economy—the entrepreneurial success stories of these individuals, who went as complete strangers to every high street of this country, opened up their shops, won customers, made friends and, more often than not, put back into their local communities. To this day, in spite of the proliferation of the giant supermarkets, the Ugandan Asians who own the two corner shops near our house know the names of all of my children, as they know the names of the children of all their customers, and they work really hard.

This country has been built on good immigration, the kind that we have seen from the Ugandan Asians, but the way in which this Government are dealing with immigration, with their immigration cap, is crude and blunt—they are using a carpet-bombing technique. The Government’s policy is not just addressing bad immigration, it is also stifling the good immigration that, quite frankly, this country has been built on over the centuries. The immigration cap is affecting businesses, not only in the signals that it is sending out in general but in very practical terms. For example, as I mentioned earlier, the foundation of my business is the Indian restaurant industry, where I know from the Bangladesh Caterers Association—the leading industry body—how much the industry is suffering because it cannot bring in the skilled staff, and chefs in particular, that it desperately needs. I am all for “curry colleges” being set up in Britain in the way that the University of West London, where I was proud to be chancellor for five years, is doing. However, these initiatives take time to produce the skilled individuals that the industry so badly needs. In the mean time the restaurants, which are already suffering a huge recession, are, on top of that, being deprived of skilled staff by the Government’s ill-considered Immigration Rules—and we as consumers are suffering because we are a nation of “curryholics”.

I have spoken many times about how the Immigration Rules are affecting higher education. Britain has the best universities in the world, alongside those in America. Now the Government have removed the two-year postgraduation visa for students, which was such an attraction to foreign students, who brought some £8 billion of revenue into this country. Quite apart from that, foreign students enrich our universities; they enrich our home students, giving them wonderful experience of interacting with international students as well as building generational links across the world. I am the third generation of my family to have been educated in this country.

We have seen a dramatic fall in the number of applications from students around the world, particularly from India, because the Government are sending out signals that Britain does not want foreign students. I know that this is not the case but that is the perception that has been created. Some 30% of academics at Oxford and Cambridge, for example, are foreign. Even they are suffering in terms of getting the brightest and the best because of what I believe is a retrograde government policy.

I have spoken before about the UK Border Agency abruptly taking away the licence from London Metropolitan University to sponsor visas for foreign students and telling the existing students that they had 60 days to find another university. It claimed to have found irregularities but the vast majority of those 2,500 to 3,000 students were completely innocent of any wrong-doing. This is without regard to the finances of the university, which will be short of £30 million a year. Not only does this jeopardise the university but it sends a signal to foreign students around the world that if they come and study in Britain there is no certainty that they will be able to complete their studies at their institution. That is damaging and short-sighted. Again, I ask the Minister if she will request the Government to remove student figures from the immigration figures, just as the United States, Canada and Australia have done. Why do we have to include them?

In conclusion, we are a tiny country of 60 million people and we are rightly worried about excessive immigration. We need to clamp down on illegal immigration, but why are we doing it in a way that is harming our economy, our universities and our competitiveness—the very fabric of our nation? As the noble Lords, Lord Popat and Lord Janner, said, the Ugandan Asian community has shown the wonderful way that it has integrated. The Asian community makes up 4% of the population of this country and yet is contributing more than double that percentage to its economy. The Ugandan Asian community has shown clearly and brilliantly that good immigration always has been, and always will be, great for this country.

15:45

[Lord Sheikh]

My Lords, I am extremely thankful for the opportunity to speak in this debate, and I am most grateful to my noble friend Lord Popat for calling it and for his excellent speech. That is not least because members of my family were among the 28,000 Ugandan Asians who came to the United Kingdom in the 1970s. Thus, the personal resonance of this subject for me holds no bounds.

I also believe that this 40th anniversary provides us with an opportunity properly to reflect on just how significant a part this movement has played in the cultural and social development of the UK, and how much better off we all are because of it. Ultimately, the UK gave asylum to around half of those exiled from Uganda, including many from a cross-section of different religions. Such a considerable and complex movement of people brings with it personal stories of triumph and turmoil.

My father originally came to Uganda in the 1920s and quickly carved out a name for himself in a wide range of industries including cotton, hides and skins, coffee and property. He was president of the Indian association in our home town for more than 30 years and represented all the communities of Asian origin. He also helped to pioneer the Ugandan education system, benefiting thousands of children. He can be described as a man of vision, an entrepreneur and a philanthropist. He died in the 1960s, before my family were expelled the following decade, but I had already learnt much that has inspired me to do well in this country.

I brought that hunger and enthusiasm with me when I came to this country. This culture is typical of many other Asians who came here from Uganda. Although the ancestors many of the Indian families were originally brought over in the 19th century to help build the railway system, they had since become successful in businesses and professions. The community prospered in every walk of life. By the 1970s, they were the backbone of Ugandan economy. There was peace and harmony between people of various religions and racial origins in Uganda. When the Asians were expelled, their properties, businesses and almost everything else was taken from them by Idi Amin and his Government. As such, they arrived on British shores completely penniless. General Amin took everything from us except our knowledge and what we had in our heads.

I think that I speak for most, if not all, of those who came to this country during this time when I express my gratitude for Prime Minister Edward Heath’s honourable decision to allow those of us with British passports to settle here. Others went to places such as Canada, Australia and Europe, but I am grateful that my family was able to come and enjoy the opportunities that the UK provided to us and thousands of others. Upon their arrival, many Ugandan Asians were able to open corner shops and other small family businesses that proved to be highly successful in serving the needs of local communities. Many of them also took jobs in various sectors. This provided them with a solid base on which to raise their families and rebuild their lives.

The children of those families have since grown up and been educated here in the UK, serving only to advance their family lines through the high quality of learning that we so celebrate in this country. While some have taken over the family corner shop or followed in their mother’s or father’s footsteps, others have moved into different professions that in many cases were not accessible to their parents.

Today, the sons and daughters of Ugandan Asians are visible in every walk of life, from medicine to banking and from writing to manufacturing. They make valuable contributions to our workforce, pay their taxes and help us to compete on the international stage. It should also be noted that the crime rate among this community is very low. Their influence can even be felt in this very House; I know that my colleagues, the noble Lord, Lord Popat, and the noble Baroness, Lady Vadera, share my proud heritage, as do Shailesh Vara and Priti Patel in the House of Commons.

Perhaps the most notable example of where Ugandan Asians have thrived as a community is in Leicester and in the London Borough of Harrow, where, despite much resistance at the time, a number of the immigrants chose to settle. In the short term they helped to breathe new life into the economy of these areas, mainly through regenerating the manufacturing base and establishing new businesses.

There are many specific examples of individuals and families who have thrived and become successful in their own right upon coming to the United Kingdom. I should like to mention the inspirational example of a good friend of mine, Mr Jaffer Kapasi, who was one of those who moved to Leicester in 1972. He arrived in the United Kingdom at the age of 22 with nothing. After university, he trained as an accountant and, several years later, set up his own business. He chaired a housing association for elderly and vulnerable people in the Midlands. When he took over the chairmanship in 1992, the association had 280 homes, and when he stepped down last year it had 1,900. He was awarded an OBE in 1997 for services to business in Leicestershire. This year, the Meiji University in Tokyo published his life story and I highly recommend that noble Lords read it.

The contributions of Ugandan Asians to the United Kingdom can be acknowledged on many levels and in many circles—economic, cultural, social and professional. It is a testament to how homogeneous a community they are that they have integrated so well into the British way of life. Wherever they have gone, they have earned respect, maintained a strong work ethic and forged successful relationships with other communities.

This is a land of opportunity and tolerance, and we have always found the environment highly conducive to success. These qualities have allowed the Ugandan Asian community to flourish and, in turn, its members have served only to enrich our society further. I believe that this anniversary should remind us of the opportunities that there have been for members of that community to live well and flourish.

Uganda’s loss truly has been Britain’s gain. The Asian community that came here and its future generations will, I believe, be good British citizens and help in the advancement and well-being of this great nation. Thank you, Britain, for accepting us when we arrived here. You have certainly lived up to the name “Great Britain”.

15:53

[Lord Bach]

My Lords, I congratulate the noble Lord, Lord Popat— who, along with me, is a member of the all-party group on India and whom I have come to know through that organisation—on obtaining this debate and particularly on the quality of his opening speech. It is a subject on which I think the whole House can be united and I look forward to what the Minister has to say in due course.

I am delighted to be making a guest appearance on the Front Bench. Like my noble friend Lord Janner, my experience is based on what I describe as “God’s own city”; others call it Leicester. For a number of years I was a ward councillor for St Margaret’s ward—part of the noble Lord’s old constituency and part of which is in the Belgrave area of the city. A very large number of my constituents were Ugandan Asians. Even today my links with the city remain strong. I have spoken to both the executive city mayor, Sir Peter Soulsby, and to Sundip Meghani, a young Labour councillor born in Leicester of Ugandan Asian parents who came to this country as refugees—Councillor Meghani started the debate in Leicester to celebrate the 40th year—concerning the Motion of the noble Lord, Lord Popat. I thank all other noble Lords who have spoken in the debate. We have had some remarkable speeches. I very much enjoyed the account by the noble Lord, Lord Steel, of what must have been a really awful experience of watching people being forced out of their own country.

Looking back at that time 40 years ago, it is easy to be critical of some of the early responses from this country to the crisis that was caused suddenly and solely by President Amin. It represented a brutal act with no regard for generations of Ugandan Asians who had been a vital and successful part of Ugandan life, particularly where business and commerce were concerned but also in a much wider context than that. The noble Lord, Lord Dykes, talked about the Heath Government, who have to be praised for the courage of the course that they took. I have no doubt there were queries within the Government. The late Lord Carr, a former Member of this House who is not spoken of much, was the Home Secretary. The proudest part of his political career, he told someone later, was the time that he spent persuading the Cabinet to do the right thing—which they clearly did—and do its duty to dual passport holders. The Government were pressed by their own supporters during the course of that year and it is to their credit that they saw off those opponents on this matter. They also had to face the appalling National Front in taking the brave decision to allow the refugees in, a decision for which they are still remembered today.

At local level, Leicester City Council’s famous advertisement, placed in a Kampala paper, encouraging people not to come to Leicester was not, perhaps, its proudest moment. However, I think it is worth repeating what the noble Lord, Lord Parekh, said: that particular advertisement appeared because the Ugandan Resettlement Board had made it clear that it was designating areas that it was trying to dissuade people from coming to. In fact, the advertisement told people to accept the advice of the Ugandan Resettlement Board. Thankfully, that advice was not taken. In fact, it may well be that many Ugandans were encouraged to come to Leicester by the advertisement. Whatever the reason, the effect has been very advantageous indeed for the city of Leicester. It is worth pointing out that there was no extra government money at that early stage when the advertisement appeared.

The truth is that this country can be pretty proud of the way in which the authorities, whether at local or national level, dealt with this issue. Grants were eventually made available; they were wisely spent, and sensible policies were adopted. I am immensely proud that for many years now Leicester has had a reputation for having people from many backgrounds and cultures living and working together in harmony. Much of that is down to the good sense and decency of both the indigenous population and the newcomers, to the sensible pragmatic policies of Leicester City Council over the years and to the Leicester Mercury and BBC Radio Leicester. I know it is not fashionable at the moment to praise the press or the BBC but they have done a lot in their own way to ensure that the culture of the city grew up and that the new Leicester was supported.

Those early days cannot have been easy for the Ugandan Asians who came to this country. Many of the men had professional jobs in Uganda but had to go on to the factory floor while many Ugandan Asian women, who I understand were used to staying at home, had to find jobs in the hosiery industry. In Leicester, the tradition is that the factories are very close to the residential areas due to the history of women having worked there for many years. It was through working together that barriers began to be broken down. When looking back, it is important not to fall into the trap of thinking that things were easy for those who arrived. The National Front targeted the City of Leicester and, after a brief burst of popular support but not electoral success, thank goodness, it was seen off by the good sense of the city and its citizens.

The Ugandans’ homes had been forcibly taken from them and this was a strange new country. Forty years on, it is the unanimous view among sensible people of good will across party, race or culture that Ugandan Asians have, as the debate has made clear, contributed enormously to the British way of life. Their commitment to family life and to entrepreneurial spirit has benefited this country immensely. Their ever-increasing role in public life enhances our political system too. From Members of Parliament and Ministers to senior officials in national and local government, through the arts, fashion, food and sports, those with a Ugandan Asian background have become an essential part of British life. Long may that continue.

This coming Saturday I hope to be having my lunch on Belgrave Road in Leicester at a very well known landmark, a vegetarian restaurant called Bobby’s. Some noble Lords will have had very pleasant experiences there. That restaurant is owned by a Ugandan Asian. When I come out from lunch at about 2 pm—it gets dark at that time these days—the Diwali lights on Belgrave Road will be on. Later on, those lights will become Christmas lights. I do not think that there is a better symbol of how Ugandan Asians, Asians in general in Leicester and the indigenous population have managed to find a way of living together in harmony.

16:03

[The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)]

My Lords, I congratulate my noble friend Lord Popat on securing this debate and on his moving and personal speech. The noble Lord clearly embodies the Motion he is moving as he highlights the contribution of the Ugandan Asian community. Perhaps I may start where he finished. I say thank you to the noble Lord, Lord Popat, for allowing me an opportunity to respond on behalf of the Government to such a timely debate. I thank the noble Lord, Lord Parekh, for an informative and enlightening contribution, teaching me much that I did not know. Few people alive in Britain 40 years ago will forget the scenes of thousands of Ugandan Asians being uprooted from their homes and arriving in Britain. In August 1972, 60,000 people were given just 90 days to leave their homes, their businesses and their country after a senseless decree by a brutal dictator, Idi Amin.

Looking back at that fateful time, we know that the UK acted swiftly. Amin announced on 4 August 1972 that there would be no room in Uganda for British Asians. Preparations began immediately in the UK for receiving those Ugandan Asians who had British passports. By 18 September the first 193 British Asians from Uganda had arrived at Stansted Airport. By 17 November more than 27,000 Ugandan Asians had arrived in the UK. In the first year—1972-73—a total of 38,500 Ugandans Asians came to Britain. I learnt about this event as history. It has been fascinating today in your Lordships’ House to hear of it as an event that so many noble Lords lived through.

My noble friend Lord Popat touched on the huge efforts to bring thousands of people to this country in that short period. He also mentioned the kindness that they were met with on arrival—of the charities waiting at Stansted and those who supported them, put them up and helped them get back on their feet. It was fascinating to hear from my noble friend Lord Dykes about his role as a local MP at that time, and it was interesting to hear from my noble friend Lord Popat about the late Conservative Prime Minister Edward Heath’s photograph proudly hanging in the living rooms of Ugandan Asians. I wonder how many recent Prime Ministers can imagine that their image hangs on people’s walls and is held in such esteem.

I thank my noble friend Lord Cormack for his contribution both today and at the time, when he supported a Prime Minister who was, as he said, “doing the right thing”. While many Ugandan Asians were forced to leave everything behind, Amin could not force them to relinquish their strength, their skills and their flair as entrepreneurs. They brought them here in abundance and we see the evidence every day. These qualities were referred to by my noble friend Lord Steel of Aikwood.

Just three months after the refugees had begun arriving, 1,000 employers had offered jobs to the newcomers. By 2002 it was estimated that Ugandan Asians had created 30,000 jobs in Leicester, which was one of the main cities where they settled in the early 1970s. In fact, Ugandan Asians now make up about 11% of employers in the city. The noble Lord, Lord Bach, referred to Leicester as “God’s own city”. I come from Yorkshire, which—I have it on good authority—is God’s own county, so I may not be able to agree with the noble Lord in his assessment of Leicester. However, we can both agree that the positives of Leicester, created both for and by Ugandan Asians, far outweigh what may have been some early mistakes.

Today we see Ugandan Asians making their mark in every corner of society: in politics with my noble friend Lord Popat and the honourable Members in the other place Shailesh Vara and Priti Patel, who was the first Asian woman elected for the Conservatives and whose parents came from Uganda; in journalism with the likes of Yasmin Alibhai-Brown and Rupal Rajani; in sport with Mohamed Asif Din playing cricket for Warwickshire; in public services with Tarique Ghaffur becoming Assistant Commissioner of the Metropolitan Police; and of course in business with entrepreneurs such as Zul Virani of Cygnet Properties & Leisure plc, Rumi Verjee, chairman of Thomas Goode & Co, who established Domino’s Pizza in the UK, Naseem and Moez Karsan of Jordans Cereals, Rupin Vadera, CEO of First International Group, and many others, including Jaffer Kapasi, to whom my noble friend Lord Sheikh referred.

In 1997, recognising the vitality lost to Uganda, the President invited the Ugandan Asians to return home. While some families did, most chose to remain in Britain as integrated British Ugandan Asians—one of this country’s greatest success stories. Their story is a lesson to us today about the successes of integration. I recently spoke about the barriers that stop people integrating. I highlighted how much Britons miss out on by failing to utilise the talents of the ethnic communities. The figure was estimated at £8.6 billion a year, but I believe it could be a lot higher. I argued that ethnic minority communities were vital to our future. My noble friend Lady Thatcher once said that,

“a new resilience derived from diversity can only strengthen Britain”.

Today we are in a global race and Britain has a secret weapon: the races from around the globe that make up our diverse nation. These people have ingenuity, resilience, determination and links and networks around the world. As my fellow Minister Don Foster said in his speech in another place earlier today, the Government are committed to promoting and supporting successful integration, and to unleashing all that untapped talent by giving everyone the opportunities they deserve.

So what is the Government’s approach to integration? Our aim is robustly to promote British values such as democracy, the rule of law, equality of opportunity and treatment, freedom of speech and the rights of all men and women to live free from persecution of any kind—values that are clearly apparent in the Ugandan Asian community. It is these values that make it possible for people to live and work together, bridge boundaries between communities and play a full role in society. When there are also opportunities to succeed and a strong sense of personal and social responsibility to the society that has made success possible, the result is a strong community.

We must ensure that all sectors of our diverse society are contributing to the economic vitality of our nation. We want to create the conditions for everyone to play a full part in national and local life. I have said before that the things that stop people getting on are the same things that stop people getting on with each other. The noble Lord, Lord Singh, spoke of integration as being a two-way street. I agree, but we must also tackle the barriers to integration, and afford everyone the opportunities and values that we all take for granted.

The noble Lord, Lord Janner, gave a reflective account of what he understood by integration—to hold on to religion, culture and where you came from but adapt to the place where you now are and consider to be home. We recognise that integration is a local issue and the Government’s role in this approach is to facilitate and set the tone. I want to give you a flavour of the 30 or so projects we are supporting.

People of faith—Christians, Muslims, Hindus, Sikhs and others—are called by their religious beliefs to serve their communities and neighbourhoods, and as a Government we are committed to promoting and celebrating this record of service. We also want to help link up the social action undertaken by different faiths to maximise the impact on those in need. So this year, to celebrate the Queen’s 60 years of service to the country, we facilitated the Year of Service programme, with each faith in turn hosting a day or days of volunteering and inviting people of other faiths to join in. Around 500 projects around the country have been part of the Year of Service and I pay tribute to all those who have taken part. We are looking for ways to harness this enthusiasm and help ensure that there are further opportunities for faith-based volunteering in future.

Separately, we continue to work with the Church Urban Fund on the Near Neighbours programme, taking advantage of the existing infrastructure and experience of the Church of England. We have invested £5 million over three years to support local projects in four areas of high deprivation, which bring people of different faiths together to improve understanding and improve neighbourhoods. So far, more than 300 local projects have received grants of up to £5,000 and there are also training programmes for community activities and faith leaders.

We recognise that English language skills are fundamental to people’s ability to participate in our society, to break down barriers and do all the everyday things that we take for granted. We have already provided more than £8 million to 35 ESOL providers—mainly further education colleges—in 19 areas of England with the highest demand for English language training, and we plan to do more to support those who most need to improve their English skills.

The noble Lord, Lord Bilimoria, referred to the issue of students. Let me be clear: there is no limit on students coming into this country. If you are a genuine student wanting to study a genuine course in a genuine university, this country is open to any such applications. The noble Lord also asked about the Asian cuisine sector. I can inform him that we are taking forward the Asian cuisine policy specifically to encourage home-grown culinary talent. We are offering support through the Department for Communities and Local Government and BIS to support training and scholarships to bring bright young people from all communities together to support this industry.

The noble Lord makes an important point, but I am sure that he would also agree that we sometimes find that the people coming to work in the communities where this demand is needed are the same communities where there are the highest levels of youth unemployment. It is therefore absolutely right that we invest in our own young people to take up these opportunities.

I am delighted to see so many events taking place to recognise the contribution of our Ugandan Asian communities. The India Overseas Trust and the British Uganda Asians Core Committee have arranged a number of commemoration events that have been taking place since September in London and Leicester. There was a speech by Shri Praful Patel in east London on 13 October and a thanksgiving event in Leicester on 16 October. Many further events are planned for the full year up to September 2013, as well as an exhibition organised by the New Greenham Arts Centre. I would urge noble Lords to participate.

I end my remarks by praising my noble friend Lord Popat for securing this debate. He has given us the chance to reflect on the enormous contribution of his community—our community—which turned dispossession into opportunity and tragedy into success; a community whom we proudly call the British Ugandan Asians.

16:15

[Lord Popat]

My Lords, I am humbled by the Minister’s excellent summing up and her comments about the Ugandan Asian community. This 40th anniversary is always going to bring mixed emotions: sadness, regret and a wonder of what might have been, but also pride, delight and inspiration. I was very proud to tell my story about the success of my community in your Lordships’ House and am delighted and inspired to have heard today from so many Peers with such a wide range of experience of the Ugandan Asian community.

Britain is an amazing country. It has been a wonderful home to the Ugandan Asians, who are—and will always consider themselves—proud to be British. I beg to move.

Motion agreed.

Economy: Growth

Thursday 6th December 2012 Lords Chamber

Question for Short Debate

16:15

Asked By

[Lord Heseltine]

To ask Her Majesty’s Government what is their response to the Report No Stone Unturned in Pursuit of Growth.

[Lord Gardiner of Kimble]

My Lords, this is a time-limited debate and the limit for Back-Benchers is three minutes. I respectfully remind the House that this means that when the clock shows three minutes the speaker has already reached their permitted limit.

[Lord Heseltine]

My Lords, it is eight months since I set out my remit from the Government to comment on their national agenda for growth. A team of officials across Whitehall provided unlimited access to any department. No attempt was made to constrain or censure my comments. I thank the Government for that unique privilege. I am greatly indebted to the talented and dedicated team of officials who enabled me to produce a report regarded, even by those who disagree with its conclusions, as professional and well presented.

It has been suggested to me that my report should have been more focused on a limited number of targets. I do not accept that. The challenge we face is too immediate and too comprehensive. Any adequate response must involve the broad range of our institutions and our people. That is why I stress the leadership of the Prime Minister, the need for a comprehensive growth agenda, the involvement of every government department as appropriate and, critically, a central capability to ensure the delivery of the promises involved in such a strategy.

Yesterday, the Chancellor of the Exchequer directed most of his response to my central theme of localism. I am most encouraged by this and by his promise of a full response in the spring.

Uniquely, of all advanced economies, this country relies on central government and its bureaucracies to initiate, determine and administer economic policy. I believe there are consequences from this: the minimum of local initiative, the almost total absence of incentive for localities to add to government funding from their own or from outside resources, and a conformity of practice that ignores the diversity of local economies.

My report outlines an alternative concept. I argue that our local economies should be more driven by local factors. They should engage a wider involvement of local leaders and use competition to attract additional, non-governmental funding. As envisaged, most of the localist agenda should be led by the local enterprise partnerships. The Government have now made available sufficient funding to ensure their ability to do this. If any local authorities are still uncertain about this partnership with the private sector, I believe that the need to bid from a single fund will persuade them to participate, although my own view is that most of them will need no such encouragement. Against that background, their local people would not be impressed by the failure to seize such an opportunity; and, of course, such a failure would strengthen the case of those who, at every turn, argue that only central quangos or departments can be relied on to deliver quality of service.

I had, then, to consider the response of the private sector to a localist initiative. We talked to each of the groups that represent the private sector. We also looked overseas at the support available in competing economies. Our findings were published in an annexe to the main report and our conclusions were as bleak as those first reached by Lord Devlin, who conducted a similar exercise in 1972. At home and abroad, other countries have developed different but comprehensive support for their small and medium enterprises. This Government have set out an ambitious target to increase our exports to £1 trillion by the year 2020. The Prime Minister, on recent visits to Brazil and India, two of our target markets, found that there were no British chambers of commerce there at all. Led by my noble friend Lord Green, this Government have moved swiftly to remedy this problem. In the first instance he is working on 20 key markets, and he has appointed a number of new trade envoys. I think that is excellent, and I am very much in agreement with the remarks of my noble friend Lord Howell of Guildford and of my noble friend Lord Green himself in an earlier debate in this House today.

However, we need the same sense of urgency at home. Chambers of commerce, as they are now constituted, represent only a fraction of our companies. Let me give just two examples: Birmingham has fewer than 3,000 members; Milan has 350,000 members. As the noble Lord, Lord Haskins, knows, as he was present at the meeting in Humberside, where I discovered these figures, the chamber there has 1,000 members. The Federation of Small Businesses has 1,000 members. There are 70 entrepreneurs who have formed a breakaway group; that is 2,070 firms. There are 40,000 firms on Humberside.

An important route to the export market is to reach out to the overwhelming majority of companies that actually do not export. The British Chambers of Commerce’s own analysis revealed that 58% of exporting companies did so because overseas customers approached them in the first place. This is not exactly what we might call entrepreneurial salesmanship.

It is my belief that we need to provide more sophisticated services to support our small and medium enterprises across the range. They need to be private sector-led. Membership of chambers should remain voluntary, but it should be sufficiently attractive to draw more members. They should signpost advisory services, they should be involved in the provision of mentoring opportunities, they should encourage local procurement and they should provide a vehicle for the delivery of central departments' services.

The simple test is to ensure that our companies are supported by the same quality of services that our competitors enjoy overseas, whether it be the Small Business Administration in the United States of America or the more state-orientated proposals on the continent of Europe. The British Chambers of Commerce and its associated member chambers have now communicated to the Government their enthusiastic endorsement of such an approach in this country. I very much hope that this will be reflected in the Government’s response in the spring.

The Chancellor was good enough to say that the report has attracted wide support, and much work was already under way in the localist agenda. Greater Manchester has pioneered the concept of a combined authority. Liverpool negotiated the first city deal. The noble Lord, Lord Adonis, is working in the north-east on how to make progress there. More specifically, Andy Street, the managing director of John Lewis and chairman of the West Midlands and Solihull LEP, and Sir Albert Bore, leader of Birmingham City Council, have asked the Prime Minister whether I can work with them to develop proposals along the lines of my report, which the Government could consider as they reach conclusions. Such work would obviously include and involve the Birmingham chamber of commerce in exploring a wider role. I hope very much that the Prime Minister will agree to this suggestion and I fully recognise that it would involve no commitment to accept any proposals that arose from such an initiative.

The Chancellor’s response yesterday seems to have one novel feature. Most government reports are targeted at specific policies, activities and groups. It is easy for most people to feel that it is someone else’s responsibility and has little to do with them. The announcement of the single fund for local economic development and competitive bidding changes that. There are now 39 teams—the LEPs— of talented, motivated local people with the opportunity to attract public money in a way that serves their places, encourages them to raise additional resources and binds the public and private sectors together in a common cause. If I may borrow a phrase, we are all in this together.

16:26

[Lord Mandelson]

My Lords, I warmly congratulate the noble Lord on securing this debate and on his report as a whole. It will not surprise him that I strongly agree with the bulk of it. When I returned to the Government when the financial crisis struck in 2008, my eyes had been opened by my continental experience to what most other sensible Governments do in placing their weight behind the growth of new markets, sectors and technologies in their economies.

This is not, or need not be, dirigisme of the clumsy and counterproductive kind. It is about identifying an economy’s comparative advantages and then maximising the public and private investment in those advantages; removing unnecessary barriers to new and growing businesses; making sure that all the available national and local instruments or interventions of government are acting, as far as possible, in harmony; pump-priming with additional government resource where the market is failing to provide adequate finance; doing some of the heavy lifting in attracting foreign investment in R&D and building domestic supply chains based on this activity; or helping British manufacturers and service providers to enter global supply chains.

The kinds of frustration that the noble Lord will experience in achieving his report’s implementation are, I suspect, the same that I faced. I want to comment briefly on them. Broadly, they are of three kinds. First, there is lethal short-termism—the bane of British government and corporate life, neither of which have a sufficiently long-termist view inculcated into their perspective and working methods. When I embarked on my own policies of industrial activism, I am afraid that the policy horizon of many in government seemed to stretch from the day of policy announcement to around a couple of months before interest was lost. The hope of those who never signed up to the policies in the first place seemed to be that the policies would die through indifference. It therefore requires strong political will in government to counter this. I regret that such stop/go short-termism kicked in again when the change of government came. The coalition, rather than building on what I started, decried Labour’s growth policies and pinned all its hopes on deficit reduction instead.

The second obstruction lies with the Treasury. Its long-held attitude is that smart, strategic, interventionist policies do not work because, in principle, Ministers and markets do not mix. This is coupled with deep scepticism about public borrowing for extra investment which, in its view, simply adds to the country’s borrowing requirement without delivering anything of very much value. Its approach, I am afraid, is to kill the policies at birth when it can. Then, if this fails, it severely cash-limits the measures and makes access to them by businesses so difficult that they are soon shown to have failed. This inbred Treasury attitude simply has to be conquered in order to make any progress.

The third source of obstruction is more latent than malign, and possibly the most difficult to overcome. It is the sheer lack of experience and capability inside government to design and implement the sort of market-based interventionist policies and instruments we need, especially in the financial area. We need to prioritise this capability and recruit it with government—by which I do not mean, incidentally, collecting further centrally based Whitehall officials.

In conclusion, we can and should learn from others, so if I had one piece of advice for my own party, it would be to spend its time while it can looking at others’ experience internationally and, at home, be inventive; build on what exists rather than returning to ground zero and be prepared to take a major leap in ambition, intervention and organisation in government. Nothing short of that will be needed in the huge economic battle we have to continue to take on.

16:31

[Lord Shipley]

Every time I cross the Gateshead Millennium Bridge I think back 25 years to a polluted River Tyne with little economic activity. The transformation has been inspirational. It is the result of public sector intervention through urban development corporations, led largely by local people triggering private sector investment. Those corporations were, of course, the creation of my noble friend Lord Heseltine, who had a compelling vision of what could be achieved in our cities.

That vision is here again in this report: England is too centralised and faster growth cannot be delivered by Whitehall. The Government have taken several steps to address this: city deals, the Localism Act, and enabling local authorities to share in business rate growth. They now need to go a step further so that local enterprise partnerships, the private sector and local authorities working together and empowered by central government can drive growth in their localities.

Most of Whitehall operates in silos and my noble friend Lord Heseltine is right to say that the Government need to think more in terms of places outside London and how to build on their unique strengths. The abolition of government offices in England was a mistake. I do not advocate government offices which centralise public service delivery in their regions, but I do want government offices which bring key Whitehall departments into a single place with a duty to drive growth and unlock barriers to growth.

Such a government office would work as a partner of the private sector, local authorities and LEPs. I agree entirely with my noble friend Lord Heseltine that LEPs must become engines of growth and I welcome the Chancellor signalling yesterday that a greater proportion of growth-related spending would be devolved to LEPs from April 2015 in transport, skills and employment.

Central to this are enhanced roles for FE colleges and the private sector. Recently I was at an event in the new creative quarter in Nottingham. The event was held in New College, Nottingham, a founder member of the Gazelle Colleges Group formed last year by five leading FE colleges in England: New College, North Hertfordshire, Gateshead, City College Norwich and Warwickshire College. There are now 20 of them, all seeking to reshape FE colleges by putting entrepreneurs in a more strategic position and focusing on self-employment and new business development. They are working to align local growth clusters to support business formation and the delivery of appropriate skills. They should be commended for this.

This report has attracted strong support from the private sector, but there was a hint, initially from the British Chambers of Commerce, that the report focused too much on institutions. I do not think that is valid because institutions matter. We need our chambers of commerce to be delivery partners of the LEPs in business support and training, and if the chambers maintain a voluntary membership structure, as they seem to prefer to do, we should create a one-stop shop through the chambers which businesses positively want to join.

A local structure is now emerging composed of LEPs with authority and resources, enhanced private sector support for business, as outlined by my noble friend Lord Heseltine, and local government leading the growth agenda, with all three partners being supported by central government,

Eleven words in this report are vital, although every word is important; that,

“there are some things only government can do to drive growth”.

This report shows us how.

16:36

[Lord Skidelsky]

My Lords, the best thing about the report by the noble Lord, Lord Heseltine, is that it reflects a broad agreement that something more than deficit reduction is needed to get the economy growing again. The noble Lord’s enthusiasm to get things done is the thing I have most admired about him over the years. There is a good cartoon on the front of his report, No Stone Unturned. Noble Lords have probably all seen it, but the rock the noble Lord needs to push away ought to have the image of the Chancellor graven on it. The noble Lord proposes a Whitehall pot of £50 billion to be bid for by voluntary partnerships between local authorities and businesses over five years but, as far as I understand it, and I stand to be corrected, the Government are making no extra resources available. Rather, this is a way of getting local responsibility for the spending of money already available to local authorities so there is no assurance of any additional stimulative effect. That is an important defect.

The noble Lord has been anxious not to breach the Chancellor’s deficit reduction programme. In fact, the report explicitly states:

“I believe the Government’s economic strategy is right”,

but it is precisely this that needs to be questioned. We are in an extraordinary position. The main international organisations now all agree that austerity is having a chilling effect on the economies of Europe, yet they also say that there is no alternative. That seems much too passive. The Chancellor alone denies that his deficit reduction policy has any responsibility for the weak performance of the economy. It is all blamed on head winds. I regret to say that the OBR has helped him massage his figures to show that the deficit is coming down and therefore that he is on track, even through the track is five years longer than he thought it would be in 2010. As Chris Giles notes in today’s Financial Times,

“had the OBR shown teeth, Mr Osborne would have failed on all his fiscal targets”.

The only thing worth talking about today is the validity of the targets themselves and the theory of the economy on which they are based, but that is the last thing this House seems to be willing to discuss. I hope we will soon be given more than three minutes per speaker to address the larger issue.

16:38

[Lord Baker of Dorking]

My Lords, the essence of the Heseltine report is the growth and wealth of the economy over the next 50 years. We all know that it will not come from banking services and real estate but from technological innovation, inventions and the capacity to make goods and services that the rest of the world wants to buy, but there is a massive skills shortage. The Royal Academy of Engineering and the Engineering Employers’ Federation have recently forecast that by 2020 there will be a shortage of 1.25 million professional scientists, engineers and technicians in this economy. If we have that, we cannot meet any of the targets that the Chancellor set yesterday.

The only educational institutions that are trying to meet that demand are the colleges that I have been pioneering for four years, which started under Labour, as the noble Lord, Lord Mandelson, will remember: university technical colleges. They are for 14 to 18 year- olds. There are 600 students. They are employer-led, university supported, and the youngsters do up to two days per week practical work.

The first one, which has operated for two years in December, was the most successful school in the country. Every youngster at 16 or 18 got a job, an apprenticeship or a place at college or university. We have five colleges open; 33 approved and 21 applied for. We need masses more of these colleges—seriously a large number. They accord very much with the spirit of the Heseltine report as they are employer led. Hitachi wants one in Durham because it is building a factory for 700 staff to build rolling stock and there are simply not enough skilled technicians in that area to fill the factory.

In Salisbury the LEP, the agency my noble friend is quite rightly using, came to us and said there was a skills shortage there because of the redeployment of the Army from Germany and the building of new maintenance depots, so together with the local employers, the University of Southampton and local people it was going to apply for one.

My point is that if we do not fill this skills shortage, you can forget all the targets because we will simply stagnate. This is the single most important thing we have to do. Matthew Hancock, the Minister for Skills in my noble friend’s department today issued a statement setting out the policy for the next two years. In particular, he said that the LEPs should be given a strategic policy for skills policy. That is going to be very important. I hope that they will bid for some of the money that has been suggested and have some money of their own. This is singly one of the most important things we can do. Without those skilled people, unless we import from overseas, we will meet none of our targets.

16:41

[Lord Haskel]

My Lords, the noble Lord, Lord Heseltine, has form on industrial policy and I am delighted to see that he has carried it with him into this report. Instead of just market forces, he speaks about all aspects of industrial strategy and what it should look like. I particularly welcome his emphasis on co-operation—Government, business, technology, education, finance and society all working together and all interrelated, aligned in a trajectory directed towards growth, leaving no stone unturned. At least I think that is what the cover says.

He calls for all government departments to develop a growth agenda. He wants the Government to help industry to create winners. He wants the Government to tilt business towards British industry. I absolutely agree. He wants the financial sector to play its part in this to serve business and industry rather than itself. I agree.

He wants to help the education system to create the STEM graduates the noble Lord, Lord Baker, has just told us about. He wants to do something about the one in four adults who are functionally innumerate. Who could not agree? We are again reminded that we enjoy the fruits of investment in science and technology and research planted by earlier generations. Of course, we have a similar obligation to the generations that come after us.

The noble Lord speaks of localism. He wants to bring back the importance of place and the Government have responded with money for the LEPs. It is a pity they did away with the RDAs because then it would have happened a lot more quickly.

He explained why he wants to strengthen the local chambers of commerce but society now plays an even more important part in industrial strategy. It plays an important part in getting people to work together. During the past 20 years, we have developed clusters where we can stimulate and support each other and speed things up. We have developed knowledge transfer networks. Publicly funded science is becoming open source. The minimum wage is developing into a local living wage.

Some employers have kept people in work by reducing working hours to see them through the hard times instead of sacking everybody. We have some highly productive factories, not only because of investment, but also because employers and workers see themselves as one instead of two sides of industry.

Business now has to be socially responsible because society rejects clothing from sweat shops, it prefers products and services that are environmentally friendly and fair trade, and it rejects those firms whose tax arrangements are seen to be unfair. Marks & Spencer wins prizes for its Plan A.

We probably have to shine more light under this stone better to understand how society has to play its part in our industrial strategy. I think that goes beyond localism.

16:45

[Lord Bilimoria]

My Lords, the noble Lord, Lord Heseltine, has always been known as a man of action. From the day of his long-awaited maiden speech—after more than 10 years’ patience on behalf of your Lordships, to be precise, and when I had the privilege of paying the tributes to him—he has hit the ground running. Within barely seven months, he has produced his No Stone Unturned—In Pursuit of Growth report. The Economist teasingly referred to it as “Tarzanomics”.

To his credit, the noble Lord is absolutely right to conclude that:

“There are no easy or short term ways to beat the world’s most competitive economies”.

The suggestion to create a huge pool of money, endorsed by the Autumn Statement yesterday, to be devolved locally is, in theory, very good. The promotion of public-private partnerships is excellent. I am proud to be the founding chairman of the UK-India Business Council, which is funded by UK Trade & Investment and the private sector. I know that the strength of the UKIBC is that, as a public sector organisation alone it would not be effective, and as a private sector organisation alone it would not be effective. It is effective only because of the collective efforts of the public and private sectors—from British and Indian business to UKTI and Foreign and Commonwealth Office teams in the UK and across India.

My worry is that, in spite of what the noble Lord, Lord Haskel, has said, the RDAs created by the previous Government were not considered to be that effective. The Learning and Skills Council, which was created at great expense, was disbanded. These were great ideas in theory but difficult to implement in practice. They simply resulted in the creation of another layer of bureaucracy and another opportunity to waste money.

In building a business from scratch, I have seen that ideas are one thing but execution is what makes it happen. Will the Government confirm whether LEPs are local enterprise partnerships or, as the report refers to them, local economic partnerships? I hope it means both.

I was very worried about the report’s approach to foreign investment. Just look at what Tata has done since 2006. It has invested more than £10 billion and has performed a miracle in turning around Jaguar Land Rover, which now has made a profit of more than £1.5 billion. This is in spite of the previous Government turning it down for the funding that it so desperately needed in the depths of the recession. I hope that the Government will not take up the insinuations in the report. We have always been one of the most open economies in the world and we need constantly and desperately to attract foreign investment.

In the report, I was delighted to see the Government being asked to deal with illegal immigration, which they have failed to do so far. UKBA has been absolutely failing. However, will the Government also rethink their immigration policy, which is damaging British business and higher education?

In conclusion, I congratulate the noble Lord, Lord Heseltine, on his report but will it really get this Government creating institutions that are as effective as the American Small Business Administration, to which the noble Lord referred? It has been instrumental in supporting small businesses, not just with advice but by providing finance to the tune of billions of dollars a year in a sustained manner for decades. Will it be as effective as the German chambers of commerce, to which every business in Germany belongs? If not, I fear that this report will be another well intentioned, half-way step when what we as a nation desperately need is a giant step forward.

16:48

[Lord Wolfson of Aspley Guise]

My Lords, I congratulate the noble Lord, Lord Heseltine, on his excellent and energetic report. However, I should like to add a different perspective. In doing so, I declare an interest: I am the serving CEO of a FTSE 100 retailer that employs around 46,000 people. Our problem is not cash or the availability of funds; we generate £240 million more than we need to invest in the business or to pay our dividends. Our problem is not finance. Along with many large companies, we are able to raise finance on the bond markets at prices that we have never seen before—4% for 10-year money. Nor is the problem a lack of opportunity for investment; we have identified 1.2 million square feet of shops that we would like to open and we would like to employ 5,000 more people.

The problem is that all too often the Government are getting in the way. Next year, of that 1.2 million square feet, we will open barely 250,000 square feet. In the vast majority of cases, the problem is the planning system. The issue is not just that it says no but the time that it takes to say yes. In one shop, it took nine months just to get planning permission to build storage for stock. We then had to wait three months to see if we were going to be judicially reviewed. That is one year in which 100 people did not have jobs because of our planning system.

The problem, it seems to me, is that, while we have some great councils in this country, there are far too many people involved in our planning system who simply do not understand wealth creation. They do not understand that building new shops and creating new jobs and new services for local communities actually creates wealth. Far too often they say to me what one council official I was talking to said. We have a £2 million shop in the town centre and we wanted to put an additional shop outside the town. He said, “Surely you’ll just spread the same amount of trade over the two shops”. The shop outside the town centre will take, conservatively, £20 million. He did not understand the potential. Oddly, he did understand the inverse. He understood that to close shops is to destroy wealth and deprive people of local services.

That imbalance of perception courses through the veins of our planning system. It means that we have a planning system driven by people who are profoundly pessimistic about the ability to create wealth. Their belief that one cannot create new wealth by opening new shops, for example, means that they stop us opening new shops. It is a self-fulfilling prophecy and extremely dangerous. In particular, it has led to a hugely damaging zoning system that puts houses in places where people do not want to live and shops in places where they do not want to shop.

Noble Lords will all see an example of that if they drive down a motorway over the next week; if they look to the side they will see, at some point on their journey, a brand new housing estate; neat new-build houses, built where the planners have put them. The planners cannot see, because they do not understand wealth creation, that by building houses in horrible places they destroy wealth.

If we are to have a thriving economy, my belief is that there is enormous pent-up energy in the private sector that can be released. All the planning system needs to do is let us build homes where people want to live, and of the type they want to live in, and build shops where they want to shop and offices where they want to work. If the planning system were driven by those principles, we would have a far more vibrant and effective economy.

16:52

[Lord Hollick]

My Lords, on page 17 of his excellent report, the noble Lord, Lord Heseltine, sets out in graphic detail the persistently poor level of UK productivity compared with our main competitors. His response is, characteristically, to lead from the front. He has demonstrated that one energetic and open-minded person who believes that the state has a key role to play in promoting economic growth can, in six months, come up with a telling analysis of our growth crisis—and it is a crisis—and recommend 89 generally sensible and practical proposals to address that crisis, a task that has eluded a platoon of Business Ministers for two and a half years.

Investment in infrastructure, plant, equipment and skills are, as the noble Lord, Lord Heseltine, points out, essential to improving our productivity. Yesterday the Chancellor made welcome moves in that direction, but far more ambitious measures are required in order to meet the estimated £350 billion infrastructure investment needed over the next 30 years, according to McKinsey. Such measures include an infrastructure bank which can benefit from record low long-term borrowing rates. Road pricing, long advocated across this House, would spur large-scale investment in our aging motorway networks. These measures as well as the proposal of the noble Lord, Lord Heseltine, to help public and private pension funds, insurers and banks to finance infrastructure instead of buying gilts must all be energetically pursued.

The noble Lord is surprisingly reticent about additional measures to stimulate demand, which is the key to growth and investment. The failed efforts to promote lending will continue to fail unless and until businesses can see increased demand to justify taking on more debt or, preferably, raising more equity. There are fiscally neutral ways of stimulating demand. Is using the proceeds of the 4G auction to pay down debt the best strategic use of this windfall during the worst economic crisis of modern times? Why are the Government still taxing houses on the basis of the 1991 valuation when the proceeds arising from a modest revaluation at the top level would finance the reduction of VAT on home refurbishment or a further £200 on the income tax threshold?

The noble Lord’s call for empowered localism to replace the inefficient and bureaucratic Whitehall is welcome and was warmly embraced by the Chancellor. The history of local versus regional versus central delivery is littered with disappointment and failure, all too often driven by political fashion rather than by proven performance. Recommendation 7 hits the nail on the head when it calls for LEP boards to have,

“the necessary skills and expertise to deliver their expanded functions”.

The recent excoriating report by the Public Accounts Committee into the competence of the Regional Growth Fund provides a stark and timely warning of what can go awry.

The noble Lord rightly highlights stability as an essential precondition to economic transformation and goes on to cite our relationship with Europe as a prime example of the need for stability. Now that the noble Lord enjoys the warm embrace of both the Prime Minister and the Chancellor, we can be more confident that a rational voice in support of developing a sustainable relationship with the European Union, our major economic and trade partner, will be heard and, hopefully, heeded.

16:55

[Lord Hodgson of Astley Abbotts]

My Lords, in the three minutes available to me, I begin by congratulating my noble friend on his remarkable tour d’horizon and its 89 recommendations. I want to focus on just two issues: the malign impact of regulatory overlap, in his recommendation 44, and the role of the Government as a commissioner and purchaser in recommendations 36 and 37.

First, on regulatory overlap, during the two reports that I have done for the Government, in particular Unshackling Good Neighbours, which focused on the regulatory burdens on smaller firms, charities and voluntary groups, it became clear that there is a great tendency for regulators to take in each others’ dirty washing. Ofsted asks about the frequency of testing electrical appliances, the Charity Commission about CRB checks. Both those issues are very important, but they are the subject of separate statute law and have their own enforcement procedures and authorities. Firms, especially smaller ones, are vulnerable to repeated questions about whether they have checked this or that—questions that very often are not set in context, do not need to be asked and are not accurate. They leave the firm feeling that, to be on the safe side, everything should be checked. As a result, the default option becomes, “If in doubt, check everything”. Per contra, if my noble friend’s ambitions are to be realised, we need more judgment and less process.

On commissioning and purchasing, of course we have to ensure value for money for taxpayers, but purchasers and commissioners need to consider how many tenderers need to be invited against the size of the contract. There can be only one winner, and the economic frictional costs of many losers are considerable. Purchasers and commissioners also need to consider the cost of tendering in relation to the value of the contract. In Unshackling Good Neighbours, we suggested 2% of the value of the contract up to £500,000 and 1% thereafter. When a service is being provided, commissioners also need to consider the annual cost to the provider of the monitoring. Again, we suggested 4% up to £500,000 and 2% thereafter.

Further, commissioners should not change their methods of measurement midstream. To do so adds exponentially to the costs of SMEs. All this may appear very nitty-gritty but, unless the Government are able to agree centrally and locally and stick to some performance yardsticks, much of the potential benefit of their purchasing power will be dissipated.

16:57

[Lord Giddens]

My Lords, there was quite an amusing headline in the satirical magazine Private Eye recently, which touches on the point made by the noble Lord, Lord Skidelsky. It went something like, “After four years of intensive study, the IMF has concluded that austerity leads to austerity”. We can all agree that we now need to focus on growth, but not just any old growth—it has to be environmentally sustainable and evenly spread. There is no point if it benefits only the top 0.1% of income earners.

There is much to agree with in the outstanding report from the noble Lord, Lord Heseltine. We should think in a radical and adventurous way about our economic future. Something utterly dramatic is happening at the cutting edge of manufacture, perhaps equivalent to or much more than Arkwright’s spinning jenny all those years ago: computers have crossed the line from the digital world and are intervening in the world of reality itself. This is perhaps one of the most momentous changes ever to happen in human productive activity. Although it is in its early stages, 3D printing can already make an enormous range of items, from engineering parts to dental crowns. At MIT, Neil Gershenfeld is working on computers that will be able to fabricate not just single items but complete functional systems. For example, his aim is to make a plane that can fly right out of the computer, as he says—and he does not regard this as a Utopian project.

This might be thought to be fanciful but much of it is already here. It is documented in a very detailed book by Chris Anderson called Makers: The New Industrial Revolution. Crucially, it reverses the assumption that manufacture will inevitably be outsourced to low-cost countries.

In Barcelona, where youth unemployment is more than 50%, the city is setting up digital fabrication workshops across different neighbourhoods, encouraging young people to train in them. The aim, in Gershenfeld’s words, is for the city to be,

“globally connected for knowledge but self-sufficient for what it consumes”.

This, to me, is the cutting edge of what could be a tremendous global revolution. Why should we not think along the same lines for Manchester, Birmingham and Liverpool, which brook so large in the noble Lord’s report?

17:00

[The Earl of Lytton]

My Lords, this is an enormously important report. It sets sheer practicality in a philosophical context, and I hang my hat on that.

By virtue of my professional business and chamber of commerce interests, I have spent much of my life, like Voltaire’s antihero, Candide, noting both cause and effect while observing that current times are not the best of all possible worlds. The elephant in the room is the unnecessarily adversarial nature of much of our national politics, legal system and regulation. This creates risks and, in public administration terms, the response often seems to be inward-looking and protectionist, sometimes as turf wars but primarily in defence of systems rather than outcomes for growth. This has consequences. The Federation of Small Businesses surveys support my own long-held view that small businesses in particular still bear disproportionate burdens in terms of regulation, employment and tax treatment. For example, nobody wins by turning employment rights into a legal battlefield and the general costs to small businesses are, I believe, unsustainable.

The informer network of HMRC has been likened in this week’s press to the Stasi. The taxman’s reputation for aggressive treatment of small businesses is well known. While this department formally accepts some tax avoidance schemes—it has a box for it on its forms—it is an avid player in a game of catching out the ignorant, weak and unwary, even if honest, while apparently shrinking from bigger issues and slipperier customers. Similar generic shortcomings, dual standards and ignorance occur downstream in every aspect of business life.

On the plus side, though, is the growth in microbusinesses. Many are home-based and rural-based, outsourcing much of what they need and requiring little direct employment, and thus avoiding workplace pitfalls. Many are not VAT-registered or incorporated. The internet facilitates this virtual world of micro-commerce. West Sussex, where I live, apparently has 27,000 of them, but no one knows quite how many make up this major element of local GDP. Is this simply opting out in favour of lifestyle choices? Is it a consequence of obstructive and ephemeral laws and regulations? Is it a desire to keep beneath the radar? Or is it a new economic dawn? What might it mean for national economic policy?

I applaud the efforts that the Government are already making to cut red tape. The UK remains a great place to start a business. It also needs to be a great place to grow one on. This splendid report shows that we need a revolution in regulatory attitudes and I hope that the Government are listening.

17:03

[Lord Sheikh]

My Lords, the United Kingdom finds itself at an economic crossroads. This is due not just to the current financial crisis but also to the fact that changes need to be taken in our business and industrial landscape. I congratulate my noble friend Lord Heseltine on the submission of his excellent report. A renewed focus on overseas trade is severely overdue as we cannot continue to buy so much more than we sell. Our industries must be world leading and globally competitive, thus attracting inward investment and creating the potential for us to increase exports.

I was pleased that this report placed an emphasis on the long-term stability of our science and research sector, and how we market it. We need to better support and stimulate the creativity we hold within, and ensure that this is better promoted to the rest of the world.

I would also draw attention to the report’s focus on the need for our government departments to build better relationships with the private sector and with each other. So much can be gained from government embracing private sector business in a way that works with it rather than alongside it. We must give businesses confidence that the Government understand their concerns and share their aims. I agree with my noble friend Lord Heseltine that wealth creation should be the business of all government departments. BIS and the Treasury cannot capitalise on every opportunity for growth and wealth creation without the help of those in other fields. I am therefore in favour of departments contributing to a wider growth strategy through which they could join up their thinking and complement each other.

The notion of localism is also extremely important and we must capitalise on the progress that the Government are already making on this. I was pleased to hear the Chancellor accept the recommendation that more of the funding for locally tailored schemes will go into a general pot for which local enterprise partnerships can bid. True innovation is released when it is free from central constraints, and it is the job of central government to promote and support this. Competitive bidding for such funds will encourage local communities to raise their game, give the successful bidders freedom to spend in ways that better support their local areas and, ultimately, build a nation of more ambitious and creative communities. There needs to be a greater level of co-ordination between government and the private sector, and indeed within the Government themselves. There also needs to be full recognition of the benefits of allowing strong, independent and dynamic local economies to flourish, supported but not controlled by national government.

In conclusion, I agree that we should think hard about our industrial approach, with a fresh examination of a wider economic landscape and a reshaping of our education system. We also need to take a creative look at the skills agenda.

17:07

[Lord Monks]

My Lords, as the noble Lord, Lord Heseltine, rightly says in chapter 7 of his report:

“If there is an upside to the worst … crisis of modern times, it is the emergence of an audience for deep seated and radical proposals”.

Indeed, we cannot just go back to business as usual, pre-2007. We know that we must rebalance our economy towards innovation, manufacturing, infrastructure and the weaker regions. We must save more and invest more. We should not continue to treat the City of London with exaggerated reverence, adopting an almost protectionist zeal that we do not apply to any other sector. The City can be an asset but the banks can be near-lethal to the country, as they were in 2007-08.

The noble Lord, Lord Heseltine, details measures that aim to get the UK economy match fit. For starters, this has to be done up to the level of our neighbours on the other side of the North Sea—Germany, the Netherlands, Flanders and the Nordic states. They have high productivity, positive balances of payments, strong social states, excellent training systems, scope for local and regional initiative, and influential trade unions. Those neighbours are savers and investors.

We have covered our lack of match-fitness in the past, sometimes with North Sea oil revenues and then with the boom in the financial services sector. There are no further windfalls in view and no more short-term fixes except, perhaps, devaluation, of which we have had seven against the deutschmark or the euro since the end of the war. We must surely not rely on devaluation for our future strategy. By the way, the last thing we need is a self-imposed exile from the EU unless it bends to our model. That would be, in effect, a sort of voluntary Dunkirk—and that was a defeat.

Many of the recommendations of the noble Lord, Lord Heseltine, nod in the direction of Germany and the lessons that that country provides for the UK. I add one more: the advantage of codetermination over adversarial relations at work. These codetermination principles seem outlandish to many in the UK, but they keep managements more long-termist and less inclined to help themselves to a disproportionate share of company profits. They guide unions in the right direction, too.

The nation owes much to the long period of public service of the noble Lord, Lord Heseltine. I think of Docklands in the 1980s, Manchester in the 1990s after the bomb, and especially Liverpool over a long period, as well as many other matters, some of which have been mentioned. With this report, we are in his debt once again, and I urge the Government to act on its central recommendations.

17:10

[Lord Haskins]

My Lords, as the chair of the Humber local enterprise partnership, it would be remiss of me not to say that I entirely support this proposal from the noble Lord, Lord Heseltine, and I congratulate him on it. It was a very interesting symbolic moment when he chose to launch it in Birmingham Town Hall, which many noble Lords will recall was where Joe Chamberlain made all his speeches. While the noble Lord, Lord Heseltine, was giving his speech, the figure of Joe Chamberlain was standing over him, reminding us of the past.

The talk of the erosion of local government and the move towards central government is one aspect that I should like to mention. I can also point to the talk of the erosion of corporate Britain away from the provinces and towards the centre, into London. In 1906, some 85% of the headquarters of the top 100 companies were outside London. Today, I guess that there are less than 10. We have seen over a period great companies such as Rowntree’s being devoured by Nestlé, an old international company, and the local identity of Rowntree’s has gone. Aviva thought that Norwich Union was not a great name, so it chose something else. Above all else, the banks have devolved local power to the centre. In the job that I do, it is difficult to make sense of all that. Contrast that with BMW in Munich, Volkswagen in Saxony, Microsoft in Seattle, Coca-Cola in Atlanta and McDonald’s in Chicago. Corporate Britain must learn to let go.

There is a huge attraction in localism. There is better accountability—a case of Whitehall versus City Hall, and I have no doubt where the accountability lies—as well as local knowledge and local experience. The noble Lord, Lord Baker, mentioned the skills problem. It is very important that that is dealt with at a local level and that local needs are met. Localism also means a speedy response, ownership and civic pride. I believe that the LEPs will develop into something called city regions, which will probably have more credibility than the regional development agencies because people identify with cities. If people identify with cities, there is a chance. Apart from in Yorkshire, people have never identified with regional development agencies.

However, the LEPs have to demonstrate that they are competent to take greater responsibility, getting talented people into public life once again and getting local authorities to pool their resources—something that is not very easy in my part of the world. Getting local business associations and local authorities to work together is, again, not very easy. Big businesses must devolve much more authority to the local level so that people such as me can get answers on big economic decisions at the local level, rather than having to go back to daddy.

17:12

[Lord Northbrook]

My Lords, I welcome this opportunity to debate the important report produced by my noble friend Lord Heseltine but I regret that the usual channels have not allowed the opportunity of a full three or four-hour debate. To limit contributions to three minutes makes each contribution only a speed-dating effort in addressing such an important publication.

The Government gave only the briefest of initial responses to the report until yesterday, so I look forward to hearing what the Minister has to say. The Government are planning to strip Whitehall of about £58 billion of business support funding and place it in the hands of local enterprise partnerships, LEPs, in the biggest act of financial devolution ever seen. The CBI has commented:

“LEPs have so far lacked the power and resources to impact local growth”.

Given that this review highlights a number of key areas in which LEPs can support private sector activities, it is pleasing to hear that they have been given appropriate resources to help them to meet this challenge. Does the Minister believe that they have the powers and the skills?

The British Chambers of Commerce generally welcomes the report:

“Lord Heseltine’s analysis of the state of the UK economy is compelling”,

it says, yet his report for action,

“focuses too much on institutions, rather than on the fundamental barriers to business growth. Ministers should think carefully before committing to a restructuring of government, and focus first on the key restraints facing the real economy: the availability of growth finance, practical help for our exporters, our creaking physical infrastructure, and an education … system that responds to businesses needs. Government can best support enterprise by collaborating with business to get the basics right”.

Does the Minister agree with its observations?

The Federation of Small Businesses also welcomes the report by the noble Lord, Lord Heseltine. It suggests, however:

“The boards of LEPs must represent all sizes and sectors of local businesses. Otherwise they will fail. The FSB does not believe that the chambers should be legislated as they do not represent all businesses, particularly self-employed and micro firms”.

It concludes:

“To create a stable environment for businesses to thrive, the Government should look to the success of the US Small Business Administration—SBA—to coordinate small business policy, such as lending, procurement and exporting”.

I will end by congratulating the Government on three measures in the Pre-Budget Report that I believe will encourage growth. First, the increase in capital allowances from £50,000 to £250,000 is an excellent signal to manufacturers and has rightly been praised by key industrialists such as Sir Anthony Bamford of JCB. Secondly, the cut in corporation tax of 1% is equally welcome to increase UK competitiveness. Finally, the extension of the empty property rate relief is a measure to be much welcomed.

17:15

[Lord Desai]

My Lords, the Heseltine report is not just for Christmas and not just for austerity; it is for a much longer period than that. Some of the things that the noble Lord has pointed out have been constant and I have been hearing about them ever since I arrived here 45 years ago. We are too centralised and there is too little power in the regions and local authorities. There is too much regional inequality and London is too powerful compared to the regions. You can see that in the noble Lord’s diagrams.

The noble Lord is a paradox. He is a centralist who wants to decentralise by using central power and he is strongly in favour of state intervention to encourage private business. It is an interesting model. If we are serious about decentralisation the first thing to do is to decentralise Whitehall. There is no reason why all the ministries should be in London. There is no reason why Local Government, Transport or Business, Innovation and Skills should be in London. Once upon a time the technology was such that they needed to be near each other. Now with cyber technology none of them needs to be near the others. We can completely decentralise government and delocate it. That would be a great step forward in making the regions more powerful and generating more employment in the regions.

As my noble friend Lord Hollick said, if we are serious about local government, we have to give local government income which is independent of central government. The best way to do it would be to do what has been long delayed and revalue property. Property values have not really been revised since the early 1990s. We got into the whole poll tax/council tax dilemma because of the reluctance to revalue properties quinquennially or periodically. If we could do that, given council tax rates, we would generate buoyant incomes for local authorities. They would not need to come to central government for their income and that would allow central government to cut central taxes. If we are serious about localism, we should break up Whitehall into the regions.

Lastly, this is a wonderful opportunity. As we are considering the refurbishment and repair of the Palace of Westminster, let us move Parliament out of London.

17:18

[Lord Paul]

My Lords, I declare an interest as chairman of Caparo Group, an industrial manufacturing company. I thank the noble Lord, Lord Heseltine, for initiating this debate and add my voice to the plaudits he has received for his report. I have been actively involved in UK industry for more than 40 years. In this time dozens of reports, documents, policy briefs and plans have come and gone. No Stone Unturned in Pursuit of Growth is an outstanding and comprehensive report that reflects the noble Lord’s rare depth of experience in both commerce and public life.

I am glad that the Chancellor has announced that the Government are taking action on the report, although he will respond formally in April. It is a happy coincidence that today’s debate is timed to follow the Autumn Statement. I am glad that the Chancellor is to take some immediate action. Speed is of the essence and I urge the Government to implement the report quickly in its entirety because decentralisation of power to the regions is long overdue. However, we must be careful not to create more layers of bureaucracy, more quangos and more consultants which will produce more inertia, of which there is too much already.

We need to bring together the education and business sectors. Education has been a lifelong interest of mine and I have been active in several institutions of higher education. When I was a student at MIT, I was most impressed by the strong collaboration between business, government-sponsored projects and universities in the United States. Universities get their funding while government projects and industry benefit from first rate research and technology. We in the UK have first-class universities and we need to encourage more collaboration along those lines. I have spoken on this subject many times. Innovative technology will help to build a more dynamic economy that will attract more foreign investment than public relations exercises or cash incentives.

This report has the potential for a dramatic impact on the economic crisis so I strongly endorse it. I hope that the Government act today to pursue its implementation with the same energy, commitment and determination that has been shown by the noble Lord in producing it. I was planning to ask for this debate in my name but, true to his reputation, the noble Lord beat me to it.

17:21

[Lord Lea of Crondall]

My Lords, we are living through a period of the worst economic situation since well before the recession of the 1930s, if one looks at the loss of potential output. We need a massive kick-start. I am 100% in favour of what the noble Lord has done, particularly as he challenges us all in our cultural assumptions. Where will this massive kick-start come from?

We have a catastrophic imbalance and there are so many ways of looking at that imbalance: north-south divide, the City of London versus the sticks, and even the plebs versus the 0.1%. Indeed, someone has described it as a Wimbledon economy. As long as the multinationals have their headquarters here and their wives and husbands—they are gender neutral these days—can be within spitting distance of Wimbledon, that is fine. Transfer pricing and taxation all comes within that package. So the political radicalism that one wishes to bring to this is a matter of taste.

I start from the position that we need a national investment bank. The City of London has some of the best brains in the country. According to the Office for National Statistics, if value-added equals wages and salaries, then the City of London must be hugely productive and have high value-added because it pays itself a lot. There is something wrong with the measure of the economy in that sense of value added. They are not laying golden eggs; they are laying hand grenades and that is not value added in anyone’s book.

My thought is that the City of London ought to provide the best brains, if that is what they are, to make the national investment bank transfer a lot of our savings. Every time you open a newspaper, they are trying to pump £50 billion into long-term loans which do not get spent, but that should make the kick-start. They should work for national or regional investment banks. After all they cannot all wind up as the Archbishop of Canterbury. The heart of the classic Keynesian paradox is that we are spending too little and yet are told every day that we are spending too much. The noble Lord, Lord Skidelsky, rightly continues to remind us of that.

My final point is on Europe. I will set another challenge to the noble Lord, Lord Heseltine. I would like him to look at how much truth there may be in the notion that Europe is getting in the way of industrial policy. I think that there are a lot of myths about this. There are many things that you can do within the rules of the European Community on industrial interventionism, finance and so on. We ought to nail once and for all the idea that we cannot co-operate in Europe and also have an active industrial policy, including a national investment bank. Everyone else is doing it; why cannot we? I echo what my noble friend Lord Mandelson said in that regard.

17:27

[Baroness Wilcox]

My Lords, I thank the Minister for allowing me to speak for a moment from personal experience in support of the call from my noble friend Lord Heseltine for empowering the chambers of commerce. In the 1990s, I went to France to take over the largest fish-canning factory in France, on the docks of the port of Boulogne. I took a new landing and processing method from Britain, and some of our people to work with us. I also took a small fleet to add to the very large fleet that there was already in Boulogne-sur-Mer.

As many noble Lords will know, it is a very busy port for ferries. I was catching pelagic fish that had to be processed within hours. In docks such as those there is a high-pressure atmosphere. When I got there, I was amazed to see that the most important building in the docks was the chamber of commerce, because the chamber there has statutory power. It ran—and runs—the docks. It made an enormous difference. It meant that we could go somewhere to fight our cause. The smallest voices tended to get the biggest listen, because the port was always looking for new businesses to come forward in case it lost control of the movement of any of the cargo that it was dealing with.

When I came back to London, Plymouth and Cornwall, I saw our chambers of commerce struggling with volunteer members in that lovely amateur way in which we like to run the world. It made me realise that we cannot do this any longer. Our chambers of commerce must be empowered to promote British business. We must be able to take our place in continental Europe. It would love us to do so. It cannot believe that our chambers of commerce have no power—and neither should we.

17:27

[Lord Wood of Anfield]

My Lords, the excellent report of the noble Lord, Lord Heseltine, paints a vivid picture of some of the problems that have characterised our economy for decades, such as low productivity, poor translation of basic research into goods and services, and technical skills gaps. However, for me the issue that his report brings most to light is the staggering scale of regional inequalities in growth and income. Britain has bigger disparities between regions than any of our major competitors. It is the most regionally unequal country in the EU. GDP per head in the richest region is nine times greater than that in the poorest region—and the regional gap is widening, not shrinking. Since the 2008 recession began, poorer areas have seen income per head fall twice as quickly as in the wealthiest areas. In London alone, the richest 10% have 273 times the wealth of the poorest 10%. This is not just unfair and corrosive of social solidarity; it is holding our economy back. The impact affects us all.

What can be done about this? There are 89 recommendations in the report, but at their heart are three central principles that the noble Lord, Lord Heseltine, is urging on us all. The first is the indispensable need for a growth strategy. The noble Lord says that this strategy,

“must send a loud and unequivocal message to the country that the Government takes growth seriously and has a credible strategy”.

I think that it is fair to say that so far the coalition has sent not so much a loud and unequivocal message as something that has oscillated between a mumble and total silence.

The noble Lord’s second principle is the importance of devolving policy responsibility to the regions and localities. His report details a familiar story of excessive centralism and Whitehall silos. Some imagination on getting funding streams both rationalised and decentralised is clearly needed and we are keen to work collaboratively on any proposals with that aim. But what a shame that the bodies that would have been best suited to bear the weight of this agenda, the Regional Development Agencies, were hastily scrapped two years ago in a move that the noble Lord, Lord Heseltine, himself said was a mistake last year.

Yesterday, we heard that the Government are minded to make some progress towards single-pot funding for LEPs, which could be promising. But as the noble Lord, Lord Northbrook, said, for devolved funding to work, the bodies that power is devolved to must have the capacity to do the job properly. I am not convinced that LEPs have this capacity and I am not alone, because concerns about their governance, their ability to leverage funding, whether they have procurement contract management skills, under-representation of SME's and other worries are widespread and feature in the noble Lord’s report. Building up this capacity is a crucial precondition for any serious attempt to have a regional growth policy. Will the Minister say what the Government intend to do about that?

Concerns about LEPs seem positively minor compared with the concerns about the Regional Growth Fund. This fund aimed to create 330,000 jobs in its first year. It created 40,000. Two years into its life, only £60 million of the £1.4 billion allocated has reached the front line. The PAC said that its value for money was scandalous. Again, I would like the Minister to tell us how the Government intend to respond to those criticisms.

The final principle, which is at the heart of this report, is the belief that active government, far from being the enemy of enterprise and growth, is indispensable to it. The noble Lord, Lord Heseltine, had the intellectual and political courage to stand up for this idea when it was deeply unfashionable under a Tory Government in the 1980s. My noble friend Lord Mandelson stood up for it in the last few years of the Labour Government, when it was also unfashionable. If there is one legacy of this excellent report for us all, I hope that it is that we rid ourselves of the prejudice that an active industrial strategy is bad economics, and rid ourselves of the error of believing that a laissez-faire approach is good economics.

00:00

[The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Lord Marland)]

My Lords, this has been a magnificent debate and I am very grateful to the noble Lord, Lord Heseltine, for initiating it. It must have been wonderful for his grandchildren to witness this great debate.

When the thud of this arrived on my desk and the noble Lord gave us a briefing on it, the words of Caesar came to mind: “Veni, Vidi, Vici”. He came, he saw and he conquered, as he produced this excellent document. It is a capable landscape of the issues and problems that we all face. The most important thing is that it has answers. So often we criticise in society today but we do not have answers.

I will restrict my remarks in this very short time to a response to his document on behalf of the Government. I hope that noble Lords will forgive me for not dealing with their individual questions. I am sure that we can deal with those later. It is fair to say that the Government do not agree with everything the noble Lord said—it would be a rare world if we did—but I was much heartened when he said that the Chancellor's words yesterday were as much as he could have hoped for on the report.

Of course, a great deal of what the noble Lord wrote in this report is also happening within government. In particular, he wants to put in a test case in Birmingham where he is looking for a response for the Prime Minister. I have no intention of shooting the Prime Minister’s fox on this one because the noble Lord is waiting for him to reply, but I have a slight indication that he may be disposed to that as the right thing to do.

The noble Lord talked about a national growth strategy in this fine document, as did the noble Lords, Lord Wood and Lord Mandelson. It is absolutely fundamental that out of all of this we have a national growth strategy. That is what the Government are working to at the moment. Part of that strategy relies on the chambers. The report says that we should enhance the legal status of the chambers. The chambers are indeed at the heart of a British-led recovery. However, as the noble Lord, Lord Heseltine, remarks, the chambers themselves are in, at best, a pretty feeble state. They need boosting up. We will return in the spring to his comments on that with an official response, but clearly the direction of travel in boosting the chambers, which we are doing abroad at the moment, needs to happen very extensively in this country, because we have a serious breakdown at the moment.

Strategic relationship management was referred to. We have established 38 strategic relationship partnerships with big companies to lead ourselves out of the mess that we are in. Our ambition is to have 150 relationships by 2015. Rationalisation of trade associations is another issue. Having been the Minister for Intellectual Property and been on the receiving end as some 100 associations bombarded me with information in relation to intellectual property, I cannot help but agree with the noble Lord. That has of course to be led by the industry, but this gives a very helpful nudge.

The noble Lord refers to procurement strategy and procurement specialists within government. He is absolutely right. I was one of the five Ministers who were responsible, under Francis Maude, for renegotiating all government contracts and establishing strategic relationships and partnerships with government suppliers. That will be critical, not only for saving costs but in terms of building relationships. The Government’s commitment to 25% of government contracts going to small and medium-sized enterprises is absolutely key to helping the SMEs forward.

I am on the Civil Service reform board so am much taken by the reference the noble Lord makes to improving management information within government. We have to improve management information, which has not changed since the noble Lord, Lord Mandelson, was in government. We are still deluged by paper, which, in a modern world, should not be the case. There are communication issues within the Civil Service, but it is working hard to find a way forward with that, as indeed it is in commercialising the Civil Service, which is going to be critical to any reform.

A lot of the meat of what the noble Lord says relates to LEPs. I am glad that he feels that LEPs, working alongside stakeholders, are absolutely key to development through our regions. I do not think there is much argument in this House about that. The Government have committed £1.5 billion of funds which LEPs can apply to borrow. We have established 35 LEPs and a wave of city deals—28 already—which should increase employment by 175,000. A lot of work is going on there.

A number of noble Lords have referenced local government, while the noble Lord, Lord Wolfson, referred to planning and getting a much clearer path in that respect. That is very important, especially coming from a top entrepreneur like the noble Lord, who understands it as well as anybody. It is absolutely fundamental that we simplify some of the methods of local government.

On skills, I am a great fan of the UTCs, and we all pay huge tribute to the noble Lord, Lord Baker, for his part in devising them. I have had the privilege of working with him on a few things to do with UTCs and where they could be. They will be part of the regeneration in various areas. In addition to that, the Government have set up a number of skills training programmes and mentoring programmes, such as Get Mentoring, which has 15,000 mentors throughout the country supplying help to businesses starting up. It is all part of reducing that skills gap, as my noble friend Lord Heseltine suggested.

The noble Earl, Lord Lytton, referred to red tape. The one-in, one-out regulation reduction that we have has already saved £850 million of regulation costs to businesses. We must build on that, and we support the recommendations that the noble Lord has made.

In addition, the Government have adopted several key initiatives. We have set up the Green Investment Bank with £3 billion of funding. We have announced a business bank with £1 billion of new funding. We have set up catapults with an investment of £200 million to transform some of the new advanced technologies. We have set up the Business Finance Partnership. We have the Enterprise Capital Funds and the Funding for Lending scheme, as well as a whole raft of infrastructure projects that the Chancellor has announced not only recently but in the past two years. So the Government are trying their very best to force business and industry to respond to the challenges that the economy now faces.

Strategically, we have identified some of the economies that we want to back, such as advanced manufacturing in aerospace, motor and science. The Chancellor announced great support for science and technology yesterday in the Autumn Statement. We also want to support knowledge-intensive industries such as education, IT and business services—all key things in which we have tremendous skills. In addition, we want to enable some of the construction and energy companies to start rebuilding infrastructure.

At the heart of this is trade. Unless we start to trade as a nation, we will not have growth. Our initiatives for trade include investing more funds in UKTI, a department that I am proud to be involved with. We have reformed UKTI as a much more outward-facing unit than it has been. The Prime Minister has led several big trade delegations; there have been more than 280 missions this year alone through UKTI. We have had Export Week, we have had ExploreExport, and as of late I am pleased to have taken on the chairmanship of the Prime Minister’s trade envoys.

If there is one thing that I think sums up this debate and the admirable concerns of all noble Lords in this Chamber, which were echoed by the noble Lord, it is the notion that we are definitely all in this together. Through the trade envoys—which involve Labour, Liberal Democrat and Conservative Peers—and through our business ambassadors, we will be able to take the trade out to the world as UK plc. That is how we will get out of this mess—by all being in it together. I admire the words that the noble Lord used, because they are the icing on the cake on what I think is an excellent document and a good reference point for our Government.

House adjourned at 5.42 pm.